Environment, human development and economic growth

Over the last few years, environmental issues have entered into policy design, particularly development and growth policies. Natural resources are considered necessary production inputs and environmental quality is considered a welfare determinant. The integration of environmental issues into economic growth and development theories and empirics is currently widely analyzed in the literature. The effects of natural resources endowment on economic growth are mainly analyzed through the so-called Resource Curse Hypothesis (RCH) whereas the effects of economic growth on environmental quality are part of the Environmental Kuznets Curve (EKC). Furthermore, recent contributions on RCH and EKC have shown the important role of institutions and human development dimensions in building a sustainable development path. In this paper, we attempt to analyze the causal relationships between economic growth, human development and sustainability combining the RCH and EKC models and adopting a human development perspective. Results confirm the importance of high institutional quality and investments for human capital accumulation in order to build a sustainable development path.     

Equilibrium Selection and Stability for the Groves Ledyard Mechanism

In their seminal paper Groves and Ledyard (1976) construct a balanced incentive compatible mechanism that solves the free rider problem. In subsequent research, Bergstrom, Simon, and Titus (1983) prove that there exist numerous asymmetric equilibria in addition to the symmetric equilibrium. In the present paper, we explicitly solve for the additional equilibria and use computational experiments to examine the structure and stability of the set of equilibria of the Groves Ledyard Mechanism. We find that all of the equilibria found by Berstrom, Simon, and Titus are unstable and that for a high level of the punishment parameter these equilibria do not exist. Further, we find that there exists an additional boundary equilibrium for each of the equilibria found by Bergstrom, Simon, and Titus. The boundary equilibria are all stable.     

Start-ups as drivers of economic growth

The purpose of this study is to determine the relationships between the implementation of start-ups and the dynamics of the main characteristics of national economic growth. In developing the methodological design of the study, a quantitative approach was used, which allowed realizing the advantages of the integrated use of correlation and regression analysis, analysis of trend models and general scientific methods of knowledge to analyze the time series model and prove the following hypotheses on the example of the economies of Canada, China, and South Korea. Н1: An increase in the number of start-ups has a positive impact on the sustainable development of the social sphere. Н2: More start-ups have a positive impact on the sustainable development of the economy. Н3: More start-ups have a positive impact on the sustainable development of the green society; Н4: The increase in the number of start-ups has a positive effect on the development of the institutional sphere. The study results substantiate a strong direct correlation between the implementation of start-ups and the achievement of the UN SDGs (Sustainable Development Goals), with a link proven not only for economic, but also for social, environmental, and institutional SDGs, which increases the importance of start-ups for achieving sustainable development in territories.This study may be of interest to state and municipal officials in the implementation of measures to create a favorable startup ecosystem and to academic researchers, opening new avenues for future research.     

Gaming-simulation of the functioning of economic systems

This article attempts to provide a structure-functional analysis of economic activity and propositions based on this analysis about applications of gaming-simulation for an institutionalist study of the functioning of economic systems. Modern institutionalism in contrast to neoclassical economics, which is to a great extent mathematicized, does not actually use any quantitative methods and models. Simulation games represent such models that can be designed and promote the implementation of research in the spirit of neoinstitutional economics. In this sense, gaming-simulation may be considered as institutional modeling. In this work we shall, first be concerned with a ‘static’ structure of economic activity deriving from the three-level scheme by Parsons. Next, a ‘dynamic’ structure of economic activity will be analyzed in terms of the concept of limited rationality by Simon. In the final section, we characterize the methods of reflection of different components of economic systems in gaming simulation models, as well as ways of implementing the research on such models.     

A fresh look on economic evolution from the kinetic viewpoint

Dynamic economic theory and evolutionary economics are both subject to the trade-off between explanation power and accounting for novelty. The present paper makes a contribution to filling in this gap basing on a general equilibrium model including production and taxes. Our notion of an "open loop evolution equilibrium" is based on arguments from the gradual vs. bang-bang tax reform controversy and from the debate on optimal macroeconomic policy design. The term "kinetic" indicates that, in contrast to traditional comparative statics, our approach neither hinges on the uniqueness of equilibria, nor is confined to the analysis of prescribed parameter variations. JEL Classification: B52, C62, D50, D58     

A Simple Model of Contract Enforcement Institutions

We demonstrate that in highly productive economies contract enforcement institutions are endogenously established, and partnership contracts correct inefficient land allocation. In less productive economies, however, such institutions are not established, and partnership contracts are not formed. In economies with intermediate productivity levels, multiple Nash equilibria exist; that is, contract enforcement institutions are established in the high Nash equilibrium whereas they are not formed in the low Nash equilibrium. In this case, institutional quality can be diverse across economies. We also prove that improvement in institutional quality reduces within‐country inequality. All these outcomes are consistent with cross‐country observations.     

Hidden information,bargaining power,and efficiency: an experiment

We devise an experiment to explore the effect of different degrees of bargaining power on the design and the selection of contracts in a hidden-information context. In our benchmark case, each principal is matched with one agent of unknown type. In our second treatment, a principal can select one of three agents, while in a third treatment an agent may choose between the contract menus offered by two principals. We first show theoretically how different ratios of principals and agents affect outcomes and efficiency. Informational asymmetries generate inefficiency. In an environment where principals compete against each other to hire agents, these inefficiencies may disappear, but they are insensitive to the number of principals. In contrast, when agents compete to be hired, efficiency improves dramatically, and it increases in the relative number of agents because competition reduces the agents’ informational monopoly power. However, this environment also generates a high inequality level and is characterized by multiple equilibria. In general, there is a fairly high degree of correspondence between the theoretical predictions and the contract menus actually chosen in each treatment. There is, however, a tendency to choose more ‘generous’ (and more efficient) contract menus over time. We find that competition leads to a substantially higher probability of trade, and that, overall, competition between agents generates the most efficient outcomes.     

A Solution Concept for Majority Rule in Dynamic Settings

We define and explore the notion of a Dynamic Condorcet Winner (DCW), which extends the notion of a Condorcet winner to dynamic settings. We show that, for every DCW, every member of a large class of dynamic majoritarian games has an equivalent equilibrium, and that other equilibria are not similarly portable across this class of games. Existence of DCWs is guaranteed when members of the community are sufficiently patient. We characterize sustainable and unsustainable outcomes, study the effects of changes in the discount factor, investigate efficiency properties, and explore the potential for achieving renegotiation-proof outcomes. We apply this solution concept to a standard one-dimensional choice problem wherein agents have single-peaked preferences, as well as to one involving the division of a fixed aggregate pay-off.     

How to allocate forward contracts: The case of electricity markets

Several regulatory authorities worldwide have imposed forward contract commitments on electricity producers as a way to mitigate their market power. In this paper we analyze the impact of such commitments on equilibrium outcomes in a model that reflects important institutional and structural features of electricity markets. We show that, when firms are asymmetric, the distribution of contracts among firms matters. In the case of a single dominant firm, the regulator can be confident that allocating contracts to that firm will be pro-competitive. However, when asymmetries are less extreme, certain contract allocations might yield anti-competitive outcomes by eliminating more competitive equilibria. Our analysis thus suggests that forward contracts should be allocated so as to (virtually) reduce asymmetries across firms.     

新经济地理学中的制度转向与区域发展

近年来,伴随着资本主义社会经济转型和全球化,资本主义进入了制度重建的新阶段,社会科学日益重视“制度”因素的作用。经济地理学强调制度、文化对区域发展的影响,提出了经济地理学的“制度转向”。文章深入分析西方学者提出的制度转向、制度厚度概念及与区域发展关系的基础上,进行理论评析,并简要探讨对中国区域发展的启示。     

Transition economies and trust building: a network perspective on EU enlargement

Many transition economies are characterised by a relativelyrudimentary institutional framework. Weak legislative structuresand the absence of effective market regulation and propertyright enforcement rules diminish the chance of mutually profitablebusiness transactions and—more generally—restrictthe chances for innovation and sustainable growth. Against thisbackground, we analyse the extent to which more efficient governancemechanisms can contribute to a more favourable business environment.In doing so, we adopt a network perspective. We argue that bothin developed market economies as well as in centrally plannedeconomies much of economic exchange takes place in networks.However, the characteristics of these networks, in particularthe concept of trust, can differ significantly. This leads usto conclude that the real challenge of the process of economictransition is connected to building new economic exchange networks.In this paper, we discuss this argument and analyse how thecurrent enlargement of the EU into Eastern Europe may favourablyaffect this process of institutional change in the accessioncountries.     

Endogenous strength of intellectual property rights: Implications for economic development and growth

The key institution that determines sustained growth in R&D-based growth models is the strength of intellectual property rights, which are usually assumed to be exogenous. In this paper we endogenize the strength of the intellectual property rights and show how private incentives to protect these rights affect economic development and growth. Our model explains endogenous differences in intellectual property rights across countries as private incentives to invest in property rights generate multiple equilibria. We show that the resulting institutional threshold offers an explanation for why the effect of a transfer of institutions from one country to another depends on the quality of the institutions that were imported.     

Institutional transformation and the origins of world income distribution

This paper presents an attempt to quantify institutional changes and examine the respective effects of de jure and de facto political institutions on the path of long-run economic growth and development for a large panel of countries in the period 1810–2000. Using factor analysis, latent indices of de jure and de facto political institutions are constructed by exploiting several existing institutional datasets. The empirical evidence consistently suggests that societies with more extractive political institutions in Latin America, South Asia, Middle East and Eastern Europe have achieved systematically slower long-run economic growth and failed to catch-up with the West. The evidence confirms the primacy of de facto institutional differences over de jure institutions in causing differential growth and development outcomes over time. It also explains why highly concentrated political power and extractive political regimes inhibited the path of economic growth by setting persistent barriers to the engagement in collective action. In the long run, institutional differences account for up to two thirds of within-country development path and up to 83% of between-country development gaps.     

The double trap: Institutions and economic development

The empirical growth literature has established that institutional quality is a deep determinant of economic growth. We examine whether institutional quality in low income countries converges to the level witnessed in high income countries, or whether they are trapped in convergence clubs that stagnate or even deteriorate over time. Using the log-t-test suggested by Phillips and Sul (2007), we find evidence of multiple equilibria in institutional quality, with several countries stuck in poor quality institutions traps. We further find that per capita incomes of some of the developing countries are also stuck in low-level traps. Finally, using bivariate probit estimations, we establish that poor institutional traps are major determinants of low income traps. These results indicate that these countries are caught in a double trap where their incomes are stuck in low-level traps from which it is difficult to escape, because the institutions that enable growth are also stuck in low-quality traps.     

Stochastic Learning and the Evolution of Conventions

This paper shows that aspiration driven, stochastic learning processes can enable the members of a population to reach more efficient conventions, which are modeled as equilibria of a coordination game. As opposed to adaptation processes based on either myopic optimization or imitating behaviour, which generally select the risk dominant equilibrium, the present paper provides conditions under which the efficient equilibrium is selected, even if it is risk dominated by another equilibrium. Further, the impact of players' aspiration levels on the existence and local stability of a convention is analyzed. In general, higher aspirations induce more efficient outcomes. In addition, in the case of a local interaction structure there exist an inverse relation between the size of the individual neighbourhoods and the aspiration level required in order to sustain efficient outcomes.     

Hayek Reads the Literature on the Emergence of Norms

Hayek’s approach to cultural and institutional evolution has been frequently criticized because it is explicitly based on the controversial notion of (cultural) group selection. In this paper this criticism is rejected on the basis of recent works on biological and cultural evolution. The paper’s main contention is that Hayek employed group selection as a tool for the explanation of selection among several equilibria, and not as a vehicle for the emergence of out of equilibrium behavior (i.e., altruism). The paper shows that Hayek’s ideas foreshadowed some of the most promising developments in the current literature on the emergence of norms. JEL Classification: B31, B41     

A theory of stopping time games with applications to product innovations and asset sales

Summary In this paper, the pure strategy subgame perfect equilibria of a general class of stopping time games are studied. It is shown that there always exists a natural class of Markov Perfect Equilibria, called stopping equilibria. Such equilibria can be computed as a solution of a single agent stopping time problem, rather than of a fixed point problem. A complete characterization of stopping equilibria is presented. Conditions are given under which the outcomes of such equilibria span the set of all possible outcomes from perfect equilibria. Two economic applications of the theory, product innovations and the timing of asset sales, are discussed.Parts of this paper were presented at seminars at Chicago, Rochester and Rutgers and we acknowledge helpful comments. We are also indebted to a referee for his detailed and thoughtful comments. The usual disclaimer applies.     

Fooling All of the People Some of the Time: A Theory of Endogenous Sequencing in Confidential Negotiations

We analyse a bargaining game in which one party, called the buyer, has the option of choosing the sequence of negotiations with other participants, called sellers. When the sequencing of negotiations is confidential and the sellers' goods are highly complementary, efficient, non-dissipative equilibria exist in which the buyer randomizes over negotiation sequences. In these equilibria, the buyer can obtain higher pay-offs than in pure strategy equilibria or in public negotiations. The degree of sequencing uncertainty that maximizes buyer pay-offs is inversely related to the aggregate bargaining power of the sellers.     

Multiple equilibria in bargaining models of decentralized trade

Summary A market in which population size is endogenously determined is modeled. Buyers and sellers are randomly matched upon entering the market, whereupon they engage in non-cooperative bilateral bargaining. It is shown that general matching technologies and heterogeneity of buyer or seller populations often result in multiple market equilibria. Up to four equilibria can occur and the equilibria can always be ranked according to population size. Under some conditions all equilibria can also be Pareto ranked. The set of equilibria depends on the relative population sizes of different types of potential entrant, market entry costs, and the degree of differentiation between agents on the same side of the market.This paper evolved from a chapter in my dissertation. I am indebted to Leo Simon for many helpful conversations. Michael Hanemann, Jeff Perloff, Stefan Reichelstein, Jim Vercammen, Brian Wright, and participants in seminars at U.C. Berkeley, the University of Maryland, the University of British Columbia and the Australian National University also provided useful comments. Lastly, I benefited greatly from the thorough comments and corrections provided by an anonymous referee.     

三峡库区经济发展与生态环境保护问题研究

经济发展与环境保护之间呈既对立又统一的关系,要实现经济的可持续发展必须在发展经济的同时重视对生态环境的保护。文章以三峡库区为例,通过系统阐述经济发展与环境保护之间的关系,结合三峡库区经济与生态环境的现状分析,认为库区经济发展离不开环境保护,而生态环境的改进也要以经济发展为物质基础,进而提出分别从政府、企业、公民三个方面努力以促进库区经济发展与环境保护协调发展的基本对策。