Private takings

This paper examines the implications associated with a recent Supreme Court ruling, Kelo v. City of New London (2005). Kelo can be interpreted as supporting eminent domain as a means of transferring property rights from one set of private agents—landowners—to another private agent—a developer. Under voluntary exchange, where the developer sequentially acquires property rights from landowners via bargaining, a holdout problem arises. Eminent domain gives all of the bargaining power to the developer and, as a result, eliminates the holdout problem. This is the benefit of Kelo. However, landowners lose all their bargaining power and, as a result, their property investments become more inefficient. This is the cost of Kelo. A policy of eminent domain increases social welfare compared to voluntary sequential exchange only when the holdout problem is severe, and this occurs only if the developer has very little bargaining power. We propose an alternative government policy that eliminates the holdout problem but does not affect the bargaining power of the various parties. This alternative policy strictly dominates a policy of eminent domain, which implies that eminent domain is an inefficient way to transfer property rights between private agents.     

The Scope of Anonymous Voluntary Bargaining Under Asymmetric Information

We present a model of anonymous collective bargaining where individuals'preferences and information may be significantly interdependent. We showthat the bargaining outcome becomes independent of individuals'preferences and information as the bargaining group increases in size. As acorollary, we show that anonymous voluntary bargaining completely fails inlarge groups. Either the difference between the bargaining outcome and thestatus quo vanishes as the size of the group becomes larger, or, thebargaining becomes coercive and results in a violation of at least someindividuals' rights. The result provides a rationale for the inherentdifficulty of reform in the presence of asymmetric information.
"There is nothing more difficult to carry out, nor more doubtful ofsuccess, nor more dangerous to handle, than to initiate a new order ofthings."
Niccolò Machiavelli, The Prince (1532)     

Costly Coasean Bargaining and Property Right Security

This paper examines how transaction costs affect Coasean bargaining with secure and insecure property rights in the lab. Consistent with the theory that secure property rights lowers the cost of non-cooperation, we find that bargaining efficiency is inversely related to property right security. Less secure property rights increased economic efficiency twofold. Property owners with secure rights are more likely to opt for their riskless outside option rather than pay the costs of bargaining.     

On the Private Provision of Two or More Public Goods

We extend the simple model of voluntary public good provision to allow for two or more public goods, and explore the new possibilities that arise in this setting. We show that, when there are many public goods, voluntary contribution equilibrium typically generates, not only too low a level of public good provision, but also the wrong mix of public goods. We also analyze the neutrality property in the more general setting, and extend a neutrality proposition of Bergstrom, Blume, and Varian (1986) .     

Strategic Complements, Substitutes, and Ambiguity: The Implications for Public Goods

We examine the effect of ambiguity in symmetric games with aggregate externalities. We find that ambiguity will increase/decrease the equilibrium strategy in games with strategic complements/substitutes and positive externalities. These effects are reversed in games with negative externalities. We consider some economic applications of these results to Cournot oligopoly, bargaining, macroeconomic coordination, and voluntary donations to a public good. In particular we show that ambiguity may reduce free-riding. Comparative statics analysis shows that increases in uncertainty will increase donations, to a public good. Journal of Economic Literature C72, D81, H41.     

Status Quo Bias in Bargaining: An Extension of the Myerson-Satterthwaite Theorem with an Application to the Coase Theorem

We generalize the Myerson-Satterthwaite theorem to study inefficiencies in bilateral bargaining over a divisible good, with two-sided private information on the valuations. For concave quasi-linear preferences, the ex ante most efficient Bayes equilibrium of any mechanism always exhibits a bias toward the status quo. If utility functions are quadratic every Bayes equilibrium is ex post inefficient, with the expected amount of trade biased toward the disagreement point. In other words, for the class of preferences we study, there is a strategic advantage to property rights in the Coase bargaining setup in the presence of incomplete information. Journal of Economic Literature Classification Numbers: C78, D23, D62, D82.     

我国旧城更新改造中的产权问题研究

本文认为,产权明晰是旧城更新改造规划得以有效实施的前提。产权失灵是过去制约城市规划干预效率的内在原因。根据当代产权制度多元化的趋势,今后我国旧城中应当鼓励公有、共有和私有产权的多样并存,而不应当片面地从一种制度极端(公有产权占绝大多数)骤然跃进到另一种制度极端(私有产权占绝大多数)。传统大规模更新的巨大惯性是在公有制转轨上形成的,要转向小规模、渐进式的更新方式,必须另外铺就一条合理的路径。私有产权的轨道上,只能容纳少部分受益者,而大量的弱势群体注定没有能力跟上这趟貌似充满效率的快车。只有兼顾效率和公平的共有产权制度,才有可能为旧城朝向"有机更新"方式的顺利转轨,提供坚实的路基。包括公共产权形式在内的多样化产权形式是旧城更新中的最好选择,它能够帮助我们实现社会保障和促进多样化的更新模式。     

Asset Ownership and the Threat to Sell

In this paper the effects of selling assets are examined in a property rights model à la Grossmann, Hart and Moore. The possibility of selling an asset gives its owner a bargaining tool which can strengthen his bargaining power under certain circumstances. This offers a form of protection against opportunistic behavior in the hold-up problem, which has not yet been considered in the literature on property rights. With this model it is possible to give a rationale for unconditional joint ownership. Moreover, an explanation for privatization, outsourcing and the existence of passive outside owners can be derived within the model.     

Endogenous Games and Mechanisms: Side Payments Among Players

We characterize the outcomes of games when players may make binding offers of strategy contingent side payments before the game is played. This does not always lead to efficient outcomes, despite complete information and costless contracting. The characterizations are illustrated in a series of examples, including voluntary contribution public good games, Cournot and Bertrand oligopoly, principal–agent problems, and commons games, among others.     

Coalition Stability in Public Goods Provision: Testing an Optimal Allocation Rule

We test the canonical model of international environmental agreements (IEAs) in a laboratory setting with asymmetric agents. IEA participation represents coalition formation and public good provision where there are gains to cooperation, but an incentive to free-ride. We test four competing methods of dividing the coalition’s worth: a recently proposed optimal rule which accounts for subjects’ payoffs as a single free-rider, the Shapley value, the Nash bargaining solution, and an equal split. Each treatment generates the theoretically predicted coalition size more often than not. The shares of the potential gains to cooperation achieved by each rule are: 51, 36, 40 and 13%, respectively. These results highlight the importance of using an optimal rule to improve IEAs, and more broadly for voluntary public good provision.     

Location and ownership of public goods

We introduce location choice for the public good in the property rights framework. We find that it can be optimal to separate location from ownership.     

Property Rights,Governance, and Economic Development

In this review article we give an intuitive account of why good institutions in general, and secure property rights in particular, matter for economic growth and development. We also discuss implications for good governance, defined as the efficient provision of property rights and other aspects of governance. Finally, we briefly touch on political institutions that might be conducive to good governance and thus economic development.     

Bargaining foundation for ratio equilibrium in public‐good economies

We provide a bargaining foundation for the concept of ratio equilibrium in public‐good economies. We define a bargaining game of alternating offers, in which players bargain to determine their cost shares of public‐good production and a level of public good. We study the stationary subgame perfect equilibrium (SSPE) without delay of the bargaining game. We demonstrate that when the players are perfectly patient, they are indifferent between the equilibrium offers of all players. We also show that every SSPE without delay in which the ratios offered by all players are the same leads to a ratio equilibrium. In addition, we demonstrate that all equilibrium ratios are offered by the players at some SSPE without delay. We use these results to discuss the case when the assumption of perfectly patient players is relaxed and the cost of delay vanishes.     

FAIR ALLOCATION OF DISPUTED PROPERTIES

We model problems of allocating disputed properties as generalized exchange economies. Therein, agents have preferences and claims over multiple goods, and the social endowment of each good may not be sufficient to satisfy all individual claims. We focus on market‐based allocation rules that impose a two‐step procedure: assignment of rights based on claims first and voluntary exchange based on the assigned rights afterward. We characterize three focal egalitarian rights‐assignment rules that guarantee that the allocation rules are fair. We apply our results to problems of greenhouse gas emissions and contested water rights.     

Factors Determining Citizen’s Attitudes Towards Agri-Environmental Property Rights

The purpose of this paper is to contribute further insights into individuals’ agri-environmental attitudes. In particular, the empirical analysis focuses on how citizens think agri-environmental property rights should be assigned. This has been done by surveying how individuals consider the environmental policy should promote the implementation of a group of agri-environmental measures, allowing us to examine the determinants of individuals’ opinions about this matter. Results indicate that higher level of income and education support the implementation of obligatory agri-environmental measures with no financial support (property rights should rest on society) except for measures to improve public access to land for leisure activities and ecological farming which are seen more of the voluntary kind (property rights should rest on farmers). Additionally, rural residency has strong significant effect on agri-environmental attitudes as rural residents are more likely to support the implementation of voluntary (with/without financial support) agri-environmental measures. On the whole, this research proves to be a valuable tool to identify factors determining individuals’ attitudes towards agri-environmental property rights which can certainly help policymakers to provide customized, better response to social demands on this matter.     

Efficient Equilibria in the Voluntary Contributions Mechanism with Private Information

We characterize generally the Bayesian Nash equilibria of a voluntary contributions public goods game for two consumers with private information.The two consumers simultaneously make voluntary contributions to the public good, and the contributions are refunded if the total falls short of the cost of the public good. Several families of equilibria (step‐function, regular and semi‐regular) are studied. Necessary and sufficient conditions for regular and semi‐regular equilibrium allocations to be interim incentive efficient are derived. In the uniform distribution case we prove (i) the existence of an open set of incentive efficient regular equilibria when the cost of production is large enough and (ii) the existence of an open set of incentive efficient semi‐regular equilibria when the cost of production is low enough. Step‐function equilibra are proved to be interim incentive inefficient.     

Voluntary Participation and Spite in Public Good Provision Experiments: An International Comparison

This paper studies voluntary public good provision in the laboratory, in a cross-cultural experiment conducted in the United States and Japan. Our environment differs from the standard voluntary contribution mechanism because subjects first decide whether or not to participate in providing this non-excludable public good. This participation decision is conveyed to the other subject prior to the subjects' contribution decisions. We find that only the American data are consistent with the evolutionary-stable-strategy Nash equilibrium predictions, and that behavior is significantly different across countries. Japanese subjects are more likely to act spitefully in the early periods of the experiment, even though our design changes subject pairings each period so that no two subjects ever interact twice. Surprisingly, this spiteful behavior eventually leads to more efficient public good contributions for Japanese subjects than for American subjects.     

Social network and private provision of public goods

Using a simple model with interdependent utilities, we study how social networks influence individual voluntary contributions to the provision of a public good. Departing from the standard model of public good provision, we assume that an agent’s utility has two terms: (a) ‘ego’-utility derived from the agent’s consumption of public and private goods, and (b) a social utility which is the sum of utility spillovers from other agents with whom the agent has social relationships. We establish conditions for the existence of a unique interior Nash equilibrium and describe the equilibrium in terms of network characteristics. We show that social network always has a positive effect on the provision of the public good. We also find that, in networks with “small world”-like modular structures, ‘bridging’ ties connecting distant parts of social network play an important role inducing an agent’s contribution to public good. Assumptions and results of the model are discussed in relation to the role of social capital in community-level development projects and to the effect of innovation networks on firms’ R&D investments.     

Property Rights,Public Enforcement,and Growth

We study the link between public enforcement of property rights, innovation investments, and economic growth in an endogenous growth framework with an expanding set of product varieties. We find that a government can assure positive equilibrium growth through public employment in the enforcement of property rights, if the economic environment is sufficiently favorable to growth and/or if public enforcement is sufficiently effective. However, in terms of welfare, an equilibrium path without property‐rights protection and growth might be preferable. In this case, the enforcement of property rights involves too much reallocation of labor from production and research towards the public sector.     

分配承诺、产权与经济效率

在政府分配的承诺可置信时,地方政府分权竞争的结果是资方获得了最大利益,而劳方的利益被忽视了。而当政府分配的承诺不可置信时,资方的投资生产激励会受到较大的削弱,社会福利会受到较大损害。关于中国经济增长奇迹的经济解释,文章认为:在改革开放初期,中性政府对经济增长起到了很重要的作用;而随着改革开放的深入,地方政府分权的竞争激励机制可能起到了更为重要的作用。产业结构与产权保护有着密切的关系,要使产业结构完成升级,拥有良好的产权保护制度是一个重要条件。针对地方政府分权竞争带来的问题以及承诺可置信性缺失,文章引入第三方规制和以权力配置作为一种可信承诺等两种解决途径,并指出了其不足之处。