FOUR CHARACTERIZATIONS OF CONSTRAINED PARETO EFFICIENCY IN CONTINUUM ECONOMIES WITH WIDESPREAD EXTERNALITIES*

In continuum economies, widespread externalities are those over which each individual has negligible control. Nash-Walrasian equilibria with lump-sum transfers are defined, and their existence proved. They are then characterized by the property of “f-constrained Pareto efficiency” for finite coalitions. More general “private good” Nash-Walrasian equilibria are characterized as private-good constrained-Pareto efficient. Introducing complete Pigou taxes or subsidies leads to equilibria that are characterized by constrained efficiency and f-constrained efficiency for given levels of the widespread externalities. But full efficiency requires resolving the public-good problem of determining those aggregate externalities or, equivalently, of setting appropriate Pigou prices.     

ELECTRIC UTILITY DEMAND-SIDE MANAGEMENT IN POLAND

Demand-Side Management (DSM) improves load factors and energy efficiency and reduces emissions. DSM methods are understood in the United States, but using DSM in Poland poses problems related to constraints in the power sector and the economic environment. This paper discusses the reorganization of the Polish energy sector and Polish energy policy during in the transition since 1989 and discusses the obstacles to implementing DSM programs.     

REVERSE DISCRIMINATION AND EFFICIENCY IN EDUCATION*

This article shows that reverse discrimination policies can find a justification purely on efficiency grounds. We study the optimal provision of education when households belong to different groups, differing in the distribution of the potential to benefit from education among individuals, which is private information. The main result is that high‐potential individuals from groups with relatively few high‐potential individuals should receive more education than otherwise identical individuals from groups with a more favorable distribution of these benefits.     

FOREIGN CAPITAL AND EFFICIENCY IN DEVELOPING COUNTRIES

This paper uses stochastic frontier methodology to analyse foreign direct investment, imported capital goods and human capital as channels for increased efficiency in less‐developed countries. Empirical investigation reveals that developing countries differ with respect to the efficiency with which they use frontier technology. Foreign direct investment and human capital play a significant and quantitatively important role in explaining these differences.     

基于面板数据的中国资本配置效率研究

基于 Jeffrey Wurgler 的方法,本文提出了一种新的基于面板数据的资本配置效率模型。使用我国39个工业行业的数据度量了90年代资本配置效率,发现从1991年到1999年我国资本配置效率的年平均值为0.0311到0.0375之间,属于很低的水平。自发投资增长指数的大小与国家产业政策的倾斜、高新技术发展方针、产业调整与转移的方向、产业国际竞争力的态势以及市场供求情况基本一致。经济增长仍然是投资主导型的,属于外延扩张的阶段,金融市场应有的资本高效优化配置的机制没有建立起来。本文还分析了相应的金融现象。     

COMPETITIVE PRICING AND EFFICIENCY IN SEARCH EQUILIBRIUM*

We consolidate and generalize some results on price determination and efficiency in search equilibrium. Extending models by Rubinstein and Wolinsky and by Gale, heterogeneous buyers and sellers meet according to a general matching technology and prices are determined by a general bargaining condition. When the discount rate r and search costs converge to 0, we show that prices in all exchanges are the same and equal the competitive, market clearing, price. Given positive search costs, efficiency obtains iff bargaining satisfies Hosios' condition and r=0. When prices are set by third‐party market makers, however, we show that search equilibrium is necessarily efficient.     

ABATEMENT COST HETEROGENEITY IN PHASE I ELECTRIC UTILITIES

The market-based instruments embodied in the Acid Rain Program have been instrumental in the reduction of SO₂ and NO _x emissions from electric utilities. Economic theory suggests that tradable pollution permit systems encourage polluters to reallocate pollution burdens to take advantage of any differences in marginal abatement costs. Such reallocations improve the efficiency of pollution reduction. This article evaluates the effectiveness of the first phase of the Acid Rain Program in achieving increased homogeneity of marginal abatement costs using an output distance function approach. The results indicate that plants have been successful in adapting to this more flexible regulatory framework.     

INFLUENCING THE PUBLIC AND EFFICIENCY IN BUREAUCRATIC PROVISION

Abstract.  In the present paper a public bureau can extract additional budgetary allocations, not only by misreporting its production cost to its oversight committee but also by 'influencing' the perceptions of the public at large. I juxtapose the bureau's ability to influence the public with its ability to misreport to the oversight committee, and find that influencing the public might support an efficient level of production by invoking a separating equilibrium. However, a pooling equilibrium involving either overproduction or underproduction of output cannot be ruled out. Accordingly, overproduction could occur even when the bureau cares only about extracting excess budget and not increasing output per se.     

THE EFFICIENCY OF SEQUESTERING CARBON IN AGRICULTURAL SOILS

Agricultural tillage practices are important human-induced activities that can alter carbon emissions from agricultural soils and have the potential to contribute significantly to reductions in greenhouse gas emission (Lal et al., The Potential of U.S. Cropland, 1998). This research investigates the expected costs of sequestering carbon in agricultural soils under different subsidy and market-based policies. Using detailed National Resources Inventory data, we estimate the probability that farmers adopt conservation tillage practices based on a variety of exogenous characteristics and profit from conventional practices. These estimates are used with physical models of carbon sequestration to estimate the subsidy costs of achieving increased carbon sequestration with alternative subsidy schemes.     

STUDYING INEQUALITY IN INCOME DISTRIBUTION OF SINGLE-PERSON HOUSEHOLDS IN FOUR DEVELOPED COUNTRIES

The increasing frequency of single-person households has become a major economic phenomenon, and is likely to become an important political force. This paper focuses on differences related to inequality of income distribution among single-person households in Europe's four largest economies, i.e. France, Germany, Italy and the U.K. Income distribution was modeled in terms of individual characteristics using a parametric model with heterogeneous model parameters. Poverty differences were also broken down using the results of Biewen and Jenkins (2005 ) in order to understand the relationship between poverty and individual characteristics among countries.     

ARE EFFICIENCY IMPROVEMENTS IN GOVERNMENT TRANSFER POLICIES SELF-DEFEATING IN POLITICAL EQUILIBRIUM?*

This paper studies an election game between two politicians, in which each provides income transfers to special-interest groups in return for political contributions. It is shown that a move to a more inefficient form of transfers may lower the total excess burden created by these transfers, because the politicians are induced to reduce their provision of transfers. For the case in which the income transfers are indirectly provided as trade protection to import-competing industries, a switch from production subsidies to tariffs as the form of protection reduces the equilibrium level of excess burden and makes both politicians better off.     

EFFICIENCY AND BARGAINING POWER IN THE INTERBANK LOAN MARKET

Using detailed transactions‐level data on interbank loans, we examine the efficiency of an overnight interbank lending market and the bargaining power of its participants. Our analysis relies on the equilibrium concept of the core, which imposes a set of no‐arbitrage conditions on trades in the market. For Canada's Large Value Transfer System, we show that although the market is fairly efficient, systemic inefficiency persists throughout our sample. The level of inefficiency matches distinct phases of both the Bank of Canada's operations as well as phases of the 2007–8 financial crisis. We find that bargaining power tilted sharply toward borrowers as the financial crisis progressed and (surprisingly) toward riskier borrowers.     

MARKET POWER AND EFFICIENCY IN A SEARCH MODEL*

We build a theoretical model to study the welfare effects and policy implications of firms’ market power in a frictional labor market. The main characteristics of our environment are that wages play a role in allocating labor across firms and the number of agents is finite. The decentralized equilibrium is inefficient and the firms’ market power results in the misallocation of workers from the high to the low productivity firms. A minimum wage exacerbates the inefficiencies by forcing the low‐productivity firms to increase their wage. Moderate unemployment benefits can increase welfare by improving the workers’ outside option.     

AFFECTING FACTORS ON RISK-ADJUSTED EFFICIENCY IN TAIWAN'S BANKING INDUSTRY

This study adopts a two-stage approach, data envelopment analysis (DEA) and tobit regression, to investigate the bank efficiency index and efficiency effect incorporated into account credit and market risk. The authors use the DEA method in the first stage to estimate bank cost efficiency, and the tobit regression model in the second stage to estimate efficiency effects. The empirical results are summarized as follows: First, results indicate that risk factors impact bank efficiency. Banks with a higher degree of nonperforming loans or value at risk will see efficiency decrease by incorporating account risk. Second, there is no significant difference with the bank efficiency index taking only credit risk or market risk into consideration, but there are significant differences on the bank efficiency index in situations without risk or with credit and/or market risks. Finally, the study notes that different bank efficiency indexes calculated according to different risks are affected by different factors. (JEL G1, G21 )