Optimal taxation and discount rate for public investment in a growth setting

This paper studies the optimal policy of a government which maximizes intertemporal social welfare using such instruments as taxes on interest income and wages, and debt in conjunction with public investment. In doing so, it has to face a decentralized economy where in each generation individuals and firms are free to maximize their own objectives subject to their own private constraints. The welfare function is a sum of discounted generational utilities and its maximization is handled by using dynamic programming. From the first order conditions so derived, it appears that an optimal policy of taxation and public capital accumulation is that which sets the tax rates according to Ramsey's optimal taxation structure and which equates the rate of return on public investment to the rate of social time preference.     

不完全信息、反倾销威胁与最优出口贸易政策

通过扩展Brander和Spencer(1985)的基本模型,本文首先证明了,在反倾销威胁下,基于完全信息假设的最优出口贸易政策要求出口国政府给予低成本企业更高的出口补贴或更低的出口征税,在无效激励机制下必然导致出口企业隐匿自己的真实成本类型,基于完全信息假设的最优出口贸易政策失效。在此基础上,本文进一步论证了不完全信息和反倾销威胁下激励相容的最优出口贸易政策,该政策要求出口国政府依据进口国国内要求保护压力的大小,采用不同的出口征税和一次性转移支付政策组合,激励出口企业如实报告成本类型,并使国家整体福利最大化。     

OPTIMAL EDUCATION POLICIES AND COMPARATIVE ADVANTAGE

We consider the optimal education policies of a small economy whose government has a limited budget. Initially, the economy is closed and the government chooses its education policy to maximize welfare under autarky. When the economy trades with the rest of the world the government chooses a new education policy that maximizes welfare under trade. Is it ever optimal for the government to choose its new policy so that it reverses the economy's comparative advantage? We find that if the budget stays fixed when it is optimal to ‘move up the skills chain’ it is not feasible. In such a case, a foreign loan is welfare improving. A move in the opposite direction can be optimal, and when it is optimal it is also feasible.     

Environmental taxes and industry monopolization

This paper considers a market with an incumbent monopolistic firm and a potential entrant. Production by both firms causes polluting emissions. The government selects a tax per unit of emission to maximize social welfare. The size of the tax rate affects whether or not the potential entrant enters the market. We identify the conditions that create a market structure where the preferences of the government and the incumbent firm coincide. Interestingly, there are cases where both the government and incumbent firm prefer a monopoly. Hence, the government might induce profitable monopolization by using a socially optimal tax policy instrument.      

Optimal fiscal decentralization: Redistribution and welfare implications

The literature has been inconclusive regarding the welfare effects of fiscal decentralization (FD), defined here as the extent to which local governments collect and spend local tax revenues. We present an original model to investigate formally the distributional and welfare implications of FD. In contrast to the standard approach that compares the implications of full FD with that of centralization, we consider that the central government chooses the level of FD to maximize welfare in a heterogeneous country. Noncooperatively, local governments choose their tax collection effort to maximize local utility. We show that an increase in the tax rate leads optimal FD to increase so as to compensate for the welfare loss from decreasing optimal local tax effort. Hence, welfare and income distribution improve in FD at its intermediate, rather than extreme, levels. We coin this result as the decentralization-Laffer curve. As regional spillovers increase, FD is less desirable as it deteriorates welfare and income distribution. This finding provides a novel support for the decentralization theorem and contributes to the fiscal policy debate.     

审计行业监管有效性研究——基于证监会处罚公告后事务所策略选择的经验证据

随着近年来审计失败案件的频发,政府对审计行业监管的作用越来越受到关注.文章基于证监会行政处罚公告,对受罚事务所与上市公司客户进行配对,研究了处罚公告对受罚事务所与未受罚事务所声誉及审计质量的影响.研究发现,受罚事务所在处罚公告后进行了声誉重塑行为,审计质量得到改善;未受罚事务所在处罚公告后保持原有审计标准,公告前后审计质量无显著变化.而处罚公告后,受罚事务所的审计质量显著高于未受罚事务所,表明证监会的监管改善了行业的审计质量.文章为证监会行政处罚的有效性提供了更多的经验证据,并证实了声誉机制对注册会计师的约束作用;研究结果对证监会、中注协、财政部等监管部门具有借鉴意义,对上市公司与会计师事务所签订审计合约也有非常重要的参考作用.     

Cooperative R&D and Strategic Trade Policy with Bertrand Competition

This paper uses a strategic trade policy model to analyze the welfare effects from allowing cooperation in R&D when firms compete in a price‐setting game in the product market. A policy game between two governments is analyzed, where each government chooses a particular cooperative R&D policy in order to maximize national welfare. At the Nash equilibrium to this game only one government allows cooperation in R&D. This equilibrium is both individually and jointly optimal. International cooperation in R&D is superior to no cooperation in R&D but is inferior to the Nash equilibrium of the government policy game.     

OPTIMAL FISCAL POLICY IN THE DESIGN OF SOCIAL SECURITY REFORMS*

The quantitative literature has documented that a privatization of the social security system generates large long‐run welfare gains at the cost of welfare losses for transition generations. In this article, we maximize over the entire policy space, following the optimal fiscal policy approach. The resulting allocation, by construction, lies on the constrained Pareto frontier. We find that the optimal design of reforms exhibits sizeable welfare gains arising from a reduction in labor supply distortions. In contrast, the welfare gains coming from the reduction of savings distortions are relatively small.     

Innovation or imitation? The effect of spillovers and competitive pressure on firms’ R&D strategy choice

In this paper a firm’s R&D strategy is assumed to be endogenous and allowed to depend on both internal firm characteristics and external factors. Firms choose between two strategies, either they engage in R&D or abstain from own R&D and imitate the outcomes of innovators. This yields three types of equilibria, in which either all firms innovate, some firms innovate and others imitate, or no firm innovates. Firms’ equilibrium strategies crucially depend on external factors. We find that the efficiency of intellectual property rights protection positively affects firms’ incentives to engage in R&D, while excessive competitive pressure has a negative effect. In addition, smaller firms are found to be more likely to become imitators when the product is homogeneous and the level of spillovers is high. Regarding social welfare our results indicate that strengthening intellectual property protection can have an ambiguous effect. In markets characterized by a high rate of innovation a reduction of intellectual property rights protection can discourage innovative performance substantially. However, a reduction of patent protection can also increase social welfare because it may induce imitation. This indicates that policy issues such as the optimal length and breadth of patent protection cannot be resolved without taking into account specific market and firm characteristics.     

Imperfect verification,appeals, and limited liability

We examine the effect of an imperfect verification and a subsequent appeals process in regulatory settings where legal or institutional restrictions impose an upper bound on penalties. We show that the verification always enhances social welfare despite the limit on penalties. The subsequent appeals process, which allows the firm to challenge an unfavorable finding by the regulator, is never socially optimal when it is costless. However, when the appeals process is costly, it can be optimal even if it is less accurate than the verification. Moreover, social welfare can increase as the cost of the appeals process increases.     

Tariffs and privatization policy in a bilateral trade with corporate social responsibility

Corporate social responsibility (CSR) has become a global business strategy and thus it provides significant welfare implications for designing optimal policies. This paper investigates the impact of CSR on policy interaction between tariffs and privatization in an international bilateral trade model. We find that CSR is closely related to the government's policy decisions on tariffs. In particular, we find that the strategic tariff for increasing domestic welfare is always higher (lower) than the efficient tariff for improving global welfare when the degree of CSR is low (high). We also show that a privatization policy raises tariff and worsens (improves) domestic welfare when the degree of CSR is low (high). Finally, we demonstrate that both countries choose a nationalization policy even though the privatization policy is globally optimal when the degree of CSR is high.     

A model of principal-agency control of wastes under technological progress

We analyze performance and outcome of principal-agency relationships in an environment with pollution externalities and technological progress. We assume that firms may not purposely violate the pollution control regulations but nonetheless generate some pollution due to negligence. The models allow firms two possible actions: either to increase the level of treated waste legally or pay an expected penalty if illegal pollution is detected. We show that in a world with pollution externalities, technological progress does not guarantee increases in the welfare level. Most important for policy purposes, the analysis shows the trade-offs between the policy instruments: penalties, taxes/subsidies and treatment costs in a world where technological progress occurs and firms may violate the law.     

Environmental taxation,information precision,and information sharing

We analyze how environmental taxes should be optimally levied in a sequential game in which regulators and firms face costs uncertainties. First, the regulator chooses the intensity of emissions taxes to reduce externalities. Then, facing common and private information with noisy signals, firms compete in the marketplace and choose outputs. We show that, under nonuniform quality of signals across firms, the regulator may calibrate differentiated tax policy. We also show that the social impact of more precise private signals hinges largely and fundamentally on the value of the ratio of the slopes of the marginal damage and the marginal consumer surplus. Finally, we investigate information sharing between polluters and its impacts on welfare. We stress that, when there are threats of severe environmental damages under deep uncertainties, collusion is welfare reducing and may jeopardize the regulatory process. Regulators need to set an appropriate precautionary policy. Numerical simulations illustrate the results that the model delivers.     

政府产品创新补贴下的企业R＆D策略选择

为了研究在政府产品创新补贴政策下企业的R＆D策略选择问题,建立了双寡头市场中面向工艺R＆D的三阶段博弈模型：第一阶段政府以社会福利最大为目标选择产品创新补贴率;第二阶段企业进行R＆D投资以降低生产成本;第三阶段企业在产品市场中进行古诺竞争。根据双寡头在第二和第三阶段是否合作,给出了研发竞争、研发卡特尔、技术共享联盟和研究共同体等四种R＆D策略,得到了相应的政府最优R＆D补贴率。研究表明：从企业的R＆D投入和产品产量的角度看,当溢出效应较高时,研发竞争策略优于研发卡特尔策略;当溢出效应较低时,研发卡特尔策略优于研发竞争策略。研发卡特尔策略与研发竞争策略相比,研发卡特尔更能推动企业利润的提高并且可以改善社会总福利。从产品产量、企业利润和社会总福利最大化角度考虑,研究共同体为四种策略中的最优策略。     

Optimal Privatization and Economic Growth in a Schumpeterian Economy

This paper analyzes the growth and welfare effects of the privatization of public firms in a Schumpeterian growth model. Two alternative definitions of privatization are proposed in our model. The first is the ratio of mixed R&D firms’ equity shares owned by the household, which is dubbed vertical privatization. The second is the number of unmixed R&D firms, which is called horizontal privatization. We find that, under both definitions, privatization is beneficial to economic growth while the effect of privatization on social welfare is ambiguous. Accordingly, our analysis reveals that a partial privatization could be an optimal policy. Moreover, we also discuss how the extent of patent protection is related to optimal privatization.     

Output‐based rebating of carbon taxes in a neighbour's backyard: Competitiveness,leakage and welfare

We investigate how, in an open economy, carbon taxes combined with output‐based rebating (OBR) perform in interaction with the carbon policies of a large neighbouring trading partner. Analytical results suggest that, whether the purpose of the OBR policy is to compensate firms for carbon tax burdens or to maximize welfare (accounting for global emission reductions), the OBR rate should be positive in policy‐relevant cases. Numerical simulations for Canada, with the US as the neighbouring trading partner, indicate that the impact of US policies on the OBR rate will depend crucially on the purpose of the Canadian OBR policies. If, for a given US carbon policy, Canada's aim is to restore the competitiveness of domestic emission‐intensive and trade‐exposed (EITE) firms to the same level as before the introduction of its own carbon taxation, we find that the necessary domestic OBR rates will be insensitive to the foreign carbon policies. However, if not only the Canadian carbon tax but also an equally high US tax is introduced, compensatory Canadian OBR rates will be up to 50% lower, depending on the sector and on US OBR policy. If the policy objective is to increase economy‐wide allocative efficiency (welfare) of Canadian policies by accounting for carbon leakage, the US policies will have only a minor downward pressure on desirable OBR rates in Canada. Practical choices of OBR rates hardly affect overall domestic economic performance; thus, output‐based rebating qualifies as an instrument for compensating EITE industries without a large sacrifice in terms of economy‐wide allocative efficiency.     

Is tied aid bad for the recipient countries?

This paper examines the welfare effects of the exclusivity of foreign aid taking consideration of donor countries' strategic and self-interested economic motivations. Based on an oligopolistic model with strategic interactions between firms and governments providing foreign aid, we demonstrate that a higher exclusivity of foreign aid, taking the form of tied aid, increases the equilibrium amount of aid and the social welfare of the recipient country when the foreign aid policies are decided in a non-cooperative fashion between donor countries. However, when donor countries coordinate aid policies to maximize joint-welfare including recipient country's welfare, the lower exclusivity of foreign aid, taking the form of untied aid, will increase the equilibrium amount of aid and the global social welfare. The results implicate that when a credible enforcement mechanism for the cooperative regime for foreign aid is not available, tied aid is welfare dominant policy for both donor and recipient countries than untied aid.     

Honesty in Environmental Regulation

This paper analyzes the determination of the optimal environmental regulatory policy under imperfect competition when the firms differ in their polluting technologies and degree of honesty. We show that more honesty does not necessarily imply lower social losses. The effect of honesty in social welfare depends not only on the degree of honesty measured by the proportion of honest firms and their particular cost features but also on the industry structure.     

Policy options for afforestation in Flanders

This paper analyses current and alternative afforestation policy instruments in Flanders. First we select forest sites that maximize net social benefits given a constraint on the total area of new forests and then we select policy instruments that yield this optimal combination of sites. For each policy option, we calculate the associated costs for landowners and government as well as net social benefits for society. Our empirical illustration shows that the welfare gain is considerable if the afforestation subsidy is conditioned on an objective criterion rather than a case-by-case approach. Our results also show that it is worthwhile to consider alternative policy instruments, such as auctions, not previously used in Belgian legislation.     

Quality differentiation and product innovation licensing

Evidence reveals that there are more than 50% product innovation licensings applied within industries. We study product innovation licensing (quality-enhancing licensing) in both exclusive and non-exclusive schemes each under unit/revenue royalty and fixed fee in a vertically differentiated Cournot oligopoly, where a quality-leading firm is an internal licensor. We show that, under a non-exclusive licensing, royalty licensing is the superior policy for the licensor if quality difference within firms is small, regardless of whether a unit or revenue royalty scheme is offered. Under an exclusive licensing, a two-part tariff is optimal. If fixed fee licensing is practicable, the licensor favors an exclusive licensing. Furthermore, an increase in quality difference within firms increases the optimal rates. Using the simulated results, we examine that licensing improves social welfare in all schemes, and the number of licensees will influence the magnitude of welfare enhancement.