NASH BARGAINING AND CO-OPERATIVES

This paper develops the generalised Nash bargaining solution for a bargaining co-operative selling its output to a single buyer. Three assumptions for co-operative members' behaviour are examined: profit maximisation, co-operative surplus maximisation and maximising members' price. Solutions are compared and comparative statics presented for these alternative assumptions and the bargaining over price and quantity transacted. The most striking feature of the results is that pursuing the objective of maximising members' price does not necessarily lead to the highest members' price     

DEMOCRACY AND GLOBALIZATION

The relationship between democracy and globalization has been a subject of both scholarly and policy debate. Some argue that the two go hand in hand – that unrestricted international transactions encourage political accountability and transparency and that politically free societies are least likely to restrict the mobility of goods and services. But others argue that democracies, in which special interests that suffer from foreign competition have voice, are more likely to have closed markets, and vice versa. Our analysis differs from its predecessors in three ways. We seek to uncover general patterns by considering as long a period as possible and all countries with the relevant data. We consider multiple dimensions of globalization, analyzing both trade liberalization and capital account liberalization. And we estimate these relationships using an instrumental variables strategy that allows us to confront the issue of simultaneity. Our findings support the existence of positive relationships between democracy and globalization.     

POLICY COMPROMISES: CORRUPTION AND REGULATION IN A DEMOCRACY

This paper evaluates the extent of regulation in a democracy with corruption. Elected politicians can restrict entry of firms in exchange for bribes from entrepreneurs. Full liberalization implies free entry and allocative efficiency. Voters re‐elect politicians based on observed performance. We demonstrate that voters agree to tolerate corruption and inefficient regulation; that efficient policies can be promoted by productivity growth; that productivity growth reduces the cost of providing wage incentives; and that corruption is procyclical and economic policy is countercyclical in a corrupt democracy.     

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.