Voluntary contributions to multiple public goods in a production economy with widespread externalities

In a production economy, multiple public goods are produced by firms in competitive markets, and provided by the government together with contributions from consumers. There are widespread externalities: all consumers’ consumption and contributions and all firms’ production enter into utility functions. Public goods can be imperfect substitutes or complements, and they can be local public goods or club goods. Zero bounds that require consumers to make nonnegative contributions complicate the differentiable approach. Applying the transversality theorem for smooth economies in a regular parameterization, we obtain the existence of equilibrium in such an economy, and generically equilibria are regular and locally unique.     

Private contracts for durable local public good provision

This paper presents a model of imperfectly durable local public good provision in a dynamic development framework. The private provision of these goods under contracts between developers and residents of condominium and homeowners' associations is examined. An optimal trajectory of public goods is determined and compared to time consistent contractual trajectories. This comparison is used to explain why developers typically transfer control of maintenance of these goods to residents before the development process ends. The optimal date to transfer control is determined and compared to existing contracts and recommendations in the industry literature. The optimal transfer date is nondecreasing in community size and length of the development process.     

Historical Significance of Labor’s Increased Precariousness in Germany,the United Kingdom,and Spain

This article addresses the historical significance of the increasing precariousness of labor, even in the most advanced economies. Given the sterility of the mainstream approach, based on methodological individualism, we start from a Marxist critique of political economy, focusing on the laws that govern the process of capitalist accumulation and its contradictions. Within the framework of these laws, we analyze the tendency of labor exploitation to increase in a capitalist economy, linked to the exigencies of profitability due to the increasing difficulties of the valorization of capital. The precariousness of labor is studied around some of the main forms it adopts in three European economies: mini‐jobs in Germany, “zero‐hours contracts” in the United Kingdom, and false self‐employment, together with internship and training contracts, in Spain. Based on theoretical and empirical analysis, several conclusions are proposed to understand the extension and deepening of labor precariousness, built on the notions of overexploitation and destruction of productive forces, linked to current demands of capitalist accumulation.     

The strong sequential core for two-period economies

The strong sequential core for two-stage economies with a possibly incomplete set of assets in period zero and trade in commodities in period one consists of those goods allocations that are in the classical core and moreover, after realization of the state of nature, in the core of the economy where executed asset contracts serve as initial endowments. The strong sequential core coincides with the classical core when all possible state-contingent contracts may serve as an asset. For finance economies it is shown that the strong sequential core is generically empty when there is an incomplete set of assets. Outside the setting of finance economies, we show that the strong sequential core can be empty even if there is a complete set of assets. If the set of constrained feasible allocations resulting from trading in assets, is enlarged to include also allocations outside the agents’ consumption sets, then a complete set of assets is sufficient for the equivalence of the resulting semi-strong sequential core and the classical core.     

Double implementation of the Lindahl equilibrium by a continuous mechanism

We consider a class of economies with public goods that have the following properties: (i) The preferences of the agents are convex, interior, and strictly increasing. (ii) The technology for production of public goods is a closed convex cone that satisfies free disposal and an additional mild assumption. No assumptions are made on continuity, completeness or transitivity of preferences. We provide a continuous and feasible mechanism that implements the Lindahl equilibrium by Nash equilibria, and has the following property: For every economy in our class every Nash equilibrium of the game induced by the mechanism is a strong Nash equilibrium.     

Equilibrium participation in public goods allocations

We consider a notion of voluntary participation for mechanism design in public goods economies in which mechanisms select public goods allocations and individuals then choose whether or not to submit their requested transfer to the central planner. The set of allocations that are robust to non-participation is shown to be sub-optimal in a wide variety of environments and may shrink to the endowment as the economy is replicated. When agents become small as the economy becomes large, any non-trivial mechanism suffers from non-participation when agents cannot be coerced to contribute.     

Product differentiation,monopolistic competition and city size

Traditionally, the formation of cities has been explained by such supply-side phenomena as scale economies in production or such demand-side phenomena as public goods. This paper presents an integrated demand and supply approach to the formation of cities in spatial economy. Demand considerations, in the form of consumer agglomeration economies (i.e., product variety), are presented as a major cause of urban agglomeration. On the supply side, scale economies are introduced. Both aspects are examined by using the Dixit-Stiglitz model of monopolistic competition to characterize the equilibrium and optimum city size. We also discuss a subsidy scheme that produces an equilibrium city size corresponding to a first-best optimum. Then we analyze the distribution of population in a system of two cities.     

Growth and fluctuations: The role of public dividends and public spending

In this paper, we consider a discrete-time version of the endogenous growth model developed by Barro [Barro, R.J., 1990. Government spending in a simple model of endogenous growth. Journal of Political Economy 98, 103–125], but augmented in order to envisage a public participation in the production of private goods. Public dividends are invested in order to provide a public good; in turn, the public good plays a role of indispensable production externality and, eventually, of growth engine.For what concerns the production of private goods, we find that an optimal policy is always based on a positive participation of the government as shareholder; also, when growth is slow, a public intervention or large substitution effects stabilize the economy.A right mix of short-run services and long-run infrastructures is suggested in slow economies to rule out expectation-driven fluctuations. Infrastructures are mainly recommended in presence of moderate income effects, while services are recommended in presence of strong income effects.     

Anonymous price taking equilibrium in Tiebout economies with a continuum of agents: Existence and characterization

We introduce a model of a local public goods economy with a continuum of agents and jurisdictions with finite but unbounded populations, where the set of possible projects for each jurisdiction/club is unrestricted in size. Under boundedness of per capita payoffs, which simply ensures that equal treatment payoffs are bounded above, we apply results of Kaneko and Wooders (1986) to obtain nonemptiness of the core of the economy. We then demonstrate, under the stronger condition of strict small group effectiveness, that the equal treatment core coincides with the set of price-taking equilibrium outcomes with anonymous prices—that is, prices for public goods depend only on observable characteristics of agents. Existence of equilibrium follows from nonemptiness of the core and equivalence of the core to the set of equilibrium outcomes. Our approach provides a new technique for showing existence of equilibrium in economies with a continuum of agents.     

Coasian equilibrium

We consider a general equilibrium economy with public goods and externalities. Following Boyd and Conley (1997), we treat externality markets directly instead of indirectly through Arrovian commodities. Because such direct externality markets are not subject to the nonconvexities that Starrett [Starrett, D., 1972. Fundamental nonconvexities in the theory of externalities. Journal of Economic Theory 4, 180–199] shows are fundamental to Arrow’s externality markets, this new approach admits the use of largely standard methods to prove welfare and existence theorems in an economy with externalities. We extend the Boyd and Conley model to allow firms to benefit from public goods and be damaged by externalities, and to allow consumers to produce externalities. We state a first welfare theorem and prove the existence of a competitive equilibrium. Taken together, this can be viewed as a type of general equilibrium Coase theorem. Considered as a special case, these theorems also represent a significant generalization of existing results for pure public goods economies.     

Counting Groves-Ledyard equilibria via degree theory

We study the Groves-Ledyard mechanism for determining optimal amounts of public goods in economies whose agents have the most general class of preferences for which a Pareto amount of public goods can be computed independently of income distribution. We use degree theory on affine spaces to show that the number of equilibria in such economies grows exponentially as the number of agents in the economy increases. The large number of equilibria in such simple economic models raises doubts as to whether the Groves-Ledyard mechanism is a workable solution to the Free Rider Problem since individuals may have incentives to falsify their preferences in order to drive the adjustment process to a preferred Nash equilibrium.     

Political contestability and public contract rigidity: An analysis of procurement contracts

Are public contracts less adaptable than private contracts? Using a comprehensive set of contracts for a standard product, we compare procurement contracts in which the procurer is either a public administration or a private corporation. We find that public‐to‐private contracts feature more rigidity clauses than private‐to‐private contracts and that the use of rigidity clauses in public contracts rises when political risks are more salient. We argue that a significant part of the increased rigidity of public contracts is a contractual adaptation to limit political hazards from political opponents and interested third parties.     

Wages,implicit contracts,and the business cycle: Evidence from a European panel

We study the joint behavior of hours and wages over the business cycle in a unique panel of 13 European countries, and document significant history dependence in wages. Workers who experience favorable market conditions during their tenure on the job have higher wages, and work fewer labor hours. Unobserved differences in productivity, such as varying job quality, or match-specific productivity are not likely to explain this variation. The results instead point to the importance of contractual arrangements in wage determination. In economies with decentralized bargaining practices, such arrangements resemble self-enforcing insurance contracts with one-sided commitment (by the employer). On the other hand, in countries with strong unions and centralized wage bargaining, wage behavior is better approximated by full-commitment insurance contracts. The co-movement of hours and wages further confirms a contractual framework with variable worker hours. Despite the strong prevalence of contracts in Europe, however, the elasticity of labor supply is considerably smaller compared to the U.S. labor market.     

Efficiency of temporary equilibria

A temporary equilibrium model of a production economy with various capital markets in which producers maximize the expected utility of cash flows in various periods is considered. Without restricting the price expectation of producers, it is shown that, if contracts to buy or sell goods at future periods can be trated in a market and if the producer's utility functions are increasing in the cash flow of the first period, then the temporary equilibrium allocations are technically efficient. Also, production is technically efficient even in the presence of some quantity constraints on sales of futures contracts which are sufficient for existence of an equilibrium.     

The graph of Lindahl correspondence as the unique von Neumann-Morgenstern abstract stable set

In this paper, we consider a continuum economy with a finite number of types of agent, and several private and public goods. The main result of the paper is that the graph of the equal-treatment Lindahl equilibria mapping is the unique abstract stable set with respect to the dominance relation in economies with crowding effects introduced by Vasil'ev et al. in 1995. The external stability of this mapping implies that, for any equal-treatment allocation x in , that is not a Lindahl equilibrium, there exists a subeconomy of such that one of its equal-treatment Lindahl allocations blocks x. This result is a counterpart of the theorem of Mas-Colell for Aumann's atomless market with private goods.     

The geometry of global production and factor price equalisation

We consider a production economy where commodities are partitioned into K irreproducible factors and L   reproducible goods, and the production technologies have constant returns to scale. We examine the geometry of the global production set in the space of commodities, and we derive theorems of non-substitution type. We define the “factors values” of the different goods, we use them to characterize the efficient production plans, and we investigate in detail the relations between the prices of goods and the prices of factors. We show that the prices of factors uniquely determine the prices of goods, and that, generically, equalising the prices of 2K$2K$ goods equalises the prices of factors.     

Government spending on public infrastructure,prices, production and international trade

This paper examines the impact of a change in government spending on public infrastructure when monopolistic competition prevails in one sector of the economy. The analysis is based on a variation of the Spence-Dixit-Stiglitz model where the presence of internal economies in the production of a differentiated intermediate good leads to specialization based external economies in the production of the final good. It is shown that changes in government spending on public infrastructure can influence relative prices, production, the degree of specialization, and pattern of international trade.     

Myopia and monetary equilibria

In an infinitely lived, representative individual economy, important properties of competitive equilibria, such as determinacy and the non-existence of monetary equilibria, are not robust to the introduction of myopia. An individual is myopic if, at each date, he plans consumption only for that date and few periods that immediately follow; that is, his planning horizon, n, is finite. Equilibria with myopia can display real indeterminacy and allow for monetary as well as non-monetary steady states; thus, they share some of the features of equilibria in economies of overlapping generation. The equilibrium price dynamics (but not the consumption dynamics) of an exchange economy with extreme myopia, n = 1, are identical to the dynamics of an overlapping generation economy with two-period lives.     

Core and equilibria in coalitional asymmetric information economies

We study coalitional economies under uncertainty and asymmetric information, assuming a finitely additive measure space of agents and finitely many possible states of nature. We introduce a suitable core notion showing that it is equivalent to Walrasian expectations equilibria. The finitely additive approach proposed in the paper permits also asymmetric information economy with countably many agents, rather than requiring only a continuum. Moreover, it allows us to overcome well-known criticisms related to the interpretation of individual private core notions.     

The rise of the entrepreneurial economy and the future of dynamic capitalism

A major shift in the organization of developed economies has been taking place: away from what has been characterized as the managed economy towards the entrepreneurial economy, or what Kirchhoff (1994) has called dynamic capitalism. However, the factors underlying this observed shift have not been identified in a systematic manner. The purpose of this paper is to analyze the main factors leading to this shift and implications for public policy. In particular, we find that technological change is a fundamental catalyst underlying the shift from the managed to the entrepreneurial economy. However, it was not just technological change but rather involved a multitude of factors, ranging from the demise of the communist system, increased globalization, corporate reorganization, increased knowledge production and higher levels of prosperity. Recognition of the causes of the shift from the managed to the entrepreneurial economy implies a shift in public policy directions. Rather than to focus directly and exclusively on promoting new firms and small firms, it may be that the current approach to entrepreneurship policy is misguided. The priority should not be on entrepreneurship policy but rather a more pervasive and encompassing approach, policy consistent with an entrepreneurial economy, in order to foster dynamic capitalism.