Does Crime Pay? A Classroom Demonstration of Monitoring and Enforcement

This article presents a classroom game in which students choose whether or not to comply with pollution regulations. By varying the level of monitoring and fines for noncompliance, the game shows students how the probability and severity of enforcement affects incentives for compliance. The game can be adapted for settings other than environmental regulation and can be used in a variety of classes including regulation, law and economics, environmental economics, public economics, or economics of crime classes. It can easily be conducted in a 50-minute class period.     

Network Externalities and the Overprovision of Quality by a Monopolist

We investigate the behavior of a monopolist supplying a vertically differentiated good with network externalities. Assuming a convex unit cost of quality improvements, we show that the presence of network externalities may yield oversupply of quality compared with the social optimum, when partial market coverage emerges at equilibrium. Overall, the incentive to expand output increases in the extent of network externalities, thereby partially counterbalancing the social damage produced by the quality distortion.     

Externalities of Network Finance and Related Reflections on Price Strategies

Externality is an important trait in economy. This paper discusses the concept of network externalities, and then analyzes the characteristics and cause of externality in network finance. Externalities of network finance have been reflected on ,the cost structure of network finance services. Furthermore, it influences the pricing strategies. This paper analyzes the influence of externalities to network finance and gives some price strategies of network finance.     

Compatibility, Standardization, and Network Effects: Some Policy Implications

Given the dramatic growth of the Internet and information-technologyindustries in general, and the importance of interconnectionin these networks, the economics of compatibility and standardizationhas become mainstream economics. In this paper, I examine severalkey policy aspects of standard setting in industries with networkeffects.     

Literacy and Intrahousehold Externalities

The size of the intrahousehold externality created when a literate household member provides literacy services to illiterate members is estimated in this paper, using a model of children's height-for-age in Papua New Guinea. This externality appears to be large. These results support the use of a new measure of literacy, developed by Basu and Foster (1998) to take account of the gains when illiterates live in households where at least one person is literate. Regional rankings change when the new measure of literacy is used, suggesting that policies guided by the usual measure of adult literacy may overlook an important pathway for human development.     

全球生产网络中的标准化进程及其影响

文章通过对全球生产网络中的标准化进程的分析,指出对有关产品的信息和知识进行分类、编码的标准化工作使信息知识在全球生产网络参与者之间能够低成本的传递,降低了知识转挟成本,提高了生产效率,从而带来了全球网络化生产结构的出现和盛行。     

Water Externalities: Tragedy of the Common Canal

Laboratory experiments are used to investigate alternative solutions to the allocation problem of a common‐pool resource with unidirectional flow. Focus is on the comparative economic efficiency of nonbinding communications, bilateral “Coasian” bargaining, allocation by auction, and allocation by exogenous usage fee. All solutions improve allocative efficiency, but communication and bilateral bargaining are not generally as effective as market allocations. An exogenously imposed optimal fee results in the greatest allocative efficiency, closely followed by an auction allocation that determines the usage fee endogenously.     

A Classroom Exercise: Voting by Ballots and Feet

This classroom experiment illustrates the efficiency-enhancing property of a Tiebout system in which local public goods decisions are determined by a political process. Students are given playing cards that induce diverse preferences for expenditures on alternative public goods and are initially assigned to specific communities. Then those in each community vote on the type and level of public goods provision, which determine the tax cost. After the provision and tax results are announced, students are free to move to a location where the prior results are more consistent with their preferences. This process continues for several rounds, with a new vote taken at each location after moves have been made. The exercise demonstrates that the combination of voting with feet and ballots tends to increase the total net benefit for all communities. The voting on provision levels is structured to facilitate a discussion of the median voter theorem.     

Human Capital Externalities and Proximity: Evidence from Repeated Cross-Sectional Data

Summary  Does schooling generate social returns in excess of the private returns captured by the individual who makes the human capital investment? As a strategy to detect human capital externalities I use Dutch survey data to estimate the impact of the average human capital stock in a region on individual wages, considering regional human capital as a local public good. Indeed, the regional fraction of high-skilled workers or the region’s average educational attainment appears with a positive and statistically significant coefficient in an augmented Mincer specification. However, the impact on individual wages completely vanishes when the firm’s human capital stock is included as an additional control. This may suggest that human capital externalities predominate within firms, though alternative explanations, in particular selection of high-skilled workers in high-productive companies and imperfect substitutability across skill groups, cannot be ruled out. I would like to thank two referees, Nicole Bosch, Theo van de Klundert, Pierre Koning, Rob Luginbuhl, Mauro Mastrogiacomo, Gabriela Schütz, Wouter Vermeulen, Dinand Webbink and seminar participants at the Enterprise and Industry Directorate-General of the European Commission, the NAKE Research Day 2007, the 64th Congress of the International Institute of Public Finance, and the CPB Netherlands Bureau for Economic Policy Analysis for helpful comments, and Joke Goes, Jelte Haagsma and Judith Hoeben for their help with the data. Views expressed are my own, and do not necessarily reflect official positions of the European Commission or the CPB Netherlands Bureau for Economic Policy Analysis.     

Repeated Auctions with Impatient Bidders and Externalities

This article studies collusion in repeated auctions both among patient and among impatient bidders when the outside option of the participation constraint is endogenous due to negative externalities. We find that (i) there are no bidding wars along the equilibrium path both for patient and for impatient bidders; compared to the optimal collusive bidding scheme for patient bidders, that for impatient bidders involves (ii) a lower threshold type above which bidding starts when externalities are small or (iii) more frequent jumps in a bidding scheme when externalities are large. The results carry an empirical implication that we should observe either a higher probability of sales or a higher number of bid levels in auctions that are repeatedly offered in unstable markets than those offered in stable markets.     

Disclosure and Recognition Requirements: Corporate Investment Decisions with Externalities*

This paper examines the effects of disclosure and recognition requirements on investment decisions when shareholders have limited liability. Firms' investment projects have either high initial pollution prevention costs or high subsequent clean‐up costs, and their liability for clean‐up costs may be either individual or joint and several. Even with individual liability for clean‐up costs, shareholders' limited liability creates an incentive to select the latter project type and to impose costs on the rest of the economy. This tendency is exacerbated when clean‐up liability is joint and several. We show that a disclosure requirement cannot have an unambiguous effect on the selection of the “cleaner” project. However, an accrual requirement, together with an accounting‐based dividend restriction, is shown to promote choice of the project that imposes lower expected costs on the rest of the economy. Moreover, we find that it is possible for a recognition requirement to have a greater impact in a joint‐and‐several liability regime than in an individual liability regime.     

寻租理论:对寻租活动正外部性的分析

寻租理论迎合了新自由主义反对凯恩斯国家干预、主张自由放任这一经济思潮.现有寻租理论的研究重点在对寻租成本的分析,推演出了寻租活动"负外部性"的特点,而对于寻租的收益研究长期被忽略.本文以"租金源于不同制度安排下要素收益的差额"这一命题为逻辑起点,分析了我国社会经济制度改革过程中的寻租行为,对寻租的"正外部性"进行探讨.     

可持续发展与政府行为外部性

文章从可持续发展的角度，考察了在决策规则和政策的制定以及实施过程中政府行为的外部性影响，认为政府在主导可持续发展时行动应该更为谨慎。     

外部性与重工业优先发展

本文建立了一个最终品种类和中间品种类均为内生决定的动态模型,同时考虑重工业投资和轻工业投资的外部性,通过比较分散经济下和社会计划者经济下对重工业和轻工业的投资,分析私人对重工业投资是否不足,以此来考察实行重工业优先发展战略是否合理.由于生产方式越迂回,生产效率越高,重工业投资具有正的技术外部性和正的金融外部性;由于消费者偏好多样性,轻工业投资具有正的金融外部性.重工业投资的外部性始终超过轻工业投资的外部性,所以私人对重工业投资不足.如果不考虑补贴造成的扭曲效应,需要一直对重工业投资进行补贴,实行重工业优先发展战略;但随着经济的发展,轻工业投资的外部性和重工业投资的外部性的差距越来越小,所以对重工业投资的补贴应该越来越小.     

Externalities,Cross-Sectoral Spillovers and Productivity Growth

We provide an interpretation of the productivity dynamics in the manufacturing sector based on the idea of the thick market externality à la Diamond. An econometric model has been estimated which allows to disentangle the long run effects of these trading externalities from those of internal economies of scale and of aggregate industry-level economies. The results obtained—based on a cointegrated system of non-linear-error-correction equations—confirm the hypothesis that the trading externality matters. Moreover, our findings point out that the emphasis generally posited both on internal and external economies of scale is not justified.     

Static and Dynamic Externalities,Industry Composition,and State Labor Productivity: A Panel Study of States

Endogenous growth models have reignited interest in regional economic growth. Recent regional growth studies focus on dynamic externalities related to localization and urbanization economies. Yet, these studies typically attempt to observe externality-induced productivity effects indirectly through examination of employment growth. Also, issues of regional differences in concentrations of nationally productive industries and distinguishing between static and dynamic externalities have received little attention. This study directly relates measures of externalities to productivity differences, decomposing them into those due to differences in industry composition and those due to average productivity differences in each industry. A two-step procedure is used to distinguish static from dynamic externalities.     

Teaching Economics with Classroom Experiments: A Symposium

Classroom experiments are effective because students are placed directly into the economic environments being studied. The papers in this special section span diverse applications, for example, speculation and multiple markets, coordination and voting games, and a simple macroeconomy. All experiments can be run with simple props, such as ordinary playing cards. After participating, students bring firsthand experience to the discussion to enhance the effectiveness of the Socratic method. In small classes, these exercises also enable bright undergraduates to run the experiments on their own classmates and to lead the ensuing discussions, creating a special teaching/learning environment.