Protection for sale with imperfect rent capturing

Abstract .  Grossman and Helpman (1994) explain tariffs as the outcome of a lobbying process. In most empirical implementations of this framework protection is instead measured using non-tariff barriers. Since tariffs allow the government to fully capture the rents from protection, while non-tariff barriers do not, the existing parameter estimates of the protection for sale model are likely to be biased. To address this problem, we augment the framework by considering instruments that allow partial capturing. Our specification is supported by the data, where we find that only 72–75% of the rent from protection is appropriated by the government.     

IS EQUALITY OF OPPORTUNITY POLITICALLY FEASIBLE?

We develop a political-economy model where the amount of education subsidies is determined in a majority vote and spending is financed by revenues from taxation. Our analysis demonstrates that limiting the extent of subsidization and thus excluding the poor from gaining enough education can be a political equilibrium. Despite being the main beneficiaries of subsidies, the politically decisive middle class hesitates to extend monetary benefits, since improved access to higher education diminishes the return to education. Moreover, a non-monotone relation between inequality and the extent of redistribution through tax-financed educational subsidies obtains.     

The Recognition and Timing of Deferred Tax Liabilities

Abstract:   This paper examines the characteristics of firms that account for deferred tax liabilities related to government investment grants under an extended adoption timing period. Not only the recognition but also the timing decision is associated with changes in future performance and changes in the debt structure. Recognisers outperform non‐recognisers in the future, while early recognition is related to post recognition performance but only for those firms that currently perform well. Changes in the balance sheet structure are also related to both decisions. Firms with recent increases in the debt level tend to postpone recognition, while currently well‐performing firms that increase their future debt level are less likely to recognise deferred taxes.     

Derivation of the unconditional state-covariance matrix for exact maximum-likelihood estimation of ARMA models

Analytical expressions for the unconditional state-covariance matrix are combined with an efficient scheme for computing theoretical autocovariances, to simplify the exact maximum-likelihood estimation of multivariate ARMA models. Alternative state-space representations for pure AR and pure MA processes, giving rise to straightforward expressions for their unconditional state covariance, are suggested.     

The English Football Industry: profit,performance and industrial structure

The English (Association) Football League is a long established industrial cartel selling a highly popular product with only imperfect substitutes. Despite that, the majority of its member clubs lose money and the industry has faced successive financial crises over the last decade. This paper develops an empirical model of the financial performance of English League clubs using a high quality dataset of 48 clubs over the period 1974–89. The underlying model explains how rents are competed away through the maximising behaviour of club owners subject to production constraints. This model is parameterised by a system of equations which describe the behaviour of a maximising owner subject to demand and production constraints. The model is then used to examine the coordination failure which lies at the heart of the English Football League's decline and to assess the prospects for the Premier League.     

Banana policy: a European perspective

European Union banana policies do not make economic sense, and hence criticism of these policies is justified. Some facts should, though, be remembered. If the EU had chosen free trade in bananas when the Single Market was established, certain producers both inside and outside the EU would have lost income, and it proved politically impossible to choose direct financial compensation. Also, the quantitative implications of the new EU banana regime may be less than sometimes assumed, as trade has not been reduced very much. The WTO's role is not to judge the economic merits of these policies, but their legal justification.     

Rumors

A Kyle (1985) model with private information diffusion is used to examine the motivation to spread stock tips. An informed investor with limited investment capacity spreads imprecise rumors to an audience of followers. Followers trade on the advice and move the price. Due to the imprecision of the rumor, the price overshoots with positive probability. This gives the rumormonger the opportunity to trade twice: First when she receives information, then when she knows the price to be overshooting. In equilibrium, rumors are informative and both rumormongers and followers increase their profits at the expense of uninformed liquidity traders.     

The biological reserve: The future's last stand

This article addresses the societal and cultural aspects of bioreserves and environmental restoration programmes. It begins with a discussion of bioreserves, then uses the example of a Man and Biosphere (MAB) inspired study of the US Everglades to illustrate how land has been shaped historically by culture and technology. It then demonstrates how current conflicts of values and culture, from both inside and outside the region, from interest groups with both pragmatic and emotional stances, are determining the future of an environment—the Everglades. The article thereby shows how human values and perceptions impact on the development of a sustainable Everglades, using the findings of surveys and public meetings to highlight the interests of the competing communities, ethnic and interest groups involved. If bioreserves are to survive they cannot become alienated from the people in the regions in which they are located.