Second-best theory and the use of multiple policy instruments

In many cases policy makers employ multiple instruments to address a single environmental problem, but much of the economics literature on instrument choice focuses on comparing properties of single policy instruments. We argue that under a fairly broad set of circumstances the use of multiple policy instruments can be justified as optimal in a second-best world. We examine two broad categories of second-best policy making: cases with multiple market failures only some of which can be corrected at any one time; and cases with exogenous (often political) constraints that cannot be removed. The fact that the use of multiple policy instruments can be justified economically in these two cases does not imply, however, that all multiple instruments employed in actual practice are economically justified.     

Tourism in Maasai communities: a chance to improve livelihoods?

This paper examines community-based tourism among Maasai communities in Tanzania in the context of national policies that have increasingly devolved control over natural resources to local communities. It focuses on economic revenues generated from tourism growth, their distribution to village communities and the constraints and conflicts resulting from attempts to control or access resources. Specific cases illustrate the political and economic complexity of devolved resource management and increased income generation at the community level. Ecotourism and community-based tourism are frequently claimed to be possible remedies for wildlife and natural resources conservation, but research indicates that implementation and revenue-sharing are far from straightforward. The paper uses case studies from communities in northern Tanzania, in Ngorongoro District (Loliondo and Lake Natron), Simanjiro District and Longido District (West Kilimanjaro) to explore issues between pastoralism, cultivation, hunting tourism, photographic tourism, conservation and governance systems. It discusses the implementation of the 1998 National Forestry and Wildlife Policies, the creation of Wildlife Management Areas and the 1999 Land Act and Village Land Act. Data and experiences were gathered over a three-year period working with the Sand County Foundation – Tanzania from 2006 to 2008. The paper contributes to the assessment and discussion of pro-poor tourism and poverty alleviation concepts.     

Party Control of State Government and the Distribution of Public Expenditures*

This paper examines the effects of party control of state governments on the distribution of intergovernmental transfers across counties from 1957 to 1997. We find that the governing parties skew the distribution of funds in favor of areas that provide them with the strongest electoral support. This is borne out in two ways. (i) Counties that traditionally give the highest vote share to the governing party receive larger shares of state transfers to local governments. (ii) When control of the state government changes, the distribution of funds shifts in the direction of the new governing party. We find only weak evidence that parties reward electorally pivotal counties or counties in electorally pivotal legislative districts. Finally, we find that increased spending in a county increases voter turnout in subsequent elections. This suggests that parties have an electoral incentive to skew the distribution of funds to influence future election results, and the mechanism through which this works is “mobilization” rather than “conversion” of voters in a fixed electorate.     

THE INFLUENCE OF EXPERT REVIEWS ON CONSUMER DEMAND FOR EXPERIENCE GOODS: A CASE STUDY OF MOVIE CRITICS*

An inherent problem in measuring the influence of expert reviews on the demand for experience goods is that a correlation between good reviews and high demand may be spurious, induced by an underlying correlation with unobservable quality signals. Using the timing of the reviews by two popular movie critics, Siskel and Ebert, relative to opening weekend box office revenue, we apply a difference‐in‐differences approach to circumvent the problem of spurious correlation. After purging the spurious correlation, the measured influence effect is smaller though still detectable. Positive reviews have a particularly large influence on the demand for dramas and narrowly‐released movies.     

Nonparametric Testable Restrictions of Household Behavior

This paper uses semialgebraic theory to derive nonparametric testable restrictions of Pareto-efficient bargaining behavior within a household. These tests are analogous in form to Samuelson's Weak Axiom of Revealed Preference (WARP) and are defined over data on household-level consumption and individual labor supplies. Thus, without observing intrahousehold division of consumption, we can nonparametrically test whether there exist nonsatiated utility functions such that household behavior is Pareto efficient. I apply these tests to data from the National Longitudinal Surveys on U.S. households and find that preferences exist that are consistent with Pareto efficiency for each household in the data set.     

Observable implications of Nash and subgame-perfect behavior in extensive games

We provide necessary and sufficient conditions for observed outcomes in extensive game forms, in which preferences are unobserved, to be rationalized first, weakly, as a Nash equilibrium and then as the unique subgame-perfect equilibrium. Thus, one could use these conditions to find that play is (a) consistent with subgame-perfect equilibrium, or (b) not consistent with subgame-perfect behavior but is consistent with Nash equilibrium, or (c) consistent with neither.     

Monitoring processes with changing variances

Statistical process control (SPC) has evolved beyond its classical applications in manufacturing to monitoring economic and social phenomena. This extension has required the consideration of autocorrelated and possibly non-stationary time series. Less attention has been paid to the possibility that the variance of the process may also change over time. In this paper we use the innovations state space modeling framework to develop conditionally heteroscedastic models. We provide examples to show that the incorrect use of homoscedastic models may lead to erroneous decisions about the nature of the process.