How Leviathan Taxes

The Leviathan hypothesis remains a cornerstone of constitutional tax theory. Following Brennan and Buchanan's (1980) seminal contribution, the power to tax is often likened to a monopoly, and its use by a revenue-maximising government is said to obey the rules of optimal taxation theory. We revisit, and refine, this position, explaining its underpinnings and discussing the Leviathan solution in several well-known optimal taxation models. It turns out that the power to tax is not a perfect analogue of ordinary monopoly power and that the similarity between Leviathan and optimal taxation solutions hinges on the irrelevance of distributional weights.     

Parallel Trade and its Ambiguous Effects on Global Welfare

The regulation of parallel trade is a fiercely debated issue in the global trading system. This paper investigates the welfare effects of parallel trade freedom for different levels of trade costs and market size. It is found that parallel trade freedom has a positive effect on global welfare if countries are sufficiently heterogeneous in terms of market size and trade costs are sufficiently low. Contrary to intuition, this result even holds in a situation where parallel trade freedom implies the closure of the smaller market. If, however, countries are virtually homogenous in terms of market size, parallel trade freedom may be detrimental to global welfare for specific levels of trade costs.     

Benefits of control,capital structure and company growth

This article studies the influence of the benefits of control on the capital structure and the growth of private companies for a sample of 8964 UK companies with limited liability observed for up to 5 years. It is hypothesized that companies in which existing owners would lose more control if they expanded, have smaller equity increases, are more highly levered and grow more slowly. Potential loss of control is measured as the difference in the probability of winning a vote for the largest owner before and after a hypothetical equity increase. Evidence is found that is consistent with the hypotheses.     

Unconscious Processes of Organizing: Intergroup Conflict in Mental Health Care

A critical but overlooked issue in Weick’s seminal work, The Social Psychology of Organizing (1969/1979), concerns ‘the heat’ of organizing processes, namely, the underground emotional processes underpinning the organizing of conflictual work relationships. We present a qualitative case study of psychiatric agencies mandated by public policy to collaborate but instead engaged in persistent conflict despite its deleterious effects on their working relationship and on the wellbeing of the clients they intended to serve. To explain these conflictual features of organizing, we integrate Weick’s organizing theory with systems psychodynamics to deepen the understanding of emotions in organizing, specifically the motivational forces underpinning sensemaking and actions between interacting psychiatric agencies. This integration of theories reveals a critical feature of the relationship between the conscious and unconscious organizing processes: When a threat is involved, sensemaking and action are overtaken by social defences, resulting in dysfunctional organizing of the primary task. Drawing on these findings, we enrich Weick’s seminal work by developing a model that portrays organizing as the ritualized interaction of emotions, sensemaking and behavioural responses.     

Measuring agricultural knowledge and adoption

Understanding the tradeoffs in improving the precision of agricultural measures through survey design is crucial. Yet, standard indicators used to determine program effectiveness may be flawed, and at a differential rate for men and women. We use a household survey from Mozambique to estimate the measurement error from male and female self‐reports of their adoption and knowledge of three practices: intercropping, mulching, and strip tillage. Despite clear differences in human and physical capital, there are no obvious differences in the knowledge, adoption, and error in self‐reporting between men and women. Having received training unanimously lowers knowledge misreports and increases adoption misreports. Other determinants of reporting error differ by gender. Misreporting is positively associated with a greater number of plots for men. Recall decay on measures of knowledge appears prominent among men but not women. Findings from regression and cost‐effectiveness analyses always favor the collection of objective measures of knowledge. Given the lowest rate of accuracy for adoption was around 80%, costlier objective adoption measures are recommended for a subsample in regions with heterogeneous farm sizes.     

DYNAMIC OUTPUT RESPONSE REVISITED: THE INDIAN CASH CROPS

Diverse instruments have been used to encourage developing agriculture. In the process, billions of dollars have been spent on providing incentives to peasants. Given scarce resources, an important concern has been the issue of what policy instruments to emphasize. In this regard, useful policy information can be gleaned from the role of expected profits (revenue and input prices), assets (irrigation and infrastructure), and relevant risks, in evoking peasant response. Using panel data for the period 1967/1968 to 1999/2000 pertaining to seven major Indian cash crops cultivated across 14 major states, we find strong evidence of a differential producer response in the post‐liberalization phase, although the important variables per se are much the same. Our results suggest that the preferred policy ought to emphasize availability of irrigation, affordable fertilizer, and rural infrastructure, rather than incessant increases in output prices.     

Joint Venture Formation and Internationalization: A Japanese MNEs' Perspective

This article examines relationships among top-management-team composition, group processes, and the effects of those processes on cohesion for international joint venture teams in Thailand. For culturally diverse teams, demographic elements (member age, length of team tenure, level of education, functional expertise) and cultural characteristics (country of education, nationality, affiliation with a parent organization, primary language spoken) define heterogeneity. Overall, demographic heterogeneity had a significant influence on openness among team members and on cohesion when mediated by openness. Cultural heterogeneity had a significant influence on openness and cohesion among team members, with loyalty and openness having a significant influence on cohesion.     

Exploring antecedents of attitudes and skepticism towards pharmaceutical advertising and inter-attitudinal and inter-skepticism consistency on three levels: an international study

Abstract

Given the increasing relevance of over-the-counter (OTC) drugs to individuals’ health and well-being, this study explores whether selected health variables, as well as consumers’ attitudes and skepticism towards advertising in general, influence their attitudes and skepticism towards pharmaceutical advertising. It extends previous research by building on the theory of inter-attitudinal consistency, examining how three different levels of attitudes and skepticism are interrelated. A field study was conducted on three continents (727 subjects; non-student sample). Results reveal that consumer attitudes and skepticism towards advertising in general, influence attitudes and skepticism towards pharmaceutical advertising in particular, which positively impact the attitudes and skepticism towards four different ad appeal types. The study extends the theory of inter-attitudinal consistency to inter-skepticism consistency. Results further indicate that attitudes and skepticism towards advertising in general can be considered as key antecedents, but that several additional health-related factors also influence consumers’ attitudes and skepticism towards pharmaceutical advertising. Moreover, attitudes and skepticism towards advertising in general, towards pharmaceutical advertising, as well as towards specific pharmaceutical ads, are negatively related. Reasons explaining these results are addressed, as are study limitations and implications for future research.     

GROWTH, POVERTY, AND INEQUALITY IN LATIN AMERICA: A CAUSAL ANALYSIS, 1970–94

Taking advantage of consistent poverty and income inequality data for 12 Latin American countries between 1970 and 1994, we analyze the determinants of changes in the incidence of urban and rural poverty and in Gini coefficients over spells of years, stressing in particular the role of aggregate income growth. We find that income growth reduces urban and rural poverty but not inequality. We also find that income growth is more effective in reducing urban poverty if the levels of inequality and poverty are lower, and the levels of secondary education higher. We show that there is an asymmetry in the impact of growth on poverty and inequality, with recession having strong negative effects on both poverty and inequality. Since growth does not reduce inequality, economic cycles create ratchet effects on the level of inequality. However, post-structural adjustment growth is quite effective at reducing poverty, particularly if inequality is low.