Component efficient solutions in line-graph games with applications

Recently, applications of cooperative game theory to economic allocation problems have gained popularity. We investigate a class of cooperative games that generalizes some economic applications with a similar structure. These are the so-called line-graph games being cooperative TU-games in which the players are linearly ordered. Examples of situations that can be modeled like this are sequencing situations and water distribution problems. We define four properties with respect to deleting edges that each selects a unique component efficient solution on the class of line-graph games. We interpret these solutions and properties in terms of dividend distributions, and apply them to economic situations. This research has been done while the third author was visiting Tinbergen Institute at the Free University, Amsterdam. The research is part of the Research Programme “Strategic and Cooperative Decision Making” at the Department of Econometrics. Financial support from the Netherlands Organization for Scientific Research (NWO) in the framework of the Russian-Dutch programme for scientific cooperation, is gratefully acknowledged. The third author also appreciates partial financial support from the Russian Leading Scientific Schools Fund (grant 80.2003.6) and Russian Humanitarian Scientific Fund (grant 02-02-00189a). We thank three anonymous referees for their valuable comments.     

Wage–Setting Institutions, Unemployment, and Voters' Demand for Redistribution Policy

This paper examines unemployment, wages, and voters' demand for redistribution policy under three different labour market structures: laissez–faire, wage–setting by company or industrial unions, and wage–setting by a central union. Decisions on the level of taxes and benefits are made by majority rule. Taxes, wages, and unemployment are lowest under competitive wage–setting and highest with decentralised unions. A higher degree of centralisation of union wage–setting implies lower unemployment and taxes because a fiscal externality is internalised. Under some conditions about the composition of the population, the political–economic equilibrium can further be improved upon by cooperation between the government and the central union. This seems to have happened in the Netherlands where the unions and the government agreed to cut taxes and restrain wages, which has led to the 'Dutch Miracle'.     

A complete characterization of Pareto optimality for general OLG economies

In the context of general pure exchange OLG economies where agents can have heterogeneous longevities, we provide both sufficient and necessary conditions for Pareto optimality of competitive equilibria. For the case in which all agents live for the same number of periods, we find that these conditions are equivalent. We also find this equivalence when agents can have different lifetimes, but in this case we need to impose particular restrictions on relative equilibrium prices. Moreover, we show that without these conditions on prices the equivalence, and hence a full characterization, is not necessarily obtained.     

The Geopolitics of Protected Areas

ABSTRACT

The conservation enterprise is embedded in ideas of the environment through which it promotes a vision of the world and the relations between the non-human and human. The papers in this forum analyse conservation from various vantage points to draw the links between geopolitics and conservation. The authors use three themes to demonstrate these links. The first theme draws on the concept of environmentality to show the mobilization of ecological rationalities and power towards the creation of protected areas. The second pays attention to networks formed across the distance, and how they influence the location and governance of protected areas. The third focuses on the strategies the conservation lobby uses to align local identities with global conservation ideals and goals. Collectively, these themes highlight features of conservation geopolitics.     

Choosing sides in the trilemma: international financial cycles and structural change in developing economies

ABSTRACT

This paper analyzes the impact of international financial cycles on structural change in developing economies. It is argued that the impact of these cycles depends on the specific combination of macroeconomic and industrial policies adopted by the developing economy. The cases of Brazil and Argentina are contrasted with those of Korea and China. In the Asian economies, macroeconomic policy has been a complementary tool along with industrial policy to foster the diversification of production and capabilities. Inversely, in the case of the Latin American countries, long periods of real exchange rate (RER) appreciation, combined with the weaknesses (or absence) of industrial policies, contributed to the loss of capabilities and lagging behind.     

Sample attrition and labor force dynamics: Evidence from the Spanish labor force survey

In this paper we examine a number of issues that arise in investigating labor force dynamics using the Spanish Labor Force Survey (EPA). These issues are by no means specific to the Spanish case and apply to most European-style labor force surveys. Our main conclusions may be summarized as follows. First, survey nonresponse cannot be neglected. Second, the EPA tends to underestimate employment and participation of high-educated young people, and to overestimate those of the low-educated elderly. Finally, we find little evidence that attrition causes important selection biases in estimating quarterly transition probabilities.     

Ethical aspects of an urban catastrophe

As a consequence of the collapse of a building in Barcelona, in December 1990, it was discovered that a large number of dwellings, mainly in Barcelona but also in other towns of Catalonia, were affected by a structural defect known as aluminosis, consisting of a deterioration of the reinforced concrete manufactured using aluminous cement, which considerably reduced its strength and that of the steel embedded in the concrete. This brought to light a series of economic, social, political and also moral problems, such as the use of the aluminous cement itself — a quality product but which requires careful handling —, the lack of regulation concerning the product and its use in construction, the poor state of repair of the buildings affected, the careless manner in which they had been built, the lag in technical knowledge, the financial situation of the people affected by the aluminosis, etc.This document provides a full account of the events and their historical, technical, economic and legal background, paying particular attention to the ethical problems created by the situation.Antonio Argandoña is Professor at IESE, the International Graduate School of Management of the University of Navarra in Barcelona (Spain), where he teaches Economics and Business Ethics. He is a member of the Executive Committee of EBEN (European Business Ethics Network), and of the Organizing Committees of the Second (Barcelona, 1989) and Sixth (Oslo, 1993) European Conferences on Business Ethics. He is also co-editor ofPeople in Corporations: Ethical Responsibilities and Corporate Effectiveness (Kluwer, 1990) and author of many articles on business and economics ethics. This article was presented to the Fifth European Conference on Business Ethics (Paris, October 1992).     

Service Quality,Competition, and Regulatory Policies in the Postal Sector

This paper presents a simple model which illustrates the possible policy- and welfare-implications of endogenous product selection in the postal sector. The cost of a unit of mail depends on its "quality" (e.g., speed of delivery) and on the type and location of the addressee (firms, urban households, and rural households). Senders have inelastic demands and differ in their willingness to pay for quality. Addressees are passive but their utility may affect social welfare. Two operators play a two-stage game, first choosing qualities and then prices. We first show that the equilibrium with two private (profit maximizing) operators results in an inefficient provision of quality. Then, we consider the mixed (Nash) equilibrium with one private and one (welfare maximizing) public operator. If the budget constraint of the public firm is not binding, this equilibrium is shown to be first-best efficient even if social welfare accounts for the utility of addressees. If the budget constraint is binding, the mixed equilibrium is not efficient but yields a higher level of welfare than the private equilibrium. Finally, we study the impact of minimum quality standards within our setting.     

The rise of cost accounting: evidence from Italy

Accounting historians link the origins of cost accounting to the rise of manufacturing firms and, in a more detailed way, to efficiency control, pricing and decision-making problems faced in those organizations. To date, the international debate has mainly focused on practices in the USA, Great Britain and France, with little evidence available of developments in other countries, such as Italy. In this paper, the authors analyse the development of cost accounting in an Italian firm, 'La Magona d'Italia'. This iron, steel and tinplate firm, situated in Piombino, is observed over the period 1865-1940, i.e. during the central phase of the industrial revolution in Italy. We find that several factors influenced the implementation of a cost accounting system at Magona, including efficiency control, strategic decision making, and stock valuation. We also find a strong British influence on Magona's strategy, organization and information system, particularly in respect of finance, managers, technology and accounting practices. There is little evidence that Italian accounting traditions and practice played much of a role.