Prizes for basic research: Human capital,economic might and the shadow of history

We study the distribution of basic scientific research across countries and time, and explain the process that resulted in the United States becoming the undisputed leader in basic research. Our study is based on the records of scientific awards, and on the data of global economic trends. We investigate the degree to which scale/threshold effects account for the number of prizes won. We constructed a stylized model, predicting a non-linear relationship with lagged relative GDP as an important explanatory variable of a country’s share of prizes. Our empirical research findings find support for these predictions and the presence of a “winner-takes-all” effect.      

Process R&;D and Product Line Deletion by a Multiproduct Monopolist

Relative to single-product firms, a multiproduct monopolist can internalize the negative externalities of its R&D investments (the ``cannibalization effect') in two ways: (1) To lower R&D investment for each product; and (2) To delete some of its product lines so as to enlarge the market size for the remaining lines. It is shown that line deletion is profitable if products are close substitutes. If products are not close substitutes, the multiproduct monopolist keeps all product lines and invests less in cost-reducing R&D than single-product firms engaging in Cournot competition with product differentiation. However, it invests more in R&D than single-product firms if there are significant economies of scope in R&D, or if the oligopolistic firms can cooperate in their R&D decisions.      

Competition in the Portuguese economy: insights from a profit elasticity approach

The article uses the elasticity of profits to marginal costs, as in Boone (Econ J 111:1245–1261, 2008b), to measure the degree of competition in the Portuguese economy in a period characterised by the reallocation of resources towards the non-tradable sector and the accumulation of macroeconomic imbalances. Using firm-level data for the period 2000–2009, we find that there is lower competition intensity in the non-tradable sector. The least competitive markets within this sector lay in professional services, network industries and segments of retail trade. We also find that reductions in competition intensity are relatively widespread in the economy, but in terms of sales, gross value added and employment they are more substantial in the non-tradable sector. Results suggest that some network industries and other services exhibit low and a declining competition intensity in the period under analysis. In addition, the article discusses the coherence of the profit elasticity with classic indicators of market power, such as the Herfindahl–Hirschman index and the price-cost margin, and find that in more than half of the markets there is an agreement in the dynamics of competition intensity.     

Incentive properties of coincident peak pricing

Coincident peak pricing is used in several electricity markets to recover the embedded cost of infrastructure, such as transmission. In this approach, measured consumption at the time of the peak is used to set charges for that pricing period or a subsequent period. If transmission costs are truly sunk, then such a recovery is unlikely to be efficient. However, in the context of growing peak demand, new additions must be built. We consider the incentive properties of coincident peak pricing when related investments are not considered to be sunk, finding that it can reproduce the incentive properties of an ideal time-varying price. We also consider several variations on this assumption.     

Courts,scheduled damages,and medical malpractice insurance

We study how the functioning of the judicial system affects the availability and affordability of medical liability insurance, as proxied by the number of insurers and the premiums paid. We use two unique datasets collected in Italy from 2000 to 2010. Using the first dataset—insurance contracts for hospitals—we estimate the average treatment effect of schedules on insurers and premiums paid, conditional on judicial efficiency and proxied by different measures. Our identification rests on the partial overlap between healthcare districts and judicial districts, meaning that the caseload of a court and malpractice events at the healthcare provider level are not perfectly correlated. On average, the adoption of schedules does not produce any significant effect on insurers or on premiums paid. However, adopting schedules has a robust and significant effect on the number of insurers, but only in inefficient courts. We further investigate these findings using a second dataset comprising 17,578 malpractice insurance claims. We find evidence of a composition effect among claims that is triggered by higher levels of judicial inefficiency: As a court’s inefficiency increases, the likelihood for a case to not be decided on the merits decreases and the levels of reserve and recovery per claim decrease.     

Debreu’s social equilibrium theorem with asymmetric information and a continuum of agents

We provide several different generalizations of Debreu’s social equilibrium theorem by allowing for asymmetric information and a continuum of agents. The results not only extend the ones in Kim and Yannelis (J Econ Theory 77:330–353, 1977), Yannelis and Rustichini (Stud Econ Theory 2:23–48, 1991), but also new theorems are obtained which allow for a convexifying effect on aggregation (non-concavity assumption on the utility functions) and non-convex strategy sets (pure strategies). This is achieved by imposing the assumption of “many more agents than strategies” (Rustichini and Yannelis in Stud Econ Theory 1:249–265, 1991; Tourky and Yannelis in J Econ Theory 101:189–221, 2001; Podczeck in Econ Theory 22:699–725, 2003). To the memory of Gerard Debreu. A preliminary draft was presented in Paris, in April of 2005. I have benefited from the discussion, comments and questions of Erik Balder, Jean-Marc Bonnisseu, Bernard Cornet and Filipe Martins Da-Rocha and Conny Podczeck. A careful and knowledgeable referee made several useful comments and rescued me from a mishap.