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.     

A MARKET WITH FRICTIONS IN THE MATCHING PROCESS: AN EXPERIMENTAL STUDY*

We construct a laboratory market in which there is a friction in the matching between buyers and sellers. Sellers simultaneously post prices and then buyers simultaneously choose a seller. If more than one buyer chooses the same seller, the seller's single unit is randomly sold to one of them. Our results show a broad consistency with theoretical predictions, although price dispersion exists and is slow to decay. Prices also exceed the equilibrium level when there are only two sellers, and buyers' purchase probabilities are insufficiently responsive to price differences when there are two sellers.     

The First U.S. Food Stamp Program: An Example of Rent Seeking and Avoiding

Abstract . Rent seeking involves the wasteful expenses incurred to secure, acquire, or maintain a monopoly position. Rent avoiding involves the expenditures undertaken to avoid the imposition of rent-seeking costs. Each represents a social cost of Tullock rectangle loss in addition to the dead-weight or Harberger triangle loss that combined to form the Harberger-Tullock trapezoid social cost. The first Food Stamp Program in the United States came about through the rent-seeking and/or rent-avoiding efforts of farmers, grocers, bankers, and other economic agents and did not lead to the promotion of social welfare. The evidence of these self-interested efforts was gleaned from articles in the New York Times and government documents. The first Food Stamp Program also fits the economic theory of regulation developed by Stigler, Jordan, Peltzman and others, and it involved imposed costs on economic agents as the program evolved.     

Unionism and the public sector

It is incorrect and misleading to speak of unionization as a ‘human right’. The only human right is ‘self-ownership’, i.e. to pursue goals with one's own abilities but with no force or fraud against others. Government cannot dispense rights, only privileges and protections to some at the expense of others. A minimal degree of coercion exercised by government is unavoidable. But labor unions are not governments. Government has granted significant privileges to unions in the private sector, but such are not appropriate for public sector unions.