Switching to Green: The Timing of Socially Responsible Innovation

We develop a timing game for adopting a product technology that features a public good. We investigate the effects of the degree of product market competition, product differentiation, the private benefits from contributing to the public good, and firm asymmetries on the timing of adoption. We then examine the effects of consumer subsidies on equilibrium timings and the proliferation of the public good.     

Market Power and Patent Strategies: Evidence from Renaissance Venice

This paper exploits the introduction of the first regularized patent system, which appeared in the Venetian Republic in 1474, to examine the factors shaping inventors’ propensity to use a new form of intellectual property. We combine detailed information on craft guilds and patents in Renaissance Venice and show a negative association between patenting activity and guild statutory norms that strongly restricted entry and price competition. Our analysis shows that the heterogeneity in patenting activity documented by the industrial organization literature is not a special feature of modern technologies, but is rather a persistent phenomenon affected by market power.     

Social Protection in a Crisis: Argentina's Plan Jefes y Jefas

The article assesses the impact of Argentina’s main socialpolicy response to the severe economic crisis of 2002. The programwas intended to provide direct income support for families withdependents and whose head had become unemployed because of thecrisis. Counterfactual comparisons are based on a matched subsetof applicants not yet receiving program assistance. Panel dataspanning the crisis are also used. The program reduced aggregateunemployment, though it attracted as many people into the workforcefrom inactivity as it did people who otherwise would have beenunemployed. Although there was substantial leakage to formallyineligible families and incomplete coverage of those who wereeligible, the program did partially compensate many losers fromthe crisis and reduced extreme poverty.     

Redistribution and fairness: a note

The introduction of (inequity adverse) fair agents in a simple redistributive voting game reduces the political relevance of the middle class and increases the equilibrium level of redistribution. Interestingly, some of the predictions in Meltzer and Richard [J. Polit. Econ. 89 (1981) 914–927] are affected: a rise in the income inequality between poor and middle class may not decrease redistribution, because of the additional support for redistribution provided by the fair agents.     

Constitutional “Rules” and Intergenerational Fiscal Policy

This paper analyzes the impact of alternative political institutions on sustainable fiscal policies. We study the choice of intergenerational transfers as outcomes of an infinite social security game among successive selfish median voters. Majoritarian systems accord the current median voter maximum fiscal discretion but no direct influence over future policy. This political arrangement sustains, among others, dynamically inefficient transfers and volatile, non-stationary sequences. Constitutional rules award to the minorities veto power over fiscal policy changes proposed by the majority. This unanimity provision is equivalent to partial precommitment. Under constitutional rules, sustainable fiscal policies feature Pareto efficient, non decreasing transfer sequences.     

Fiscal Constitutions

We study the impact of fiscal constitutions on intergenerational transfers in an overlapping generation model with linear technology. Transfers represent outcomes of a voting game among selfish agents. Policies are decided one period at a time. Majoritarian systems, which accord voters maximum fiscal discretion, sustain all individually rational allocations, including dynamically inefficient ones. Constitutional rules, which give minorities veto power over fiscal policy changes proposed by the majority, are equivalent to precommitment. These rules eliminate fluctuating and dynamically inefficient transfers and sustain weakly increasing transfer sequences that converge to the golden rule. The golden rule allocation is the unique outcome of Markov constitutional rules. Journal of Economic Literature Classification Numbers: D72, H55.     

Behavioral models of managerial decision-making

This paper reviews the literature that applies behavioral economic models to managerial decisions. It organizes the literature into research that focuses on alternative utility functions and research that focuses on non-equilibrium models. Generally, behavioral models have seen less application to manager decisions than to consumer decisions and therefore there are many opportunities to develop new theoretical models, new laboratory experiments, and new field applications. The application of these models to field data is particularly underdeveloped.