The conservative equal costs rule, the serial cost sharing rule and the pivotal mechanism: asymptotic welfare loss comparisons for the case of an excludable public project

We examine the asymptotic behavior of two strategyproof mechanisms discussed by Moulin for public goods – the conservative equal costs rule (CER) and the serial cost sharing rule (SCSR) – and compare their performance to that of the pivotal mechanism (PM) from the Clarke–Groves family. Allowing the individuals’ valuations for an excludable public project to be random variables, we show under very general assumptions that expected welfare loss generated by the CER, as the size of the population increases, becomes arbitrarily large. However, all moments of the SCSR’s random welfare loss asymptotically converge to zero. The PM does better than the SCSR, with its welfare loss converging even more rapidly to zero.     

Value-Added Trade and Empirical Distributions of RCA Indices

Revealed Comparative Advantage (RCA) indices aid in identification of the sectors in which countries reveal comparative advantage or disadvantage. Apart from serving such a dichotomous measure, the RCA indices are frequently employed as cardinal or ordinal measures over time. Application of the indices for comparative analyses calls attention towards the distributions of RCA indices, which must reasonably be stable over time, sectors and countries. Stability of index distributions facilitates the usage of indices as cardinal or ordinal measures over time. The present paper therefore analyses the empirical distributions of RCA indices to determine their suitability. However, such an analysis would be incomplete if the implications for RCA indices due to growing significance of global supply chains are not recognized. Hence apart from analyzing the distributions of gross trade based RCA indices, the distributions of domestic value-added in export based indices are also examined, and the differences are noted. Similar extensive analyses on the distributions of RCA indices are lacking in the literature. In this sense, the present paper makes an important contribution to the existing literature on RCA indices.

     

Employee responsibility in benefit change

If employers want to move employees beyond superficial acceptance of benefit changes, organizations need to increase the focus on how they manage the change process and support employee decision making. This article describes how employers can help workers understand changes and, through effective change management and communication, successfully navigate in an evolving benefits world. Using recent survey research about large employer and employee attitudes, the authors demonstrate tangible proof that these efforts pay off, both in financial and cultural terms.     

A testable model of consumption with externalities

This paper presents a nonparametric model of interdependent preferences, where an individual's consumption may act as an externality on the preferences of other consumers. We assume that individual price consumption data is observed for all consumers. It is known that the general consumption model with externalities imposes few restrictions on the observed data, where the consistency requirement is Nash rationalizability. We motivate potential games as an important sub class of games where the family of concave potential games is refutable and imposes stronger restrictions on observed data. We use this framework to extend the analysis of Brown and Matzkin [D. Brown, R. Matzkin, Testable restrictions on the equilibrium manifold, Econometrica 64 (1996) 1249-1262] on refutable pure exchange economies to pure exchange economies with externalities. Finally, we discuss an application of this model to inter-household consumption data.     

A nonparametric analysis of multi-product oligopolies

We develop revealed preference tests for models of multi-product oligopoly, building on the work in Carvajal et al. (Econometrica 81(6):2351–2379, 2013). We analyze a Cournot model with multiple goods and show that it has testable restrictions when at least one good is produced by two or more firms. We also develop a revealed preference test for Bertrand oligopoly in a setting where each firm produces a single differentiated good, and these goods are potentially substitutes for each other. Our tests require qualitative assumptions on the shape of the demand curves and (in the Bertrand case) their evolution across observations, but they do not rely on the estimation of market demand.     

Estimating welfare changes from efficient pricing in public bus transit in India

Three different and feasible pricing strategies for public bus transport in India are developed in a partial equilibrium framework with the objective of improving economic efficiency and ensuring revenue adequacy, namely average cost pricing, marginal cost pricing, and two-part tariffs. These are assessed not only in terms of gains in economic efficiency, but also in changes in travel demand and consumer surplus. The estimated partial equilibrium price is higher in all three pricing regimes when compared to the current price. As a result, consumer surplus falls in all three cases. The price increase is much larger with average cost pricing compared to marginal cost pricing or two-part tariffs, and hence a larger fall in demand and consumer surplus occurs due to average cost pricing. While there is a gain in economic efficiency from marginal cost pricing and two-part tariffs, this improvement comes at the expense of reduced public bus transit demand and consumer surplus, given the price inelastic public bus transit demand estimated for India. Given the mobility needs and the developmental concerns of a growing economy such as India, the challenge for policy makers is to balance the gains in economic efficiency in the public bus transit sector against other social, political, and developmental goals.     

SOCIAL ACCOUNTING MATRIX FOR INDIA

This paper provides the latest Social Accounting Matrix (SAM) of the year 2003–2004 for the Indian economy with a wide variety of disaggregation for the Energy sector and the sectors that are relevant for environmental and climate policy evaluation. This SAM shows the interaction between production, income, consumption and capital accumulation. It can be used to provide an analysis of the interrelationship between the production structure of an economy and the distribution of incomes and expenditures of different household groups. In addition, it can be used for multiplier analysis to capture direct, indirect and induced impact on input use due to any exogenous changes in the economy. This SAM consists of 85 sectors of the economy, three factors of production and nine categories of occupational households. The Indian economy is becoming structurally biased towards capital intensive sectors, such as service and energy production. The energy production sector itself is the most energy intensive sector as of 2003–2004.     

Observability and Sorting in a Market for Names

Can firm names be tradeable assets when changes in name ownership are observable? Earlier literature focuses on trading of firm names when trading is not observable to the consumer. Yet, casual empiricism suggests that shifts in name ownership are often publicly known. This paper studies how firm names can be traded even under full observability. In equilibrium, even when consumers see a reputed name being divested they continue to trust it and so, these names are tradeable. I further demonstrate an appealing “sorting” property of these equilibria. Competent firms can separate themselves by buying valuable names, and incompetent firms can give themselves away by using worthless names.     

Maximal surplus from the pivotal mechanism: a closed form solution

The paper derives a closed form solution for the maximal surplus generated by the pivotal mechanism in the case of a binary public good. The formula may be used to compare the pivotal mechanism to other mechanisms. An illustration is provided to demonstrate how such a comparison may be made. Received: 30 April 1997 / Accepted: 16 June 1998     

Emerging challenges for R&D executives — an American perspective

In recent years, many companies have witnessed dramatic changes in their business environment. Emergence of global markets and competitors coupled with new competitive strategies based on quality, speed and/or alliances have forced business managers — especially in the United States — to adopt new management strategies, structures and systems. These in turn have caused many R&D executives to progress from their traditional agenda of managing R&D activities in domestic laboratories to a new agenda of coordinating and integrating technology development and exploitation on a world-wide basis. This paper discusses this evolution of R&D management agenda in the United States and its implications. It also reviews the approaches being used and the experiences being gained by the American R&D management community to address the emerging challenges.