War and economy. Rediscovering the eighteenth-century military entrepreneur

Abstract

The detrimental effects traditionally assigned to warfare in the development of pre-industrial economies have obscured the prominent role that military entrepreneurs played in economic development in this period. Historiography minimises the extent to which war and the concomitant strengthening of the central state provided a whole new range of opportunities for capital investment, a tendency that has been strengthened by the paradigm of Redlich’s ‘decline of the soldier-entrepreneur’ and the technological determinism of the debate on the Military Revolution among others. The aim of this introduction is to look into the background of this relative lack of interest and to reaffirm the mutual dependence of eighteenth-century state-formation and the business of war.     

Environmental Taxation and Vertical Cournot Oligopolies: How Eco-industries Matter

This article specifies what an optimal pollution tax should be when dealing with a vertical Cournot oligopoly. Polluting firms sell final goods to consumers and outsource their abatement activities to an environment industry. It is assumed that both markets are imperfectly competitive. Thus, the tax is a single instrument used to regulate three sorts of distortions, one negative externality and two restrictions in production. Consequently, the optimal tax rate is the result of a trade-off that depends on the firms’ market power along the vertical structure. A detailed analysis of Cournot-Nash equilibria in both markets is also performed. In this context, the efficiency of abatement activities plays a key-role. It gives a new understanding to the necessary conditions for the emergence of an eco-industrial sector.      

Using Stock Price Information to Regulate Firms

This paper examines the role of the information contained in stock prices in the regulation of privatized firms. Stock prices contain noisy but unbiased information about firm's future prospects that regulators can use to decide on some regulatory policies. The main argument developed is that the observation of stock price movements reduces the incentives of regulators to develop their own monitoring technologies and can allow them to commit to relatively light-handed regulations. This protects firm's investments in cost reduction activities and can increase ex ante welfare.     

Assessing Applied Protection across the World*

This paper presents MAcMap–HS‐6, a database providing a consistent, ad valorem equivalent measure of tariff duties and tariff rate quotas for 163 countries and 208 partners, at the six‐digit level of the Harmonized System (5111 products), accounting for all preferential agreements. We describe the methodology used to compute and aggregate an ad valorem equivalent of applied protection. Emphasis is placed on minimizing the endogeneity bias in the aggregation procedure, while acknowledging structural differences in export specialization. The resulting quantitative assessment is illustrated by giving an overview of applied protection across the world in 2001, in terms of average as well as distribution.     

Planning comprehensiveness and strategy in SME's

Although it is generally assumed that planning is of great value for Small and Medium Sized Enterprises (SME's), little is known about the conditions that influence the organization of the planning process. In this paper it is hypothesized that planning comprehensiveness is, to a certain extent, related to the complexity and variability of the strategies pursued by SME's. This hypothesis is partially supported by an empirical study in which 154 SME's in the Dutch Machinery Industry are involved.     

Nash implementation with an infinite-dimensional trade space

This paper deals with the problem of implementing the Walras correspondence via Nash equilibria, in exchange economies with infinitely many commodities and finitely many households with possibly non-ordered preferences. We explicitly construct a feasible mechanism enjoying some features, which have natural economic meanings. Under a fairly weak boundary condition, this game fully implements the Walras equilibria. If this condition is not fulfilled, our mechanism nevertheless implements the constrained Walras equilibria. Received: 11 December 2003, Accepted: 29 July 2005 JEL Classification: D41, D43, D51 We thank (without implicating) Prof. Jean-Marc Bonnisseau and Cuong Le Van for helpful comments. The views expressed in this paper reflect those of the authors and not necessarily those of Calyon.     

On the smoothness of optimal paths II: some local turnpike results

We study the local turnpike property for two classes of infinite-horizon discrete-time deterministic maximization problems which have common applications, e.g., optimal growth theory. We follow a functional-analytic approach and rely on an implicit function theorem for the space of the sequences which converge to zero. We shall assume the existence of an optimal path which is not necessarily a steady-state. Relying on material developped in Blot and Crettez (Decis Econo Finance 27:1–34, 2004), “On the smoothness of optimal paths” Decis Econ Finance, 21:1–34, 2004), we provide conditions under which a variation in the initial conditions (i.e., capital stock and discount rate) yields an optimal solution which converges toward a reference solution when time becomes infinite. We also provide new results on bounded solutions of difference equations. We gratefully thank the editor, Silvano Holzer, and two anonymous referees for remarks and advices on a previous version of this paper.     

The somatic marker hypothesis: A neural theory of economic decision

Modern economic theory ignores the influence of emotions on decision-making. Emerging neuroscience evidence suggests that sound and rational decision making, in fact, depends on prior accurate emotional processing. The somatic marker hypothesis provides a systems-level neuroanatomical and cognitive framework for decision-making and its influence by emotion. The key idea of this hypothesis is that decision-making is a process that is influenced by marker signals that arise in bioregulatory processes, including those that express themselves in emotions and feelings. This influence can occur at multiple levels of operation, some of which occur consciously, and some of which occur non-consciously. Here we review studies that confirm various predictions from the hypothesis, and propose a neural model for economic decision, in which emotions are a major factor in the interaction between environmental conditions and human decision processes, with these emotional systems providing valuable implicit or explicit knowledge for making fast and advantageous decisions.     

Collusion, Delegation and Supervision with Soft Information

This paper shows that supervision with soft information is valuable whenever supervisors and supervisees collude under asymmetric information and proceeds then to derive an Equivalence Principle between organizational forms of supervisory and productive activities. We consider an organization with an agent privately informed on his productivity and a risk averse supervisor getting signals on the agent's type. In a centralized organization, the principal can communicate and contract with both the supervisor and the agent. However, these two agents can collude against the principal. In a decentralized organization, the principal only communicates and contracts with the supervisor who in turn sub-contracts with the agent. We show that the two organizations achieve the same outcome. We discuss this equivalence and provide various comparative statics results to assess the efficiency of supervisory structures.