Digital Commons Network^™

Using Auctions To Divest Generation Assets, Peter Cramton, Lisa J. Cameron, Robert Wilson

Peter Cramton

In most states, ratepayers will compensate utilities for their stranded costs. As a result, these costs must be measured as accurately as possible, in a manner that is easily understood by all concerned parties. We describe the options for measuring stranded costs and argue that a simultaneous ascending auction is the best approach.

Do Guaranteed-Low-Price Policies Guarantee High Prices, And Can Antitrust Rise To The Challenge?, Aaron S. Edlin

Aaron Edlin

Price-matching policies can be highly anticompetitive. They allow firms to raise their prices above competition levels by discriminating in price between informed and uninformed customers. The resulting high prices can persist even when new firms enter the industry, a fact that gives price matching the potential to be much more socially costly than an ordinary monopoly or cartel. At the same time, widespread entry implies that the agreement among sellers that is typical of a Sherman Act price-fixing case may be absent. In this article, Professor Edlin argues that there is nonetheless an analogy between a seller offering (and agreeing) …

International Trade Between Consumer And Conservationist Countries, M. Scott Taylor, James A. Brander

M. Scott Taylor

We consider trade between a Consumer country with an open access renewable resource and a Conservationist country that regulates resource harvesting to maximize domestic steady-state utility. In what we call the mild overuse case, the consumer country exports the resource good and suffers steady-state losses from trade, as suggested by the conventional wisdom that weak resource management standards confer a comparative advantage on domestic firms in the resource sector but cause welfare losses. Strikingly, however, when the resource stock is most in jeopardy, the conservationist country exports the resource good in steady state and both countries gain from trade.

A Theory Of Trustees, And Other Thoughts, Eric Bennett Rasmusen

Eric Bennett Rasmusen

This paper combined a brief description of my work on negotiation with comments on other papers presented on central banking and a new paradigm for thinking of judges and central bankers as trustees working on behalf of beneficiaries as directed by settlors. It has my 4 P's Theory of motivation: Place, Pride, Policy, and Power. Available, including a post-publication postscript adding Principle

Package Bidding For Spectrum Licenses, Peter Cramton, John Mcmillan, Paul Milgrom, Bradley Miller, Bridger Mitchell, Daniel Vincent, Robert Wilson

Peter Cramton

The FCC was an innovator in adopting the rules of the simultaneous ascending-price auction for its sales of spectrum licenses. While these rules have performed well in the auctions conducted so far (and would perform even better with the design improvements suggested in our first report), there are two inherent limitations in any design that seeks to assign and price the licenses individually. First, such designs create strategic incentives for bidders interested in multiple licenses that are substitutes to reduce their demands for some of the licenses in order to reduce the final prices of the others; this is the …

Stylizedfacts Of Government Finance In The G-7, Riccardo Fiorito

riccardo fiorito

The stylized facts of government finance in the G-7 show that revenues lag real GDP procyclically, while government spending mostly fail to lead the economy pro-cyclically. This is shown using detailed spending and revenue variables for quarterly, hp-filtered, data. Government deficits are always counter-cyclical bu there is little evidence that stabilization is equally successful in stimulating the economy before shocks materialize.

Stagflationary Consequences Of Prudent Monetary Policy In A Unionized Economy, Peter Skott

Peter Skott

Stylised models of the policy game between monetary policy makers and the private sector have suggested that discretionary policy regimes suffer from an inherent inflationary bias and that pre-commitment to a target rate of inflation may be desirable. This paper shows that in the presence of labour unions, the monetary policy game can lead to radically different results: a central bank that is completely indifferent to the level of inflation may obtain outcomes with high employment rates and zero inflation while 'prudent', inflation-averse, central banks generate stagflation with positive inflation and low rates of employment

On The Probability Of Existence Of Pure Equilibria In Matrix Games, S. Mishra, T. K. Kumar

Srijit Mishra

In a recent paper (Ref. 1), Papavassilopoulos obtained results on the probability of the existence of pure equilibrium solutions in stochastic matrix games. We report a similar result, but where the payoffs are drawn from a finite set of numbers N. In the limiting case, as N tends to infinity, our result and that of Papavassilopoulos are identical. We also cite similar results obtained independently by others, some of which were already independently brought to the notice of Papavassilopoulos by Li Calzi as reported in Papavassilopoulos (Ref. 2). We cite a much earlier result obtained by Goldman (Ref. 3). We …

Auction Design Enhancements For Non-Combinatorial Auctions, Peter Cramton, John Mcmillan, Paul Milgrom, Bradley Miller, Bridger Mitchell, Daniel Vincent, Robert Wilson

Peter Cramton

We evaluate a number of possible enhancements to the FCC auctions. We consider only changes to the current auction rules that stay within the basic format of the simultaneous multiple round auction for individual licenses. This report summarizes and extends our e-mail exchanges with FCC staff on this topic. A subsequent report will cover auctions with combination bids. Overall, the FCC spectrum auctions have been an enormous success. However, there are two design goals in the auction where important improvement can be achieved within the basic rules structure. These are restricting collusion among bidders and reducing the time taken to …

International Trade And Open-Access Renewable Resources: The Small Open Economy Case, M. Scott Taylor, James A. Brander

M. Scott Taylor

We examine a small open economy with an open-access renewable resource. Using a novel two-sector general equilibrium model, we characterize the autarkic steady state, and then show that trade reduces steady-state utility for a diversified resource exporter. Instantaneous gains occur as trade opens, but they are eroded by ongoing resource depletion. The present value of utility falls for appropriate discount rates, and terms of trade "improvements" may be welfare reducing. We also show that autarky prices, the pattern of trade, and the structure of production are all linked to a simple ratio of the intrinsic resource growth rate to labor …

The Learning Curve In A Competitive Industry, Eric Bennett Rasmusen, Emmanuel Petrakis, Santanu Roy

Eric Bennett Rasmusen

We consider the learning curve in an industry with free entry and exit, and price- taking firms. A unique equilibrium exists if the fixed or entry cost is positive. While equilibrium profits are zero, mature firms earn rents on their learning, and no firm can profitably enter after the date the industry begins. However, under some cost and demand conditions, firms may have to exit the market despite their experience gained earlier. Furthermore, in an equilibrium with exit, identical firms facing the same prices produce different quantities. Industry concentration need not increase in the intensity of learning. The market outcome …

Auction Design For Standard Offer Service, Peter Cramton, Andrew Parece, Robert Wilson

Peter Cramton

During the transition to a competitive electricity market, when a consumer does not select an electricity provider, who provides service to the customer and at what price? An auction for this "standard offer service" is a market-based way to assign the service responsibility and to determine its price. We explore the design issues in establishing rules for such an auction.

Electronic Money: Developments And Issues, Warren Coats

Warren Coats

What is electronic money and what issues does its use raise for users, issuers, regulators, and monetary authorities?

The Trade Induced Degradation Hypothesis, M. Scott Taylor, Brian R. Copeland

M. Scott Taylor

This paper develops a simple two-sector dynamic model to examine the effects of international trade when government policy regarding the environment is short-sighted, but still responsive to changes in income levels and in the quality of the environment. We show that free trade can usher in a negatively reinforcing cycle of increased pollution, lower environmental quality, and lower real incomes. Such cycles are not possible in autarky. We link the potential for trade to cause large environmental consequences to the structure of tastes and technologies and the attributes of industrial pollution.

Neglected Effects On The Uses Side: Even A Uniform Tax Would Change Relative Goods Prices, Don Fullerton, Diane Lim Rogers

Don Fullerton

No abstract provided.

Choosing Among Signalling Equilibria In Lobbying Games, Eric Bennett Rasmusen

Eric Bennett Rasmusen

Randolph Sloof has written a comment on the lobbying-as-signalling model in Rasmusen (1993) in which he points out an equilibrium I missed and criticizes my emphasis on a particular separating equilibrium. In this response, I discuss how to interpret multiple equilibria in games and how to interpret mixed strategy equilibria in which two types of player with identical incentives must pick different mixing probabilities.

Reply Statement On The Effect Of Nextwave’S Participation In The C-Block Auction On Antigone And Devco, Peter Cramton

Peter Cramton

For Antigone and Devco.

Statement On The Effect Of Nextwave’S Participation In The C-Block Auction On Antigone And Devco, Peter Cramton

Peter Cramton

For Antigone and Devco.

Policy Complementarities: The Case For Fundamental Labor Market Reform, Dennis Snower, David T. Coe

Dennis Snower

The paper analyzes complementarities among a variety of labor market policies. It shows that (a) a wide range of labor market institutions (.e.g unemployment benefits, job security legislation, and payroll taxes) have complementary effects on unemployment and thus (b) policies aimed at reforming these institutions are also complementary. These policy complementarities imply that partial labor market reform (directed at one institution, while leaving the other institutions in place) is unlikely to achieve significant reductions in unemployment. Rather labor market reform becomes particularly effective only once a broad range of institutional rigidities are dismantled simultaneously and the distributional objectives of the …

Environmental Levies And Distortionary Taxation: Comment, Don Fullerton

Don Fullerton

No abstract provided.

Expanding The Welfare System, Michael J. Orszag, Dennis Snower

Dennis Snower

The proposal involves the establishment of “welfare accounts” for every person in a country. There are to be four accounts: a retirement account (covering pensions), an unemployment account (covering unemployment support), a human capital account (covering education and training), and a health account (covering insurance against sickness and disability). Instead of the current welfare state systems - where welfare services are financed predominantly out of general taxes - people would make ongoing, mandatory contributions to each of these welfare accounts. The balances in these accounts would cover people’s major welfare needs. The government is to set mandatory minimum contribution rates …

Violence And Displaced Rural Women. Montería (Córdoba), Fernando Bernal Castillo

Fernando Bernal Castillo

This a study case of rural women being displaced by the violence of both the guerrillas and the paramilitary and now settled down in the slums ofof Monteria, the capital city of the department of Cordoba, Colombia

Colombia: Rural Descentralization, Performance Of The Local Governments. Its Main Determinants, Fernando Bernal Castillo, Fernando Bernal Castillo

Fernando Bernal Castillo

This paper examines the main determinants of the performance of the agricultural technical assitance offices of the municipalities of Colombia

Multinational Enterprises: The Constitution Of A Pluralistic Legal Order, Jean-Philippe Robé

Jean-Philippe Robé

No abstract provided.

Relativism, Reflective Equilibrium, And Justice, Justin Schwartz

Justin Schwartz

THIS PAPER IS THE CO-WINNER OF THE FRED BERGER PRIZE IN PHILOSOPHY OF LAW FOR THE 1999 AMERICAN PHILOSOPHICAL ASSOCIATION FOR THE BEST PUBLISHED PAPER IN THE PREVIOUS TWO YEARS.

The conflict between liberal legal theory and critical legal studies (CLS) is often framed as a matter of whether there is a theory of justice that the law should embody which all rational people could or must accept. In a divided society, the CLS critique of this view is overwhelming: there is no such justice that can command universal assent. But the liberal critique of CLS, that it degenerates into …

Equivalence And Duality Of The Sets Of Pareto-Maximal Allocations And The Sets Of Maximal Distributable Surplus Allocations, Including Externalities, Aldo Montesano

Aldo Montesano

No abstract provided.

Análise Da Experiência Antitruste Brasileira, Lucia H. Salgado

Lucia Helena Salgado

No abstract provided.

Judicial Independence In Civil Law Regimes: Econometrics From Japan, Eric Bennett Rasmusen, J. Mark Ramseyer

Eric Bennett Rasmusen

Judges in Japan cannot be fired if their decisions offend the government, but they follow a career path in which the location and type of positions they hold may be subject to political influence. We have obtained a comprehensive record of career assignments for judges educated after the Second World War. We couple data on judicial output (the quantity and nature of a judge's opinions) with these career records. We examine judges who began their careers 1961-65, focussing on the Class of 1965, for whom we have determined the number of pro- and anti- government decisions. If the promotion process …

Signal Jamming And Limit Pricing: A Unified Approach, Eric Bennett Rasmusen

Eric Bennett Rasmusen

In signal jamming, an rival uses observed profits to predict profitability, but those profits can be manipulated by a rival firm. In the present model, the size of the market is known to the incumbent, who is one of two firms that might occupy it. The potential rival observes profits, which can be manipulated by the incumbent. Depending on the monopoly premium and the prior probability that the market is large, the equilibrium may be pooling in pure or mixed strategies, or separating, which are similar to the signal- jamming and signalling equilibria of Fudenberg \& Tirole (1986) and Milgrom …

Reinventing Government: The Promise Of Comparative Institutional Choice And Government Created Corporations, Nancy J. Knauer

Nancy J. Knauer

This Article focuses on a subset of private/public partnerships - those that involve relationships between the public sector and charitable organizations, specifically "government created charitable organizations" (GCCOs). For example, the first President Bush, known as the "Education President," championed the creation of the New American Schools Development Corporation (NASDC) as the cornerstone of his education policy. Designed as an independent charitable organization, the NASDC's proposed budget relied on private corporate contributions. In this way, the federal government could assert that it would fund its new educational program without increasing the federal bureaucracy, raising taxes, or cutting other budget items. To …