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on Contract Theory and Applications |
| By: | Pollrich, Martin; Schmidt, Robert C. |
| Abstract: | A unilateral policy intervention by a country (such as the introduction of an emission price) can induce firms to relocate to other countries. We analyze a dynamic game where a regulator offers contracts to avert relocation of a firm in each of two periods. The firm can undertake a location-specific investment (e.g., in abatement capital). Contracts can be written on some contractible productive activity (e.g., emissions), but the firm's investment is not contractible. A moral hazard problem arises under short-term contracting that makes it impossible to implement outcomes with positive transfers in the second period. The regulator resorts to high-powered incentives in the first period. The firm then overinvests and a lock-in effect prevents relocation in both periods. Paradoxically, the distortion in the firstperiod contract can be so severe that higher transfers are needed to avert relocation compared to a (hypothetical) situation without the investment opportunity. |
| Keywords: | moral hazard; contract theory; limited commitment; firm mobility; abatement capital |
| JEL: | D82 D86 L51 Q58 |
| Date: | 2014–09–16 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:480&r=cta |
| By: | Dirk Bergemann (Cowles Foundation, Yale University); Benjamin Brooks (Dept. of Economics, Princeton University); Stephen Morris (Dept. of Economics, Princeton University) |
| Abstract: | We analyze the welfare consequences of a monopolist having additional information about consumers' tastes, beyond the prior distribution; the additional information can be used to charge different prices to different segments of the market, i.e., carry out "third degree price discrimination." We show that the segmentation and pricing induced by the additional information can achieve every combination of consumer and producer surplus such that: (i) consumer surplus is non-negative, (ii) producer surplus is at least as high as profits under the uniform monopoly price, and (iii) total surplus does not exceed the surplus generated by efficient trade. |
| Keywords: | First degree price discrimination, Second degree price discrimination, Third degree price discrimination, Private information, Privacy, Bayes correlated equilibrium, Concavification |
| JEL: | C72 D82 D83 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1896rrr&r=cta |
| By: | Ana María Becerra (Departamento de Economía, Universidad del Pacífico); Juan F. Castro (Departamento de Economía, Universidad del Pacífico); Gustavo Yamada (Departamento de Economía, Universidad del Pacífico) |
| Abstract: | A qualified and motivated pool of professors and researchers is a key input in any successful higher education endeavor (Salmi, 2009). Hiring professors with adequate qualifications is, of course, part of the answer to achieve this. However, improving the competitiveness of a university from within, and when the academic career has been historically based on age rather than on merit, is a much more difficult task. We believe a simple and transparent results-based incentive scheme can help reshape academic performance. Universidad del Pacífico, a medium size not for profit private institution specialized in economics and business fields, launched in 2007, an incentive system with these characteristics (Universidad del Pacífico, 2008). Monetary bonuses and promotions are linked to a set of results indicators, each having a particular weight which reflects university’s priorities regarding teaching skills and research accomplishments and dissemination. We describe this incentive system, briefly discuss the internal “politics” of its approval and implementation, and assess its potential effects on academic performance after 5 years of continuous operation. |
| Keywords: | Results-based, Incentive, Scheme, Improve, Performance, Professor, Researcher, Higher, Education |
| JEL: | D23 D82 D86 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:pai:wpaper:14-05&r=cta |
| By: | KARA Hakan |
| URL: | http://d.repec.org/n?u=RePEc:ekd:003307:330700077&r=cta |