nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2006‒06‒17
two papers chosen by
Walter Frisch
University Vienna

  1. Hedonic prices and multidimensional incentives By Masaki Nakabayashi
  2. The Economic Effects of Direct Democracy - A Cross-Country Assessment By Stefan Voigt; Lorenz Blume

  1. By: Masaki Nakabayashi (Graduate School of Economics, Osaka University)
    Abstract: Human tasks are often multidimensional. Holmstrom and Milgrom (1991) concluded that ghigh-poweredh incentives cannot work unless all dimensions of these tasks are observable in the firm. However, as this study shows, if the firm can observe the price vector of its products in the market, distinguish each dimension of the price vector, and connect the information with signals from workers in the firm, then the use of multidimensional ghigh-poweredh incentives becomes feasible. Product differentiation with committed quality satisfies those conditions, which has been practiced by the Japanese, but not by the Western, manufacturing for a century.
    Keywords: multidimensional incentives, multitask incentives, high-powered incentives, hedonic prices, Japanese manufacturing.
    JEL: L22 D23 N65
    Date: 2005–12
  2. By: Stefan Voigt (Department of Economics, University of Kassel); Lorenz Blume (Department of Economics, University of Kassel)
    Abstract: This is the first study that assesses the economic effects of direct democratic institutions on a cross country basis. Most of the results of the former intra-country studies could be confirmed. On the basis of some 30 countries, a higher degree of direct democracy leads to lower total government expenditure (albeit insignificantly) but also to higher central government revenue. Central government budget deficits are lower in countries using direct democratic institutions. As former intra-country studies, we also find that government effectiveness is higher under strong direct-democratic institutions and corruption lower. Both labor and total factor productivity are significantly higher in countries with direct democratic institutions. The low number of observations as well as the very general nature of the variable used to proxy for direct democracy clearly call for a more fine-grained analysis of the issues.
    JEL: H1 H3 H5 H8
    Date: 2006–05

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