nep-reg New Economics Papers
on Regulation
Issue of 2005‒07‒25
thirteen papers chosen by
Christian Calmes
Université du Québec en Outaouais, Canada

  1. Forced information disclosure and the fallacy of transparency in markets By Cason, Timothy N.; Plott, Charles R.
  2. Determinants, effects and costs of domestic violence By Rocio Ribero; Fabio Sánchez
  3. Do Countries Free Ride on MFN? By Rodney Ludema (Georgetown University)and Anna Maria Mayda (Georgetown University and CEPR)
  4. The Perverse Effects of Partial Employment Protection Reform: Experience Rating and French Older Workers By Luc Behaghel; Bruno Crépon; Béatrice Sédillot
  5. Elimination of the Foreign Property Rule on Tax Deferred Savings Plans By Joel Fried
  6. Does Inefficiency Justify Privatization? The Case of Intermediate Industry Monopolies By Gerhard Glomm; Fabio Mendez
  7. Règles de comptabilité publique, droit des marchés publics et management public :<br />Réflexions sur les dimensions économiques et juridiques du contrôle de la dépense publique By Thierry Kirat; Frédéric Marty
  8. La mise en œuvre de la réglementation : une lecture économico-juridique du secteur électrique et des marchés publics By Thierry Kirat; Frédéric Marty
  9. Les conflits d'aménagement, de l'utilité sociale à l'équité locale : le calcul économique et les dispositifs juridiques au défi de l'équité dans les nuisances des infrastructures. By Thierry Kirat; Nadine Levratto
  10. Banks without Parachutes – Competitive Effects of Government Bail-out Policies By Hendrik Hakenes; Isabel Schnabel
  11. Bank Size and Risk-Taking under Basel II By Hendrik Hakenes; Isabel Schnabel
  12. Cost Accounting in Early Regulated Markets: The Case of the Royal Soap Factory of Seville, 1525-1692 By SALVADOR CARMONA
  13. Piracy as Strategy? A Reexamination of Product Piracy By JULIO DE CASTRO

  1. By: Cason, Timothy N.; Plott, Charles R.
    Abstract: A theory advanced in regulatory hearings holds that market performance will be improved if one side of the market is forced to publicly reveal preferences. For example, wholesale electricity producers claim that retail electricity consumers would pay lower prices if wholesale public utility demand is disclosed to producers. Experimental markets studied here featured decentralized, privately negotiated contracts, typical of the wholesale electricity markets. Two conclusions emerge: (i) such markets generally converge to the competitive equilibrium and (ii) forced disclosure works to the disadvantage of the disclosing side. Information disclosure would result in higher wholesale and thus higher retail electricity prices
    Date: 2004–06
  2. By: Rocio Ribero; Fabio Sánchez
    Abstract: This paper analyzes the determinants, effects and costs of domestic violence (DV) against women and children in Colombia. The most relevant factors that explain the occurrence of DV in a household are suffering from DV as a child and living with someone that frequently and excessively consumes alcohol. DV against women increases their probability of unemployment by 6.4 percentage points, lowers their earnings by approximately 40% and worsens their health. DV against children negatively affects their health, school attendance and academic attainment. It is estimated that at least 4.2% of Colombian GDP is lost due to indirect costs of DV.
    Keywords: Domestic Violence
    JEL: J1
    Date: 2005–06–30
  3. By: Rodney Ludema (Georgetown University)and Anna Maria Mayda (Georgetown University and CEPR) (Department of Economics, Georgetown University)
    Abstract: The Most-Favored Nation (MFN) clause has long been suspected of creating a free rider problem in multilateral trade negotiations. To address this issue, we model multilateral negotiations as a mechanism design problem with voluntary participation. We show that an optimal mechanism induces only the largest exporters to participate in negotiations over any product, thus providing a rationalization for the Principal supplier rule. We also show that, through this channel, equilibrium tariffs vary according to the Herfindahl index of export shares: higher concentration in a sector reduces free riding and thus causes a lower tariff. Estimation of our model using sector-level tariff data for the U.S. provides strong support for this relationship. Classification-JEL Codes: F13, D7
    Keywords: Most-Favored Nation (MFN) clause, free riding, Principal supplier rule
  4. By: Luc Behaghel (LEA-INRA); Bruno Crépon (CREST-INSEE and IZA Bonn); Béatrice Sédillot (DARES)
    Abstract: French firms laying off workers aged 50 and above have to pay a tax to the unemployment insurance system, known as the Delalande tax. This is an original case of experience rating in the European context, restricted to older workers, whose employment prospects are particularly bad. We evaluate its impact on layoff (firing) as well as on hiring, taking advantage of several changes in the measure since its introduction in 1987. We find particularly strong evidence of an adverse effect of the tax on the firms’ propensity to hire older workers, thanks to a legislative change in 1992, when workers hired after the age of 50 stopped being liable for the tax. Chances to find a job increased significantly for unemployed workers older than 50, compared to workers just below 50 who remained liable for the tax. We estimate that before 1992, the tax reduced the probability that an unemployed worker aged 50 find a job by as much as 25%. Evidence on the effect on layoffs is less clear cut. The impact is sizeable only for the most stringent tax schedule, after 1998, but it is also imprecisely estimated.
    Keywords: experience rating, employment protection, older workers, firing, hiring
    JEL: J23 J63 J65
    Date: 2005–07
  5. By: Joel Fried (University of Western Ontario)
    Abstract: The Foreign Property Rule (FPR), limiting the holding of foreign property in pension plan assets, is scheduled to be eliminated this year. It has been rationalized on economic grounds by asserting that it improves the value of the dollar and decreases the cost of capital yet, at the time the FPR began, the government was trying to keep the dollar from rising and there were strong capital inflows. Further, evidence from the past changes in the FPR indicates it had little, if any, affect on the cost of capital and exchange rate, but cost middle income workers between one and three billion dollars per annum when set at 30%. I argue that the reason for its existence was the then common belief that governments could make better economic allocation decisions than markets. Removing the FPR provides pension plans with greater opportunity for risk adjusted returns as well as responsibilities. Relevant issues that arise include the degree of foreign currency exposure that is desirable and the degree of active management desired in foreign assets, and whether it makes sense to choose fund managers that are regionally focused rather than global. Pension boards will also have to rethink what a Canadian fund is and whether it should mimic Canadian production (as currently structured) or Canadian consumption patterns. An encouraging aspect of eliminating the FPR is the possibility that government ideology is changing to place greater emphasis on the positive benefits of using markets to allocate resources.
    Date: 2005
  6. By: Gerhard Glomm (Indiana University); Fabio Mendez (University of Arkansas)
    Abstract: We use an infinitely lived agent model in which an intermediate good is provided either by a public or a private monopolist to study the effects of privatization on steady state levels of income. We allow for public sector inefficiencies(x-inefficiency) which shift down the intermediate goods technology as well as bureaucratic inefficiencies which decrease the amount of tax revenue which will actually be allocated to public investment. We solve the model numerically for reasonable parameter values. The results of the model indicate that the benefits of this type of privatizations depend crucially on the size of the relative inefficiency of public firms and the amount of public investment. Furthermore, the gains from privatization are found to be strongly related to the balance sheet of the public firm that is privatized. Privatization of public firms which run deficits (surpluses) typically generate increases (decreases) in steady state consumption.
    Keywords: Privatization, Deregulation, Public Inefficiency, Public Monopolies
    JEL: E
    Date: 2005–07–22
  7. By: Thierry Kirat (IRISECREP - Institut de recherche interdisciplinaire en socio-économie - Centres de Recherches et d'Etudes Politiques - - CNRS : UMR7170 - Université Paris Dauphine - Paris IX); Frédéric Marty (IDEFI - Institut de droit et d'économie de la firme et de l'industrie - - CNRS : FRE2814 - Université de Nice Sophia-Antipolis)
    Abstract: Le papier traite des relations entre la comptabilité publique, le droit du contrat public et la gestion publique. Le point de départ en est le constat de la pauvre performance de la comptabilité publique de caisse dans la régulation des surcoûts et des retards dans l'exécution des marchés publics. Cet état de fait peut être expliqué par la nature particulière et la destination de l'information comptable produite par l'appareil public. Elle relève davantage d'une rationalité politique et administrative qu'économique et gestionnaire. Nous soutenons que la mise en oeuvre de nouvelles formes de contrats publics (tels les contrats de partenariat public-privé) à cadre comptable inchangé risque de conduire à une impasse. En effet, les partenariats public-privé sont susceptibles de générer de nouveaux risques si leur environnement comptable n'est pas approprié. Nous débouchons sur une réflexion sur la comptabilité patrimoniale de l'Etat et les réformes budgétaires.
    Keywords: comptabilité publique - contrat public -gestion publique
    Date: 2005–07–19
  8. By: Thierry Kirat (IRISECREP - Institut de recherche interdisciplinaire en socio-économie - Centres de Recherches et d'Etudes Politiques - - CNRS : UMR7170 - Université Paris Dauphine - Paris IX); Frédéric Marty (IDEFI - Institut de droit et d'économie de la firme et de l'industrie - - CNRS : FRE2814 - Université de Nice Sophia-Antipolis)
    Abstract: Nous nous proposons d'appliquer une grille de lecture institutionnelle, sensible aux dimensions économiques du droit, aux dispositifs juridiques relatifs au secteur électrique et aux marchés publics, en particulier de la défense. Ces domaines ont en commun d'être fortement réglementés, de mettre en jeu la présence de l'Etat dans l'activité économique et, à ce titre, d'être liés à la conduite de l'action publique. Deux dimensions seront privilégiées : d'une part, celle de l'architecture institutionnelle des systèmes de réglementation et des conditions dans lesquelles ils opèrent ; d'autre part, celle de la mise en œuvre des règles, dont nous verrons qu'elle constitue un processus plus complexe qu'une simple application de règles prescrivant des comportements. <br />Une première section sera consacrée aux logiques d'action des institutions de réglementation. La seconde abordera la question de la mise en œuvre des règles, et insistera sur l'importance des recours aux tribunaux et des interdépendances entre règles. La conclusion reviendra sur les questions méthodologiques que l'utilisation de matériaux juridiques en économie permet de poser.
    Keywords: réglementation - droit - économie - secteur électrique - marchés publics
    Date: 2005–07–20
  9. By: Thierry Kirat (IRISECREP - Institut de recherche interdisciplinaire en socio-économie - Centres de Recherches et d'Etudes Politiques - - CNRS : UMR7170 - Université Paris Dauphine - Paris IX); Nadine Levratto (IDHE-Cachan - Institutions et Dynamiques Historiques de l'Economie - - CNRS : UMR8533 - Université Panthéon-Sorbonne - Paris I;Université Paris VIII Vincennes-Saint Denis;Université de Nanterre - Paris X - Ecole Normale Supérieure de Cachan)
    Abstract: Cet article s'intéresse à la question de l'équité et à différentes formes sociales et territoriales face à l'exposition aux nuisances liées aux aménagements et ouvrages d'intérêt public. La perspective suivie met en parallèle les termes du calcul économique public mobilisé et les différents dispositifs juridiques mis en œuvre dans de tels projets. L'article montre comment l'analyse des conflits permet d'aborder la question des politiques publiques d'aménagement et des conflits afférents. On montre que la compensation des externalités non prévue dans la décision d'Etat ne peut trouver une expression que dans le « voice » et ses avatars (conflits, recours en justice…).
    Keywords: conflits d'aménagement - environnement - calcul économique - droit - équité
    Date: 2005–07–20
  10. By: Hendrik Hakenes (Max Planck Institute for Research on Collective Goods, Bonn, Germany); Isabel Schnabel (Max Planck Institute for Research on Collective Goods, Bonn, Germany)
    Abstract: The explicit or implicit protection of banks through government bail-out policies is a universal phenomenon. We analyze the competitive effects of such policies in two models with different degrees of transparency in the banking sector. Our main result is that the bail-out policy unambiguously leads to higher risk-taking at those banks that do not enjoy a bail-out guarantee. The reason is that the prospect of a bail-out induces the protected bank to expand, thereby intensifying competition in the deposit market and depressing other banks’ margins. In contrast, the effects on the protected bank’s risk-taking and on welfare depend on the transparency of the banking sector.
    Keywords: Government bail-out, banking competition, transparency, “too big to fail”, financial stability
    JEL: G21 G28 L11
    Date: 2004–11
  11. By: Hendrik Hakenes (Max Planck Institute for Research on Collective Goods, Bonn, Germany); Isabel Schnabel (Max Planck Institute for Research on Collective Goods, Bonn, Germany)
    Abstract: This paper discusses the relationship between bank size and risk-taking under Pillar I of the New Basel Capital Accord. Using a model with imperfect competition and moral hazard, we find that small banks (and hence small borrowers) may profit from the introduction of an internal ratings based (IRB) approach if this approach is applied uniformly across banks. However, the banks’ right to choose between the standardized and the IRB approaches unambiguously hurts small banks, and pushes them towards higher risk-taking due to fiercer competition. This may even lead to higher aggregate risk in the economy.
    Keywords: Basel II, IRB approach, bank competition, capital requirements, SME financing
    JEL: G21 G28 L11
    Date: 2005–03
  12. By: SALVADOR CARMONA (Instituto de Empresa)
    Abstract: (WP 16/03 Clave pdf) Regulated markets and state-owned monopolies characterized the economies of many Southern European territories around the end of the Middle Ages and during the Renaissance. Although this economic form was of considerable importance in implementing public policy at the time, investigation into the functioning of cost accounting in such contexts has been consistently neglected in accounting research. In this paper, we examine the role of cost systems in early regulated markets by focusing on the case of the soap production and distribution monopoly in the City of Seville, Spain.
    Keywords: Early cost accounting, Institutional sociology, Regulated markets
    Date: 2003–11
  13. By: JULIO DE CASTRO (Instituto de Empresa)
    Abstract: (WP 08/04 Clave pdf) To explore the impact that piracy has on demand for legal versions of a product and firm performance, we use the literatures of information economics and strategic management to expand the analysis of piracy to markets other than software. Our paper helps clarify the nature of customer demand for legal versions of products, and gain a deeper understanding of the way that piracy can enhance the performance of those firms that own the intellectual property. We contend that although piracy represents unauthorized imitation of a firm’s intellectual property, there are some circumstances when piracy can improve the value of the intellectual property.
    Date: 2004–03

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