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on Regulation |
| By: | Paul Makdissi (Département d'économique, Université de Sherbrooke); Quentin Wodon (AFTPM, World Bank) |
| Abstract: | Using an extension of Lucas' model of endogenous growth with education externality, we show that an environmental tax may increase growth. This is because the tax makes physical capital accumulation less attractive, thereby correcting for the underinvestment by agents in human capital. |
| Keywords: | Regulation, Environment, Growth, Human Capital |
| JEL: | O11 O13 Q28 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:shr:wpaper:02-12&r=reg |
| By: | Paul Makdissi (Département d'économique, Université de Sherbrooke); Quentin Wodon (AFTPM, World Bank) |
| Abstract: | This paper extends familiar results on the optimal pricing of publicly provided goods and price cap regulations in a stochastic dominance framework. The key advantage is that the assessment as to whether pricing or price cap reforms are poverty reducing or welfare improving is not contingent on any given social welfare function. Rather, robust assessments of the impact of reforms can be made for wide classes of ethical judgments. |
| Keywords: | Poverty, social welfare, public prices, price caps |
| JEL: | I31 I32 L43 |
| Date: | 2001 |
| URL: | http://d.repec.org/n?u=RePEc:shr:wpaper:04-04&r=reg |
| By: | Jos Jansen |
| Abstract: | A firm actively manages its rival’s beliefs by disclosing and concealing information on the size of its process innovation. The firm’s disclosure strategy results from the trade-off between two effects on product market incentives. First, the firm’s competitor learns that the firm is efficient, which discourages the competitor. Second, the competitor becomes more efficient himself, since he can expropriate part of the disclosed knowledge, which encourages him. I characterize the equilibrium disclosure strategies for any knowledge spillover in a simple Cournot duopoly model, and illustrate the results graphically. Moreover, I compare the strategic disclosure equilibria with equilibria under non-strategic disclosure. |
| Keywords: | process innovation, Cournot competition, strategic substitutes, information disclosure, knowledge spillovers |
| JEL: | D82 L23 O31 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1459&r=reg |
| By: | Ingo Vogelsang |
| Abstract: | Performance-based regulation (PBR) is influenced by the Bayesian and non-Bayesian incentive mechanisms. While Bayesian incentives are impractical, the insights from their properties can be combined with practical non-Bayesian mechanisms for application to transmission pricing. This combination suggests an approach based on the distinction between ultra-short, short and long periods. Ultra-short periods are marked by real-time pricing of point-to-point transmission services. Pricing in short periods involves fixed fees and adjustments via price-cap formulas or profit sharing. Productivity-enhancing incentives have to be tempered by long-term commitment considerations, so that profit sharing may dominate pure price caps. Investment incentives require long-term adjustments based on rate-of-return regulation with a “used and useful” criterion. |
| JEL: | L50 L90 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1474&r=reg |
| By: | Basu, Arnab K; Chau, Nancy H; Kanbur, Ravi |
| Abstract: | In many countries, the authorities turn a blind eye to minimum wage laws that they have themselves passed. But if they are not going to enforce a minimum wage, why have one? Or if a high minimum wage is not going to be enforced one hundred percent, why not have a lower one in the first place? Can economists make sense of such phenomena? This paper argues that we can, if a high official minimum wage acts as a credible signal of commitment to stronger enforcement of minimum wage laws. We demonstrate this as an equilibrium phenomenon in a model of a monopsonistic labour market in which enforcement is costly, and the government cannot pre-commit to enforcement intensity. In this setting we also demonstrate the paradoxical result that a government whose objective function gives greater weight to efficiency relative to distributional concerns may end up with an outcome that is less efficient. We conclude by suggesting that the explanations offered in this paper may apply to a broad range of phenomena where regulations are imperfectly enforced. |
| Keywords: | dynamic consistency; equity and efficiency; minimum wage; non-complience |
| JEL: | D60 E61 J38 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5107&r=reg |
| By: | Emons, Winand; Fluet, Claude |
| Abstract: | An arbiter can decide a case on the basis of his priors or he can ask for further evidence from the two parties to the conflict. The parties may misrepresent evidence in their favour at a cost. The arbiter is concerned about accuracy and low procedural costs. When both parties testify, each of them distorts the evidence less than when they testify alone. When the fixed cost of testifying is low, the arbiter hears both, for intermediate values one, and for high values no party at all. The ability to commit to an adjudication scheme makes it more likely that the arbiter requires evidence. |
| Keywords: | adversarial; costly state falsification; evidence production; inquisitorial; procedure |
| JEL: | D82 K41 K42 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5124&r=reg |
| By: | Fluck, Zsuzsanna; Mayer, Colin |
| Abstract: | This paper investigates the governance structure choices of firms when there is competition between legal systems. We study the impact of the allocation of control over choice of governance and reincorporation on firms’ technologies and technological specialization of countries in the context of a model of the firm in which there are agency conflicts between shareholders and managers. We show that the allocation of control over firms’ reincorporation decisions determines the corporate governance choice ex ante and the outcome of the competition between legal regimes ex post. When managers have control over firms’ reincorporation then competitive deregulation and ‘runs to the bottom’ ensue. When shareholders have partial or full control then there is diversity in governance structures. Runs to the bottom are not necessarily socially undesirable but they have a feedback effect on firms’ choices of technologies that may make the party in control worse off ex ante. We show that it is impossible for any country to achieve social welfare maximization of its existing and new enterprises. With competition between legal regimes, start-up and mature companies incorporate in different jurisdictions even when reincorporation is correctly anticipated. |
| Keywords: | competition between legal systems; corporate governance; freedom or reincorporation; managerial private benefits; shareholder protection; technology choice |
| JEL: | G34 K22 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5133&r=reg |
| By: | Thomas Barnebeck Andersen (Department of Economics, University of Copenhagen); John Rand (Department of Economics, University of Copenhagen) |
| Abstract: | This paper explores the empirical association between internet use, e-government and corruption in a large panel of countries covering the 1998-2003 period. We show that higher numbers of internet users and higher levels of e-government are associated with significantly lower levels of corruption. Controlling for most variables used in previous work on corruption and addressing the endogeneity issue, results are shown to be robust and to carry economic significance. This leads us to conclude that well-designed ICT policies are likely to bring substantial benefits in the fight against corruption. |
| Keywords: | corruption; ICT; internet; e-government |
| JEL: | D73 H11 O1 O57 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:0510&r=reg |
| By: | Sanjit Dhami; Ali al-Nowaihi |
| Abstract: | This paper develops a hierarchical principal-agent model to explore the influence of corruption, bribery, and politically provided oversight of production on the efficiency and level of output of some publicly provided good. Under full information, an honest politician acheives the first best while a dishonest politician creates shortages and bribes. Under asymmetric information, however, an honest politician might create more shortages relative to a dishonest one, although, the latter creates greater bribes. Furthermore, the contracted output can be greater or smaller relative to that produced by an unregulated private monopolist. The model identifies a tradeoff between bribery and allocative efficiency. This helps to reconcile some conflicting results on the implications of corruption for the size of the public sector and provides new results on the circumstances under which an improvement in the auditing technology is beneficial. Relative to the static case, in the dynamic renegotiation-proof equilibrium, shortages fall but bribes can increase or decrease, raising important issues of the choice between long-term and short-term contracts. |
| Keywords: | Corruption; Regulation; Asymmetric Information; Renegotiation-Proofness |
| JEL: | D82 D78 L51 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:05/16&r=reg |
| By: | Marco Battaglini; Stephen Coate |
| Abstract: | This paper develops an infinite horizon model of public spending and taxation in which policy decisions are determined by legislative bargaining. The policy space incorporates both productive and distributive public spending and distortionary taxation. The productive spending is investing in a public good that benefits all citizens (e.g., national defense or air quality) and the distributive spending is district-specific transfers (e.g., pork barrel spending). Investment in the public good creates a dynamic linkage across policy-making periods. The analysis explores the dynamics of legislative policy choices, focusing on the efficiency of the steady state level of taxation and allocation of tax revenues. The model sheds new light on the efficiency of legislative policy-making and has a number of novel positive implications. |
| JEL: | D7 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11495&r=reg |
| By: | Thorsten Beck; Asli Demirgüç-Kunt; Ross Levine |
| Abstract: | Which commercial bank supervisory policies ease or intensify the degree to which bank corruption is an obstacle to firms raising external finance? Based on new data from more than 2,500 firms across 37 countries, this paper provides the first empirical assessment of the impact of different bank supervisory policies on firms’ financing obstacles. We find that the traditional approach to bank supervision, which involves empowering official supervisory agencies to directly monitor, discipline, and influence banks, does not improve the integrity of bank lending. Rather, we find that a supervisory strategy that focuses on empowering private monitoring of banks by forcing banks to disclose accurate information to the private sector tends to lower the degree to which corruption of bank officials is an obstacle to firms raising external finance. In extensions, we find that regulations that empower private monitoring exert a particularly beneficial effect on the integrity of bank lending in countries with sound legal institutions. |
| JEL: | G3 G28 L51 O16 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11498&r=reg |
| By: | Ross Levine |
| Abstract: | While scholars have hypothesized about the sources of variation in property rights for over 2500 years, it is only very recently that researchers have begun to test these theories empirically. This paper reviews both the theory and empirical evidence supporting and refuting the law and endowment views of property rights. The law view holds that historically determined differences in national legal traditions continue to shape cross-country differences in property rights. The endowment view argues that during European colonization, differences in climate, crops, the indigenous population, and the disease environment influenced long-run property rights. |
| JEL: | N01 K4 O00 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11502&r=reg |
| By: | Lee Branstetter; Raymond Fisman; C. Fritz Foley |
| Abstract: | This paper examines how technology transfer within U.S. multinational firms changes in response to a series of IPR reforms undertaken by 16 countries over the 1982-1999 period. Analysis of detailed firm-level data reveals that royalty payments for technology transferred to affiliates increase at the time of reforms, as do affiliate R&D expenditures and total levels of foreign patent applications. Increases in royalty payments and R&D expenditures are concentrated among affiliates of parent companies that use U.S. patents extensively prior to reform and are therefore expected to value IPR reform most. For this set of affiliates, increases in royalty payments exceed 30 percent. Our results collectively imply that U.S. multinationals respond to changes in IPR regimes abroad by significantly increasing technology transfer to reforming countries. |
| JEL: | O34 O33 F23 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11516&r=reg |
| By: | Anna Aizer; Sara McLanahan |
| Abstract: | Increasing the probability of paying child support, in addition to increasing resources available for investment in children, may also alter the incentives faced by men to have children out of wedlock. We find that strengthening child support enforcement leads men to have fewer out-of-wedlock births and among those who do become fathers, to do so with more educated women and those with a higher propensity to invest in children. Thus, policies that compel men to pay child support may affect child outcomes through two pathways: an increase in financial resources and a birth selection process. |
| JEL: | J12 J13 I38 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11522&r=reg |
| By: | Ilya Segal; Michael Whinston |
| Abstract: | We study the effects of antitrust policy in industries with continual innovation. A more protective antitrust policy may have conflicting effects on innovation incentives, raising the profits of new entrants, but lowering those of continuing incumbents. We show that the direction of the net effect can be determined by analyzing shifts in innovation benefit and supply holding the innovation rate fixed. We apply this framework to analyze several specific antitrust policies. We show that in some cases, holding the innovation rate fixed, as suggested by our comparative statics results, the tension does not arise and a more protective policy necessarily raises the rate of innovation. |
| JEL: | L40 O31 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11525&r=reg |
| By: | Yooki Park; Suzanne Scotchmer |
| Abstract: | As it becomes cheaper to copy and share digital content, vendors are turning to technical protections such as encryption. We argue that if protection is nevertheless imperfect, this transition will generally lower the prices of content relative to perfect legal enforcement. However, the effect on prices depends on whether the content providers use independent protection standards or a shared one, and if shared, on the governance of the system. Even if a shared system permits content providers to set their prices independently, the equilibrium prices will depend on how the vendors share the costs. We show that demand-based cost sharing generally leads to higher prices than revenue-based cost sharing. Users, vendors and the antitrust authorities will typically have different views on what capabilities the DRM system should have. We argue that, when a DRM system is implemented as an industry standard, there is a potential for "collusion through technology." |
| JEL: | L13 L14 L15 K21 O33 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11532&r=reg |
| By: | Sandra Eden |
| Abstract: | This article considers the supervisory jurisdiction of the UK courts through an examination of their control of the UK tax authorities. It concentrates on the conditions under which the tax authorities have been authorized by the UK courts to enter extra statutory arrangements to afford some taxpayers concessional treatment. The article considers the basis of judicial review and then examines the legislative framework within which the Revenue operates. With this background the article considers the principles of judicial review in tax cases. Starting with the general principles, it then examines the argument that the Revenue makes extra statutory concessions on the basis of its powers of care and management and it considers the limitations of that argument. The cases dealing with legitimate expectation are examined too, as are the limits on the legitimate expectation principle. Finally, the article considers “the slippery principle of equality” within the UK constitution and the equally frustrating (for third parties) problem of establishing locus standi. The article concludes that there are significant tensions between competing interests when the Courts review the Revenue’s granting of extra statutory concessions. They seem to have afforded the taxing authorities considerable autonomy in their fulfilment of their management function, but they have limited them to the exercise of discretion only in the course of their care and management of the tax system and in the context of their primary duty to collect tax. The author concludes that the courts have done well in balancing the interests of the tax authorities and taxpayer but that wider interests, such as equality between taxpayers, have not fared as well. |
| Keywords: | Judicial power, tax, Judicial review, courts, tax authorities, Revenue |
| Date: | 2005–06–29 |
| URL: | http://d.repec.org/n?u=RePEc:nsw:discus:311&r=reg |
| By: | OECD |
| Abstract: | <P>The obligation to provide “fair and equitable treatment” is often stated, together with other standards, as part of the protection due to foreign direct investment by host countries. It is an “absolute”, “non-contingent” standard of treatment, i.e. a standard that states the treatment to be accorded in terms whose exact meaning has to be determined, by reference to specific circumstances of application, as opposed to the “relative” standards embodied in “national treatment” and “most favoured nation” principles which define the required treatment by reference to the treatment accorded to other investment1. Although some references to the standard can be found in the first negotiating attempts of multilateral trade and investment instruments, it became established as a principle mainly through the increasing network of bilateral investment treaties.</P><P>The obligation of the parties to investment agreements to provide to each other’s investments “fair and equitable treatment” ...</P> |
| Date: | 2004–09 |
| URL: | http://d.repec.org/n?u=RePEc:oec:dafaaa:3-en&r=reg |
| By: | OECD |
| Abstract: | <P>It is a well recognised rule in international law that the property of aliens cannot be taken, whether for public purposes or not, without adequate compensation. Two decades ago, the disputes before the courts and the discussions in academic literature focused mainly on the standard of compensation and measuring of expropriated value. The divergent views of the developed and developing countries raised issues regarding the formation and evolution of customary law. Today, the more positive attitude of countries around the world toward foreign investment and the proliferation of bilateral treaties and other investment agreements requiring prompt, adequate and effective compensation for expropriation of foreign investments have largely deprived that debate of practical significance for foreign investors.</P><P> Disputes on direct expropriation – mainly related to nationalisation that marked the 70s and 80s -- have been replaced by disputes related to foreign investment regulation ...</P> |
| Date: | 2004–09 |
| URL: | http://d.repec.org/n?u=RePEc:oec:dafaaa:4-en&r=reg |
| By: | Paul Conway; Véronique Janod; Giuseppe Nicoletti |
| Abstract: | <P>This paper describes trends in product market regulation in OECD countries over the period 1998 to 2003. The analysis is based on summary indicators of product market regulation that measure the degree to which policies promote or inhibit competition. The results suggest that regulatory impediments to competition have declined in all OECD countries in recent years. Regulation has also become more homogenous across the OECD as countries with relatively restrictive policies have, in some areas, moved towards the regulatory environment of the more liberalized countries. Within some countries product market policies have become more consistent across different regulatory provisions, although relatively restrictive countries still tend to have a more heterogeneous approach to competition. In general, domestic barriers to competition tend to be higher in countries that have higher barriers to foreign trade and investment, and high levels of state control and barriers to competition ...</P> <P>Ce document décrit les évolutions de la réglementation encadrant les marchés de produits dans les pays de l'OCDE sur la période 1998-2003. L'analyse est basée sur des indicateurs synthétiques de la réglementation des marchés de produits qui mesurent l’intensité avec laquelle les politiques favorisent ou restreignent la concurrence. Les résultats suggèrent que les entraves à la concurrence résultant de la réglementation ont décliné dans tous pays de l’OCDE ces dernières années. La réglementation est aussi devenue plus homogène à travers l'OCDE, les pays disposant de politiques relativement restrictives, s’étant ralliés, dans certains domaines, à l’environnement réglementaire des pays plus libéraux. Dans certains pays, les politiques concernant les marchés de produits sont devenues plus cohérentes au regard des différents dispositifs réglementaires, même si les pays relativement restrictifs ont toujours tendance à disposer d’une approche plus disparate de la concurrence. De façon ...</P> |
| Keywords: | product market regulation, Indicators, Indicateurs, Réglementation des marchés de produits |
| JEL: | K2 L5 |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:419-en&r=reg |
| By: | Nicola Brandt |
| Abstract: | <P>Building on an earlier study of patterns on firm entry, exit growth and survival based on new data from Eurostat covering nine European Union member countries (Brandt, 2004), this paper takes a closer look at the role of policies and institutions for firm entry and survival and at the link between new firm creation and economic performance. The earlier study revealed that firm entry rates, <I>i.e.</I> the number of new firms in a market in relation to all active enterprises, were particularly high in Information and Communication (ICT) related industries in recent years. This lends some support to the idea present in some theories of economic growth that new firms are important for the development and implementation of new technologies. This paper takes a closer look at the relationship between firm entry and economic performance. Results reveals that high rates of firm entry tend to coincide with rapid productivity, output and employment growth, especially in the ICT related services ...</P> <P>Dynamique de l’entreprise, réglementation et performance <P>S'appuyant sur une étude antérieure concernant les profils d'entrée, de sortie, de croissance et de survie des entreprises, elle-même fondée sur de nouvelles données d'Eurostat portant sur neuf pays membres de l'Union européenne (Brandt, 2004), le présent rapport examine de plus près le rôle des politiques et des institutions dans l'entrée sur le marché et la survie des entreprises, ainsi que le lien entre la création de nouvelles entreprises et les performances économiques. L'étude initiale révélait que les taux d'entrée des entreprises, c'est-à-dire le nombre de nouvelles entreprises en proportion de l'ensemble des entreprises en activité sur un marché, avaient été particulièrement élevés dans les branches d'activité liées à l'information et aux communications (TIC) ces dernières années. Cela tend à confirmer l'idée avancée dans certaines études théoriques sur la croissance économique selon laquelle les nouvelles entreprises jouent un rôle important dans le développement et la ...</P> |
| Date: | 2004–03–17 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaaa:2004/3-en&r=reg |
| By: | Celik, Gorkem; Sayan, Serdar |
| Abstract: | In this paper, we develop a model of law enforcement with the possibility of corruption between the enforcer and the potential offender. We study how the violation rate changes with the level of the fine imposed on violations. We show that there is always equilibrium violation regardless of the fine level. Moreover, we find, in contrast to the conventional wisdom, that the fine level that minimizes violations can be intermediate rather than large. |
| JEL: | K42 D73 D78 D82 |
| Date: | 2005–08–03 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:pmicro:celik-05-08-03-12-50-26&r=reg |
| By: | Douglas Hibbs (Göteborg University); Violeta Piculescu (Göteborg University) |
| Abstract: | In this paper we propose a model of how institutional benefits, taxation and government regulations affect the productive activity of private enterprises. We consider an environment in which public officials enforcing tax and regulatory obligations are potentially corruptible, and markets for corruption may therefore arise that give firms the option of producing unofficially and evading taxes and regulations. By contrast to some previous studies that view corruption and bribery as forces driving firms out of official production into the underground economy, our model features the idea that the `grabbing hands' of corrupt bureaucrats may alternatively serve as `helping hands' allowing firms to exploit profitable opportunities in the unofficial sector. And contrary to a traditional view maintaining that high tax rates are intrinsically a major cause of large shadow economies, our model implies that incentives to evade taxation and produce underground depend on statutory tax rates relative to firm-specific thresholds of tax toleration. Tax toleration is determined, among other things, by firm-specific institutional benefits available to official producers and the costs of corruption required to produce unofficially. Some core predictions of the model concerning the determinants of tax toleration and the relative size of unofficial activity and tax evasion receive broad support from empirical analyses based on firm-level data from the World Business Environment Surveys sponsored by the World Bank. |
| Keywords: | institutions corruption tax evasion unofficial economy underground economy |
| JEL: | D21 H26 K42 O17 |
| Date: | 2005–08–05 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwppe:0508003&r=reg |
| By: | Jean-Robert Tyran; Lars P. Feld |
| Abstract: | Law backed by non-deterrent sanctions (mild law) has been hypothesized to achieve compliance because of norm activation. We experimentally investigate the effects of mild law in the provision of public goods by comparing it to severe law (deterrent sanctions) and no law. The results show that exogenously imposing mild law does not achieve compliance, but compliance is much improved if mild law is endogenously chosen, i.e. self-imposed. We show that voting for mild law induces expectations of cooperation, and that people tend to comply with the law if they expect many others to do so. |
| Keywords: | Deterrent effect of legal sanctions; Expressive law; Social norms; Public goods; Voting |
| JEL: | C92 D72 K42 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2005-17&r=reg |
| By: | Michele Cincera (DULBEA, Université libre de Bruxelles, Brussels, and CEPR) |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:dul:wpaper:05-11rr&r=reg |