nep-reg New Economics Papers
on Regulation
Issue of 2006‒12‒22
ten papers chosen by
Christian Calmes
Universite du Quebec en Outaouais, Canada

  1. Product Market Regulation in the Non-Manufacturing Sectors of OECD Countries: Measurement and Highlights By Paul Conway; Giuseppe Nicoletti
  2. International Financial Integration and Entrepreneurship By Laura Alfaro; Andrew Charlton
  3. Emergence and Persistence of Inefficient States By Daron Acemoglu; Davide Ticchi; Andrea Vindigni
  4. Job Creation and Job Destruction in the Presence of Informal Labour Markets By Mariano Bosch
  5. Owners of Developed Land versus Owners of Undeveloped Land: Why Land Use is More Constrained in the Bay Area than in Pittsburgh By Christian Hilber; Frédéric Robert-Nicoud
  6. Asymmetric Equilibria and Non-cooperative Access Pricing in Telecommunications By Stefan Behringer
  7. Institutionalized Incentives for Ingenuity Patent Value and the German Employees Inventions Act By Harhoff, Dietmar; Hoisl, Karin
  8. Top Ten Myths Of Social Security Reform By Jeffrey Brown; Kevin Hassett; Kent Smetters
  9. Growth and Intellectual Property By Michele Boldrin; David K. Levine
  10. Is Drug Coverage a Free Lunch? Cross-Price Elasticities and the Design of Prescription Drug Benefits By Martin Gaynor; Jian Li; William B. Vogt

  1. By: Paul Conway; Giuseppe Nicoletti
    Abstract: Product market regulation in the non-manufacturing sectors of OECD countries: measurement and highlights This paper describes a new set of indicators that measure differences in the regulation of non-manufacturing sectors of OECD countries over the past three decades. The indicators focus on regulations that affect competitive pressures in areas where competition is economically viable and on the potential costs that these regulations entail for economic activities that use the output of regulated sectors as intermediate inputs in production. The paper illustrates the methodology used to compute the indicators and the patterns of product market regulation and regulatory reform that emerge from the analysis. The robustness of results is assessed in three ways: comparing the indicators to other available data covering the same areas; computing confidence intervals around the indicator values; and listing econometric results obtained by linking the indicators to measures of competition and economic performance. <P>Régulation des services dans les pays de l’OCDE : évaluation et traits saillants <BR>Régulation des services dans les pays de l’OCDE : évaluation et traits saillants Ce document décrit un nouvel ensemble d'indicateurs qui mesurent les différences dans la régulation des secteurs non-manufacturiels des pays de l'OCDE au cours de trois dernières décennies. Les indicateurs se concentrent sur les régulations qui influencent la pression concurrentielle dans les domaines d'activité économique où la concurrence est possible, ainsi que sur les coûts potentiels que ces régulations impliquent pour les activités économiques qui utilisent les produits des secteurs régulés comme biens intermédiaires. Le document illustre la méthodologie utilisée pour calculer les indicateurs ainsi que les profils de régulation et de réforme des marchés des biens qui émergent de l'analyse. La robustesse des résultats est vérifiée de trois façons: on compare les indicateurs à d'autres sources d'information concernant les même domaines d'analyse; on calcule des intervalles de confiance centrés sur les valeurs estimées des indicateurs; et on mentionne les résultats conometriques qui ont été obtenus par les nombreuses études qui ont exploité ces indicateurs pour examiner la relation entre l'intensité de la concurrence et la performance économique.
    Keywords: competition, services, services, regulation, concurrence, régulation, indicators, indicateurs
    JEL: L50 L91 L92 L93 L94 L95 L96 L98
    Date: 2006–12–07
  2. By: Laura Alfaro; Andrew Charlton
    Abstract: We explore the relation between international financial integration and the level ofentrepreneurial activity in a country. Using a unique data set of approximately 24 million firmsin nearly 100 countries in 1999 and 2004, we find suggestive evidence that internationalfinancial integration has been associated with higher levels of entrepreneurial activity. Ourresults are robust to using various proxies for entrepreneurial activity such as entry, size, andskewness of the firm-size distribution; controlling for level of economic development,regulation, institutional constraints, and other variables that might affect the businessenvironment; and using different empirical specifications. We further explore various channelsthrough which international financial integration can affect entrepreneurship (a foreign directinvestment channel and a capital/credit availability channel) and provide consistent evidence tosupport our results.
    Keywords: international financial integration, capital mobility, entrepreneurship, firm entry,capital controls, foreign direct investment
    JEL: F21 F23 F35 G15 G18 O19
    Date: 2006–10
  3. By: Daron Acemoglu; Davide Ticchi; Andrea Vindigni
    Abstract: Inefficiencies in the bureaucratic organization of the state are often viewed as important factors in retarding economic development. Why certain societies choose or end up with such inefficient organizations has received very little attention, however. In this paper, we present a simple theory of the emergence and persistence of inefficient states. The society consists of rich and poor individuals. The rich are initially in power, but expect to transition to democracy, which will choose redistributive policies. Taxation requires the employment of bureaucrats. We show that, under certain circumstances, by choosing an inefficient state structure, the rich may be able to use patronage and capture democratic politics. This enables them to reduce the amount of redistribution and public good provision in democracy. Moreover, the inefficient state creates its own constituency and tends to persist over time. Intuitively, an inefficient state structure creates more rents for bureaucrats than would an efficient state structure. When the poor come to power in democracy, they will reform the structure of the state to make it more efficient so that higher taxes can be collected at lower cost and with lower rents for bureaucrats. Anticipating this, when the society starts out with an inefficient organization of the state, bureaucrats support the rich, who set lower taxes but also provide rents to bureaucrats. We show that in order to generate enough political support, the coalition of the rich and bureaucrats may not only choose an inefficient organization of the state, but they may further expand the size of bureaucracy so as to gain additional votes. The model shows that an equilibrium with an inefficient state is more likely to arise when there is greater inequality between the rich and the poor, when bureaucratic rents take intermediate values and when individuals are sufficiently forward-looking.
    JEL: H11 H26 H41 P16
    Date: 2006–12
  4. By: Mariano Bosch
    Abstract: Recessions and policy interventions in labour markets in developing countries arecharacterized not only by changes in the unemployment rate, but also by changes in theproportion of formal or protected jobs. This reallocation between formal and informal jobs islarge and occurs mainly because the job finding rate of formal jobs reacts substantially morethan the job finding rate of informal jobs. This paper presents a search and matching model tocapture this fact. I assume that firms operate the within firm margin of formality, choosing tolegalize only those matches that are good enough to compensate the costs of formality. In thisframework, recessions or stricter regulations in the labour market trigger two effects. Asexpected, they lower the incentives to post vacancies (meeting effect), but also affect thefirms' hiring standards, favouring informal contracts (offer effect). This new channel shedslight on how the actions of policy makers alter the outcomes in an economy with informaljobs. For instance, attempts to protect employment by increasing .ring costs will reallocateworkers to informal jobs, where job separation is high. They are also likely to increaseunemployment.
    Keywords: Informal economy, search models, labour markets, regulations.
    JEL: J64 H26 O17
    Date: 2006–11
  5. By: Christian Hilber; Frédéric Robert-Nicoud
    Abstract: We model residential land use constraints as the outcome of a political economy game between owners of developed and owners of undeveloped land. Land use constraints are interpreted as shadow taxes that increase the land rent of already developed plots and reduce the amount of new housing developments. In general equilibrium, locations with nicer amenities are more developed and, as a consequence, more regulated. We test our model predictions by geographically matching amenity, land use, and historical Census data to metropolitan area level survey data on regulatory restrictiveness. Following the predictions of the model, we use amenities as instrumental variables and demonstrate that metropolitan areas with better amenities are more developed and more tightly regulated than other areas. Consistent with theory, metropolitan areas that are more regulated also grow more slowly.
    Keywords: Land use regulations, zoning, land ownership, housing supply
    JEL: H7 Q15 R52
    Date: 2006–11
  6. By: Stefan Behringer (Economics Department, Frankfurt University)
    Abstract: This paper looks at competition in the Telecommunications industry with non-linear tariffs and network based price discrimination where one of the networks has a relative advantage. We investigate profit-maximizing network pricing behaviour, in particular competitively chosen, non-cooperative access prices at potentially asymmetric market equilibria.
    Keywords: Telecommunications, asymmetric access pricing
    JEL: L96 L51
    Date: 2006–12
  7. By: Harhoff, Dietmar; Hoisl, Karin
    Abstract: Germany is one of few countries in which the monetary compensation for inventors is not only determined by negotiations between employer and employee-inventor, but also by relatively precise legal provisions. In this paper, we describe the characteristics of the German Employees Inventions Act (GEIA) and discuss which incentives it creates. We rely on responses from a recent survey of 3,350 German inventors to test hypotheses regarding this institution. We conclude from our data that the law creates substantial monetary rewards for productive inventors. The qualitative responses from our survey confirm this view, but also point to a number of dysfunctional effects.
    Keywords: Employee-Inventor; Inventor Compensation; Patent Value; Productivity
    JEL: O34 O32 J M54
    Date: 2006
  8. By: Jeffrey Brown; Kevin Hassett; Kent Smetters
    Abstract: This paper critically examines ten leading myths that have gained currency in the debate about reforming the U.S. Social Security system, including myths that have been propagated by both proponents and opponents of including personal accounts as part of any reform package.
    Keywords: social security, pensions, reform packages
    Date: 2006–06–21
  9. By: Michele Boldrin; David K. Levine
    Abstract: Intellectual property (IP) protection involves a trade-off between the undesirability of monopoly and the desirable encouragement of creation and innovation. Optimal policy depends on the quantitative strength of these two forces. We give a quantitative assessment of current IP policies. We focus particularly on the scale of the market, showing that as it increases, due either to growth or to the expansion of trade, IP protection should be reduced.
    JEL: A0 A1 A10 D0 D00 D02
    Date: 2006–12
  10. By: Martin Gaynor; Jian Li; William B. Vogt
    Abstract: Recently, many US employers have adopted less generous prescription drug benefits. In addition, the U.S. began to offer prescription drug insurance to approximately 42 million Medicare beneficiaries in 2006. We use data on individual health insurance claims and benefit data from 1997-2003 to study the effects of changing consumers' co-payments for prescription drugs on the quantity demanded and expenditure on prescription drugs, inpatient care and outpatient care. We allow for effects both in the year of the co-payment change and in the year following the change. Our results show that increases in prescription drug prices reduce both the use of and spending on prescription drugs. However, consumers substitute the use of outpatient care and inpatient care for prescription drug use, and the expenditure reductions on prescription drugs are largely offset by the increases in other spending.
    JEL: D12 I10 M50
    Date: 2006–12

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