Inequality, Coalitions and Collective Action

In a model where cooperation is beneficial, but subject to cheating, and is supported by trigger strategy punishments in a repeated game, we explore the relationship between the nature of cooperation (size and composition of coalitions) and underlying inequality in the distribution of private productive assets.

Artfilms, Handicrafts and Other Cultural Goods: The Case for Subsidy

Though widespread, the practice of public subsidies for cultural activity lacks a rigorous and consistent economic rationale. We analyze a canonical market structure that characterizes much cultural activity: the competition of mass-produced goods with heterogeneous non- standardized goods that are imperfect substitutes. We analyze several types of market failure: uncertainty about preferences (we do not know what we like, and we do not know what we might like in the future); endogeneity of preferences (we like what our neighbors talk about, and we like what we're accustomed to); and externalities associated with production (future production costs are determined by current production). The model provides a basis for cultural subsidies to promote social welfare and economic development.

Reforming India's Institutions of Public Expenditure Governance

The poor quality and effectiveness of much of government expenditure in India makes it important to analyze ways of improving effectiveness through institutional reform. Improvements in outcomes include better targeting of redistributive measures and more efficient spending on productive projects. Four potential areas of institutional reform are: (1) improved functioning of individual ministries and departments, at the central and state levels; (2) better coordination across individual ministries and between the center and states, through reform of the Planning Commission; (3) reassignment of expenditure responsibilities across levels of government (center to state and/or state to local); and (4) reassignment of tax authorities to provide improved incentives for expenditure governance through electoral accountability. The paper will discuss each of these four areas of potential institutional reforms, their likely impacts, and possibilities for implementing change

Diversity of Communities and Economic Development: An Overview

This paper reviews the literature on the impact of ethnic diversity on economic development. Ethnically polarized societies are less likely to agree on the provision of public goods and more likely to engage in rent seeking activities providing lower levels of social capital. Initial conditions are important determinants of adverse development outcomes. The role of decentralization, democracy and markets as potential remedies are discussed. The paper then presents a number of preliminary hypotheses on the relationship between diversity and instability in order to stimulate future research