Heterogeneous mark-ups, growth and endogenous misallocation

The recent work on misallocation argues that aggregate productivity in poor countries is low because various market frictions prevent marginal products from being equalized. By focusing on such allocative inefficiencies, misallocation is construed as a purely static phenomenon. This paper argues that misallocation also has dynamic consequences because it interacts with firms’ innovation and entry decisions, which determine the economy’s growth rate. To study this link between misallocation and growth, I construct a tractable endogenous growth model with heterogeneous firms, where misallocation stems from imperfectly competitive output markets. The model has an analytical solution and hence makes precise predictions about the relationship between growth, misallocation and welfare. It stresses the importance of entry. An increase in entry reduces misallocation by fostering competition. If entry also increases the economy-wide growth rate, static misallocation and growth are negatively correlated. The welfare consequences of misallocation might therefore be much larger once these dynamic considerations are taken into account. Using firm-level panel data from Indonesia, I present reduced form evidence for the importance of imperfect output market and calibrate the structural parameters. A policy, which reduces existing entry barriers, increases growth and reduces misallocation. The dynamic growth effects are more than four times as large as their static counterpart

Citizenship, democracy and social justice: A conversation with Maria Olson

Maria Olson is a researcher and lecturer in Education at Stockholm University and the University of Skövde, Sweden. Her areas of interest include democracy and citizenship in relation to education. Her major fields are educational theory and educational philosophy. Her current publications include most recently a series of papers that develop themes of citizenship, democracy and social justice, including: “Citizenship Education without Citizenship? The Migrant in EU Policy on Participatory Citizenship – Toward the Margin through ‘Strangification,’” in R. Hedke and T. Zimenkova (eds.), Education for Civic and Political Participation: A Critical Approach (pp. 155–170). London: Routledge, 2012; “Citizenship ‘in Between’: The Local and the Global Scope of European Citizenship in Swedish Educational Policy,” in S. Goncales and M. A. Carpenter (eds.), Intercultural Policies and Education (pp. 193–203). New York: Peter Lang, 2012; “The European ‘We’: From Citizenship Policy to the Role of Education,” Studies in Philosophy and Education 31(1), 77–89, 2012; “Opening Discourses of Citizenship Education: Theorizing with Foucault” (with Nicoll, K., Fejes, A., Dahlstedt, M. & Biesta, G. J. J.), Journal of Education Policy, 2013 (forthcoming); “Democracy Lessons in Market-oriented Schools: The Case of Swedish Upper Secondary Education,” Education, Citizenship and Social Justice, online first, Doi: 10.1177/17461979134836842013 (with Lundahl, Lisbeth), 2013; “What Counts as Young People’s Civic Engagement in Times of Accountability? On the Importance of Maintaining Openness about Young People’s Civic Engagement in Education,” in M. Olson (ed.), Theme: Citizenship Education under Liberal Democracy. Utbildning & Demokrati [Education & Democracy] 21(1), 29–55, 2012

Innis Lecture: Hedonic Equilibrium

This paper describes hedonic equilibrium and shows how and why the concept has to be modified when characteristics of traders on both sides of the market are endogenous.hedonic, matching, ex ante investment

Pure Strategies and No Externalities with Multiple Agents

This note considers two properties of common agency models - pure strategy equilibria with simple competition are robust and equilibria in mechanisms can be reproduced as equilibria with simple competition provided an appropriate no-externalities assumption holds. This note provides counter examples to both these theorems when there are multiple agents.

The Pre-Marital Investment Game: Addendum

The paper proves existence of equilibrium in a fairly general version of the pre-marital investment game. The game has discontinuous payoffs, so the method of Reny (1999) is used. Three assumptions are imposed on the matching process that occurs after investments are realized. It must be assortative, it must resolve ties efficiently, and it must not allow externalities.pre-marital investment, assortative matching, equilibrium in discontinuous games

Managerialism and the neoliberal university: Prospects for new forms of "open management" in higher education

The restructuring of state education systems in many OECD countries during the last two decades has involved a significant shift away from an emphasis on administration and policy to an emphasis on management. The "new managerialism" has drawn theoretically, on the one hand, on the model of corporate managerialism and private sector management styles, and, on public choice theory and new institutional economics (NIE), most notably, agency theory and transaction cost analysis, on the other. A specific constellation of these theories is sometimes called "New Public Management," which has been very influential in the United Kingdom, Australia, Canada and New Zealand. These theories and models have been used both as the legitimation for policies that redesigning state educational bureaucracies, educational institutions and even the public policy process. Most importantly, there has been a decentralization of management control away from the center to the individual institution through a "new contractualism" - often referred to as the "doctrine of self-management" - coupled with new accountability and competitive funding regimes. This shift has often been accompanied by a disaggregation of large state bureaucracies into autonomous agencies, a clarification of organizational objectives, and a separation between policy advice and policy implementation functions, together with a privatization of service and support functions through "contracting out". The "new managerialism" has also involved a shift from input controls to quantifiable output measures and performance targets, along with an emphasis on short-term performance contracts, especially for CEOs and senior managers. In the interests of so-called "productive efficiency," the provision of educational serviceshas been made contestable; and, in the interests of so-called allocative efficiency state education has been progressively marketized and privatized. In this paper I analyze the main underlying elements of this theoretical development that led to the establishment of the neoliberal university in the 1980s and 1990s before entertaining and reviewing claims that new public management is dead. At the end of the paper I focus on proposals for new forms of "the public" in higher education as a means of promoting "radical openness" consonant with the development of Web 2.0 technologies and new research infrastructures in the global knowledge economy

Competing Pre-marital Investments

Pre-marital investments by spouses are largely viewed as public goods within the marriage. So individuals may underinvest. But individuals also use their investments to compete for spouses with higher investments. In a large marriage market, the higher equilibrium match quality obtained by increasing pre-marital investment exactly internalizes the external benefit of the investment so the competitive equilibrium is effcient. This model of competing investments in local public goods is a special case of Rosen's hedonic market model. In small marriage markets, the competition for spouses will raise incentives to invest in pre-marital investments as well as making these investments less predictable.

Technical Appendix to Internet Auctions with Many Traders

Proofs of some of the theorems in Internet Auctions with Many Traders