Allocation in Practice

How do we allocate scarcere sources? How do we fairly allocate costs? These are two pressing challenges facing society today. I discuss two recent projects at NICTA concerning resource and cost allocation. In the first, we have been working with FoodBank Local, a social startup working in collaboration with food bank charities around the world to optimise the logistics of collecting and distributing donated food. Before we can distribute this food, we must decide how to allocate it to different charities and food kitchens. This gives rise to a fair division problem with several new dimensions, rarely considered in the literature. In the second, we have been looking at cost allocation within the distribution network of a large multinational company. This also has several new dimensions rarely considered in the literature.Comment: To appear in Proc. of 37th edition of the German Conference on Artificial Intelligence (KI 2014), Springer LNC

Access, Veto and Ownership in the Theory of the Firm

Ownership may not always be the best driver for investment incentives in an incomplete contract context. This paper shows that ownership has two facets (access and veto) which can be used specifically, and sometimes independently, to foster investment. Access is more efficient than ownership when assets are complements at the margin, and veto is sometimes more efficient when assets are substitutes at the margin. In particular, outside veto is more efficient than ownership because it reduces the incentive to invest on substitute assets. And joint veto is more efficient than ownership because it protects the incentives of highly productive agents while preventing them to merge the asset with substitute assets. We discuss several implications, in particular the existence of shareholders and non-owner workers, the optimality of outside ownership, joint ownership and partnerships, hybrid governance structures, employments contracts and capital structure (debt vs equity).Theory of the firm; Property rights; Bargaining; Ownership; Access; Ve to

Environmental Determinants of Cost Sharing--An Application to Irrigation

Multiple-cost sharing rules often coexist in seemingly identical environments. We use shared irrigation costs as a context for examining the extent to which the structural environment explains the selection of a cost sharing rule. We find that environmental factors that-induce greater dependence on the cooperation of others, influence majority interests, create difficulties for interpersonal utility comparisons, or impact notions of faimess -all have impressive explanatory power. These results present the first formal empirical analysis of the manner in which structural features influence the actual cost-sharing choices of economic agents

The global distribution of economic activity: nature, history, and the role of trade

We explore the role of natural characteristics in determining the worldwide spatial distribution of economic activity, as proxied by lights at night, observed across 240,000 grid cells. A parsimonious set of 24 physical geography attributes explains 47% of worldwide variation and 35% of within-country variation in lights. We divide geographic characteristics into two groups, those primarily important for agriculture and those primarily important for trade, and confront a puzzle. In examining within-country variation in lights, among countries that developed early, agricultural variables incrementally explain over 6 times as much variation in lights as do trade variables, while among late developing countries the ratio is only about 1.5, even though the latter group is far more dependent on agriculture. Correspondingly, the marginal effects of agricultural variables as a group on lights are larger in absolute value, and those for trade smaller, for early developers than for late developers. We show that this apparent puzzle is explained by persistence and the differential timing of technological shocks in the two sets of countries. For early developers, structural transformation due to rising agricultural productivity began when transport costs were still high, so cities were localized in agricultural regions. When transport costs fell, these agglomerations persisted. In late-developing countries, transport costs fell before structural transformation. To exploit urban scale economies, manufacturing agglomerated in relatively few, often coastal, locations. Consistent with this explanation, countries that developed earlier are more spatially equal in their distribution of education and economic activity than late developers

Economic and Socio-Psychological Analyses of Social Housing Policies in the U.K.

Whilst access to housing is a fundamental part of the United Nation’s Universal Declaration of Human Rights, it remains an unfulfilled objective in the U.K. On the contrary, the U.K. housing crisis has continued to worsen, with housing affordability deteriorating significantly since the 1980s due to the increased financialisation of housing. The crisis is particularly reflected in the social housing sector, where contemporary discussions on potential drivers have focused on structural ‘supply’ and other issues that can be easily materialised or quantified. However, issues beyond supply have often been overlooked in quantitative housing studies. Therefore, I aim to bridge the research gap by discussing social housing issues beyond ‘bricks and mortar’. This paper contributes to two further research gaps. First, there remains limited attempts in bringing Bourdieusian social theories into social housing studies and policy making. Second, incorporating computational modelling into social housing studies remains an under-explored area. The analysis is predominantly based on a case study of London, utilising Zoopla rental listings and granular neighbourhood data. The main research methods involve a range of econometric techniques including hedonic modelling, spatial analysis and panel data regression. Furthermore, I apply computational simulation methods including agent-based modelling and Monte-Carlo simulations. The findings draw the following key insights. First, residents and relocators make housing choices to maximise both material and objective benefits, as well as immaterial and subjective benefits. Second, distinct habitus exists between family and non-family households, between different socio-economic statuses, and between suburban and Central London locations. In addition, migrants carry their habitus into their newly migrated country, which may be conveyed in their benefit claiming behaviour. The research findings suggest that a multi-agency partnership is required to establish a sustainable social housing policy framework. Moreover, there is a need to critically reassess the fundamental philosophy of the current social housing policies

Scale, Technique and Composition Effects in Manufacturing SO2 Emissions

Combining two data sources on emissions with value-added and employment data, this paper constructs six data bases on sulfur dioxide (SO2) intensities that vary across countries, sectors and years. This allows us to perform a growth decomposition exercise where the change in world manufacturing emissions is decomposed into scale, composition and technique effects. The sample covers the period 1990-2000, and includes 62 countries that account for 76% of world-wide emissions. While manufacturing activity has increased by a rough 10% (scale effect), we estimate that emissions have fallen by about 10%, thanks to the adoption of cleaner production techniques (the technique effect) and a small shift towards cleaner industries (between-sector effect). As output and productivity gains have been biased towards large emerging countries like China and India, which are both clean in terms of emissions per unit labor and dirty in terms of emissions per dollar, the sign and magnitude of the between-country effect depends on the choice regarding the scaling factor (−2% for employment, +25% for value-added, with a corresponding adjustment of the technique effect). The paper also shows that these estimates are robust to changes in aggregation across entities (regions or countries) and across industries, and that composition changes are correlated with changes in prices and trade intensitie

Grossman-Hart (1986) Goes Global: Incomplete Contracts, Property Rights, and the International Organization of Production

I survey the influence of Grossman and Hart's (1986) seminal paper in the field of International Trade. I discuss the implementation of the theory in open-economy environments and its implications for the international organization of production and the structure of international trade flows. I also review empirical work suggestive of the empirical relevance of the property-rights theory. Along the way, I develop novel theoretical results and also outline some of the key limitations of existing contributions.