Informational Smallness and the Scope for Limiting Information Rents

For an incomplete-information model of public-good provision with interim participation constraints, we show that e¢ cient outcomes can be approximated, with approximately full surplus extraction, when there are many agents and each agent is informationally small. The result holds even if agents' payoffs cannot be unambiguously inferred from their beliefs, i.e., even if the so-called BDP property ("Beliefs Determine Preferences") of Neeman (2004) does not hold. The contrary result of Neeman (2004) rests on an implicit uniformity requirement that is incompatible with the notion that agents are informationally small because there are many other agents who have information about them.surplus extraction, mechanism design, BDP, informational smallness, correlated information

Beyond the Need to Boast: Cost Concealment Incentives and Exit in Cournot Duopoly

This paper studies the incentives for production cost disclosure in an asymmetric Cournot duopoly. Whereas the efficient firm (consumers) prefers information sharing (concealment) when the firms choose accommodating strategies in the product market, the firm (consumers) may prefer information concealment (sharing) when it can exclude its competitor from the market. Hence, the rankings of expected profit and consumer surplus can be reversed if exit of the inefficient firm is possible. Although the efficient firm has stronger incentives to share information when it shares strategically, there remain cases in which the firm conceals information in equilibrium to induce exit.cost asymmetry, Cournot duopoly, exit, information disclosure, precommitment

A Critique of Computable General Equilibrium Models for Trade Policy Analysis

The paper will deal in turn with three sets of modelling issues: the question of 'data'; the 'micro' problem of specifying market behaviour, and the. 'macro' issue of 'closing' the models in aggregate. I will conclude with some suggestions for future research. The basic theme of the paper is this: CGE modelling is essentially a conservative or 'neoclassical' scientific endeavour, and exhibits the strengths and weaknesses of neoclassicism. And as for the recent injection of apparently nonneoclassical imperfect competition or industrial organization (IO) concepts into CGE, though, as an 10 specialist myself I certainly welcome this in principle, I have doubts about the usefulness of the practice.International Relations/Trade,

The basic analytics of access to financial services

Access to financial services, or rather the lack thereof, is often indiscriminately decried as a problem in many developing countries. The authors argue that the"problem of access"should rather be analyzed by identifying different demand and supply constraints. They use the concept of an access possibilities frontier, drawn for a given set of state variables, to distinguish between cases where a financial system settles below the constrained optimum, cases where this constrained optimum is too low, and-in credit services-cases where the observed outcome is excessively high. They distinguish between payment and savings services and fixed intermediation costs, on the one hand, and lending services and different sources of credit risk, on the other hand. The authors include both supply and demand side frictions that can lead to lower access. The analysis helps identify bankable and banked population, the binding constraint to close the gap between the two, and policies to prudently expand the bankable population. This new conceptual framework can inform the debate on adequate policies to expand access to financial services and can serve as the basis for an informed measurement of access.Banks&Banking Reform,Economic Theory&Research,Markets and Market Access,Access to Markets,Financial Intermediation

The Relationship Between Intellectual Property Law and Competition Law: An Economic Approach

This paper presents an economic analysis of the relationship between Intellectual Property (IP) Law and Competition Law. Contrary to some of the recent debate, our analysis emphasises the separation of IP Law and Competition Law: IP law should concern itself with assigning and defending intellectual property rights, while Competition Law should concern itself with the use of those rights. This separation extends to the enforcement of the law as well, where we argue that once property rights have been assigned, no further distinction based on intellectual or non-intellectual property should be made. While the IP/Competition Law interface has some specificity due to the types of behaviours that tend to arise more frequently where IP is concerned, we argue for a set of principles for Competition Policy that include restraint, a commitment not to revisit ex post the rights granted by IP law, and a commitment to make large changes in property right regimes only when very large changes in ex post regulation occur.

Credit Risk Transfer and Bank Competition

We present a banking model with imperfect competition in which borrowers’ access to credit is improved when banks are able to transfer credit risks. However, the market for credit risk transfer (CRT) works smoothly only if the quality of loans is public information. If the quality of loans is private information, banks have an incentive to grant unprofitable loans in order to transfer them to other parties, leading to an increase in aggregate risk. Nevertheless, the introduction of CRT generally increases welfare in our setup. However, under private information, higher competition induces an expansion of loans to unprofitable firms, which in the limit offsets the welfare gains from CRT completely.access to credit, bank competition, credit derivatives, Credit risk transfer, public and private information

The Endowment Effect in Groups with and without Strategic Incentives

The realization of market transactions often depends on decisions in groups in which members are anonymous and cannot communicate, but have interrelated outcomes. In a comprehensive study, we investigated the interaction of group effects, strategic effects and endowment effects in different group situations. We show that groups display an endowment effects for uncertain goods which is reduced by about 50% compared to the endowment effect in individuals in corresponding situations. In group situations with additional strategic incentives to overprice the endowment effect completely diminished. The strategic effects and group effects on pricing in group situations cannot be found for participants’ personal valuations of the good, whereas the endowment effect for personal valuations prevailed in both group conditions. This indicates that the endowment effect might be more fundamental than group effects and strategic effects. A paramorphic model for pricing in strategic group situations is suggested and practical implications are discussed.Decision Making, Endowment Effects, Groups, Strategic Incentives

Information Sharing and International Taxation

The sharing between national tax authorities of taxpayer-specific information has emerged over the last few years as a-probably "the"-central issue in the formation of international tax policy.Yet this refocusing of the debate on international taxation-away from parametric tax coordination and towards strengthening information exchange-has gone largely unnoticed in the public finance literature.This paper gives an overview of this increasingly important area of international taxation, reviewing the key economic, legal and practical concepts and issues bearing on the analysis and implementation of information exchange, and providing an account of recent policy initiatives and emerging theoretical insights.International tax evasion;tax competition;tax information exchange;tax treaties;money laundering;savings tax directive

Opting In and Opting Out: Bargaining for Fiduciary Duties in Cooperative Ventures

After surveying the Perfect-Markets analysis in Section I of this Article, Section II explores some strategic implications of its central insight regarding the imperfection of fiduciary duty protection. At the same time, by focusing just on strategic effects due to asymmetric information, the results in Section II are very limited and do not provide the backbone for a positive theory of opting in and opting out of fiduciary duties. Section III outlines how such a theory might proceed by considering a number of complicating factors that are important in the Perfect-Markets analysis and that also enrich the strategic approach in Section II. Section IV then applies my positive theory to selected doctrinal issues raised by the paradigm cases I described above