Cost-allocation principles for pipeline capacity and usage

This paper applies principles f rom game theory to the problem o f allocating the cost o f a shared facility, such as a pipeline. The theory o f cooperative games s t r ongl y suggest s t hat no method e x i s t s for allocating costs that wi l l achieve all major policy goals. We apply results from the theory o f cooperative games a n d principles o f cost allocation to assess some c o mmo n l y adopted rules for allocating costs and def i ni ng u n i t charges. Mos t notably, the postage-stamp toll is f o u n d to fail a mi ni mal set o f commonly applied principles.cost allocation; pipeline

Raising Juveniles

This paper investigates how families make decisions about the education of juveniles. The decision problem is analyzed in three variations: a 'decentralized' scheme, in which the parents control the purse-strings, but the children dispose of their time as they see fit; a 'hierarchical' scheme, in which the parents can enforce a particular level of schooling by employing a monitoring technology; and the cooperative solution, in which the threat point is one of the two noncooperative outcomes. Adults choose which game is played. While the subgame perfect equilibrium of the overall game is Pareto-efficient when viewed statically, it may yield less education than the hierarchical scheme. Regulation in the form of restrictions on child labor and compulsory schooling generally affects both the threat point and the feasible set of bargaining outcomes, and families may choose more schooling than the minimum required by law.family decision-making, youth, human capital, bargaining

Endogenous Spillovers under Cournot Rivalry and Co-opetitive Behaviors.

We develop a model of Cournot oligopolists with endogenous R§D spillovers where a specific type of co-opetition is introduced. The two principle factors of R§D spillovers, namely the absorptive capacity and the information-sharing parameter, are assumed to depend positively on the percentage of knowledge the firm chooses to codify and reveal. It is shown that identical firms that are rivals on the final good market do not necessarily choose the lowest level for the spillover parameters. Furthermore, there is some justification for a subsidy to knowledge codification and information-sharing. However, the latter is obtained under conditions on firms' technologies and spillover functions which ensure the emergence of symmetric solutions.cost reduction, endogenous spillovers, information sharing, absorptive capacity, co-opetition

Combining Climate and Energy Policies: Synergies or Antagonism? Modeling Interactions With Energy Efficiency Instruments

In addition to the already present Climate and Energy package, the European Union (EU) plans to include a binding target to reduce energy consumption. We analyze the rationales the EU invokes to justify such an overlapping and develop a minimal common framework to study interactions arising from the combination of instruments reducing emissions, promoting renewable energy (RE) production and reducing energy demand through energy efficiency (EE) investments. We find that although all instruments tend to reduce emissions and a price on carbon tends to give the right incentives for RE and EE too, the combination of more than one instrument leads to significant antagonisms regarding major objectives of the policy package. The model allows to show in a single framework and to quantify the antagonistic effects of the joint promotion of RE and EE. We also show and quantify the effects of this joint promotion on ETS permit price, on wholesale market price and on energy production levels.Renewable Energy, Energy Efficiency, Energy Policy, Climate Policy, Policy Interaction

Fiscal federalism in Bosnia-Herzegovina : The Dayton challenge

The authors describe Bosnia's current arrangements in fiscal federalism, outline the unique challenges that the Dayton system proposed, and draw lessons for the design of fiscal federal systems in ethnically diverse economies. Traditional economic models of federalism suggest a government structure assuming there is an intent to achieve Pareto-efficiency for the entire country. Current attitudes in Bosnia challenge this paradigm's aptness unmodified, since many people in each ethnic group see themselves as members of their group, rather than as Bosnians, and are not broadly concerned about the entire country's welfare or access to public services outside the group. The motivation for the fiscal federalism structure proposed in the Dayton Accords is better interpreted as an effort to manage conflict between the ethnic groups. Federalism, in a conflict management sense, does not require that each group be given its own state; rather it leads to the conclusion that institutions of power should be brought closer to the people so that decisionmaking can be more sensitive to the different ethnic groups. Decentralization in this context is a means to lessen the points where disagreement exists, rather than a structure to obtain economic efficiency. Common institutions at the state, entity or canton levels are maintained, but only for functions that must be broader in scope. The fiscal (and other) interdependencies flowing from these institutions present opportunities to build relationships and trust over time. While the government structure included in Dayton is workable, governments must negotiate other arrangements to prevent, in the short to medium term, diseconomies of scale in providing certain services that are more cost-efficient at other levels. In the latter scenario, services with geographic spillovers would be underprovided because governments would fail to adequately account for benefits received by other ethnic group members. Further, little concern would be given to equitable distribution of services, resulting in widely different access across the country. Better service delivery mechanisms -from a national, Pareto-efficient perspective- will not be selected given the very strong distaste for cross subsidies and minority group fears of larger group domination. Despite these concerns, the authors conclude that more efficient arrangements can be expected to evolve over time as confidence in the government structures evolve.Public Sector Economics&Finance,Municipal Financial Management,National Governance,Banks&Banking Reform,Environmental Economics&Policies,National Governance,Public Sector Economics&Finance,Banks&Banking Reform,Environmental Economics&Policies,Municipal Financial Management

Inequality in Intercollegiate Athletics: Origins, Trends and Policies

In this paper, the author provides an overview of economic inequality in intercollegiate athletics, tracing it from its origins in the late 19th century, through home rule, the introduction of the NCAA’s national broadcasting policy and its subsequent regionalization after Oklahoma v. NCAA, conference realignments, RSNs, the BCS and NCAA distribution policies. The paper argues that the current economic situation and the growing inequality is unsustainable and that policies to reverse the course are necessary. Policies to moderate inequality will not only assist in promoting financial stability but will also blunt the all-out drive to win and thereby help to reestablish the primacy of education in intercollegiate athletics

R&D Collaboration Networks in Mixed Oligopoly

We develop a model of endogenous network formation in order to examine the incentives for R&D collaboration in a mixed oligopoly. Our analysis reveals that the complete network, where each firm collaborates with all others, is uniquely stable, industry-profit maximizing and efficient. This result is in contrast with earlier contributions in private oligopoly where under strong market rivalry a conflict between stable and efficient networks is likely to occur. A key finding of the paper is that state-owned enterprises may be used as policy instruments in tackling the potential conflict between individual and collective incentives for R&D collaboration.Networks, R&D Collaboration, Mixed Oligopoly

An analysis of debt-reduction schemes initiated by debtor countries

In evaluating the benefits of a voluntary debt reduction scheme, look for efficiency gains that allow both debtor and creditor to gain. In particular certain debt reduction operations can: (i) increase the incentives for growth in highly indebted countries; (ii) allocate risk more efficiently between debtor and creditors; and (iii) signal the credibility of a country's willingness to adjust its economy. Market-based debt conversion is more likely to improve the debtor nations welfare when: (i) the opportunity cost of foreign exchange is low; (ii) there is great probability of default with a deadweight loss to the creditor; (iii) private rather than public debt is swapped for equity investments; (iv) the country has no other way of signalling its commitment; and (v) the country has an extreme case of debt overhang.Strategic Debt Management,Economic Theory&Research,Environmental Economics&Policies,Housing Finance,Financial Intermediation