Meetings with Costly Participation: An Empirical Analysis

Using data from the Mid-Atlantic surf clam and ocean quahog fishery, we find that firms with a preference for extreme, rather than moderate, policies are much more likely to participate in public meetings where regulation is determined. We also find that participation rates are higher for larger, closer, and more influential firms. These results; (1) improve our understanding of a very common institution for resource allocation, 'meetings with costly participation', (2) they refine our intuition about regulatory capture, (3) they provide broad confirmation of the recent theoretical literature predicting that polarization and bipartisanship should emerge under a variety of democratic institutions, and finally, (4) they may help to explain management problems in US fisheries.

Meetings with Costly Participation: An Empirical Analysis

Using data from the Mid-Atlantic surf clam and ocean quahog fishery, we find that firms with a preference for extreme, rather than moderate, policies are much more likely to participate in public meetings where regulation is determined. We also find that participation rates are higher for larger, closer, and more influential firms. These results: (1) improve our understanding of a very common institution for resource allocation, “meetings with costly participation”, (2) they refine our intuition about regulatory capture, (3) they provide broad confirmation of the recent theoretical literature predicting that polarization and bipartisanship should emerge under a variety of democratic institutions, and finally, (4) they may help to explain management problems in U.S. fisheries

Cost-effectiveness of managing Natura 2000 sites: an exploratory study for Finland, Germany, the Netherlands and Poland

Natura 2000 sites are expected to assure the long-term survival of Europe's most valuable and threatened species and habitats. It follows that successful management of the sites is of great importance. Next to goal attainment, cost-effectiveness is increasingly recognised as a key requirement for gaining social and political acceptance for costly conservation measures. We identify and qualitatively examine issues of cost-effectiveness related to the design and implementation of management measures in Natura 2000 sites in Finland, Germany, the Netherlands and Poland. Given the wide variety of management design and implementation options within the four countries, our study is purely of an exploratory nature. We derive recommendations for improving the cost-effectiveness of management in Natura 2000 sites and for future research. Examples of policy recommendations include guaranteeing the availability of funds for longer periods, and ensuring the appropriate allocation of funds between the different tasks of designing and implementing management plans. Further research should examine the cost-effectiveness of controversial suggestions such as, for example, more tailored payment schemes for conservation measures that result in higher ecological outputs but are costly to administer. Moreover, more research is needed to better understand how rules for administrations, as well as rules and governance structures for tasks within administrations, should be designed

The emergence and future of central counterparties

The authors explain why central counterparties (CCPs) emerged historically. With standardized contracts, it is optimal to insure counterparty risk by clearing those contracts through a CCP that uses novation and mutualization. As netting is not essential for these services, it does not explain why CCPs exist. In over-the-counter markets, as contracts are customized and not fungible, a CCP cannot fully guarantee contract performance. Still, a CCP can help: As bargaining leads to an inefficient allocation of default risk relative to the gains from customization, a transfer scheme is needed. A CCP can implement it by offering partial insurance for customized contracts.Risk management ; Over-the-counter markets ; Contracts

The Emergence and Future of Central Counterparties

We study the role of a central counterparty (CCP) in controlling counterparty risk. When trading is organized via a centralized exchange with fungible contracts -- as in a futures market -- we show that it is optimal to clear trades via a CCP that uses (i) novation to pool the risk of default and (ii) mutualization of losses to insure against the aggregate cost of default in the form of price risk. We then analyze the design of CCP clearing for over-the-counter (OTC) trades where contracts are customized and, hence, not fungible. A CCP can still offer gains from novation by pooling default risk across all customized contracts. Bargaining in OTC trades leads to an inefficient allocation of default risk across trades. A transfer scheme can alleviate this inefficiency, but necessitates novation being offered by a CCP. Hence, the benefit from CCP clearing for OTC markets goes beyond simple netting as it is a prerequisite for an efficient allocation of default risk in such markets.Central Counterparty, Clearing, Over-the-counter Markets, Novation and Mutualization, Default Risk

Using a ‘wellbeing’ cost-effectiveness approach to improve resource allocation in social care

The promotion of wellbeing is the newly-stated guiding principle for the long-term care (social care) system in England. It signals a shift away from a focus on care need ‘deficits’ approach. Such a change in perspective has the potential to substantially alter how public care systems operate. The practical challenges are significant, both in the interpretation of wellbeing goals and in determining how the care system might be configured to achieve them. The main aim of this paper is to contrast a needs-led resource allocation system with one using a maximising wellbeing approach; that is, one based on: measuring the wellbeing consequences of using services and applying the principles of cost-effectiveness and opportunity cost. As a precursor, the paper also describes how a maximising wellbeing approach might be applied in the case of long-term care. We argue that in theory a maximising wellbeing approach with full information will produce greater total wellbeing improvement for the same budget than a needs-based system. In practice, the comparison will depend on: (a) whether we can actually measure wellbeing in a way that is consistent with the policy goals; (b) the availability of cost-effectiveness information; and (c) the decision rules used to implement a maximising wellbeing approach

Efficient institutions

Are efficiency considerations important for understanding differences in the development of institutions? The authors model institutional quality as the degree to which obligations associated with exchanging capital can be enforced. Establishing a positive level of enforcement requires an aggregate investment of capital that is no longer available for production. When capital endowments are more unequally distributed, the bigger dispersion in marginal products makes it optimal to invest more resources in enforcement. The optimal allocation of the institutional cost across agents is not monotonic and entails a redistribution of endowments before production begins. Investing in enforcement benefits primarily agents at the bottom of the endowment distribution and leads to a reduction in consumption and income inequality. Efficiency, redistribution and the quality of institutions are thus intricately linked and should be studied jointly.Human capital ; Capital