Auction theory, sequential local service privatization, and the effects of geographical scale economies on effective competition

A sequential weakly efficient two-auction game with entry costs, interdependence between objects, two potential bidders and IPV assumption is presented here in order to give some theoretical predictions on the effects of geographical scale economies on local service privatization performance. It is shown that the first object seller takes profit of this interdependence. The interdependence externality rises effective competition for the first object, expressed as the probability of having more than one final bidder. Besides, if there is more than one final bidder in the first auction, seller extracts the entire bidders expected future surplus differential between having won the first auction and having lost. Consequences for second object seller are less clear, reflecting the contradictory nature of the two main effects of object interdependence. On the one hand, first auction winner becomes stronger, so that expected payments rise in a competitive environment. On the other hand, first auction loser becomes relatively weaker, hence (probably) reducing effective competition for the second object. Additionally, some contributions to static auction theory with entry cost and asymmetric bidders are presented in the appendix.local service, privatization

A duration model analysis of privatization of municipal water services

En este trabajo se utiliza un modelo de duración para estudiar los factores determinantes de la privatización del servicio de aguas. Se cuantifica cómo la influencia de estos factores cambia con el paso del tiempo, usando una muestra de municipios catalanes en las seis legislaturas locales acontecidas durante el período 1980-2002. Se presenta la hipótesis del efecto proximidad dinámico, la cual no es refutada por los datos: en una primera fase (primeros años 80), la privatización del servicio es más probable en ámbitos territoriales donde no hay experiencias previas de privatización; en una segunda fase (los 90), sucede lo contrario. La manera que otros factores influyen en la decisión de privatizar también evoluciona durante estas dos décadas, desde la priorización de la reparación de infraestructuras descapitalizadas hasta una mayor preocupación por la eficiencia del servicio. Los problemas presupuestarios al parecer sólo incitan a privatizar en períodos de grave crisis económica. El signo político del gobierno municipal puede influir en la decisión sobre el modo de producción del servicio si no existe consenso sobre cuál es el más eficiente.privatización, servicio de aguas, modelos de duración.

Machiavellian Taxation? The political economy of public service financing

In this paper, we develop a simple theoretical model in order to explain how politicians choose between progressive and regressive tax schemes that serve to afford some local service production costs. It consists of a bipartisan model in which each party’s preferences are lexicographic, giving priority to winning but following ideological preferences given that it wins. Concerning voters, this model distinguishes for the first time in the literature between pragmatic majorities and social ones, and predicts what happens when both majorities have the same ideological sign and what happens when these majorities are in conflict. “Pragmatic” refers to local-specific considerations regarding general performance of the government while “social” makes reference to issues related to voters’ wealth status and social class. Ruling party’s identity follows from pragmatic considerations, but tax policies becomes a moderate equilibrium between ideological ruling party’s preferences and social majority’s ones. A tax policy would be extreme (either progressive or conservative) if and only if both social majority and pragmatic majority (ruling party) are of the same ideological sign. These predictions are successfully tested by OLS regression thru the use of a wide sample of municipalities concerning waste collection and treatment service- specific deficits.Tax choice, voting model, local public goods

On the magnetic field evolution timescale in superconducting neutron star cores

We revisit the various approximations employed to study the long-term evolution of the magnetic field in neutron star cores and discuss their limitations and possible improvements. A recent controversy on the correct form of the induction equation and the relevant evolution timescale in superconducting neutron star cores is addressed and clarified. We show that this ambiguity in the estimation of timescales arises as a consequence of nominally large terms that appear in the induction equation, but which are, in fact, mostly irrotational. This subtlety leads to a discrepancy by many orders of magnitude when velocity fields are absent or ignored. Even when internal velocity fields are accounted for, only the solenoidal part of the electric field contributes to the induction equation, which can be substantially smaller than the irrotational part. We also argue that stationary velocity fields must be incorporated in the slow evolution of the magnetic field as the next level of approximation.Comment: 6 pages, version accepted by MNRA