Welfare and Revenue Guarantees for Competitive Bundling Equilibrium

We study equilibria of markets with $m$ heterogeneous indivisible goods and $n$ consumers with combinatorial preferences. It is well known that a competitive equilibrium is not guaranteed to exist when valuations are not gross substitutes. Given the widespread use of bundling in real-life markets, we study its role as a stabilizing and coordinating device by considering the notion of \emph{competitive bundling equilibrium}: a competitive equilibrium over the market induced by partitioning the goods for sale into fixed bundles. Compared to other equilibrium concepts involving bundles, this notion has the advantage of simulatneous succinctness ($O(m)$ prices) and market clearance. Our first set of results concern welfare guarantees. We show that in markets where consumers care only about the number of goods they receive (known as multi-unit or homogeneous markets), even in the presence of complementarities, there always exists a competitive bundling equilibrium that guarantees a logarithmic fraction of the optimal welfare, and this guarantee is tight. We also establish non-trivial welfare guarantees for general markets, two-consumer markets, and markets where the consumer valuations are additive up to a fixed budget (budget-additive). Our second set of results concern revenue guarantees. Motivated by the fact that the revenue extracted in a standard competitive equilibrium may be zero (even with simple unit-demand consumers), we show that for natural subclasses of gross substitutes valuations, there always exists a competitive bundling equilibrium that extracts a logarithmic fraction of the optimal welfare, and this guarantee is tight. The notion of competitive bundling equilibrium can thus be useful even in markets which possess a standard competitive equilibrium

Nuisance

This essay sets out the law and the economic theory of nuisance. Nuisance law serves a regulatory function: it induces actors to choose the socially preferred level of an activity by imposing liability when the externalized costs of the activity are substantially greater than the externalized benefits or not reciprocal to other background external costs. Proximate cause doctrine plays a role in supplementing nuisance law

How do banks assess entrepreneurial competence? The role of voluntary information disclosure

This research adds to the literature on relationship lending in the small business context by discussing the roles of entrepreneurial competence and voluntarily disclosed information as determinants of credit access. More specifically, we propose that the loan manager’s evaluation of the information voluntarily disclosed by the entrepreneur is an important complement to publicly available financial data and soft information collected through observation and third parties in framing the loan manager’s perception of the entrepreneur’s competence. Further, we argue that banks charge lower interest rates if the loan manager perceives the entrepreneur to be competent. Econometric analysis based on 433 bank-firm relationships supports these hypothesised relationships. The results imply that entrepreneurs need to communicate their competence effectively to loan managers, and that banks should utilise their loan managers’ personal evaluations as inputs to lending decisions

How UK climate change policy has been made sustainable

UK climate change policy is based on the advice of the Committee on Climate Change established under the Climate Change Act 2008. This Committee is an independent, expert agency established as part of the reconceiving of the regulatory state as a response to the neo-liberal critique of older forms of regulation. But the quality of the advice given in the Committee’s recent Fourth Carbon Budget Review is so tendentious as to barely be able to be described as advice at all. This grave shortcoming poses the most serious questions for contemporary constitutional and regulatory processes

The theory of international business: the role of economic models

This paper reviews the scope for economic modelling in international business studies. It argues for multi-level theory based on classic internalisation theory. It present a systems approach that encompasses both firm-level and industry-level analysis

The Balanced Threat Agreement for Individual Externality Negotiation Problems

This paper introduces a model to analyze individual externalities and the associated negotiation problem, which has been largely neglected in the game theoretic literature. Following an axiomatic perspective, we propose a solution, as a payoff sharing scheme, called the balanced threat agreement, for such problems. It highlights an agent’s potential influences on all agents by threatening to enter or quit. We further study the solution by investigating its consistency. We also offer a discussion on the related stability issue

From the Expected to the Desired Future of Passenger Transport

Sustainability as an unambiguous policy goal is not a priori secured, as is clearly shown in the transport sector, where the negative externalities are still increasing despite official policies aiming at a reduction of these external costs and at the achievement of a sustainable transport system. To analyse why this is the case, a conceptual model is developed in this paper, in which stakeholders are identified which influence sustainable transport policies. These stakeholders are individuals, the public sector (subdivided into politicians and civil servants), international organizations and pressure groups (car industry, oil industry, car users and environmental groups). It appears that - although it may be assumed that nobody desires an unsustainable future - most incentives and mechanisms in our conceptual model of the decision-making process hamper the achievement of a sustainable transport system. In the second part - by way of empirical test - results of a questionnaire among Dutch transportation experts on the expected and desired future of European passenger transport are concisely discussed, in which the year 2030 is taken as a reference year. It appears that in the expected future the stakeholders largely behave as predicted in the conceptual model. I

Smart Contracts in Insurance: A Law and Futurology Perspective

Smart contracts are innovative contracts that differ from traditional ones in that they are self-executing, as they entail the possibility of representing contract terms in programming code that gets automatically executed on a blockchain or other distributed ledgers. Following the latest developments in blockchain technology, smart contracts have been the focus of growing attention and are currently among the major innovations that are taking place in financial services. This paper investigates the scope for their application in insurance both in the near and longer term, exploring the legal challenges that they pose. The analysis shows that in the near term smart contracts will be mainly exploited to automate underwriting, claims handling and payouts. It considers how the automation of these processes will operate at law and emphasises the impact that smart contracts can have especially on the reduction of transaction costs and on the very essence of the insurance contract—the insurer's promise to pay. Building on current technological developments, the paper then turns to role that smart contracts can play in insurance in the longer term, advancing the prospect of the automation of the entire insurance contract. In particular, it argues that the interaction between smart contracts and artificial intelligence and machine learning can challenge traditional frameworks of thought such as incomplete contracting and, in the farther-distant future, will culminate in contracts that will both self-interpret and self-enforce their terms—what can be called the true smart contracts. The analysis identifies and addresses the main legal issues that can arise in this context, exploring how to strike a balance between the goal of fostering innovation and the need to ensure policyholder and investor protection

Do we need to rethink our waterways? Values of ageing waterways in current and future society

In the past canals were developed, and some rivers were heavily altered, driven by the need for good transportation infrastructure. Major investments were made in navigation locks, weirs and artificial embankments, and many of these assets are now reaching the end of their technical lifetime. Since then the concept of integrated water resource management (IWRM) emerged as a concept to manage and develop water-bodies in general. Two pressing problems arise from these developments: (1) major reinvestment is needed in order to maintain the transportation function of these waterways, and (2), it is not clear how the implementation of the concept of IWRM can be brought into harmony with such reinvestment. This paper aims to illustrate the problems in capital-intensive parts of waterway systems, and argues for exploring value-driven solutions that rely on the inclusion of multiple values, thus solving both funding problems and stakeholder conflicts. The focus on value in cooperative strategies is key to defining viable implementation strategies for waterway projects