Can Incomplete Information Lead to Under-exploitation in the Commons

This paper analyzes the protection of a common pool resource (CPR) through the manage- ment of information. Speci?cally, we examine an entry deterrence model between an incumbent perfectly informed about the initial stock of a CPR and an uninformed potential entrant. In our model, the appropriation of the CPR by the incumbent reduces both players?future pro?ts from exploiting the resource. In the case of complete information, we show that the incumbent operating in a high-stock common pool overexploits the CPR during the ?rst period since it does not internalize the negative external e¤ect that its ?rst-period exploitation imposes on the en- trant?s future pro?ts. This ine¢ ciency, however, is absent when the common totally regenerates across periods. Under incomplete information, we identify an additional form of ine¢ ciency. In particular, the incumbent operating in a low-stock CPR underexploits the resource in order to signal the low available stock to potential entrants, deterring entry. When the common fully regenerates, we show that such underexploitation becomes more signi?cant since the low-stock incumbent aims to protect its larger monopoly pro?ts.Common Pool Resources; Signaling games; Externalities

The Informative Role of Subsidies

This paper investigates the effect of monopoly subsidies on entry deterrence. We consider a potential entrant who observes two signals: the subsidy set by the regulator and the output level produced by the incumbent firm. We show that not only an informative equilibrium can be supported, where information about the incumbent's costs is conveyed to the entrant, but also an uninformative equilibrium, where the actions of regulator and incumbent conceal the monopolist's type, thus deterring entry. While the regulator?s role can support entry-deterrence practices, we demonstrate that his presence is nonetheless welfare improving. Furthermore, we compare equilibrium welfare relative to two benchmarks: complete information environments, and standard entry-deterrence games where the regulator is absent.Entry deterrence; Signaling; Monopoly subsidies

Commitment in Environmental Policy as an Entry-Deterrence Tool

This paper investigates under which conditions governments strategically commit to stringent environmental policies in order to protect domestic markets from entry. We compare social welfare under two policy regimes: a ?exible and in?exible environmental policy. We show that commitment becomes socially optimal when its associated welfare loss, due to a stringent fee across time, is smaller than its welfare gain, which arises from an improved environmental quality. Otherwise, the regulator optimally chooses a ?exible environmental policy which cannot credibly deter entry. In addition, we demonstrate that the incentives of the social planner and the incumbent fi?rm are not necessarily aligned regarding entry deterrence. In particular, under certain conditions the regulator ?nds socially optimal to practice entry deterrence whereas the incumbent would actually prefer entry.Entry deterrence, Emission fees, Perfect commitment

Buscando arraigo. Inmigrantes y vivienda: otro modo de exclusión

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Biofuel policy for the pursuit of multiple goals: The case of Washington State

Agricultural and Food Policy, Resource /Energy Economics and Policy,

The effect of parental leave on female employment: evidence from state policies

This paper analyzes the effect of federal and state maternity leave policies on female employment. We analyze if the enactment of the federal Family Medical Leave Act (FMLA) differentially affected states that previously implemented maternity leave laws than those states which did not. Additionally, we study whether FMLA caused an increase in the female employment and labor force participation in those states that expanded its benefits and relaxed the eligibility criteria. Finally, we analyze the Paid Family Leave program in California, comparing how the change in female employment and labor force participation differs from those states which have FMLA alone and those which have complemented the benefits of FMLA. Using March CPS data available from the Integrated Public Use Micro data Series (IPUMS), our results suggest, first, a positive and significant effect of FMLA on female employment and, second, a positive and significant effect on the change in female employment for some of the states that expanded the benefits and eligibility criteria of FMLA.Family Medical Leave Act, Temporary Disability Insurance, Female Employment

Promoting Lies through Regulation: Deterrence Impacts of Flexible versus Inflexible Policy

This paper investigates the signaling role of tax policy in promoting or hindering the ability of a monopolist to practice entry deterrence. We study contexts in which tax policy is Flexible and inflexible. We show that not only an informative equilibrium can be supported where information is conveyed to the entrant, but also an uninformative equilibrium where information is concealed. In addition, inflexible policies promote information transmission. Therefore, our results identify a potential benefit of inflexible policies, namely, hampering the practice of entry deterrence.Entry deterrence; Signaling; Emission fees; Perfect commitment

Keeping Negotiations in the Dark: Environmental Agreements under Incomplete Information

This paper investigates the role of uncertainty as a tool to support cooperation in international environmental agreements. We consider two layers of uncertainty. Under unilateral uncertainty treaties become successful with positive probability in the signaling game, even under parameter conditions for which no agreement is reached under complete information. Under bilateral uncertainty, a separating equilibrium emerges where the leader participates in the treaty only when its environmental concerns are high. We show that the agreement is signed for larger sets of parameter values under unilateral uncertainty. We then show that further layers of uncertainty might enhance social welfare.Signaling games; Unilaterial uncertainty; Bilateral uncertainty; Non-binding negotiations