Plurality versus proportional electoral rule: study of voters' representativeness

Thinking of electoral rules, common wisdom suggests that proportional rule is more fair, since all voters are equally represented: at times, it turns out that this is false. I study the formation of both Parliament and Government; for the composition of the former I consider plurality and proportional rule; for the formation of the latter, I assume that parties play a non-cooperative game à la Rubinstein. I show that, unless parties are impatient to form a Government, proportional electoral rules translate into a more distortive distribution of power among parties than plurality rule; this happens because of the bargaining power of small parties during Government formation.electoral systems, proportional rule, plurality rule, voters¿ representation.

Education and selective vouchers

A widely accepted result in the literature is that the majority of votersare against the introduction of universal vouchers. Chen and West (2000) predict that voters' attitudes towards selective vouchers (SV) may be dif- ferent. They claim that voters are indi®erent between the no-voucher and SV regimes, unless competition leads to a reduction in the education price. I show that, when public schools are congested, the majority of voters are in favour of SV. Furthermore, SV induces a Pareto improvement. In equili- brium, the introduction of SV induces a reduction in income strati¯cation at school, with some relatively poor students attending private schools.positive public economics; education; vouchers; voting

‘Information doesn’t want to be free’: informational shocks with anonymous online platforms

Anonymous information platforms (e.g. Airbnb) provide information about experience goods while keeping agents’ identity hidden until the transaction is completed. In doing so, they generate heterogeneity in the information levels across consumers. In this paper, I show that such platforms induce a weak increase of offline prices and that only low-valuation goods are cheaper online than offline. Platforms always lead to an increase in profits. In terms of consumer welfare, the platform equilibrium is Pareto superior for low-and high-valuation goods, while for intermediate ranges some buyers benefit while others lose from the presence of the platform

A model of music piracy with popularity-dependent copying costs

Anecdotal evidence and recent empirical work suggest that musicpiracy has differential effects on artists depending on their popularity.Existing theoretical literature cannot explain such differential effectssince it is exclusively concerned with single-firm models. We present amodel with two types of artists who differ in their popularity. Weassume that the consumers' costs of illegal downloads increase withthe scarcity of a recording, and that scarcity is negatively related to theartist's popularity. Moreover, we allow for a second source of revenuesfor artists apart from CD sales. These alternative revenues depend onan artist's recognition as measured by the number of consumers whoobtain his recording either by purchasing the original or downloadinga copy. Our findings for the more popular artist generalize a resultfound by Gayer and Shy (2006) who show that piracy is beneficial tothe artist when alternative revenues are important. In our model,however, this does not carry over to the less popular artist, who isoften harmed by piracy even when alternative revenues are important.We conclude that piracy tends to reduce musical variety.piracy, file sharing, heterogeneous artists.

Itemised Deductions: A Device to Reduce Tax Evasion

With direct incentives and sanctions being the most common instruments to fight tax evasion, the theoretical literature has tended to overlook indirect schemes, such as itemised deductions, in which one agent's behaviour affects the likelihood that others will declare their revenue. Itemised deductions provide an incentive for consumers to declare their purchases. This induces a partial shift in the demand from the black market to the legal one, for consumers need a transaction receipt to enjoy the tax deduction. I show that it is possible to increase tax proceeds by choosing a suitable level of itemised deduction, and this, for any level of taxation. Indeed, the cost for the tax authority on the consumers' side is more than compensated for by the extra proceeds generated on the sellers' sid

Itemised Deductions: A Device to Reduce Tax Evasion [WP]

With direct incentives and sanctions being the most common instruments to fight tax evasion, the theoretical literature has tended to overlook indirect schemes, such as itemised deductions, in which one agent's behaviour a effects the likelihood that others will declare their revenue. Itemised deductions provide an incentive for consumers to declare their purchases. This induces a partial shift in the demand from the black market to the legal one, for consumers need a transaction receipt to enjoy the tax deduction. I show that it is possible to increase tax proceeds by choosing a suitable level of itemised deduction, and this, for any level of taxation. Indeed, the cost for the tax authority on the consumers' side is more than compensated for by the extra procedes generated on the sellers' side

Plurality versus proportional electoral rule: which is most representative of voters?

This study compares the representativeness of voters in the proportional electoral system with the situation under plurality rule. Representativeness is commonly measured by comparing parties’ received votes with their shares of seats in the Parliament; this implies that proportional rule should always better represent voters. A coalition within the Parliament, however, rules the country without interference and supports the government; when a coalition is formed, the pivotal role of small parties and the proposal right of the formateur can significantly impact the distribution of power. Focusing on the coalition formation stage, I demonstrate that the proportional rule is more representative only under very specific conditions. If these conditions are not met, introducing some distortions in the distribution of seats among parties can actually improve representativeness

Online booking and information: competition and welfare consequences of review aggregators

Online review aggregators (e.g., booking.com or ClubKviar) provide detailed information about experience goods, such as restaurants and hotels. This study fosters the understanding of how such aggregators modify competition, profits and welfare. Using a spokes model of horizontal competition, I show that review aggregators enhance total welfare mainly by making valuable information available to consumers. The effect on welfare goes through different channels: 1) realised transactions are more valuable for the match between producers and consumers is more accurate; 2) the costumer base enlarges, for more agents find a suitable product; 3) the equilibrium price weakly decreases for competition amongst firms is more intense. However, firms face a prisoner dilemma: firms best response to the status quo is to appear on the aggregator's web so as to enlarge their market share, however, this leads to lower profits than if they all agreed not to use the aggregator

Education and selective vouchers

The literature on vouchers often concludes that a voucher-based system cannot be the outcome of a majority vote. This paper shows that it is possible to propose selective vouchers (of exogenous value) such that the majority of voters are in favour of selective vouchers. As long as the introduction of vouchers does not undermine the existence of public schools, introducing selective vouchers induces a Pareto improvement. Some agents use vouchers in equilibrium to buy private education, while the poorest agents continue attending public schools and enjoy an increase in per-capita expenditure.positive public economics; education; vouchers; voting.

A model of music piracy with popularity-dependent copying costs

Anecdotal evidence and recent empirical work suggest that music piracy has differential effects on artists depending on their popularity. Existing theoretical literature cannot explain such differential effects since it is exclusively concerned with single-firm models. We present a model with two types of artists who differ in their popularity. We assume that the costs of illegal downloads increase with the scarcity of a recording, and that scarcity is negatively related to the artist’s popularity. Moreover, we allow for a second source of revenues for artists apart from CD sales. These alternative revenues depend on an artist's recognition as measured by the number of consumers who obtain his recording either by purchasing the original or downloading a copy. Our findings for the more popular artist generalize a result found by Gayer and Shy (2006) who show that piracy is beneficial to the artist when alternative revenues are important. In our model, however, this does not carry over to the less popular artist, who is often harmed by piracy even when alternative revenues are important. We conclude that piracy tends to reduce musical variety.Piracy, file sharing, heterogeneous artists