Trajectory-correction propulsion system Patent

Spacecraft trajectory correction propulsion syste

John Wheatley’s Contribution to Monetary Thought - From Strict Monetary Neutrality to Real Effects of Monetary Policy and the Role of the Payment System

This paper reassesses John Wheatley’s contribution to the development of monetary doctrine at the beginning of the nineteenth century. His contribution is still underrated, despite an advanced methodological approach and his radical refinement of bullionist arguments. His contributions to theoretical monetary policy and international monetary economics deserve more attention as his often harsh criticism of fellow bullionists demonstrates his uncompromising adherence to methodological principles, his independence and his originality. However, he was willing to reassess his own conclusions in the light of contradicting evidence. Based on his “An Essay on the Theory of Money and Principles of Commerce” (1807) historians of economic thought portray him as a proponent of strict monetary neutrality. But his less popular pamphlets of 1816 and 1819 elucidate a more differentiated position. There, he highlights the role of the payment system in the propagation of monetary shocks to the real economy. In the light of the crises of 1814-16 he emphasises the pronounced real effects a reduction of the quantity of money can have due to a disruption of the payment system.John Wheatley, monetary doctrine, bullionist controversy

The Effects of E-commerce on the Structure of Intermediation

The paper questions the notion that the diffusion of electronic commerce will lead to disintermediation. Rather than interpreting intermediation as a single service it is pointed out that intermediaries can provide a number of services. The analysis based on the New Institutional Economics, Market Microstructure Theory, and Information Economics shows that the three intermediation services studied are, generally, not under threat by the diffusion of electronic commerce. The overall effects on intermediation depend on the relevance of these services relative to others (e.g. order processing) which are supposed to become obsolete.B2C eCommerce, intermediation, new institutional economics

On the Interplay of Hidden Action and Hidden Information in Simple Bilateral Trading Problems

A buyer and a seller can exchange one unit of an indivisible good. While producing the good, the seller can exert unobservable effort (hidden action). Then the buyer realizes whether his valuation is high or low, which stochastically depends upon the seller's effort level (hidden information). The parties are risk neutral, they can rule out renegotiation and write complete contracts. It is shown that the first best cannot be achieved whenever the ex post efficient trade decision is trivial. The second-best contract is characterized and an application of the model to the choice of risky projects is briefly discussed.Hidden Action; Hidden Information; Hold-up Problem

Monopolistic Licensing Strategies under Asymmetric Information

Consider a research lab that owns a patent on a new technology but cannot develop a marketable final product based on the new technology. There are two downstream firms that might successfully develop the new product. If the downstream firms' benefits from being the sole supplier of the new product are private information, the research lab will sometimes sell two licences, even though under complete information it would have sold one exclusive licence. This is in contrast to the standard result that a monopolist will sometimes serve less, but never more buyers when there is private information.Licences; Innovation; Monopoly; Private information

On contractual solutions to hold-up problems with quality uncertainty and unobservable investments

A seller and a buyer can write a contract. After that, the seller produces a good. She can influence the expected quality of the good by making unobservable investments. Only the seller learns the realized quality. Finally, trade can occur. It is always ex post efficient to trade. Yet, it may be impossible to achieve the first best, even though the risk-neutral parties are symmetrically informed at the contracting stage and complete contracts can be written. The second best is characterized by distortions that are reminiscent of adverse selection models (i.e., models with precontractual private information but without hidden actions).Hold-up problem; hidden action; hidden information; common values

Partial Privatization and Incomplete Contracts: The Proper Scope of Government Reconsidered

In this paper it is argued that privatization is not the only alternative to public ownership. Adopting the incomplete contract approach, it is shown that partial privatization may well be the optimal ownership structure. While in the standard incomplete contract model joint ownership is usually dominated, it is shown here that joint ownership in the form of partial privatization can be optimal since it mitigates the disadvantages of public ownership (no incentives to improve quality if the manager invests or too strong incentives if the government invests) and of privatization (too strong incentives for the manager to reduce costs).Partial Privatization; Public Ownership; Incomplete Contracts

Carl Menger’s “Money” and the Current Neoclassical Models of Money

The paper analyzes three neoclassical models of money with emphasis on the equilibrium concepts employed. It is argued that the neoclassical theories fail to analyze the emergence of the social institution of money. Instead, they focus on the consistency of individual decisions regarding the rational acceptability of intrinsically worthless objects given the social institution of money and the Pareto superiority of the allocations in monetary vis-à-vis barter economies. The equilibrium concepts employed by neoclassical theories are not suitable for the study of the emergence of new electronic payment systems. Instead, a theory of the emergence of social institutions, of institutional change is required: the Mengerian method of institutional analysis.Electronic money, monetary theory, Menger

On simple contracts, renegotiation under asymmetric information, and the hold-up problem

In this paper it is demonstrated that voluntary bargaining over a collective decision under asymmetric information may well lead to ex post efficiency if the default decision is non-trivial. It is argued that the default decision may be interpreted as a 'simple' contract that the parties have written ex ante. This result is used in order to show that simple unconditional contracts which are renegotiated may allow the hold-up problem to be solved, even if the parties' valuations are private information.Contract theory; Private information; Hold-up problem

On the Joint Use of Liability and Safety Regulation

The efficiency of two different means of controlling hazardous economic activities, namely ex post liability for harm done and ex ante safety regulation, is re-examined. Some researchers have stressed that the complementary use of these two instruments can be socially advantageous. Here it is argued that the models which have been built in order to support this view crucially depend on the assumption that there are persistent enforcement errors. It is demonstrated that such a rather unsatisfactory assumption is not needed if wealth varies among injurers.Liability; Safety Regulation