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 precipitation recycling network to assess freshwater vulnerability : challenging the watershed convention

Water resources and water scarcity are usually regarded as local aspects for which a watershed-based management appears adequate. However, precipitation, as a main source of freshwater, may depend on moisture supplied through land evaporation from outside the watershed. This notion of evaporation as a local "green water" supply to precipitation is typically not considered in hydrological water assessments. Here we propose the concept of a watershed precipitation recycling network, which establishes atmospheric pathways and links land surface evaporation as a moisture supply to precipitation, hence contributing to local but also remote freshwater resources. Our results show that up to 74% of summer precipitation over European watersheds depends on moisture supplied from other watersheds, which contradicts the conventional consideration of autarkic watersheds. The proposed network approach illustrates atmospheric pathways and enables the objective assessment of freshwater vulnerability and water scarcity risks under global change. The illustrated watershed interdependence emphasizes the need for global water governance to secure freshwater availability

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.

Saving behaviour and global imbalances: the role of emerging market economies

In recent years there has been considerable variation in savings patterns across countries and regions, with implications for the configuration of global current account balances, asset valuations and real interest rates. This paper looks at the empirical drivers behind these trends. It uses a reduced-form model that relates private savings to a set of economic fundamentals, while controlling for structural and institutional differences across countries. Addressing a typical shortcoming of the previous literature, estimates are obtained from a dynamic model, which accounts for cross-sectional heterogeneity. The results suggest that saving rates in emerging economies are higher than cross-country estimates based on fundamentals, particularly in Asia. Demographic factors and financial catching-up have been key drivers of the observed changes in savings in these economies. Looking ahead, the prospective population aging is likely to lead to a considerable fall in saving rates in many economies - albeit the process will take decades to unfold. Further progress in financial deepening in developing economies may be conducive to a redistribution of international saving flows and may potentially support a smoother adjustment of global imbalances. JEL Classification: E20, E60emerging economies, global imbalances, panel error correction model, pooled mean group estimation, Private savings

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