Voluntary Contributions to a Public Good: Non-neutrality Results / Contributions volontaires, biens publics

We show that the famous neutrality result in the theory of public good contributions (Warr, Kemp, Bergstrom, Blume and Varian) depends crucially on the assumption that agents do not take into account the effect of their public good contribution decisions on the relative price of the private goods. Thus, the scope of applicability of their result is not as large as one might at first think. Our non-neutrality results hold even if all countries are identical in technology, preferences, and endowments. Nous démontrons que le théorème sur l’invariance du stock total d’un bien public par rapport à la distribution de revenus n’est valable que si les contributeurs ignorent l’impact de leurs contributions sur le prix relatif des biens privés. Par conséquent, le résultat de Warr, Kemp, Bergstrom, Blume et Varian n’a qu’une sphère d’application limitée. Nos résultats sur le manque de neutralité sont valables même si les préférences, les technologies, et les dotations de ressources de tous les pays sont identiques.public goods, voluntary contributions,

A Note on Transversality Conditions

We derive a new transversality condition (which we prove to be necessary) for a class of infinite horizon optimal control problems.Transversality condition, Optimal control theory

RECYCLING WITH ENDOGENEOUS CONSUMER PARTICIPATION

We show that the cost of sorting and the network effects jointly determine the rate of participation of consumers in the process of recycling. The dominant producer of virgin material takes into account the recycling activities when it makes its pricing decision. The network effects can create multiplicity of steady-state equilibria. The government can improve welfare by influencing equilibrium selection.

Designing a Performance Indicator to Economize on Monopoly Subsidy

We provide a continuum of subsidy rules based on a performance indicator that induce a monopoly to choose the socially optimal production level. These subsidy rules result in a reduction of the amount of subsidy paid to the monopolist compared to the standard case where a constant subsidy rate is used. The subsidy rate depends on a state variable that reflects the monopolist's history of performance. This variable depreciates over time, therefore requiring a permanent effort of the monopolist to maintain it at an optimal level. In an example with a linear demand and no production cost, the subsidy costs of inducing efficiency are reduced by almost fifty per cent. On montre qu'il existe un continuum de règles de subvention basées sur un indice de performance qui peuvent inciter un monopoleur à produire la quantité qui maximise le bien-être social. Avec ces règles, le gouvernement paie un montant total qui est de beaucoup inférieur à celui qu'il devrait payer dans le cas standard d'un taux d'aide constante. Le taux de subvention variable dépend de la valeur d'un stock qui reflète l'histoire de performance du monopoleur.monopoly, intertemporal optimization, performance indicator, subsidy rules, optimisation temporelle, indice de performance, règles d'aide

Is Emulation Good for You? The Ups and Downs of Rivalry

We model the emulation between two athletes whose goals are fixed by their coaches. The coaches in turn engage in a game of goal setting. We analyze the equilibriums of that game. For some range of parameter values, there are only mixed equilibriums, where one coach randomizes his goals while the other coach uses a pure strategy. We show that it is in an athlete’s interest to have a stronger rival. Both athletes can gain if there is not a big gap between their ability levels. A very big gap, however, result in poorer performance of both. Nous étudions un phénomène d’émulation entre deux athlètes pour qui des objectifs sont axés par leur entraîneur. Cela conduit à un jeu stratégique entre les entraîneurs qui aboutit à un équilibre de Nash. Pour certaines valeurs des paramètres l’un joue une stratégie mixte tandis que l’autre joue une stratégie pure. On montre qu’il est très utile pour une athlète de se confronter à une autre athlète plus forte. Cela améliore la performance des deux. Si l’écart est trop grand, les conséquences sont très mauvaises pour les deux. Le vieil adage « Qui se ressemble s’assemble » se trouve validé.Emulation, Goal Setting, Émulation

Corrupt Local Government as Resource Farmers: The Helping Hand and the Grabbing Hand

We study the role of tax share and transparency of governance on growth and stagnation. A local government maximizes its private benefits using two activities. The first one consists of providing local public goods that help local firms to increase profits, thus enlarging tax revenue. The second one consists of extortion. We show that there is a threshold level of local government tax share, and a threshold level of transparency. Below these thresholds, the economy will stagnate and above them, the economy will achieve perpetual growth.corruption, growth, local government, tax share.