1,720,980 research outputs found
Mergers under endogenous minimum quality standard: a note
No full textWe introduce merging strategies and endogenous MQS, borrowed from Ecchia and Lambertini (1997), in Scarpa (1998). MQS induces the low-quality firm to exit the market and leads to a monopoly arising from the bilateral merger of the high-quality firm
Public investment and education inequality
No full textTheory fails to predict clearly whether a greater public investment in the higher education system effectively decreases the inequality between the educational attainment of rich and poor students. It is assumed that a rich student enrolled at a university receives a monetary transfer from his parents and allocates it between private consumption and investment in private education. When private and public educational investments are substituted, it is found that a further public investment narrows the educational gap. This result is due to the behavior of rich households. Once public investment has increased, rich students and their parents reduce private investments and monetary transfer, respectively; this allows the education of the poor student to increase more than the education of the rich one. This result also holds under weak complementarity
Horizontal mergers: a solution of the insiders' dilemma
No full textWe show that in a three-firm infinitely repeated Cournot game, there exists a stick and carrot strategy equilibrium in which an exogenous bilateral horizontal merger is profitable and the incentive to remain out of the merger disappears. In this sub-game perfect equilibrium, the merged entity produces the duopoly quantity and the outsider limits its production to half the duopoly quantity. Our stick and carrot strategy entails that the merged entity threatens to produce twice the triopoly quantity for two periods if the outsider does not produce half the duopoly quantity. In this equilibrium, the aggregate price remains high enough to make the merger profitable for the insiders. Also, the quantity produced by the outsider is sufficiently low to eliminate the difference between the profit of the outsider and the merging firm
Local public education and childless voting: the arising of an "ends with the middle" coalition
No full textIt is shown that local provision of public education increases the human capital of school-age children and the value of the housing. The second effect, called capitalization, means that the higher the expenditure in local public education, the higher the value of the housings. In a two-community model, we show that when capitalization is sufficiently strong, the marginal benefit from the higher tax, capitalized into the housing price, allows childless households to vote for a positive tax. In particular, low income childless households vote for a tax raise when capitalization is strong, whereas high income childless supports a higher tax when capitalization is weak. The median income voter is never pivotal because "ends with the middle" coalitions arise; high income households (with and without a child) make coalition with middle income class with a child, whereas low income households (with and without a child) make coalition with childless middle income class. We find that the income of the childless median voter is higher than the median income, whereas the median voter with a child has income lower than the median. Thus, the equilibrium tax preferred by the median voter (childless or not), is higher than the tax preferred by the childless median income voter and lower than the tax preferred by the median income voter with a child. This result implies that it is not possible to exclude voting equilibria in which the tax of the childless median voter is higher than the tax of the median voter with a child. When capitalization disappears, only households with a child vote for a positive tax, coalitions among the voters with and without a child arise to block public provision of local educatio
University choice, peer group and distance
No full textWe analyze how authorizing a new university affects welfare when the students’ education depends on the peer group effect. Students are horizontally differentiated according to their ability and the distance from the university. Comparing a monopolistic university with a two-universities model we find that allowing a “new” university is welfare improving when the monopolistic university is only attended by able students with less mobility constraints. This occurs when mobility costs are sufficiently high. When mobility costs are low, a negative externality arises and welfare decreases. The negative externality comes through the peer group effect: high ability students that would have gone to the monopolistic university go to the university with the lower average ability. These students end up in a university with students whose ability was not high enough to go to the monopolist. On the other hand, students remaining in the good university benefit from a lower average ability. Thus, a new university is welfare improving only for those with low ability that in the monopolistic scenario would remain unskilled. When, instead, the mobility cost is high, the monopolist leaves out a significative mass of individuals. In this case, no negative externality arises because no student swaps university therefore a "new" university is welfare improving. However, this welfare improvement makes the opportunities for a higher education less equal (according to Romer, 1998) because an "external circumstance" like mobility cost, rather than own ability, becomes the main determinant of the students’ human capital
Relational Voluntary Environmental Agreements with Unverifiable Emissions
No full textEnvironmental regulation and pollution control may clash against the presence of unverifiable tasks, like source-specific emissions. To tackle this issue, we reshape a voluntary agreement instrument, already available in the existing literature, from a dynamic perspective by means of a relational contracting approach. We define a Relational Voluntary Environmental Agreement (RVEA) in an N firms symmetric context, and show that even if emissions are not contractible across firms, and therefore enforcement cannot be delegated to a third party, if firms are sufficiently patient, a self-enforcing RVEA induces the achievement of the environmental objective. Finally, our welfare analysis reveals a notable result: our RVEA can imply less free riding and be welfare-improving with respect to a Voluntary Environmental Agreement enforced by a third party (along the lines of McEvoy, D. M., and J. K. Stranlund. 2010. "Costly Enforcement of Voluntary Environmental Agreements."Environmental and Resource Economics 47: 45-63)
Transparency in repeated procurement. When hiding is better
Full text linkIn this paper we study the effect of transparency on the willingness to collude in repeated procurement competitive tenderings. We allow the buyer to postpone the revelation of the winner's identity and show that such a policy may make collusive agreements less stable in both simultaneous and sequential competitive procedures. When the buyer postpones the revelation of the winner's identity in a scenario in which colluding and "honest" (never colluding) firms participate to the same tendering, the threat of a retaliation, by means of an aggressive bidding by the colluding firms, is weakened and collusion is less stable
Teaching an Old Dog a New Trick: Reserve Price and Unverifiable Quality in Repeated Procurement
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