Journal of Public Economic Theory最新文献

We investigate the extent to which Ramsey's conjecture holds in an infinite-horizon model with two agents in strategic interaction. Our model can also be interpreted as a dynamic contest game with resource constraints and an endogenous winning prize. We show that the most patient agent holds all productive resources in the long run (consistent with Ramsey's conjecture) if he is sufficiently productive. However, under different parameter values, a steady state may arise in which both agents have positive amounts of resources or, surprisingly, in which the least patient agent holds all resources. Our results also shed light on the comparative effects of ability versus patience on the long-run equilibrium behavior in dynamic contests.

This study examines the welfare effects of tariff simplification—a shift from a specific to an ad valorem tariff—in an import trade model featuring a domestic and a foreign firm with international cross-ownership. We find that in the absence of cross-shareholdings, tariff simplification increases tariff revenue and domestic social welfare without affecting the domestic firm's profit. However, when cross-shareholdings are present, tariff simplification induces an output-reallocation effect, which shifts some output from the foreign firm to the domestic one, and thus may reduce both firms’ profits, tariff revenue, domestic social welfare, and global welfare. Consequently, an ad valorem tariff can be Pareto-inferior to a specific tariff under international cross-ownership. Extending the model to a reciprocal dumping framework with symmetric linear demands in both countries, we find that with symmetric cross-ownership, tariff simplification harms (benefits) the country with a more (less) efficient domestic firm. Furthermore, when firms have asymmetric production efficiencies, tariff simplification reduces global welfare.

We construct a model of a principal-agent game of network formation (over layered networks) with asymmetric information and consider the following two questions: (1) Is it possible for the principal to design a mechanism that links the reports of agents' private information and the set of connections allowed and recommended by the principal via the mechanism in such a way that players truthfully reveal their private information to the principal and follow the recommendations specified by the mechanism. (2) An even more fundamental question we address is whether or not it is possible for the principal to achieve the same outcome (as that achieved via a mechanism and centralized reporting) by instead choosing a profile of sets of allowable ways an agent (a player) can connect to a club (here modeled as player-club pair specific sets—or catalogs—of arc types) and then delegating connection choice to the player. We call this approach to network formation with incomplete information delegated networking and we show, under relatively mild conditions on our game-theoretic model, that strategic network formation with incomplete information, implemented via a mechanism and centralized reporting, is equivalent to implementation via arc catalogs and delegated networking with monitoring. Because the principal's problem over connection catalogs can be shown to have a solution, our equivalence result allows us to show that the principal's much more difficult problem over incentive compatible network formation mechanisms has a solution.

This paper develops a unified theoretical framework to explain why informal collective agreements frequently persist even when they deviate from welfare-maximizing rules. It addresses four empirical puzzles of cooperation, commitment without enforcement, persistence of inefficient rules, the ambiguous role of inequality, and the coexistence of unequal treatment with equalizing outcomes, by introducing the concept of robustness: the ability of a rule to sustain cooperation under the weakest incentive conditions. Within a common stochastic repeated-game setting, two archetypal forms of collective agreements are examined: club good agreements, with unequal contributions and equal benefits, and common pool agreements, with equal contributions and unequal benefits. Robust agreements are shown to exist broadly and to differ systematically across these institutional forms, yet in both cases, they minimize incentives to deviate while compressing disparities in expected utility. The analysis reconciles diverse empirical regularities, such as partial pooling, persistent inequality, and stability of informal arrangements, by shifting the focus from efficiency to robustness as the key organizing principle of sustainable cooperation under heterogeneity.

In many countries, insurers build preferred provider networks to reduce costs. In this paper, we address the issue of the optimal size of such networks. Considering the case of medical services whose price is not regulated, we assume that the insurer sets a number $��m�$ of in-network providers and organizes price competition to select the preferred providers among $��n�$ suppliers. Policyholders benefit from a higher reimbursement when they choose an in-network provider. We show that both in-network and off-network prices decrease with the number of in-network providers, that the largest possible network is optimal for the representative policyholder and for a not-for-profit insurer while a network with only one provider is preferred by a for-profit insurer.