Journal of Public Economic Theory最新文献

Tradeable permits and emissions taxes are compared in a multi-country global emissions game with perfectly competitive firms and a trans-boundary production externality. In a one-shot game, comparing welfare under the Nash equilibria, it is shown that tradeable permits are superior to emissions taxes. In an infinitely-repeated game, comparing the discount factors required to sustain a global International Environmental Agreement (IEA), it is shown that it is easier to sustain cooperation with tradeable permits than with emissions taxes when the number of countries is sufficiently large. In a coalition-formation game, the number of countries in a stable IEA is two with tradeable permits, but may be all countries in the world with emissions taxes.

Polarization is considered one of the most serious challenges in democratic countries. While substantial evidence points to exaggerated perceptions of polarization—called false polarization—whether it can persist in the long run remains understudied. This paper develops a social learning model in which each citizen belongs to either of two political groups and holds either of two attitudes on a controversial issue. In each period, two citizens—one from each group—publicly express their opinions on the issue. Citizens havePolitical polarization is considered one of the conformity motives, but their distribution could be misperceived. We show that false polarization may arise as pluralistic ignorance even when the majority shares the same attitude across the two groups. Specifically, when citizens underestimate others' conformity motives, perceived polarization can trigger a self-reinforcing spiral, leading both groups to appear polarized. Consequently, both groups may continue to publicly express different opinions. Finally, we discuss conditions under which the formation of echo chambers either mitigates or exacerbates false polarization.

This paper analyzes the stationary welfare and local stability implication of useful public spending in a discrete-time one-sector monetary economy with Taylor rule. Public spending, financed through a flat income tax, is useful and exerts externalities on production. In our economy, money is needed for transaction purposes. We show that the introduction of a public spending exerting externality in the production may lead to multiplicity and indeterminacy. When the externality in production is low enough, under a passive interest rate feedback rule, two steady states emerge and could be either locally determinate or indeterminate, depending on the interplay between the intertemporal elasticity of substitution of consumption and the elasticity of the interest rate, while under an active interest rate feedback rule, two interior locally determinate steady states and two liquidity trap locally determinate steady states exist. When externality in production is high enough, a unique local determinate interior steady state occurs, while under an active interest feedback rule, a unique liquidity trap steady state and a unique interior steady state occur, and both are locally determinate. When both two interior steady states and two liquidity trap steady states exist, when the capital stock is low, the interior steady state has a higher level of capital than the one of the liquidity trap, while, when the capital stock is high, it is the liquidity trap steady having a higher level of capital. Finally, liquidity trap equilbria Pareto-dominate the interior equilibria in view of the zero cost of money.

In group conflicts, individuals often have diverse preferences, such as maximizing personal payoff, maximizing the group's payoff, or defeating rivals. When these preferences coexist, isolating their impact on conflict outcomes becomes challenging. To disentangle in-group and out-group preferences, we conduct a group contest experiment in which human in-group or out-group players are replaced with historical subjects to maintain strategic similarity. Our study aims to explore (i) the variation in effort in group conflicts due to in-group and out-group preferences and group cohesion, and (ii) how the impact of these preferences changes when the two groups have explicitly different categorical identities. Surprisingly, our results indicate an absence of overall treatment effects on effort levels. However, the presence of in-groups has heightened concerns about individual payoffs. When out-groups are introduced, these concerns are moderated by an additional focus on the group's payoffs. The negative effect of the in-group preferences and the positive effect of the out-group preferences are weaker when group members have a common categorical identity.

In a vertically differentiated duopoly where consumers have heterogeneous preferences over the hedonic and environmental attributes of goods, we explore the effects of antihedonism and environmentalism, intended here as cultural paradigms altering consumers' preferences. We find that in a market where consumers prioritize hedonic concerns, antihedonism can reduce consumer surplus (CS), whereas an increase in environmentalism can raise CS. However, advocating for environmentalism over hedonism so that consumers prioritize environmental concerns can result in a significantly lower environmental surplus.

This paper analyzes the effects of an increase in earnings inequality between skilled and unskilled workers (rising skill premium) on education decisions, intraskilled inequality, and intergenerational mobility, depending on the way higher education is funded. The rise in the skill premium encourages higher education enrollment. When higher education is costly for individuals or their families, a rising skill premium (i) improves the relative position of children from skilled families, (ii) reduces interskill intergenerational mobility, and (iii) fosters inequality across skilled workers (“intraskilled inequality”). The impact depends on education funding, and the only situation in which skilled families are not favored is when higher education is freely provided. In this case, the increase in university enrollment must come with an increase in public expenditure on higher education to prevent the deletion of the highest skills. These results are in line with the developments observed in the last four decades in advanced economies, where the constant increase in the skill premium has come with a general increase in the educational level of the population, which has been higher at the top of the skill ladder.