Journal of Public Economic Theory最新文献

This paper examines the optimal content regulation of direct-to-consumer advertisement (DTCA) by comparing two forms of DTCA—product-specific and category-specific—and identifies a key tradeoff which underlies this policy debate. Our analysis suggests that the optimal form of DTCA depends crucially on the cost effectiveness of DTCA and the market-size distortion induced by DTCA. When the cost of advertisement is high, there often exists a Pareto-improving policy choice: category-specific DTCA is preferred when the market-size distortion is more severe while produce DTCA is preferred when it is less so. As the cost decreases, however, a conflict emerges between pharmaceutical firms and patients: firms are worse off under product-specific DTCA while patients are better off. We also find that the physician's reluctance to persuade misinformed patients can actually alleviate the market-size distortion and hence be welfare-enhancing.

The literature featuring game–theoretical models aimed at explaining the effect of the status concerns on the voluntary provision of a public good is generally focused on snob agents, driven by a desire for exclusiveness. However, the social context literature highlights that status concerns can give rise to a desire, in some individuals to be different from the “common herd,” and in some others to conform with other people. We analyze a two-player public good game under two different settings: The standard case with two positional players (PPs), versus the case in which the positional player faces a conformist player (PC). Giving entrance to conformism has two main implications. Strong status concerns by both players can lead to a virtuous cycle in which the conformist player wishes to imitate the contributing behavior of the positional player, and the latter wishes to increase contribution to distinguish herself from the former. Then, the contribution to the public good can be higher than in the case with only snob agents. This higher contribution can increase social welfare, but only if endowments are not too large and the status concern of the positional player is not excessively high.

Empirical evidence suggests that credit markets can catalyze property rights reforms. We illustrate this in a theoretical framework where a borrower must expend costly effort to protect output from predation. We consider two possible equilibrium loan contracts. In the first, lenders leave the decision to protect output to borrowers. In the second, lenders set the standard of property protection as a precondition for lending. The second contracting regime results in a higher level of property rights enforcement. Significantly, the level of economic development determines the equilibrium contracting form and vice versa. Based on this analysis, we jointly determine the evolution of property rights and economic development. The analysis also sheds light on the environments that lead an economy to a low development trap with a poor quality of property rights institutions.

This study examines two different fiscal competition games under labor market imperfections. Given that capital moves across regions and affects regional employment, governments must choose the expenditure level and tax rate on such mobile capital by accounting for the effects of fiscal variables on both capital and labor. Therefore, governments may play these games with either the tax rates on mobile capital or with public expenditures. The presence/absence of absentee ownership of capital and employment externalities are significant factors that characterize two distinct Nash equilibria, one that occurs with tax competition and the other with expenditure competition. Contrary to the existing literature, tax rates under tax competition are likely to be lower than those under expenditure competition owing to employment externalities. In some cases, governments prefer to choose government expenditure as their strategic variable rather than the tax rate. The presence of employment externalities motivates governments to use such expenditure as the variable through which it may strengthen strategic effects.

We take an axiomatic approach to study redistribution problems when agents report income and needs. We formalize axioms reflecting ethical and operational principles such as additivity, impartiality and individual rationality. Different combinations of those axioms characterize three focal rules (laissez faire, full redistribution, and need-adjusted full redistribution) as well as compromises among them. We also uncover the structure of those compromises exploring the Lorenz dominance criterion as well as majority voting. Our analysis provides an axiomatic justification for a linear income tax system. We conclude our analysis resorting to Eurostat's Household Budget Survey from where we illustrate the different redistribution patterns accounting for needs across European countries.

It is well known that if the final goods producers adopt new technologies, the input suppliers with market power can extract more rent from the final goods producers by increasing the input prices. Higher rent extraction by the input supplier neither allows the licenser of the new technology to earn large profit nor helps welfare to increase much. In a model with an outside innovator (the licenser), a final good producer (the licensee) and an input supplier, we offer a new perspective to the literature by considering a licensing option, which is often observed in the business world, but ignored in the literature. We show that the licensing option offered by the outside innovator can prevent rent extraction by the input supplier. The innovator's profit and social welfare are higher under licensing option compared to a standard licensing contract with no option.

Government financing of charities influences their fundraising and private donations. To analyze competition between charities, we modify the model of fundraising introduced by Andreoni and Payne, where there are two groups of donors and two charities. We concentrate on warm-glow motivation for giving and highlight strategic interaction in the market for donations. The charities are output-maximizing, producing services with a purchased input and in-house managerial supervision. In the absence of public funding, fundraising by charities are strategic complement given fixed costs. We show that block grants can change the nature of the competition, making fundraising strategic substitutes if grants exceed fixed costs. A charity receiving a grant will optimally reduce its fundraising, but the level of service provision will also be affected by the fact that the competing charity will solicit more intensively. The competitor will deliver more services because it benefits from the reduction in solicitation by the grant recipient. In this setting, matching grants work much like block grants as charities in both cases will compete less intensively for donations. That is, incentives for fundraising are weaker with matching grants. However, if both instruments are used the impact of a matching grant depends on whether the block grant over- or undercompensates for fixed costs. An optimal funding policy must account for this interaction effect as well as the fungibility of support working through charity competition in the market for donations.

Recent evidence demonstrates that the perceived, not the actual, level of income inequality influences the redistribution policy. The perception of inequality, as conceptualized in this paper, is closely related to both objective inequality and prospect equality. An axiomatic system of individual preferences is suggested and demonstrated to characterize an index of perceived inequality. Prospect equality reflects the individual ideal level of equality, and it serves as a reference point for perception. I adopt the proposed notion to study voting on redistribution. I theoretically identify the conditions under which a more equal society will demand redistribution while a less equal society blocks redistribution. These insights help explain the redistribution puzzle observed across nations.

According to Phelps' Golden Rule, a rise in fertility decreases the optimal capital intensity, because a higher fertility increases the investment required to sustain a given capital intensity (the capital dilution effect). Using a matrix population model embedded in a two-period overlapping generation setting, we examine the robustness of that relationship to the partitioning of the population into two subpopulations having distinct fertility behaviors and entering the production process as distinct inputs. We show that, unlike what prevails under a homogeneous population, a rise in fertility (caused by a change in type-specific fertility) does not necessarily reduce the Golden Rule capital intensity. The intuition is that changes in type-specific fertility modify the composition of the labor force, which affects the marginal productivity of capital and the capital dilution effect. When the composition effect induced by the fertility change outweighs the standard capital dilution effect prevailing under a fixed partition of the population, a rise in fertility increases the optimal capital intensity. These results are robust to a finer description of heterogeneity, that is, a partitioning of the population into a larger number of subpopulations.

How does concern about genetic data privacy compare with other concerns? We conduct behavioral experiments to compare risk attitudes towards sharing genetic data with a healthcare provider with risk attitudes towards sharing financial data with a money manager. Both scenarios involve identical decisions and monetary stakes, permitting us to focus on how the framing of data sharing influences attitudes. To delve deeper into individual motivations to share data, we provide treatments that study how data sharers' altruism and trust affect their decisions. Our findings (with 162 subjects) indicate that individuals are more willing to risk a loss to privacy of genetic data (for an anticipated return framed as health benefits) than they are to risk loss of financial data (for an anticipated return in financial benefits). We also find that 50%–60% of data recipients choose to protect another person's data, with no significant differences between frames.