Journal of Public Economic Theory最新文献

We analyze the patent licensing contracts offered by an insider innovator that has private information about the quality of innovation that can be transferred to two downstream firms. When information is complete, the first-best choice is a pure-royalty contract which is accepted by both firms (i.e., is nonexclusive). When information is incomplete, however, no nonexclusive contract can be supported as a separating equilibrium; it can only be the case where the innovator sells an exclusive contract to only one firm or a nonlicensing contract where no license is sold. In particular, when the gap in the innovation between the efficient and inefficient type is sufficiently small, there does not exist any separating equilibrium. It is sharply different from the case of an outsider innovation, in which a separating equilibrium always exists.

Even among themselves, criminals are not seen as trustworthy. Consequently, a criminal organization needs to incentivize its members, either by threats of violence or by rewarding good behavior. The cost of using violence depends on the resources police allocate to investigating intraorganizational violence. This means that the police may affect the choice of an incentive scheme by the criminal organization. The design of the optimal strategy for crime control has to take this into account. We develop a model of an infinitely repeated criminal labor market where (i) a criminal organization hires and incentivizes members, and (ii) peripheral crime (crime outside the criminal organization) is a stepping stone to a career in organized crime. We establish that there are two possible optimal strategies for the police. (i) There are situations in which the optimal strategy for the police is to use all of their resources to decrease the efficiency of criminals. (ii) In other situations, the optimal strategy for the police is to spend the minimum amount of resources to ensure that the criminal organization cannot punish disloyal criminals, and spend the rest of their resources to decrease the efficiency of criminals.

The sustainability of resource use and the management of public finances are both long-run issues that are linked to each other through savings decisions. To study them conjointly, this paper introduces a public debt stabilization constraint in an overlapping generation model in which nonrenewable resources constitute a necessary input in the production function and belong to agents. It shows that stabilization of public debt at a high level (as share of capital) may prevent the existence of a sustainable development path, that is, a path on which per capita consumption is not decreasing. Public debt thus appears as a threat to sustainable development. It also shows that higher public debt-to-capital ratios (and public expenditures-to-capital ones) are associated with lower growth. Two transmission channels are identified. As usual, public debt crowds out capital accumulation. In addition, public debt tends to increase resource use which reduces the rate of growth. We also provide a numerical analysis of the dynamics that shows that the economy is characterized by saddle path stability. Finally, we show that the public debt-to-capital ratio may be calibrated to implement the social planner optimal allocation according to which the growth rate is increasing in the degree of patience.

We investigate an extension of the Hotelling–Downs model to the case where the preferences of the voters do not have to be single peaked. In the case where candidates only care about winning or losing, assuming that a voter elects each candidate symmetrically with equal probability when indifferent, previous works by Fisher and Ryan and by Laffond, Laslier, and Le Breton have shown that the equilibrium outcome of the model is unique. Uniqueness also holds in the case where candidates care about the strength of their majority. Our paper shows that furthermore the equilibrium is unique for small asymmetries in voter's behavior but not necessarily for large ones. In particular, if voters always vote for the incumbent rather than a newcomer when indifferent, the equilibrium policy outcome may fail to be unique. Moreover, we provide a further sufficient condition for uniqueness. Namely, suppose all voters vote for a given candidate with the same probability when indifferent. Then, if there is a Nash equilibrium in completely mixed strategies between the candidates, it is the only Nash equilibrium.

By considering combinations of a lump-sum fee and a per-unit royalty as licensing schemes in the transfer of new technology through licensing from a technology holder to oligopolistic firms, we investigate stable licensing schemes that are realized as bargaining outcomes. The licensing schemes agreeable to both the technology holder and licensees are necessarily rejection-proof; that is, no subgroup of licensees has an incentive to reject the licensing schemes. We newly define the rejection-proof core for each group of licensees as the set of rejection-proof licensing schemes for its group that are not dominated by any other rejection-proof licensing schemes for any licensees' group. Our principal findings are as follows: For the group of licensees that maximizes the sum of the technology holder's (gross) profit and licensees' total surplus, the rejection-proof core is always nonempty. Furthermore, from the perspective of profit maximization, the nonempty rejection-proof cores suggest that the technology holder should license the new technology to such a group.

This study explores the optimal taxation of participation within a monopolistically competitive product market that exhibits increasing markups. Individual labor supply responds along both intensive and extensive margins. The government simultaneously optimizes a nonlinear Mirrleesian income tax scheme, a flat profit tax rate, and a flat unemployment benefit. It is shown analytically that the monetized welfare cost of an increase in unemployment benefit is higher under monopolistic competition compared to under perfect competition. Nevertheless, numerical simulations suggest that the optimal unemployment benefit increases in response to greater markups when the government simultaneously optimizes all of its tools. The reason is that, along with a higher profit tax, rising markups require a decline in marginal income taxes. Lower marginal income taxes relieve the extensive margin distortions and accommodate an increase in the unemployment benefit. Accordingly, optimal nominal participation taxes remain approximately unchanged for the lower half of the ability distribution. For the upper half, the decline in income taxes outweighs the increase in the unemployment benefit, leading to lower optimal nominal participation taxes.

Rewards that consumers receive on credit card payments influence their payment choice. They are not taxed but merchants deduct card fees from their taxes. This article analyzes the tax effects in a model where card companies set interchange fees, merchants decide whether to accept card payments, and consumers choose their preferred payment method. I find that card companies raise interchange fees when merchants are allowed to deduct these fees from their taxes. Taxing consumers' card rewards reduces interchange fees. The optimal distribution of cash and card payments cannot be supported without a policy combination of taxes and regulated interchange fees.

The cultural diversity that new immigrants bring to the host economy is potentially beneficial for the productivity of both immigrants and natives, but immigrants must assimilate to some extent for these benefits to be realized. In general, immigrants assimilate more slowly than natives would like, as they ignore the external material benefits of assimilation for natives and their resistance to foreign cultural influences. We develop a formal framework that highlights the complementarity between immigrants' cultural assimilation, economic integration, and investment in human capital, indicating the scope for mutually beneficial policies, offering immigrants material incentives to assimilate more rapidly.

We investigate privatization decisions in a mixed oligopoly market, with and without environmental regulation. We consider three agents: the manager of the public firm, the environmental agency, and the regulator choosing privatization levels; allowing them to assign different weights to pollution. When environmental policy is absent, we find that privatization decisions in equilibrium suffer from agency problems, yielding potentially inefficient privatizations. When environmental regulation is present and privatization decisions precede this regulation, privatizations have no impact on equilibrium output; while the opposite holds when environmental policy is chosen first. Our results, then, identify the presence of a second-mover advantage when asymmetric government agencies act sequentially.

We construct a continuous-time overlapping generations model with an endogenous growth structure and consider fiscal sustainability under two fiscal rules: (i) the government fixes the budget deficit-to-GDP ratio and (ii) the government fixes the primary balance-to-GDP ratio. Under the constant budget deficit-to-GDP rule, fiscal sustainability is ensured when the initial public debt-to-GDP and budget deficit-to-GDP ratios are sufficiently small. Under the constant primary balance-to-GDP rule, it is difficult to ensure fiscal sustainability when the primary balance is in deficit or zero. However, fiscal sustainability is ensured when the primary balance is in surplus and the initial government debt-to-GDP ratio is sufficiently small.