Selection of efficient institutions or policies in politics requires constituents to estimate the net benefits of political reforms. Political competition fails to inform constituents of the costs of forgone political alternatives. Ignorance of ‘political opportunity costs’ prevents the adoption of welfare enhancing reforms of public institutions and policies. The empirical record supports this contention.

The use of knowledge about society

Private ownership should generally be preferred to public ownership when the incentives to innovate and to contain costs must be strong. In essence, this is the case for capitalism over socialism, explaining the dynamic vitality' of free enterprise. The great economists of the 1930s and 1940s failed to see the dangers of socialism in part because they focused on the role of prices under socialism and capitalism and ignored the enormous importance of ownership as the source of capitalist incentives to innovate. Moreover, many of the concerns that private firms fail to address social goals' can be addressed through government contacting and regulation without resort to government ownership. The case for private provision only becomes stronger when competition between suppliers, reputational mechanisms, and the possibility of provision by private not-for-profit firms, as well as political patronage and corruption, are brought into play.

State Versus Private Ownership

This paper uses political reservations for women in India to study the impact of women's leadership on policy decisions. Since the mid-1990's, one third of Village Council head positions in India have been randomly reserved for a woman: In these councils only women could be elected to the position of head. Village Councils are responsible for the provision of many local public goods in rural areas. Using a dataset we collected on 265 Village Councils in West Bengal and Rajasthan, we compare the type of public goods provided in reserved and unreserved Village Councils. We show that the reservation of a council seat affects the types of public goods provided. Specifically, leaders invest more in infrastructure that is directly relevant to the needs of their own genders.

/pdf/women-as-policy-makers-evidence-from-a-randomized-policy-2t01edcd8c.pdf

Women as policy makers: evidence from a randomized policy experiment in india

We study shareholder returns for firms that acquired five or more public, private, and/or subsidiary targets within a short time period. Since the same bidder chooses different types of targets and methods of payment, any variation in returns must be due to the characteristics of the target and the bid. Results indicate bidder shareholders gain when buying a private firm or subsidiary but lose when purchasing a public firm. Further, the return is greater the larger the target and if the bidder offers stock. These results are consistent with a liquidity discount, and tax and control effects in this market.

https://www.jstor.org/stable/pdfplus/3094523.pdf

What Do Returns to Acquiring Firms Tell Us? Evidence from Firms That Make

We study shareholder returns for firms that acquired five or more public, private, and0or subsidiary targets within a short time period. Since the same bidder chooses different types of targets and methods of payment, any variation in returns must be due to the characteristics of the target and the bid. Results indicate bidder shareholders gain when buying a private firm or subsidiary but lose when purchasing a public firm. Further, the return is greater the larger the target and if the bidder offers stock. These results are consistent with a liquidity discount, and tax and control effects in this market. Takeovers are one of the most important events in corporate finance, both for a firm and the economy. Extensive research has shown that shareholders in target firms gain significantly and that wealth is created at the announcement of takeovers ~i.e., combined bidder and target returns are positive!. However, we know much less about the effects of takeovers on the shareholders of acquiring firms. Evidence suggests that these shareholders earn, on average, a zero abnormal return at the acquisition’s announcement, though there is tremendous variation in these returns. Researchers have been unable to successfully explain much of this variation, partially because the announcement of a takeover reveals information about numerous things. For example, Grinblatt and Titman ~2002, p. 708! state that the stock return at the time of the bid cannot be completely attributed to the expected effect of the acquisition on profitability, arguing that, “the stock returns of the bidder at the time of the announcement of the bid may tell us more about how the market is reassessing the bidder’s business than it does about the

https://leeds-faculty.colorado.edu/bhagat/ReturnsAcquiringFirms.pdf

What do returns to acquiring firms tell us? Evidence from firms that make many acquisitions

Using cross‐sectional time‐series data for U.S. counties from 1977 to 1992, we find that allowing citizens to carry concealed weapons deters violent crimes, without increasing accidental deaths. If those states without right‐to‐carry concealed gun provisions had adopted them in 1992, county‐ and state‐level data indicate that approximately 1,500 murders would have been avoided yearly. Similarly, we predict that rapes would have declined by over 4,000, robbery by over 11,000, and aggravated assaults by over 60,000. We also find criminals substituting into property crimes involving stealth, where the probability of contact between the criminal and the victim is minimal. Further, higher arrest and conviction rates consistently reduce crime. The estimated annual gain from all remaining states adopting these laws was at least $5.74 billion in 1992. The annual social benefit from an additional concealed handgun permit is as high as $5,000.

/pdf/crime-deterrence-and-right-to-carry-concealed-handguns-4zyekb7iw2.pdf

Crime, Deterrence, and Right-to-Carry Concealed Handguns

OPTIMAL penalties for corporate fraud require that firms face expected penalties equal to the total social costs of the crime. Yet formal courtimposed sanctions for committing fraud often represent a small fraction of the damage produced by the fraud. Alain Sheer and Chih-Chin Ho, for example, estimate that the median and mean ratios of criminal fines to the private loss from private fraud were .14 and .73 in 1988. The corresponding median and mean ratios for government procurement

The Reputational Penalty Firms Bear from Committing Criminal Fraud

This paper examines the growth of government during this century as a result of giving women the right to vote. Using cross‐sectional time‐series data for 1870–1940, we examine state government expenditures and revenue as well as voting by U.S. House and Senate state delegations and the passage of a wide range of different state laws. Suffrage coincided with immediate increases in state government expenditures and revenue and more liberal voting patterns for federal representatives, and these effects continued growing over time as more women took advantage of the franchise. Contrary to many recent suggestions, the gender gap is not something that has arisen since the 1970s, and it helps explain why American government started growing when it did.

/pdf/did-women-s-suffrage-change-the-size-and-scope-of-government-37q5gcpjbk.pdf

Did Women's Suffrage Change the Size and Scope of Government?

This paper examines the sizes of the fines, damage awards, remediation costs, and market value losses imposed on companies that violate environmental regulations. Firms violating environmental laws suffer statistically significant losses in the market value of firm equity. The losses, however, are of similar magnitudes to the legal penalties imposed; and in the cross section, the market value loss is related to the size of the legal penalty. Thus, environmental violations are disciplined largely through legal and regulatory penalties, not through reputational penalties.

The Reputational Penalties for Environmental Violations: Empirical Evidence

This paper examines the sizes of the fines, damage awards, remediation costs, and market value losses imposed on companies that violate environmental regulations. Firms that violate environmental laws suffer statistically significant losses in the market value of firm equity. The losses, however, are of similar magnitudes to the legal penalties imposed, and in the cross section, the market value loss is related to the size of the legal penalty. Thus, environmental violations are disciplined largely through legal and regulatory penalties, not through reputational penalties.

https://www.jstor.org/stable/10.1086/430806

John R. Lott

Papers

Crime, Deterrence, and Right-to-Carry Concealed Handguns

The Reputational Penalty Firms Bear from Committing Criminal Fraud

Did Women's Suffrage Change the Size and Scope of Government?

The Reputational Penalties for Environmental Violations: Empirical Evidence

The reputational penalties for environmental violations: empirical evidence