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Equal rules or equal opportunities? Demystifying level playing field
TL;DR: In this article, the authors introduce two specifications of the concept of level playing field: a rules-based level-playing-field, which means that all firms in a market are treated the same in equal circumstances with regard to legislation, taxes, subsidies etcetera.
Abstract: Pleas for a level playing field, for instance in international trade, are often not well-founded. This is because it is not exactly clear what a 'level playing field' means. But even if it would be clear what the plea would imply, a level playing field is not always desirable from an economic perspective. To clarify the meaning of 'a level playing field' we introduce two specifications of the concept. First, a rules-based level playing field, which means that all firms in a market are treated the same in equal circumstances with regard to legislation, taxes, subsidies etcetera. Second, an outcome-based level playing field, which means that all firms in a market have the same expected profit. This means that, in case firms are heterogeneous, the government compensates the disadvantaged firms (for instance with subsidies). The first conclusion in the report is that a rules-based level playing field is desirable, although there are reasons to deviate from this assumption. The second conclusion is that it is never desirable to pursue a fully outcome-based level playing field, but that it may be desirable to level the playing field to a certain extent in the case of market failure. In case of market failure it is preferable to use symmetric rules (equal for all firms), in stead of asymmetric rules (favouring some firms). The report introduces a framework with questions that can help policymakers analyse level playing field issues. The framework makes clear that in general one cannot tell whether a plea for a 'level playing field' is justified or not. It is necessary to focus on the policy issues hidden behind the plea, i.e. policy issues concerning market failure, dynamic efficiency, redistribution of income and differences in preferences between countries.
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Book•
01 Dec 1989
TL;DR: Handbook of industrial organization, Handbook of industrial organisation as mentioned in this paper, and Handbook of Industrial Organization (HIO) [1], [2] and [3] [4].
Abstract: Handbook of industrial organization , Handbook of industrial organization , کتابخانه دانشگاه امام صادق(ع)
438 citations
Posted Content•
TL;DR: In this article, the allocation of credit in a market in which borrowers have greater information concerning their own riskiness than do lenders is examined and the authors suggest a role for government as the lender of last resort.
Abstract: This paper examines the allocation of credit in a market in which borrowers have greater information concerning their own riskiness than do lenders. It illustrates that (1)the allocation of credit is inefficient and at times can be improved by government intervention, and (2) small changes in the exogenous risk-free interest rate can cause large (discontinuous) changes in the allocation of credit and the efficiency of the market equilibrium. These conclusions suggests a role for government as the lender of last resort.
373 citations
Journal Article•
TL;DR: Theories of persistent inequality and intergenerational mobility (T. Bertola) as discussed by the authors have been proposed for the distribution of wealth in the United Kingdom and the United States of America.
Abstract: Introduction. Income distribution and Economics (A.B. Atkinson, F. Bourguignon). Social justice and distribution of income (A.K. Sen). Measurement of inequality (F.A. Cowell). Three centuries of inequality in Britain and America (P.H. Lindert). Historical perspectives on income distribution: The case of Europe (C. Morrisson). Empirical evidence on income inequality in industrialized countries (P. Gottschalk, T.M. Smeeding). Income poverty in advanced countries (M. Jantti, S. Danziger). Theories of the distribution of earnings (D. Neal, S. Rosen). Theories of persistent inequality and intergenerational mobility (T. Piketty). Macroeconomics of distribution and growth (G. Bertola). Wealth inequality, wealth constraints and economic performance (P. Bardhan, S. Bowles and H. Gintis). The distribution of wealth (J.B. Davies, A.F. Shorrocks). Redistribution (R. Boadway, M. Keen). Income distribution and development (R. Kanbur). Income distribution, economic systems and transition (J. Flemming, J. Micklewright).
217 citations
TL;DR: This article conducted a meta-analysis to determine what it is about ECA participation that supports positive educational outcomes and concluded that the lack of evidence supporting the causal effects, and thus the common theoretical assumptions about the effects of ECA on educational outcomes, is due to methodology limitations in these studies.
Abstract: Secondary schools tend to sponsor a large number of extra-curricular activities (ECA) yet little is known about their contribution to students’ educational outcomes. This meta-analysis aims to determine what it is about ECA participation that supports positive educational outcomes. Furthermore, this study challenges the theoretical assumptions about the benefits of participation in ECA. 29 studies (all except for one based on data collected in the United States) met the search criteria for inclusion in the analysis. Most effect sizes on academic achievements yielded from non-specific ECA, academic clubs and journalism were small, as were participation in performing arts, sports and leadership activities on a range of educational outcomes. Although the results show associations between participation in ECA and educational outcomes, causal effects could not be confirmed. It is concluded that the lack of evidence supporting the causal effects, and thus the common theoretical assumptions about the effects of ECA on educational outcomes, is due to methodology limitations in these studies.
107 citations
TL;DR: In this paper, the authors argue that the playing field for the competition between European and Gulf carriers is unlevel and that the competitive threat of the Gulf carriers has been increasingly answered in Europe by protectionist measures.
Abstract: The competitive threat of the Gulf carriers has been increasingly answered in Europe by protectionist measures. This policy was justified by allegations of unfair competition and an unlevel playing field. Indeed it is obvious that the playing field for the competition between European and Gulf carriers is unlevel. The main cause however, is the location of the Gulf carriers' home bases that enable them to develop long-haul hourglass hubs and to benefit from technological economies of scale of a modern long-haul wide-body fleet. In this respect, unit costs of for example Emirates are not unusual if one takes into account these network and fleet characteristics. The other way around, European carriers have to operate from hinterland hubs and are consequently confronted with costly short-haul feeder systems due to the location of their home bases in the European market. All in all, the unlevel playing field is primarily caused by Ricardian comparative advantages of States in the Gulf region. The playing field is further tilted by EU policy measures to the detriment of the European network carriers. The third and least important category of factors that also tilt the playing field emerges from the economic and institutional conditions in the Gulf States. In contrast with the European approach these conditions work in the Gulf carriers' favour. Protectionist measures in Europe are primarily justified by this third and least important category.
34 citations
References
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TL;DR: In this paper, the authors present a struggling attempt to give structure to the statement: "Business in under-developed countries is difficult"; in particular, a structure is given for determining the economic costs of dishonesty.
Abstract: This paper relates quality and uncertainty. The existence of goods of many grades poses interesting and important problems for the theory of markets. On the one hand, the interaction of quality differences and uncertainty may explain important institutions of the labor market. On the other hand, this paper presents a struggling attempt to give structure to the statement: “Business in under-developed countries is difficult”; in particular, a structure is given for determining the economic costs of dishonesty. Additional applications of the theory include comments on the structure of money markets, on the notion of “insurability,” on the liquidity of durables, and on brand-name goods.
17,764 citations
7,666 citations
TL;DR: Optimal auctions are derived for a wide class of auction design problems when the seller has imperfect information about how much the buyers might be willing to pay for the object.
Abstract: This paper considers the problem faced by a seller who has a single object to sell to one of several possible buyers, when the seller has imperfect information about how much the buyers might be willing to pay for the object. The seller's problem is to design an auction game which has a Nash equilibrium giving him the highest possible expected utility. Optimal auctions are derived in this paper for a wide class of auction design problems.
6,003 citations
"Equal rules or equal opportunities?..." refers background in this paper
...46 Respectively Myerson (1981) and Ayres and Cramton (1996)....
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TL;DR: A Theory of Incentives in Procurement and Regulation (TIIN) as mentioned in this paper is a popular textbook for regulatory economics, with a particular focus on the regulation of natural monopolies such as military contractors, utility companies and transportation authorities.
Abstract: More then just a textbook, A Theory of Incentives in Procurement and Regulation will guide economists' research on regulation for years to come. It makes a difficult and large literature of the new regulatory economics accessible to the average graduate student, while offering insights into the theoretical ideas and stratagems not available elsewhere. Based on their pathbreaking work in the application of principal-agent theory to questions of regulation, Laffont and Tirole develop a synthetic approach, with a particular, though not exclusive, focus on the regulation of natural monopolies such as military contractors, utility companies, and transportation authorities. The book's clear and logical organization begins with an introduction that summarizes regulatory practices, recounts the history of thought that led to the emergence of the new regulatory economics, sets up the basic structure of the model, and previews the economic questions tackled in the next seventeen chapters. The structure of the model developed in the introductory chapter remains the same throughout subsequent chapters, ensuring both stability and consistency. The concluding chapter discusses important areas for future work in regulatory economics. Each chapter opens with a discussion of the economic issues, an informal description of the applicable model, and an overview of the results and intuition. It then develops the formal analysis, including sufficient explanations for those with little training in information economics or game theory. Bibliographic notes provide a historical perspective of developments in the area and a description of complementary research. Detailed proofs are given of all major conclusions, making the book valuable as a source of modern research techniques. There is a large set of review problems at the end of the book.
3,619 citations
TL;DR: The tax competition literature as mentioned in this paper argues that independent governments engage in wasteful competition for scarce capital through reductions in tax rates and public expendi- ture levels, and identifies efficiency enhancing roles for competition among governments.
Abstract: A central message of the tax competition literature is that independent governments engage in wasteful competition for scarce capital through reductions in tax rates and public expendi- ture levels. This paper discusses many of the contributions to this literature, ranging from early demonstrations of wasteful tax com- petition to more recent contributions that identify efficiency- enhancing roles for competition among governments. Such roles involve considerations not present in earlier models, including im- perfectly-competitive market structures, government commitment problems, and political economy considerations.
1,735 citations
"Equal rules or equal opportunities?..." refers background in this paper
...The central tenet of the corresponding literature is that uncoordinated taxation leads to results that may be optimal from the perspective of the individual government, but are suboptimal from a communal perspective (Wilson, 1999)....
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