Showing papers on "Subsidy published in 1998"

How valuable is patent protection? Estimates by technology field

Abstract: I present evidence on the private value of patent rights in France for different technology fields and nationalities of ownership, using nonparametric techniques and a parametric model of patent renewal. I find that the distribution of the value of patent rights is highly skewed, that patent protection is a significant but not the major source of private returns to R&D, and that these characteristics vary across technology fields. I compute the R&D cash subsidy that is equivalent to the value of patent rights, measure the variations in value of time, technology fields, and nationalities, and show that these differences are correlated with patent grant rates.

Sports, jobs, and taxes : the economic impact of sports teams and stadiums

Abstract: This book examines the economic impact of new stadiums or a sports franchise on the local economy. It explores such general issues as the appropriate method for measuring economic benefits and costs, the source of the bargaining power of teams in obtaining subsidies from local government, the local politics of attracting and retaining teams, the relationship between sports and local employment, and the importance of stadium design in influencing the economic effects of a facility. The book also contains case studies of major league sports facilities in Baltimore, Chicago, Cincinnati, Cleveland, Indianapolis, San Francisco, and the Twin Cities and of minor league baseball stadiums and spring training facilities. The primary conclusions are the sports teams and stadiums are not a source of local economic growth and employment; the size of the net subsidy exceeds the financial benefit of a new stadium; and cities are probably willing to subsidize sports teams because of the intense popularity of sports among a substantial proportion of voters and businesses and the leverage that teams enjoy from the monopoly position of professional sports leagues.

Mixed Oligopoly, Privatization, and Strategic Trade Policy

Abstract: This paper investigates the effects of privatization in the presence of strategic trade policies within an international mixed oligopoly serving a single market. If the government uses a domestic production subsidy, then welfare is always increased with privatization, while the optimal subsidy falls. If the government uses an import tariff, privatization increases welfare over much of the parameter space. The optimal tariff, however, may rise or fall. In recent years, many countries around the world are privatizing their state-owned industries. At the same time, many of these countries are also showing remarkable changes in their economic policies toward international trade. On many occasions, tariffs are significantly altered and domestic production subsidies are substantially reduced. For example, Russia has privatized its aircraft industry and doubled its tariff on imported aircraft. Colombia has privatized its stateowned automobile maker Colombia Automotriz and reduced the import tariffs on foreign-made cars. In Argentina, the government is pursuing a policy of selective privatization and subsequent reduction of subsidies. In Western Europe countries such as Germany and Spain have privatized their major airlines (Lufthansa and Iberia, respectively) and significantly reduced subsidies. What is the connection between privatization and strategic trade policies? Does privatization require a welfare-maximizing government to alter trade barriers? The objective of this paper is to answer these questions by investigating the interaction between privatization and strategic trade policies. The effects of privatization are typically analyzed in the context of mixed oligopoly models, where state-owned welfare-maximizing public firms interact with profit-maximizing private firms.1 We investigate the interaction between privatization and strategic trade policies by incorporating strategic trade instruments in an international mixed oligopoly model. Specifically, we consider two strategic trade instruments: an import tariff and a domestic production subsidy. The government chooses the optimal level of tariff or subsidy to maximize domestic welfare. For each trade instrument, we primarily focus on two questions. First, does privatization increase

Beyond the nation state

Abstract: Ironically, developed societies at century's end must confront the return of a problem that they seemed, under the pressure of system rivalry, to have just solved. It is a problem as old as capitalism itself: how to exploit the allocative functions of self‐regulating markets effectively without incurring unequal distribution and social costs that undermine the integration of liberal societies. In the West's mixed economies, the state—with much of the national product at its disposal—had gained a certain latitude for making transfer and subsidy payments and, on the whole, for establishing efficient policies for employment, infrastructure and social security. The state could influence the overall conditions of production and distribution, with the aim of achieving growth, price stability and full employment. In other words, the regulatory state could, through growth inducements on the one hand and social policy on the other hand, simultaneously stimulate the economy and guarantee social integration. To guar...

First-time Home-ownership in the Family Life Course: A West German-Dutch Comparison:

Abstract: The transition to first-time home-ownership is made at increasingly younger ages in both West Germany and the Netherlands. This trend is stronger in the Netherlands than in Germany, however. There are also marked differences between the two countries in the extent to which first-time home-ownership is connected with events in the family life course (marriage and childbirth) and the availability of resources from the parental family. These differences can be understood in terms of differences in house prices, housing policy (subsidies and other regulations) and other differences in the legal and financial systems.

Law, Finance and Firm Growth

Abstract: We investigate how differences in legal and financial systems affect firms' use of external financing to fund growth. We show that in countries whose legal systems score high on an efficiency index, a greater proportion of firms use long-term external financing. An active, though not necessarily large, stock market and a large banking sector are also associated with externally financed firm growth. The increased reliance on external financing occurs in part because established firms in countries with well-functioning institutions have lower profit rates. Government subsidies to industry do not increase the proportion of firms relying on external financing.

Subsidies in World Fisheries: A Reexamination

Abstract: Fisheries in the world are reaching a turning point. Many of the traditional most highly valued stocks are fully or overexploited in a biological sense; in economic terms most fisheries employ excessive fishing effort to reach current levels of production. Ineffective management systems will govern exploitation of most major fishing stocks. Paradoxically, fisheries management effectiveness is being undermined by the very subsidies that are provided to maintain fisheries sector income. This study examines the role of subsidies in explaining the obvious and injurious mismatch between fishing effort and biological production capacity. It uses the definition and methodology of the World Trade Organization on Subsidies and Countervailing Measures of 1994 in defining the nature and size of subsidies to the sector and their impact, based on case studies for Japan, the European Union, Norway, the United States, Russia, and China. It covers the subsidies explicitly covered in the WTO agreement--including those that that are part of public budgets covering operations in local and foreign waters, and unbudgeted subsidies--including subsidized sectoral lending, tax preferences, cross-sectoral subsidies, and infrastructure. In addition, subsidies that are implied by the WTO agreement, like resource rent subsidies and conservation subsidies are assessed in some detail.

Perverse Subsidies: How Tax Dollars Can Undercut the Environment and the Economy

Abstract: Much of the global economy depends upon large-scale government intervention in the form of subsidies, both direct and indirect, to support specific industries or economic sectors. Distressingly, many of these subsidies can be characterised as "perverse"-rather than helping society achieve a desired goal, they work in the opposite direction, causing damage to both our economies and our environments. World-wide subsidies have long been thought to total $2 trillion per year, but until now, no attempt has been made to determine what proportion of that actually subverts the public interest. In Perverse Subsidies, leading environmental analyst Norman Myers takes a detailed look at the subject, offering a comprehensive view of subsidies world-wide with a particular focus on the extent, causes, and consequences of perverse subsidies. He defines many different kinds of subsidies, from tax incentives to government handouts, and considers their wide-ranging impacts, as he: - examines the role of subsidies in policymaking - quantifies the direct costs of perverse subsidies - examines the major subsidies in agriculture, energy, road transportation, water, fisheries, and forestry - considers the environmental effects of those subsidies - offers policy advice and specific recommendations for eliminating harmful subsidies The book provides a valuable framework for evaluation of perverse subsidies, and offers a dramatic illustration of the scale and dimensions of the problem. It will be the standard reference on those subsidies for government reform advocates, policy analysts, and environmentalists, as well as for scholars and students interested in the interactions between policymaking and environmental issues.

Dealing with Public Risk in Private Infrastructure

Abstract: This volume reports on the findings of a conference on managing government exposure to private infrastructure projects. The transfer of risk to private operators should lead to the development of new infrastructure, improvements in the operation of existing infrastructure, and a reduction in budgetary subsidies. Yet it also raises problems for governments. Infrastructure privatization in the developing world has frequently been accompanied by extensive residual risk-bearing by governments, which threatens to vitiate its efficiency benefits and confront future governments with large financial liabilities. To solve these problems governments need to institute policies that make investment attractive even in the absence of extensive guarantees. With these policies in place, developing country governments should be able to restrict their risk-bearing to certain political and regulatory risks over which they have direct control. When governments do provide guarantees they should attempt to measure the costs of these guarantees and improve the way they treat them in their accounts and budgets. Measurement and budgeting are critical to improving decisions about whether to provide guarantees, to improving project selection and contract design, and to protecting governments from unknowingly entering into commitments that might jeopardize future budgets.

The potential and limitations of self-targeted food subsidies

Abstract: Can self-selection of subsidized commodities be used as a mechanism to transfer income to the poor? Evidence from two self-targeting programs, one in South Africa and one in Tunisia, shows that although self-targeting can clearly improve the distribution of food subsidies to the poorest members of society, its power to alleviate poverty and reduce income disparities is limited by preference patterns, income inequality, and the size of the individual subsidies. Self-targeting through quality and product differentiation can be a useful means to reform existing universal subsidy schemes, but it should be considered a transitional tool while the capacity for implementing more precise mechanisms is developed.

Part-time versus full-time work and child care costs: evidence for married mothers

Abstract: This paper contributes to the analysis of female labour supply by accounting for both child care costs and differences in part-time and full-time work. An ordered probit model is used to examine the impact of child care costs on the work status of married mothers. Data are drawn from the Canadian National Child Care Survey and the Labour Market Activity Survey. The results from this paper show the degree to which child care subsidies may have differential impacts on part-time and full-time work decisions by mothers: the child care cost elasticities for part-time and full-time employment are reported to be -0.21 and -0.71, respectively.

Privatization, Competition, and Budget Constraints: Disciplining Enterprises in Russia

Abstract: We investigate whether privatization, competitive forces, and hardening of budget constraints have yet begun to play efficiency-enhancing roles in Russia. The empirical work is based on information from a 1994 survey of privatized and state-owned Russian firms, together representing around 10 percent of Russian manufacturing output. We find robust evidence of a positive impact of privatization on labor productivity: in our basic specifications, we estimate that a ten percentage point increase in private share ownership raises real sales per employee by three to five percent. The evidence for the effect of product market competition is much weaker, depending on measurement and model specification: in some equations, domestic sales concentration is estimated to have a negative impact and the geographic scope of markets a positive effect on productivity, but the results are sensitive to minor changes in specification, and import penetration is never estimated to play a positive disciplinary role. While subsidies (soft budget constraints) are estimated to reduce the pace of restructuring in most of our models, the effect is usually small and rarely precisely estimated. We find some evidence that privatization and subsidy reduction are substitutes, that privatization and competition are complements when the latter is measured as the geographic scope of markets, and that competition and subsidy reduction are independent, in their impacts on Russian enterprise productivity.

Targeted and Untargeted Subsidy Schemes: Evidence from Postdivestiture Efforts to Promote Universal Telephone Service*

Abstract: Normative economic analysis traditionally has pointed toward the merits of policies wherein prices reflect the economic cost of providing a good or service. Subsidization policies are, nevertheless, common in a variety of industries. Where such subsidies occur, economists have long advocated targeting those subsidy flows to maximize their effectiveness and minimizing the allocative inefficiency caused by financing of the subsidy. Despite the apparent consensus in economic thought on this subject, empirical evidence of the relative effectiveness of targeted versus untargeted subsidies to date has been lacking. In this article, we address this lacuna by examining a set of large‐scale targeted and untargeted subsidy flows that have developed side by side, each with the same nominal policy goal—promoting universal telephone service. Specifically, we test empirically the relative contributions of the alternative subsidy mechanisms in promoting the policy goal of maximizing subscription to the public s...

Agricultural Trade Policy: Completing the Reform

Abstract: The Uruguay Round Agreement on Agriculture (URAA) replaced non-tariff barriers with bound tariffs, curbed subsidies, and codified domestic agricultural programmes. This study argues that multilateral, regional, and unilateral paths could be coordinated to liberalize agricultual trade.

From Growth Theory to Technology Policy - Coordination Problems in Theory and Practice

Abstract: Economists, in particular Bresnahan and Trajtenberg (1995), have recently drawn attention to the importance of generic or general purpose technologies (GPTs) and their significance for economic growth. An interesting part of this research identifies coordination problems in the introduction of GPTs, and the potentially large benefits in coordinating research and product development. Thinking about information technology as a GPT, with the associated coordination problems, seems to fit well with the motivation behind governmental support schemes to IT and related high-tech industries in Norway. The first part of our study focuses on a series of such IT-programs that have been implemented in Norway from the early 1980s with the objective of coordinating the development of information technology and its application throughout the economy. We examine in some detail the largest of these IT-programs through its planning and implementation stages and emphasize how closely it is connected to recent economic analysis of GPTs. The second part of our study examines to what extent these governmental plans and subsidy schemes have been successful in creating economic results in terms of growth and profits in the IT and IT-related industries. In the final part of the paper we discuss some of the lessons about the problems with technology policy at a practical level.

Pollution Regulation and the Efficiency Gains from Technological Innovation

Abstract: Previous studies suggest a preference for emissions taxes over (non-auctioned) emissions permits and performance standards based on their potential for promoting technological innovation. We present simulation results that cast some doubt on the empirical importance of this assertion: the welfare gain induced by an emissions tax is significantly larger than that induced by other policies only in the case of very major innovations. We also find that the presence of technology spillovers per se does not necessarily imply large inefficiencies. Thus, despite spillovers, the welfare gain from additional policies to promote innovation (such as R&D subsidies) may be limited.

Co-optation, Competition, and Resistance: State and Street Vendors in Mexico City

Abstract: The growth of the urban informal economy in Latin America has generally been attributed to the failure of economic policy initiatives to stimulate sufficient job growth in the region to match the rapid increase in the urban labor supply. As import substitution, protectionism, and state ownership reached their limit in the late 1970s and early 1980s, a series of economic crises halted and even reversed the trend toward steadily increasing living standards that had been marked, for example, by the "Mexican Miracle" of the 1960s. Economic restructuring, initiated under pressure from the International Monetary Fund and similar international agencies, required that these nations follow a very different economic logic-privatization, export orientation, and the reduction of subsidies, sometimes referred to as "neoliberalism" (Roxborough, 1992). Although debate still rages about the longterm effect of these changes, there is little doubt that in the short term this period saw a tremendous growth in the informal sector as a growing proportion of the population searched for subsistence opportunities outside the stagnant formal sector. Although academic and governmental interest in the informal sector has focused primarily on its economic causes and effects, there is growing interest in its political implications. Defined as economic activity outside the normative regulatory system of the state (de Soto, 1989; Portes, Castells, and Benton, 1989), informality implies a series of strategies of evasion or resistance on the part of participants in the informal economy, who carry out their activity in the face of state indifference at best and state repression at worst. The significance of these strategies has often been overlooked, the assumption being that the state, unable or unwilling to enforce its regulations,

The Outsiders: Planning and Transport Disadvantage

Abstract: The notion of transport disadvantage and how it is addressed by planners in the United States, Australia, and the United Kingdom are examined in this paper. Key groups of transport disadvantaged people are identified, which leads to a discussion of the importance of the concept of mobility and access for all members of the community. The second part of the paper suggests that the provision of transport can be used as a tool to advance equity in a population. Given that government subsidies are often associated with the promotion of equity, the effects of transportation subsidies are discussed. The third section of the paper examines some possible remedies for transport disadvantage in both an operational and policy sense. Non-mainstream transportation solutions are examined and their place in the overall system identified. The chief strength of much paratransit its close ties to local planning processes is compared with traditional transport planning approaches. Finally, a case is made for more public par...

Lifting the veil on perverse subsidies

Abstract: Many government subsidies serve useful purposes, but others adversely affect the economy and the environment. A forthcoming report suggests that governments could profit from scrapping such ‘perverse’ subsidies.

Nonprofit Production and Competition

Abstract: Industries in which private nonprofit production is present and significant, such as health care and education, account for more than one-fifth of US economic activity. This paper argues that previous analysis of nonprofits has not separated profit-deviating preferences from the state-defined regulatory status of nonprofit production. We argue that this separation is crucial in providing predictions about the underlying forces which allow the coexistence of nonprofit and for-profit production in an industry, as well as predictions about such fundamental matters as the share of nonprofit activity. By separating choice of nonprofit status from profit-deviating preferences, the paper provides predictions about the forces which determine the share of nonprofit production in an industry. We argue that this share falls with the share of the demand that is publicly subsidized, rises with the total number of firms in the industry, and rises with growth in the pace or extent of cost-reductions resulting from learning-by-doing. These predictions stem from a basic aspect of regulatory nonprofit choice which links the degree of competition in a market with the share of nonprofits: the availability of economic profits under for-profit status raises the cost of choosing nonprofit status when such a status is associated with a distribution constraint. Empirical evidence using panel data on US states in the long-term care industry from 1989 to 1994 suggests the presence of the discussed predictions in this industry.

Pitfalls in the Theory of International Trade Policy: Concertina Reforms of Tariffs, and Subsidies to High‐Technology Industries

Abstract: This paper explores the links between international trade theory and the practice of trade and industrial policy in open economies, with special attention to three areas where theoretical lessons have been misunderstood in policy debates. The author argues that the 'concertina rule' for tariff reform justifies reductions in high tariffs but not moves toward uniformity and particularly not increases in low tariffs. He shows that the basic principles of tariff reform are the same in unilateral, multilateral, and customs union contexts. Finally, the author suggests that the theory of strategic trade policy does not justify subsidies to high-technology industries.

The Uses and Misuses of Technology Development as a Component of Climate Policy

Abstract: The current misplaced focus on short-term climate policies is a product both of domestic political exigencies and badly flawed technical analyses. A prime example of the latter is a recent U.S. Department of Energy study, prepared by five national laboratories. The 5-Labs study assumes—incorrectly—that technical solutions are readily at hand. Worse, advocates of short-term emissions targets under the Framework Convention on Climate Change are using this study to justify the subsidy of existing energy technologies—diverting resources from the effective long-term technology response that will be needed if the climate picture darkens.