The potential benefits of centrally planning the topics of scientific research and who should be engaged in them are studied by means of a linear program. The efficiency conditions show that the planning goals could be achieved through self-motivated choices of scientists without direction by planners, when the “scientific worth” of problems is well-defined and known, provided the costs of rese...

The typical form of redistribution investigated in the lab resembles progressive redistribution in which money is transferred from rich to poor. There are, however, many governmental policies that involve regressive redistribution from poor to rich. Examples range from the TARP in the US to R&D subsidies for corporations and a variety of benefits given to firms in developing countries to encour...

Financial crises in countries are often accompanied by an out‡ow of foreign portfolio investment and an in‡ow of foreign direct investment (FDI). We provide an agency-theoretic framework that explains this phenomenon. During crises, agency problems a¤ecting domestic …rms are exacerbated, and, in turn, external …nancing constrained. Direct ownership can circumvent these problems, but during cris...

We develop a discrete or finite household model with congestable local public goods where the level of provision, the number of facilities and their locations are all endogenously determined in a purely normative context. We prove the existence of an equal-treatment identical-provision second best optimum, where all households are required to reach the same utility level, the provision of local...

This paper studies slot allocation at congested airports in Europe. First, I discuss the inefficiencies of the current regulation, introduced as part of the liberalisation process of the air transport market. Then, I consider three marked based methods which are suitable to achieve a more efficient allocation of slots to airlines: congestion pricing, auctions and secondary trading. These method...

We analyze the interaction between risk sharing and capital accumulation in a stochastic OLG model with production. We give a complete characterization of interim Pareto optimality. Our characterization also subsumes equilibria with a PAYG social security system. In a competitive equilibrium interim Pareto optimality is equivalent to intergenerational exchange e¢ciency, which in turn implies dy...

This paper introduces a dynamic equilibrium model of the research-based pharmaceutical industry and parameterizes it using industry facts. In the model, imposing price controls in the U.S. reduces firm value, R&D, the flow of new drugs, and the net present value of consumer welfare in the U.S. and globally. Removing price controls in one or more non-U.S. countries increases firm value, R&D, the...

The excess burden of taxation is the efficiency cost, or deadweight loss, associated with taxation. Excess burden is commonly measured by the area of the associated Harberger triangle, though accurate measurement requires the use of compensated demand and supply schedules. The generation of empirical excess burden studies that followed Arnold Harberger’s pioneering work in the 1960s measured th...

Efficiency in a Matching Model with Heterogeneous Agents: Too Many Good or Bad Jobs? This paper analyses the efficiency of the equilibrium allocation in a matching model with two types of workers and jobs. The basic assumption is that high-skill workers can perform both skilled and unskilled jobs, while low-skill workers can only perform unskilled jobs. Our first result shows that the equilibri...