Optimal Financial Exclusion

By Cyril Monnet and Erwan Quintin

American Economic Journal: Microeconomics, November 2021

We study efficient exclusion policies in a canonical credit model that features both exogenous and strategic default along the equilibrium path. Policies that maximize welfare in a stationary equilibrium implement exclusion for a finite and deterministic ...

Obsolescence of Capital and Investment Spikes

By Arthur Fishman and Boyan Jovanovic

American Economic Journal: Microeconomics, November 2021

The prospect of capital obsolescence inhibits investment. Investors thus become more optimistic when the obsolescence of their capital slows down. We propose a model with no fixed costs of investment, and random technological progress that induces obsoles...

A Simple Method for Bounding the Elasticity of Growing Demand with Applications to the Analysis of Historic Antitrust Cases

By Wallace P. Mullin and Christopher M. Snyder

American Economic Journal: Microeconomics, November 2021

We propose a simple method, requiring only minimal data, for bounding demand elasticities in growing, homogeneous-product markets. Since growing demand curves cannot cross, shifts in market equilibrium over time can be used to "funnel" the demand curve in...

Effects of Copyrights on Science: Evidence from the WWII Book Republication Program

By Barbara Biasi and Petra Moser

American Economic Journal: Microeconomics, November 2021

Copyrights, which establish intellectual property in music, science, and other creative goods, are intended to encourage creativity. Yet, copyrights also raise the cost of accessing existing work—potentially discouraging future innovation. This paper us...

Spillover Effects of Institutions on Cooperative Behavior, Preferences, and Beliefs

By Florian Engl, Arno Riedl, and Roberto Weber

American Economic Journal: Microeconomics, November 2021

Most institutions are limited in scope. We study experimentally how enforcement institutions affect behavior, preferences, and beliefs beyond their direct influence over the behaviors they control. Groups play two identical public good games, with coopera...

Political Selection

[Symposium: Institutions]

By Timothy Besley

Journal of Economic Perspectives, Summer 2005

Almost every major episode of economic change over the past 200 years of political history has been associated with key personalities coming to power with a commitment to these changes. But if such dynamic leaders are so important, then we need to underst...

Dynamic Evaluation Design

By Alex Smolin

American Economic Journal: Microeconomics, November 2021

A principal owns a firm, hires an agent of uncertain productivity, and designs a dynamic policy for evaluating his performance. The agent observes ongoing evaluations and decides when to quit. When not quitting, the agent is paid a wage that is linear in ...

The Market for Online Influence

By Itay P. Fainmesser and Andrea Galeotti

American Economic Journal: Microeconomics, November 2021

Recent developments in social media have morphed the age-old practice of paying influential individuals for product endorsements into a multibillion dollar industry, extending well beyond celebrity sponsorships. We develop a parsimonious model in which ...

A Delegation-Based Theory of Expertise

By Attila Ambrus, Volodymyr Baranovskyi, and Aaron Kolb

American Economic Journal: Microeconomics, November 2021

We investigate information aggregation and competition in a delegation framework. An uninformed principal is unable to perform a task herself and must choose between one of two biased and imperfectly informed experts. In the focal equilibrium, experts exa...

Orchestrating Information Acquisition

By Jingfeng Lu, Lixin Ye, and Xin Feng

American Economic Journal: Microeconomics, November 2021

We study how to orchestrate information acquisition in an environment where bidders endowed with original estimates ("types") about their private values can acquire further information by incurring a cost. We consider both single-round and fully sequentia...

Fair Social Ordering, Egalitarianism, and Animal Welfare

By Marc Fleurbaey and Martin Van der Linden

American Economic Journal: Microeconomics, November 2021

We study fairness in economies where humans consume one private good and one public good representing the welfare of other species. We show that a social evaluator cannot be egalitarian with respect to humans while always respecting humans' unanimous pref...

Inequality, Bipolarization, and Tax Progressivity

By Oriol Carbonell-Nicolau and Humberto Llavador

American Economic Journal: Microeconomics, November 2021

The steady rise in income and wealth inequality in the last four decades, together with the evolution of a vanishing middle class, has raised concerns about potentially pernicious effects of these trends on social stability and economic growth. This paper...

Cost and Efficiency in Government Outsourcing: Evidence from the Dredging Industry

By Aaron Barkley

American Economic Journal: Microeconomics, November 2021

This paper investigates the how government outsourcing affects efficiency and expenditures by considering how outsourcing decisions are determined along two dimensions: (i) cost differences between private firms and government suppliers of public goods an...

Voter Turnout and Preference Aggregation

By Kei Kawai, Yuta Toyama, and Yasutora Watanabe

American Economic Journal: Microeconomics, November 2021

We study how voter turnout affects the aggregation of preferences in elections. Under voluntary voting, election outcomes disproportionately aggregate the preferences of voters with low voting cost and high preference intensity. We show identification of ...

Front Matter

American Economic Journal: Economic Policy, November 2021

The Internet as a Tax Haven?

By David R. Agrawal

American Economic Journal: Economic Policy, November 2021

If online transactions are tax free, increased online shopping may lower tax rates as jurisdictions seek to reduce tax avoidance; but, if online firms remit taxes, online sales may put upward pressure on tax rates because internet sales help enforce desti...

Law, Endowments and Property Rights

[Symposium: Institutions]

By Ross Levine

Journal of Economic Perspectives, Summer 2005

While scholars have hypothesized about the sources of variation in property rights for over 2500 years, it is only very recently that researchers have begun to test these theories empirically. This paper reviews both the theory and empirical evidence supp...

Corporate Taxation under Weak Enforcement

By Pierre Bachas and Mauricio Soto

American Economic Journal: Economic Policy, November 2021

How should developing countries tax corporate income? We study this question in Costa Rica, where firms face higher average tax rates on profits when revenues marginally increase. We combine discontinuity and bunching designs to estimate the elasticity of...

The Long-Run Impacts of Special Education

By Briana Ballis and Katelyn Heath

American Economic Journal: Economic Policy, November 2021

Over 13 percent of US students participate in special education (SE) programs annually, at a cost of $40 billion. However, due to selection issues the effect of SE placements remains unclear. This paper uses administrative data from Texas to examine the l...

Local Protectionism, Market Structure, and Social Welfare: China's Automobile Market

By Panle Jia Barwick, Shengmao Cao, and Shanjun Li

American Economic Journal: Economic Policy, November 2021

This study documents the presence of local protectionism and quantifies its impacts on market competition and social welfare in the context of China's automobile market. A salient feature of China's auto market is that vehicle models by joint ventures a...