Conflicts of interest, information provision and competition in banking

In some markets, such as the market for drugs or for financial services, sellers have better information than buyersregarding the matching between the buyer's needs and the good's actual characteristics. Depending on the market structure,this may lead to conflicts of interest and/or the underprovision of information by the seller. This paper studies this issuein the market for financial services. The analysis presents a new model of competition between banks, as banks' pricecompetition influences the ensuing incentives for truthful information revelation. We compare two different firm structures,specialized banking, where financial institutions provide a unique financial product, and one-stop banking, where a financialinstitution is able to provide several financial products which are horizontally differentiated. We show first that, althoughconflicts of interest may prevent information disclosure under monopoly, competition forces full information provision forsufficiently high reputation costs. Second, in the presence of market power, one-stop banks will use information strategicallyto increase product differentiation and therefore will always provide reliable information and charge higher rices thanspecialized banks, thus providing a new justification for the creation of one-stop banks. Finally, we show that, ifindependent financial advisers are able to provide reliable information, this increases product differentiation and thereforemarket power, so that it is in the interest of financial intermediaries to promote external independent financial advice.

Corruption and competition in procurement

We consider a procurement problem in which the procurement agent is supposed to allocate the realization of a project according to a competitive mechanism that values bids in terms of the proposed price and quality. Potential bidders have private information about their production costs. Since the procurement agent is also in charge of verifying delivered quality, in exchange for a bribe, he can allow an arbitrary firm to be awarded the realization of the project and to produce a quality level lower than the announced. We compute the equilibrium level of corruption and we study the impact on corruption of the competitiveness of the environment, and in particular of: i) an increase in the number of potential suppliers of the good or service to be procured, ii) competitive (rather than collusive) behavior of procurement agents, and iii) an increase of competition in the market for procurement agents. We identify the effects that influence the equilibrium level of corruption and show that, contrary to conventional wisdom, corruption may well be increasing in competition.

Electoral competition under the threat of political unrest

We study elections in which one party (the strong party) controls a source of political unrest; e.g., this party could instigate riots if it lost the election. We show that the strong party is more likely to win the election when there is less information about its ability to cause unrest. This is because when theweak party is better informed, it can more reliably prevent political unrest by implementing a ``centrist'' policy. When there is uncertainty over the credibility of the threat, ``posturing'' by the strong party leads to platform divergence.

The Brauer group and the second Abel-Jacobi map for 0-cycles on algebraic varieties

This paper focuses on the connection between the Brauer group and the 0-cycles of an algebraic variety. We give an alternative construction of the second l-adic Abel-Jacobi map for such cycles, linked to the algebraic geometry of Severi-Brauer varieties on X. This allows us then to relate this Abel-Jacobi map to the standard pairing between 0-cycles and Brauer groups (see [M], [L]), completing results from [M] in this direction. Second, for surfaces, it allows us to present this map according to the more geometrical approach devised by M. Green in the framework of (arithmetic) mixed Hodge structures (see [G]). Needless to say, this paper owes much to the work of U. Jannsen and, especially, to his recently published older letter [J4] to B. Gross.

Experimental evidence that intra-specific competition in seagrass meadows reduces reproductive potential in the sea urchin Paracentrotus lividus (Lamarck)

To better understand the biological controls that regulate sea urchin dynamics, we studied the effects of potential inter- and intra-specific competition for food on several biological variables of the main sea urchin in the Mediterranean (Paracentrotus lividus). We carried out a caging experiment in which we manipulated sea urchin density (natural vs. high density) and herbivorous fish (Sarpa salpa) accessibility (free access vs. exclusion) in a Posidonia oceanica meadow. No evidence of competition between fish and urchins was detected. Neither density-dependent mortality nor changes in the somatic variables were found; however, we detected that intra-specific competition affected the reproductive potential of P. lividus. The gonad index of urchins at high population densities was ca. 30% lower than that of urchins at natural densities. As a spawning event had just occurred when urchins were collected, these differences probably reflect differences in reserve content, which may compromise the following reproductive period and decrease survival in the long term, as the gonads are also used as storage organs. For the time period studied, mortality rates appeared to be independent of local densities. The results indicate that a long-term negative feedback mechanism appears to take place in P. lividus in response to increased population density.

Lobbying, political competition, and local land supply: recent evidence from Spain

We analyze whether local land supply is influenced by the degree of political competition, and interpret the findings as being indicative of the influence wielded by land development lobbies. We use a new database including both political and land supply data for more than 2,000 Spanish municipalities for the period 2003-2007. In Spain, land use policies are largely a local responsibility with municipalities having periodically to pass compre- hensive land use plans. The main policy variable in these plans, and the one analyzed here, is the amount of land classified for potential development. We measure local political competition as the margin of victory of the incumbent government. We instrument this variable using the number of votes obtained by parties represented in local government when standing at the first national legislative elections following the re-establishment of democracy, and the number of votes they actually obtained regionally at the national legislative elections. The results indicate that stiffer political competition does indeed reduce the amount of new land designated for development. This effect is found to be most marked in suburbs, in towns with a high percent of commuters and homeowners, and in municipalities governed by the left.

The empirics of spatial competition: evidence from European regions

The New Economic Geography literature allows detailed analysis of the factors that determine the location decisions of firms in integrated markets. However, the competitive process is modelled in a rather rudimentary way, and the empirical evidence has usually been obtained from reduced-form econometric specifications. This study describes a structural model that takes into account strategic interactions between firms. We investigate the relationship between the degree of perceived competition ¿ not only from local firms but from firms in other regions ¿ and geographic concentration. The preliminary results indicate that, in aggregate terms, local firms present stronger competition than firms in other regions. Moreover, it is confirmed that greater geographical concentration of production reduces market power, due to the intensification of local competition; however, its impact on production costs is unclear.

The empirics of spatial competition: evidence from European regions

The New Economic Geography literature allows detailed analysis of the factors that determine the location decisions of firms in integrated markets. However, the competitive process is modelled in a rather rudimentary way, and the empirical evidence has usually been obtained from reduced-form econometric specifications. This study describes a structural model that takes into account strategic interactions between firms. We investigate the relationship between the degree of perceived competition ¿ not only from local firms but from firms in other regions ¿ and geographic concentration. The preliminary results indicate that, in aggregate terms, local firms present stronger competition than firms in other regions. Moreover, it is confirmed that greater geographical concentration of production reduces market power, due to the intensification of local competition; however, its impact on production costs is unclear.

Lobbying, political competition, and local land supply: recent evidence from Spain

We analyze whether local land supply is influenced by the degree of political competition, and interpret the findings as being indicative of the influence wielded by land development lobbies. We use a new database including both political and land supply data for more than 2,000 Spanish municipalities for the period 2003-2007. In Spain, land use policies are largely a local responsibility with municipalities having periodically to pass compre- hensive land use plans. The main policy variable in these plans, and the one analyzed here, is the amount of land classified for potential development. We measure local political competition as the margin of victory of the incumbent government. We instrument this variable using the number of votes obtained by parties represented in local government when standing at the first national legislative elections following the re-establishment of democracy, and the number of votes they actually obtained regionally at the national legislative elections. The results indicate that stiffer political competition does indeed reduce the amount of new land designated for development. This effect is found to be most marked in suburbs, in towns with a high percent of commuters and homeowners, and in municipalities governed by the left.

Auction theory, sequential local service privatization, and the effects of geographical scale economies on effective competition

A sequential weakly efficient two-auction game with entry costs, interdependence between objects, two potential bidders and IPV assumption is presented here in order to give some theoretical predictions on the effects of geographical scale economies on local service privatization performance. It is shown that the first object seller takes profit of this interdependence. The interdependence externality rises effective competition for the first object, expressed as the probability of having more than one final bidder. Besides, if there is more than one final bidder in the first auction, seller extracts the entire bidder¿s expected future surplus differential between having won the first auction and having lost. Consequences for second object seller are less clear, reflecting the contradictory nature of the two main effects of object interdependence. On the one hand, first auction winner becomes ¿stronger¿, so that expected payments rise in a competitive environment. On the other hand, first auction loser becomes relatively ¿weaker¿, hence (probably) reducing effective competition for the second object. Additionally, some contributions to static auction theory with entry cost and asymmetric bidders are presented in the appendix

Exported oscillator competition: A concept to analyse complex rhytms

We study the interaction between two independent nonlinear oscillators competing through a neutral excitable element. The first oscillator, completely deterministic, acts as a normal pacemaker sending pulses to the neutral element which fires when it is excited by these pulses. The second oscillator, endowed with some randomness, though unable to make the excitable element to beat, leads to the occasional suppression of its firing. The missing beats or errors are registered and their statistics analyzed in terms of the noise intensity and the periods of both oscillators. This study is inspired in some complex rhythms such as a particular class of heart arrhythmia.

Wave competition in excitable modulated media.

The propagation of an initially planar front is studied within the framework of the photosensitive Belousov-Zhabotinsky reaction modulated by a smooth spatial variation of the local front velocity in the direction perpendicular to front propagation. Under this modulation, the wave front develops several fingers corresponding to the local maxima of the modulation function. After a transient, the wave front achieves a stationary shape that does not necessarily coincide with the one externally imposed by the modulation. Theoretical predictions for the selection criteria of fingers and steady-state velocity are experimentally validated.

Self-organized criticality and synchronization in a coupled map lattice model of integrate-and-fire oscillators

We introduce two coupled map lattice models with nonconservative interactions and a continuous nonlinear driving. Depending on both the degree of conservation and the convexity of the driving we find different behaviors, ranging from self-organized criticality, in the sense that the distribution of events (avalanches) obeys a power law, to a macroscopic synchronization of the population of oscillators, with avalanches of the size of the system.