Optimal law enforcement and criminal organization

In this paper, we take an organizational view of organized crime. In particular, we study the organizational consequences of product illegality attending at the following characteristics: (i) contracts are not enforceable in court, (ii) all participants are subject to the risk of being punished, (iii) employees present a major threat to the entrepreneur having the most detailed knowledge concerning participation, (iv) separation between ownership and management is difficult because record-keeping and auditing augments criminal evidence.

A note on the convergence to competitive equilibria in economies with moral hazard

We examine the conditions under which competitive equilibria can beobtained as the limit, when the number of strategic traders getslarge, of Nash equilibria in economies with asymmetric informationon agents' effort and possibly imperfect observability of agents'trades. Convergence always occur when either effort is publiclyobserved (no matter what is the information available tointermediaries on agents' trades); or effort is private informationbut agents' trades are perfectly observed; or no information at allis available on agents' trades. On the other hand, when eachintermediary can observe its trades with an agent, but not theagent's trades with other intermediaries, the (Nash) equilibriawith strategic intermediaries do not converge to any of thecompetitive equilibria, for an open set of economies. The source ofthe difficulties for convergence is the combination of asymmetricinformation and the restrictions on the observability of tradeswhich prevent the formation of exclusive contractual relationshipsand generate barriers to entry in the markets for contracts.

Sequential screening

We present a model of price discrimination where a monopolistfaces a consumer who is privately informed about thedistribution of his valuation for an indivisible unit ofgood but has yet to learn privately the actual valuation.The monopolist sequentially screens the consumer with amenu of contracts:the consumer self-selects once by choosing a contract andthen self-selects again when he learns the actual valuation. A deterministic sequential mechanism is a menu of refundcontracts, each consisting of an advance payment and a refundamount in case of no consumption, but sequential mechanismsmay involve randomization.We characterize the optimal sequential mechanism when someconsumer types are more eager in the sense of first-orderstochastic dominance, and when some types face greatervaluation uncertainty in the sense of mean-preserving-spread.We show that it can be optimal to subsidize consumer typeswith smaller valuation uncertainty (through low refund, as inairplane ticket pricing) in order to reduce the rent to thosewith greater uncertainty. The size of distortion depends bothon the type distribution and on how informative the consumer'sinitial private knowledge is about his valuation, but noton how much he initially knows about the valuation per se.

Speculative securities

A speculative security is an asset whose payoff depends on a random shock uncorrelated with economic fundamentals (a sunspot) about which some traders have superior information. In this paper we show that agents may find it desirable to trade such a security in spite of the fact that it is a poorer hedge against their endowment risks as the time oftrade, and has an associated adverse selection cost. In the specific institutional setting of innovation of futures contracts, we show that a futures exchange may not have an incentive to introduce a speculative security even when all traders favor it.

Insurance with frequent trading: A dynamic analysis of efficient insurance markets

This paper extends existing insurance results on the type of insurance contracts needed for insurance market efficiency toa dynamic setting. It introduces continuosly open markets that allow for more efficient asset allocation. It alsoeliminates the role of preferences and endowments in the classification of risks, which is done primarily in terms of the actuarial properties of the underlying riskprocess. The paper further extends insurability to include correlated and catstrophic events. Under these very general conditions the paper defines a condition that determines whether a small number of standard insurance contracts (together with aggregate assets) suffice to complete markets or one needs to introduce such assets as mutual insurance.

Flexibility vs. rigidity: Does Spain have the worst of both worlds?

In this paper we study the structure of labor market flows in Spain and compare them with France and the US. We characterize a number of empirical regularities and stylized facts. One striking result is that the job finding rate is slightly higher than in France, while the jon loss rate is much higher, putting Spain half-way between France and the US. This suggests that while Spain has borne the full cost of its labor market reforms in terms of job precarity, the benefits in terms of job creation have been quite modest. We hypothesize that this has been due to the reform s credibility being imperfect, which leads toexpectation of reversal.

The quasi-judicial role of large retailers: An efficiency hypothesis of their relation with suppliers

The paper explores an efficiency hypothesis regarding the contractual process between large retailers, such as Wal-Mart and Carrefour, and their suppliers. The empirical evidence presented supports the idea that large retailers play a quasi-judicial role, acting as "courts of first instance" in their relationships with suppliers. In this role, large retailers adjust the terms of trade to on-going changes and sanction performance failures, sometimes delaying payments. A potential abuse of their position is limited by the need for re-contracting and preserving their reputations. Suppliers renew their confidence in their retailers on a yearly basis, through writing new contracts. This renovation contradicts the alternative hypothesis that suppliers are expropriated by large retailers as a consequence of specific investments.

Insurance with frequent trading

This paper looks at the dynamic management of risk in an economy with discrete time consumption and endowments and continuous trading. I study how agents in such an economy deal with all the risk in the economy and attain their Pareto optimal allocations by trading in a few natural securities: private insurance contracts and a common set of derivatives on the aggregate endowment. The parsimonious nature ofthe implied securities needed for Pareto optimality suggests that insuch contexts complete markets is a very reasonable assumption.

The influence of supplementary health insurance on switching behaviour: evidence from Swiss data.

This paper focuses on the switching behaviour of enrolees in the Swiss basic health insurance system. Even though the new Federal Law on Social Health Insurance (LAMal) was implemented in 1996 to promote competition among health insurers in basic insurance, there is limited evidence of premium convergence within cantons. This indicates that competition has not been effective so far, and reveals some inertia among consumers who seem reluctant to switch to less expensive funds. We investigate one possible barrier to switching behaviour, namely the influence of supplementary insurance. We use survey data on health plan choice (a sample of 1943 individuals whose switching behaviours were observed between 1997 and 2000) as well as administrative data relative to all insurance companies that operated in the 26 Swiss cantons between 1996 and 2005. The decision to switch and the decision to subscribe to a supplementary contract are jointly estimated.Our findings show that holding a supplementary insurance contract substantially decreases the propensity to switch. However, there is no negative impact of supplementary insurance on switching when the individual assesses his/her health as 'very good'. Our results give empirical support to one possible mechanism through which supplementary insurance might influence switching decisions: given that subscribing to basic and supplementary contracts with two different insurers may induce some administrative costs for the subscriber, holding supplementary insurance acts as a barrier to switch if customers who consider themselves 'bad risks' also believe that insurers reject applications for supplementary insurance on these grounds. In comparison with previous research, our main contribution is to offer a possible explanation for consumer inertia. Our analysis illustrates how consumer choice for one's basic health plan interacts with the decision to subscribe to supplementary insurance.

A virtual exhibition of open source software for libraries

Frequently the choice of a library management program is conditioned by social, economic and/or political factors that result in the selection of a system that is not altogether suitable for the library’s needs, characteristics and functions. Open source software is quickly becoming a preferred solution, owing to the freedom to copy, modify and distribute it and the freedom from contracts, as well as for greater opportunities for interoperability with other applications. These new trends regarding open source software in libraries are also reflected in LIS studies, as evidenced by the different courses addressing automated programs, repositorymanagement, including the Linux/GNU operating system, among others. The combination of the needs of the centres and the new trends for open source software is the focus of a virtual laboratory for the use of open source software for library applications. It was the result of a project, whose aim was to make a useful contribution to the library community, that was carried out by a group of professors of the School of Library and Information Science of the University of Barcelona, together with a group of students, members of a Working Group on Open Source Software for Information Professionals, of the Professional Library Association of Catalonia.

Do PES Improve the Governance of Forest Restoration?

Payments for Environmental Services (PES) are praised as innovative policy instruments and they influence the governance of forest restoration efforts in two major ways. The first is the establishment of multi-stakeholder agencies as intermediary bodies between funders and planters to manage the funds and to distribute incentives to planters. The second implication is that specific contracts assign objectives to land users in the form of conditions for payments that are believed to increase the chances for sustained impacts on the ground. These implications are important in the assessment of the potential of PES to operate as new and effective funding schemes for forest restoration. They are analyzed by looking at two prominent payments for watershed service programs in Indonesia-Cidanau (Banten province in Java) and West Lombok (Eastern Indonesia)-with combined economic and political science approaches. We derive lessons for the governance of funding efforts (e.g., multi-stakeholder agencies are not a guarantee of success; mixed results are obtained from a reliance on mandatory funding with ad hoc regulations, as opposed to voluntary contributions by the service beneficiary) and for the governance of financial expenditure (e.g., absolute need for evaluation procedures for the internal governance of farmer groups). Furthermore, we observe that these governance features provide no guarantee that restoration plots with the highest relevance for ecosystem services are targeted by the PES

The aggregate claims distribution of a life insurance portfolio with a pairwise positive dependence structure

The individual life model has always been considered as the one closest to the real situation of the total claims of a life insurance portfolio. It only makes the ¿nearly inevitable assumption¿ of independence of the lifelenghts of insured persons in the portfolio. Many clinical studies, however, have demonstrated positive dependence of paired lives such as husband and wife. In our opinion, it won¿t be unrealistic expecting a considerable number of married couples in any life insurance portfolio (e.g. life insurance contracts formalized at the time of signing a mortatge) and these dependences materially increase the values for the stop-loss premiums associated to the aggregate claims of the portfolio. Since the stop-loss order is the order followed by any risk averse decison maker, the simplifying hypothesis of independence constitute a real financial danger for the company, in the sense that most of their decisions are based on the aggregated claims distribution. In this paper, we will determine approximations for the distribution of the aggregate claims of a life insurance portfolio with some married couples and we will describe how to make safe decisions when we don¿t know exactly the dependence structure between the risks in each couple. Results in this paper are partly based on results in Dhaene and Goovaerts (1997)

Long-Term Community Recovery Strategy, Waverly, IA, December 2008

Long-Term Community Recovery Targeted Technical Assistance Strategy is an outcome of the coordinated effort of the city, Rebuild Iowa Office and Federal Emergency Management Agency Emergency Support Function. In partnership with City officials and RIO and informed by community outreach efforts, provided Targeted Technical Assistance to the community. This support helped the community identify and provide visibility to recovery issues, needs and opportunities that when addressed can result in a more effective long-term recovery for the community.

Long-Term Community Recovery Strategy, Iowa City, IA, December 2008

Long-Term Community Recovery Targeted Technical Assistance Strategy is an outcome of the coordinated effort of the city, Rebuild Iowa Office and Federal Emergency Management Agency Emergency Support Function. In partnership with City officials and RIO and informed by community outreach efforts, provided Targeted Technical Assistance to the community. This support helped the community identify and provide visibility to recovery issues, needs and opportunities that when addressed can result in a more effective long-term recovery for the community.