Penalizing Cartels: The Case for Basing Penalties on Price Overcharge

In this paper we set out the welfare economics based case for imposing cartel penalties on the cartel overcharge rather than on the more conventional bases of revenue or profits (illegal gains). To do this we undertake a systematic comparison of a penalty based on the cartel overcharge with three other penalty regimes: fixed penalties; penalties based on revenue, and penalties based on profits. Our analysis is the first to compare these regimes in terms of their impact on both (i) the prices charged by those cartels that do form; and (ii) the number of stable cartels that form (deterrence). We show that the class of penalties based on profits is identical to the class of fixed penalties in all welfare-relevant respects. For the other three types of penalty we show that, for those cartels that do form, penalties based on the overcharge produce lower prices than those based on profit) while penalties based on revenue produce the highest prices. Further, in conjunction with the above result, our analysis of cartel stability (and thus deterrence), shows that penalties based on the overcharge out-perform those based on profits, which in turn out-perform those based on revenue in terms of their impact on each of the following welfare criteria: (a) average overcharge; (b) average consumer surplus; (c) average total welfare.

Factors Affecting the Financial Success of Motion Pictures: What is the Role of Star Power?

In the mid-1940s, American film industry was on its way up to its golden era as studios started mass-producing iconic feature films. The escalating increase in popularity of Hollywood stars was actively suggested for its direct links to box office success by academics. Using data collected in 2007, this paper carries out an empirical investigation on how different factors, including star power, affect the revenue of ‘home-run’ movies in Hollywood. Due to the subjective nature of star power, two different approaches were used: (1) number of nominations and wins of Academy Awards by the key players, and (2) average lifetime gross revenue of films involving the key players preceding the sample year. It is found that number of Academy awards nominations and wins was not statistically significant in generating box office revenue, whereas star power based on the second approach was statistically significant. Other significant factors were critics’ reviews, screen coverage and top distributor, while number of Academy awards, MPAA-rating, seasonality, being a sequel and popular genre were not statistically significant.

Picking the Right Budget Constraint for Scotland

This position paper considers the devolution of further fiscal powers to the Scottish Parliament in the context of the objectives and remit of the Smith Commission. The argument builds on our discussion of fiscal decentralization made in our previous published work on this topic. We ask what sort of budget constraint the Scottish Parliament should operate with. A soft budget constraint (SBC) allows the Scottish Parliament to spend without having to consider all of the tax and, therefore, political consequences, of that spending, which is effectively the position at the moment. The incentives to promote economic growth through fiscal policy – on both the tax and spending sides are weak to non-existent. This is what the Scotland Act, 1998, and the continuing use of the Barnett block grant, gave Scotland. Now other budget constraints are being discussed – those of the Calman Commission (2009) and the Scotland Act (2012), as well as the ones offered in 2014 by the various political parties – Scottish Conservatives, Scottish Greens, Scottish Labour, the Scottish Liberal Democrats and the Scottish Government. There is also the budget constraint designed by the Holtham Commission (2010) for Wales that could just as well be used in Scotland. We examine to what extent these offer the hard budget constraint (HBC) that would bring tax policy firmly into the realm of Scottish politics, asking the Scottish electorate and Parliament to consider the costs to them of increasing spending in terms of higher taxes; or the benefits to them of using public spending to grow the tax base and own-sourced taxes? The hardest budget constraint of all is offered by independence but, as is now known, a clear majority of those who voted in the referendum did not vote for this form of budget constraint. Rather they voted for a significant further devolution of fiscal powers while remaining within a political and monetary union with the rest of the UK, with the risk pooling and revenue sharing that this implies. It is not surprising therefore that none of the budget constraints on offer, apart from the SNP’s, come close to the HBC of independence. However, the almost 25% fall in the price of oil since the referendum, a resource stream so central to the SNP’s economic policy making, underscores why there is a need for a trade off between a HBC and risk pooling and revenue sharing. Ranked according to the desirable characteristic of offering something approaching a HBC the least desirable are those of the Calman Commission, the Scotland Act, 2012, and Scottish Labour. In all of these the ‘elasticity’ of the block grant in the face of failure to grow the Scottish tax base is either not defined or is very elastic – meaning that the risk of failure is shuffled off to taxpayers outside of Scotland. The degree of HBC in the Scottish Conservative, Scottish Greens and Scottish Liberal Democrats proposals are much more desirable from an economic growth point of view, the latter even embracing the HBC proposed by the Holtham Commission that combines serious tax policy with welfare support in the long-run. We judge that the budget constraint in the SNP’s proposals is too hard as it does not allow for continuation of the ‘welfare union’ in the UK. We also consider that in the case of a generalized UK economic slow requiring a fiscal stimulus that the Scottish Parliament be allowed increased borrowing to be repaid in the next economic upturn.

Disputes, Debt and Equity

We show how the prospect of disputes over firms’ revenue reports promotes debt financing over equity. These findings are presented within a costly state verification model with a risk averse entrepreneur. The prospect of disputes encourages incentive regimes which limit penalties and avoid stochastic monitoring, even when the lender can commit to stochastic enforcement strategies. Consequently, optimal contracts shift away from equity and toward standard debt. For a useful special case of the model, closed form solutions are presented for leverage and consumption allocations under efficient debt contracts.

Productivity, quality, and export intensities

We study how firm and foreign market characteristics affect the geographic distribution of exporter' sales. To this purpose, we use export intensities (the ratio of exports to sales) across destinations as our key measures of firms'relative involvement in heterogeneous foreign markets. In a representative sample of Italian manufacturing firms, we find a robust negative correlation between revenue-TFP and export intensity to low-income destinations and, more generally, that the correlations between export intensities and TFP are increasing in per capita income of the foreign destinations. We argue that these (and other) empirical regularities can arise from the interplay between (endogenous) cross-firm heterogeneity in product quality and cross-country heterogeneity in quality consumption. To test this conjecture, we propose a new strategy to proxy for product quality that allows to exploit some unique features of our dataset. Our results strongly suggest that firms producing higher-quality products tend to concentrate their sales in the domestic and other high-income markets.

Multi-level SLA-driven resource management on Cloud Providers

Nowadays, service providers in the Cloud offer complex services ready to be used as it was a commodity like water or electricity to their customers with any other extra effort for them. However, providing these services implies a high management effort which requires a lot of human interaction. Furthermore, an efficient resource management mechanism considering only provider's resources is, though necessary, not enough, because the provider's profit is limited by the amount of resources it owns. Dynamically outsourcing resources to other providers in response to demand variation avoids this problem and makes the provider to get more profit. A key technology for achieving these goals is virtualization which facilitates provider's management and provides on-demand virtual environments, which are isolated and consolidated in order to achieve a better utilization of the provider's resources. Nevertheless, dealing with some virtualization capabilities implies an effort for the user in order to take benefit from them. In order to avoid this problem, we are contributing the research community with a virtualized environment manager which aims to provide virtual machines that fulfils with the user requirements. Another challenge is sharing resources among different federated Cloud providers while exploiting the features of virtualization in a new approach for facilitating providers' management. This project aims for reducing provider's costs and at the same time fulfilling the quality of service agreed with the customers while maximizing the provider's revenue. It considers resource management at several layers, namely locally to each node in the provider, among different nodes in the provider, and among different federated providers. This latter layer supports the novel capabilities of outsourcing when the local resources are not enough to fulfil the users demand, and offering resources to other providers when the local resources are underused.

Origins and efficiency of the electric industry regulation in Spain, 1910-1936

The aim of this paper is to discover the origins of utility regulation in Spain, and to analyse, from a microeconomic perspective, its characteristics and the impact of regulation on consumers and utilities. Madrid and the Madrilenian utilities are taken as a case study. The electric industry in the period studied was a natural monopoly2. Each of the three phases of production, generation, transmission and distribution, had natural monopoly characteristics. Therefore, the most efficient form to generate, transmit and distribute electricity was the monopoly because one firm can produce a quantity at a lower cost than the sum of costs incurred by two or more firms. A problem arises because when a firm is the single provider it can charge prices above the marginal cost, at monopoly prices. When a monopolist reduces the quantity produced, price increases, causing the consumer to demand less than the economic efficiency level, incurring a loss of consumer surplus. The loss of the consumer surplus is not completely gained by the monopolist, causing a loss of social surplus, a deadweight loss. The main objective of regulation is going to be to reduce to a minimum the deadweight loss. Regulation is also needed because when the monopolist fixes prices at marginal cost equal marginal revenue there would be an incentive for firms to enter the market creating inefficiency. The Madrilenian industry has been chosen because of the availability of statistical information on costs and production. The complex industry structure and the atomised demand add interest to the analysis. This study will also provide some light on the tariff regulation of the period which has been poorly studied and will complement the literature on the US electric utilities regulation where a different type of regulation was implemented.

Parents, television and cultural change

This paper develops a model of cultural transmission where television plays a central role for socialization. Parents split their free time between educating their children which is costly and watching TV which though entertaining might socialize the children to the wrong trait. The free to air television industry maximizes advertisement revenue. We show that TV watching is increasing in cultural coverage, cost of education, TV's entertainment value and decreasing in the perceived cultural distance between the two traits. A monopolistic television industry captures all TV watching by both groups if the perceived cultural distance between groups is small relative to the TV's entertainment value. Otherwise, more coverage will be given to the most profitable group where profitability increases in group size, advertisement sensitivity and perceived cultural distance. This leads to two possible steady states where one group is larger but both groups survive in the long run. Competition in the media industry might lead to cultural extinction but only if one group is very insensitive to advertisement and not radical enough not to watch TV. We briefly discuss the existing evidence for the empirical predictions of the model.

Tax evasion, technology shocks, and the cyclicality of government revenues

This paper analyzes the behavior of the tax revenue to output ratio over the business cycle. In order to replicate the empirical evidence, we develop a simple model combining the standard Ak growth model with the tax evasion phenomenon. When individuals conceal part of their true income from the tax authority, they face the risk of being audited and hence of paying the corresponding fine. Under the empirically plausible assumptions that the intertemporal elasticity of substitution exhibits a sufficiently small value and that productivity shocks are serially correlated, we show that the elasticity of government revenue with respect to output is larger than one, which agrees with the empirical evidence. This result holds even if the tax system displays flat tax rates. We extend the previous setup to generate larger fiscal deficits when the economy experiences a recession.

The Rise of The Swiss Tax Haven in the Interwar Period: An International Comparison

The history of tax havens during the decades before World War II is still little known. To date, the studies that have focused on the 1920s and 1930s have presented either a very general perspective on the development of tax havens or a narrow national point of view. Based on unpublished historical archives of five countries (Switzerland, Great Britain, Belgium, France, Germany), this paper offers therefore a new comparative appraisal of international tax competition during this period in order to answer the following question: What was the specificity of the Swiss case - already considered a quintessential tax haven at the time - in comparison to other banking centres? The findings of this research study are twofold. First, the 1920s and 1930s appear as something of a golden age of opportunity for avoiding taxation through the relocation of assets. Most of the financial centres granted consistent tax benefits for imported capital, while the limited degree of international cooperation and the usual guarantee of banking secrecy in European countries prevented the taxation of exported assets. Second, within this general environment, the fiscal strategies of a tax haven like Switzerland differed from those of a great financial power like Great Britain. Whereas the Swiss administration readily placed itself at the service of the banking community, British policy was more balanced between the contradictory interests of the Board of Inland Revenue, the Treasury, and the English business circles.

HSC(F) 34-2013 Supplement 1 (PDF 448 KB)

Guidance On The Completion Of Revised Revenue Business Case Templates And Post Project Evaluation - The Need To Complete A Relevant Business Case Relating To Leased Accommodation

Organizational form and business performance

This project deals with the generation of profitability and the distribution of its benefits. Inspired by Davis (1947, 1955), we define profitability as the ratio of revenue to cost. Profitability is not as popular a measure of business financial performance as profit, the difference between revenue and cost. Regardless of its popularity, however, profitability is surely a useful financial performance measure. Our primary objective in this project is to identify the factors that generate change in profitability. One set of factors, which we refer to as sources, consists of changes in quantities and prices of outputs and inputs. Individual quantity changes aggregate to the overall impact of quantity change on profitability change, which we call productivity change. Individual price changes aggregate to the overall impact of price change on profitability change, which we call price recovery change. In this framework profitability change consists exclusively of productivity change and price recovery change. A second set of factors, which we refer to as drivers, consists of phenomena such as technical change, change in the efficiency of resource allocation, and the impact of economies of scale. The ability of management to harness these factors drives productivity change, which is one component of profitability change. Thus the term sources refers to quantities and prices of individual outputs and inputs, whose changes influence productivity change or price recovery change, either of which influences profitability change. The term drivers refers to phenomena related to technology and management that influence productivity change (but not price recovery change), and hence profitability change.

Speech by Mr Micheál Martin TD at Launch of Pre-Registration Nursing Degree Programme

Good afternoon ladies and gentlemen. I am very pleased that you were all able to accept my invitation to join me here today on this landmark occasion for nursing education. It is fitting that all of the key stakeholders from the health and education sectors should be so well represented at the launch of an historic new development. Rapid and unpredictable change throughout society has been the hallmark of the twenty-first century, and healthcare is no exception. Regardless of what change occurs, no one doubts that nursing is intrinsic to the health of this nation. However, significant changes in nurse education are now needed if the profession is to deliver on its social mandate to promote people´s health by providing excellent and sensitive care. As science, technology and the demands of the public for sophisticated and responsive health care become increasingly complex, it is essential that the foundation of nursing education is redesigned. Pre-registration nursing education has already undergone radical change over the past eight years, during which time it has moved from an apprenticeship model of education and training to a diploma based programme firmly rooted in higher education. The Secretary General of my Department, Michael Kelly, played a leading role in bringing about this transformation, which has greatly enhanced the way students are prepared for entry to the nursing profession. The benefits of the revised model of education are clearly evident from the quality of the nurses graduating from the diploma programme. The Commission on Nursing examined the whole area of nursing education, and set out a very convincing case for educating nursing students to degree level. It argued that nurses of the future would be required to possess increased flexibility and the ability to work autonomously. A degree programme would provide nurses with a theoretical underpinning that would enable them to develop their clinical skills to a greater extent and to respond to future challenges in health care, for the benefit of patients and clients of the health services. The Commission has provided a solid framework for the professional development of nurses and midwives, including a process that is already underway for the creation of clinical nurse specialist and advanced nurse practitioner posts. This process will facilitate the transfer of skills across divisions of nursing. In this scenario, it is clearly desirable that the future benchmark qualification for registration as a nurse should be a degree in nursing studies. A Nursing Education Forum was established in early 1999 to prepare a strategic framework for the implementation of a nursing degree programme. When launching the Forum´s report last January, I indicated that the Government had agreed in principle to the introduction of the proposed degree programme next year. At the time two substantial outstanding issues had yet to be resolved, namely the basis on which nurse teachers would transfer from the health sector to the education sector and the amount of capital and revenue funding required to operate the degree programme. My Department has brokered agreements between the Nursing Alliance and the Higher Education Institutions for the assimilation of nurse teachers as lecturers into their affiliated institutions. The terms of these agreements have been accepted by all four nursing unions following a ballot of their nurse teacher members. I would like to pay particular tribute to all nurse teachers who have contributed to shaping the position, relevance and visibility of nursing through leadership, which embodies scholarship and excellence in the profession of nursing itself. In response to a recommendation of the Nursing Education Forum, I established an Inter-Departmental Steering Committee, chaired by Bernard Carey of my Department, to consider all the funding and policy issues. This Steering Committee includes representatives of the Department of Finance and the Department of Education and Science as well as the Higher Education Authority. The Steering Committee has been engaged in intensive negotiations with representatives of the Conference of Heads of Irish Universities and the Institutes of Technology in relation to their capital and revenue funding requirements. These negotiations were successfully concluded within the past few weeks. The satisfactory resolution of the industrial relations and funding issues cleared the way for me to go to the Government with concrete proposals for the implementation of degree level education for nursing students. I am delighted to announce here today that the Government has approved all of my proposals, and that a four-year undergraduate pre-registration nursing degree programme will be implemented on a nation-wide basis at the start of the next academic year, 2002/2003. The Government has approved the provision of capital funding totalling £176 million pounds for a major building and equipment programme to facilitate the full integration of nursing students into the higher education sector. This programme is due to be completed by September 2004, and will ensure that nursing students are accommodated in purpose built schools of nursing studies with state of the art clinical skills and human science laboratories at thirteen higher education sites throughout the country. The Government has also agreed to make available the substantial additional revenue funding required to support the nursing degree programme. By 2006, the full year cost of operating the programme will rise to some £43 million pounds. The scale of this investment in pre-registration nursing education is enormous by any yardstick. It demonstrates the firm commitment of myself and my Government colleagues to the full implementation of the recommendations of the Commission on Nursing, of which the introduction of pre-registration degree level education is arguably the most important. This historic decision, and it is truly historic, will finally put the education of nurses on a par with the education of other health care professionals. The nursing profession has long been striving for parity, and my own involvement in the achievement of it is a matter of deep personal satisfaction to me. I am also pleased to announce that the Government has approved my plans for increasing the number of nursing training places to coincide with the implementation of the degree programme next year. Ninety-three additional places in mental handicap and psychiatric nursing will be created at Athlone, Letterkenny, Tralee and Waterford Institutes of Technology. This will yield 392 extra places over the four years of the degree programme. A total of 1,640 places annually on the new degree programme will thus be available. This is an all-time record, and maintaining the annual student intake at this level for the foreseeable future is a key element of my overall strategy for ensuring that we produce sufficient “home-grown” nurses for our health services. I am aware that the Nursing Alliance were anxious that some funding would be provided for the further academic career development of nurse teachers who transfer to one of the six Universities that will be involved in the delivery of the degree programme. I am happy to confirm that up to £300,000 in total per year will be available for this purpose over the first four years of the degree programme. In line with a recommendation of the Commission on Nursing, my Department will have responsibility for the administration of the nursing degree budget until the programme has been bedded down in the higher education sector. A primary concern will be to ensure that the substantial capital and revenue funding involved is ring-fenced for nursing studies. It is intended that responsibility for the budget will be transferred to the Department of Education and Science after the first cohort of nursing degree students have graduated in 2006. In the context of today´s launch, it is relevant to refer to a special initiative that I introduced last year to assist registered nurses wishing to undertake part-time nursing degree courses. Under this initiative, nurses are entitled to have their course fees paid by their employers in return for a commitment to continue working in the public health service for a period following completion of the course. This initiative has proved extremely popular with large numbers of nurses availing of it. I want to confirm here today that the free fees initiative will continue in operation until 2005, at a total cost of at least £15 million pounds. I am giving this commitment in order to assure this year´s intake of nursing students to the final diploma programmes that fee support for a part-time nursing degree course will be available to them when they graduate in three years time. The focus of today´s celebration is rightly on the landmark Government decision to implement the nursing degree programme next year. As Minister for Health and Children, and as a former Minister for Education, I also have a particular interest in the educational opportunities available to other health service workers to upgrade their skills. I am pleased to announce that the Government has approved my proposals for the introduction of a sponsorship scheme for suitable, experienced health care assistants who wish to become nurses. This new scheme will commence next year and will be administered by the health boards. Successful applicants will be allowed to retain their existing salaries throughout the four years of the degree programme in return for a commitment to work as nurses for their health service employer for a period of five years following registration. Up to forty sponsorships will be available annually. The new scheme will enable suitable applicants to undertake nursing education and training without suffering financial hardship. The greatest advantage of the scheme will be the retention by the public health service of staff who are supported under it, since they will have had practical experience of working in the service and their own personal commitment to upgrading their skills will be informed by that experience. I am confident that the sponsorship scheme will be warmly welcomed by health service unions representing care assistants as providing an exciting new career development path for their members. Education and health are now the two pillars upon which the profession of nursing rests. We must continue to build bridges, even tunnels where needed to strengthen this partnership. We must all understand partnerships donâ?Tt just happen they are designed and must be worked at. The changes outlined here today are powerful incentives for those in healthcare agencies, academic institutions and regulatory bodies to design revolutionary programmes capable of shaping a critical mass of excellent practitioners. You have an opportunity, greater perhaps than has been granted to any other generation in history to make certain those changes are for the good. Ultimately changes that will make the country a healthier and more equitable place to live. The challenge relates to building a seamless preparatory programme which equally respects both education and practise as an indivisible duo whilst ensuring that high tech does not replace the human touch. This is a special day in the history of the development of the Irish nursing profession, and I would like to thank everybody for their contribution. I want to express my particular appreciation of two people who by this stage are well known to all of you – Bernard Carey of my Department and Siobhán O´Halloran of the National Implementation Committee. Bernard and Siobhán have devoted considerable time and energy to the project on my behalf over the past fourteen months or so. That we are here today celebrating the launch of degree level education is due in no small part to their successful execution of the mandate that I gave them. We live in a rapidly changing world, one in which nursing can no longer rely on systems of the past to guide it through the new millennium. In terms of contemporary healthcare, nursing is no longer just a reciprocal kindness but rather a highly complex set of professional behaviours, which require serious educational investment. Pre-registration nurse education will always need development and redesign to ensure our health care system meets the demands of modern society. Nothing is finite. Today more than ever the health system is dependent on the resourcefulness of nursing. I have no doubt that the new educational landscape painted will ensure that nurses of the future will be increasingly innovative, independent and in demand. The unmistakable message from my Department is that nursing really matters. Thank you.

A Carbon Tax for Ireland

The Programme for Government 2007-2012 states that '[a]ppropriate fiscal instruments, including a carbon levy, will be phased in on a revenue-neutral basis over the lifetime of this Government.' The terms of reference of the Commission on Taxation repeats the commitment to introduce measures to further lower carbon emissions and to phase in on a revenue neutral basis appropriate fiscal measures including a carbon levy over the lifetime of the Government and invites the Commission to [i]nvestigate fiscal measures to protect and enhance the environment including the introduction of a carbon tax. This paper presents thoughts and considerations about such a carbon tax. It discusses selected design issues, and presents a preliminary impact assessment for what the authors think is a reasonable design. More specifically, It addresses ten questions: 1. Why impose a carbon tax? 2. What level should the tax be? 3. Who should be taxed? 4. What is the expected revenue? 5. What to do with the revenue? 6. What are the macro-economic implications? 7. What are the effects on emissions? 8. What are the effects on income distribution? 9. How to tax internationally traded goods and services? 10. What about fuel tourism? On some of these questions, it presents arguments and evidence. Other questions call for further research. Aspects of some questions can only be answered by the Dail �ireann.This resource was contributed by The National Documentation Centre on Drug Use.

Implementing A vision for change: moving towards a modern, quality and responsive mental health service. Carlow / Kilkenny / South Tipperary.

The key element of the HSE South’s Programme is to enhance and develop community mental health services in Carlow, Kilkenny and South Tipperary, to enable the service user to remain in the community to the greatest extent possible. HSE South has prioritised the implementation of the change programme and has allocated more than €20m capital funding and over €1.75m revenue funding to support this comprehensive development programme. Speaking at the briefings Mr. Pat Healy, Regional Director of Operations, HSE South said, “When this plan is delivered, clients will have access to the highest standards of services in all three counties, which should significantly improve these clients’ treatment programmes and quality of life. The National Service Users Executive are supporting the change programme, which is of immense importance to HSE South. The programme heralds the enhancement and development of community mental health services, the closure of old long stay institutions, the separation of North and South Tipperary acute inpatient mental health services and development of appropriate acute inpatient services, for the extended catchment area, in line with the national strategy for mental health “A Vision for Change”. The programme also acts on recommendations of the Mental Health Commission.”This resource was contributed by The National Documentation Centre on Drug Use.