Moral Behaviour, Altruism and Environmental Policy

Free‐riding is often associated with self‐interested behaviour. However if there is a global mixed pollutant, free‐riding will arise if individuals calculate that their emissions are negligible relative to the total, so total emissions and hence any damage that they and others suffer will be unaffected by whatever consumption choice they make. In this context consumer behaviour and the optimal environmental tax are independent of the degree of altruism. For behaviour to change, individuals need to make their decisions in a different way. We propose a new theory of moral behaviour whereby individuals recognise that they will be worse off by not acting in their own self‐interest, and balance this cost off against the hypothetical moral value of adopting a Kantian form of behaviour, that is by calculating the consequences of their action by asking what would happen if everyone else acted in the same way as they did. We show that: (a) if individuals behave this way, then altruism matters and the greater the degree of altruism the more individuals cut back their consumption of a ’dirty’ good; (b) nevertheless the optimal environmental tax is exactly the same as that emerging from classical analysis where individuals act in self‐interested fashion.

Legal Uncertainty, Competition Law Enforcement Procedures and Optimal Penalties

In this paper we make three contributions to the literature on optimal Competition Law enforcement procedures. The first (which is of general interest beyond competition policy) is to clarify the concept of “legal uncertainty”, relating it to ideas in the literature on Law and Economics, but formalising the concept through various information structures which specify the probability that each firm attaches – at the time it takes an action – to the possibility of its being deemed anti-competitive were it to be investigated by a Competition Authority. We show that the existence of Type I and Type II decision errors by competition authorities is neither necessary nor sufficient for the existence of legal uncertainty, and that information structures with legal uncertainty can generate higher welfare than information structures with legal certainty – a result echoing a similar finding obtained in a completely different context and under different assumptions in earlier Law and Economics literature (Kaplow and Shavell, 1992). Our second contribution is to revisit and significantly generalise the analysis in our previous paper, Katsoulacos and Ulph (2009), involving a welfare comparison of Per Se and Effects- Based legal standards. In that analysis we considered just a single information structure under an Effects-Based standard and also penalties were exogenously fixed. Here we allow for (a) different information structures under an Effects-Based standard and (b) endogenous penalties. We obtain two main results: (i) considering all information structures a Per Se standard is never better than an Effects-Based standard; (ii) optimal penalties may be higher when there is legal uncertainty than when there is no legal uncertainty.

Optimal Universal and Categorical Benefits with Classification Errors and Imperfect Enforcement

We determine he optimal combination of a universal benefit, B, and categorical benefit, C, for an economy in which individuals differ in both their ability to work - modelled as an exogenous zero quantity constraint on labour supply - and, conditional on being able to work, their productivity at work. C is targeted at those unable to work, and is conditioned in two dimensions: ex-ante an individual must be unable to work and be awarded the benefit, whilst ex-post a recipient must not subsequently work. However, the ex-ante conditionality may be imperfectly enforced due to Type I (false rejection) and Type II (false award) classification errors, whilst, in addition, the ex-post conditionality may be imperfectly enforced. If there are no classification errors - and thus no enforcement issues - it is always optimal to set C>0, whilst B=0 only if the benefit budget is sufficiently small. However, when classification errors occur, B=0 only if there are no Type I errors and the benefit budget is sufficiently small, while the conditions under which C>0 depend on the enforcement of the ex-post conditionality. We consider two discrete alternatives. Under No Enforcement C>0 only if the test administering C has some discriminatory power. In addition, social welfare is decreasing in the propensity to make each type error. However, under Full Enforcement C>0 for all levels of discriminatory power. Furthermore, whilst social welfare is decreasing in the propensity to make Type I errors, there are certain conditions under which it is increasing in the propensity to make Type II errors. This implies that there may be conditions under which it would be welfare enhancing to lower the chosen eligibility threshold - support the suggestion by Goodin (1985) to "err on the side of kindness".

Keeping Up with the Joneses: Who Loses Out?

This paper investigates how well-being varies with individual wage rates when individuals care about relative consumption and so there are Veblen effects – Keeping up with the Joneses – leading individuals to over-work. In the case where individuals compare themselves with their peers – those with the same wage-rate - it is shown that Keeping up with the Joneses leads some individuals to work who otherwise would have chosen not to. Moreover for these individuals well-being is a decreasing function of the wage rate - contrary to standard theory. So those who are worst-off in society are no longer those on the lowest wage.

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.

Consumption Decisions When People Value Conformity

In this paper we assume that for some commodities individuals may wish to adjust their levels of consumption from their normal Marshallian levels so as to match the consumption levels of a group of other individuals, in order to signal that they conform to the consumption norms of that group. Unlike Veblen’s concept of conspicuous consumption this can mean that some individuals may reduce their consumption of the relevant commodities. We model this as a three-stage game in which individuals first decide whether or not they wish to adhere to a norm, then decide which norm they wish to adhere to, and finally decide their actual consumption. We present a number of examples of the resulting equilibria, and then discuss the potential policy implications of this model.

Choice, Deferral and Consistency

In this paper we study decision making in situations where the individual’s preferences are not assumed to be complete. First, we identify conditions that are necessary and sufficient for choice behavior in general domains to be consistent with maximization of a possibly incomplete preference relation. In this model of maximally dominant choice, the agent defers/avoids choosing at those and only those menus where a most preferred option does not exist. This allows for simple explanations of conflict-induced deferral and choice overload. It also suggests a criterion for distinguishing between indifference and incomparability based on observable data. A simple extension of this model also incorporates decision costs and provides a theoretical framework that is compatible with the experimental design that we propose to elicit possibly incomplete preferences in the lab. The design builds on the introduction of monetary costs that induce choice of a most preferred feasible option if one exists and deferral otherwise. Based on this design we found evidence suggesting that a quarter of the subjects in our study had incomplete preferences, and that these made significantly more consistent choices than a group of subjects who were forced to choose. The latter effect, however, is mitigated once data on indifferences are accounted for.

Measuring Tax Complexity

This paper critically examines a number of issues relating to the measurement of tax complexity. It starts with an analysis of the concept of tax complexity, distinguishing tax design complexity and operational complexity. It considers the consequences/costs of complexity, and then examines the rationale for measuring complexity. Finally it applies the analysis to an examination of an index of complexity developed by the UK Office of Tax Simplification (OTS).

The Inventor Balance and the Functional Specialization in Global Inventive Activities

We study the functional specialization whereby some countries contribute relatively more inventors vs. organizations in the production of inventions at a global scale. We propose a conceptual framework to explain this type of functional specialization, which posits the presence of feedbacks between two distinct sub-systems, each one providing inventors and organizations. We quantify the phenomenon by means of a new metric, the “inventor balance”, which we compute using patent data. We show that the observed imbalances, which are often conspicuous, are determined by several factors: the innovativeness of a country relative to its level of economic development, relative factor endowments, the degree of technological specialization and, last, cultural traits. We argue that the “inventor balance” is a useful indicator for policy makers, and its routine analysis could lead to better informed innovation policies.

Choosing on Influence

Interaction, the act of mutual influence between two or more individuals, is an essential part of daily life and economic decisions. Yet, micro-foundations of interaction are unexplored. This paper presents a first attempt to this purpose. We study a decision procedure for interacting agents. According to our model, interaction occurs since individuals seek influence for those issues that they cannot solve on their own. Following a choice-theoretic approach, we provide simple properties that aid to detect interacting individuals. In this case, revealed preference analysis not only grants the underlying preferences but also the influence acquired. Our baseline model is based on two interacting individuals, though we extend the analysis to multi-individual environments.

Stochastic Complementarity

Classical definitions of complementarity are based on cross price elasticities, and so they do not apply, for example, when goods are free. This context includes many relevant cases such as online newspapers and public attractions. We look for a complementarity notion that does not rely on price variation and that is: behavioural (based only on observable choice data); and model-free (valid whether the agent is rational or not). We uncover a conflict between properties that complementarity should intuitively possess. We discuss three ways out of the impossibility.

Delay and Haircuts in Sovereign Debt: Recovery and Sustainability

One of the striking aspects of recent sovereign debt restructurings is, conditional on default, delay length is positively correlated with the size of "haircut", which is size of creditor losses. In this paper, we develop an incomplete information model of debt restructuring where the prospect of uncertain economic recovery and the signalling about sustainability concerns together generate multi-period delay. The results from our analysis show that there is a correlation between delay length and size of haircut. Such results are supported by evidence. We show that Pareto ranking of equilibria, conditional on default, can be altered once we take into account the ex ante incentive of sovereign debtor. We use our results to evaluate proposals advocated to ensure orderly resolution of sovereign debt crises.

Enhancing Interns’ Aspirations towards the Labour Market through Skill-Acquisition: The Second Chance Schools Experience

Second Change School programmes are active in a number of European countries. These schools offer vulnerable young adults an alternative opportunity to enhance their employability skills by alternating education with work experience. People enrolling in these programmes disengaged from schools at an early age. They already experienced or are at-risk to enter into unemployment. This paper examines the impact of the Second Chance Schools on their participants’ aspirations towards the labour market through skill-acquisition. We are able to identify the perception of Second Chance Schools’ interns regarding entry to the professional life. A third of them, for example, consider their attitude or their surroundings as a barrier preventing them from getting a job. However, our results emphasise the role of the interns’ coach in improving their aspirations towards the labour market. We also show that when compared to male interns, female interns have a stronger (positive) perception of the school as a place where they can gain skills.

La responsabilidad patrimonial de la Administración Pública Urbanística

En la memoria del trabajo se detallan las tareas realizadas durante los cuatro años en los que he sido beneficiaria de la beca FI, que me permitió incorporarme en el área de Derecho Administrativo de la Universidad de Girona, bajo la dirección del Dr. Joan M. Trayter Jiménez, para la elaboración del proyecto de investigación "La responsabilidad patrimonial de la Administración Púbica Urbanística", que una vez terminado dará lugar a la Tesis Doctoral. Durante el primer año realizé y superé los cursos del programa de Doctorado “Globalización y Derecho: el Derecho Europeo como referencia”; que me permitió obtener la renovación de la Beca FI, para la elaboración y defensa en el año posterior de la tesina titulada "La responsabilidad patrimonial de la Administración Pública por cambio de la ordenación territorial o urbanística”; con la consiguiente obtención del Diploma de Estudios Avanzados en Derecho. En líneas generales, puedo destacar -además de la investigación en la elaboración de la Tesis-, la realización de dos estancias de investigación en la University of Oxford, bajo la tutorización del Prof. Paul Craig, del St. John's College; gracias a la concesión de una beca por parte del "Institut d'Estudis Autonòmics de Catalunya" y otra, por la Generalitat de Catalunya, dirigida a estancias de investigación en el extrangero. También diversas publicaciones traducidas en la participación en dos libros, un artículo, una recensión y una comunicación; así como la asistencia a distintos Congresos de Derecho Administrativo y seminarios, la realización de distintos cursos entre ellos un Posgrado de Derecho Urbanístico en la UdG y la docencia realizada. Asimismo he devenido miembro de los proyectos de investigación del grupo de investigación del Área; importantes por formar parte del Plan Nacional I+D, financiados por el Ministerio de Educación y Ciencia.

Daisy Roots Garden Project

In the summer of 2009 a local Men’s group that met in St Helena’s thought that it might be a good idea to sow a wild garden on the site.  Then came the raised beds – 2 were placed in the garden area opposite the front door of the house and as it was winter there was not much happening and they were quickly renamed the ‘coffins’.  This was the start of ‘Daisy Roots’. Dublin City Council provided top soil and water butts.  An Taisce funded the start up phase of the project and now continue to provide funds for insurance and some development work.  At the right hand side of St Helena’s there is, what was the old stable yard of the ‘big house’.  This had been used to house a large ‘lock up container and a porta-cabin.  These have been now removed and this is where the main part of the garden is. Following a conference of Business in the Community Ireland, DX Ltd expressed an interest in getting involved in a local project.  Together DX staff and the volunteers reclaimed the old stables and gave them new roofs and new doors.  Paths were put in between the raised vegetable beds and new raised beds were built.  A seating area was developed.  The garden is now wheelchair accessible and there are wheelchair accessible flowerbeds in the garden also.  The newest projects in the garden are a memorial flowerbed and a propagator. Dublin City Council via Cherry Orchard Regeneration Board Initiative Type Community Food Growing Projects Location Dublin 11 Funding Dublin City Council via Cherry Orchard Regeneration Board Partner Agencies An Taisce Dublin City Council HSE Tolka Area Partnership