Akram Temimi

Private provision of discrete public goods with incomplete information

We analyze the private provision of discrete public good games with incomplete information and continuous contributions. To use the terminology of [Admati and Perry, Review of Economic Studies 58 (1991) 259], we consider contribution and subscription games. In the former, contributions are not refunded if the project is not completed, while in the latter they are. We show that the contribution game has only the strong free riding equilibria if cost is high enough. Thus, in this range of cost, the subscription game is superior to the contribution game. We present several interesting equilibria of both types of games and give a new proof of the ex-post inefficiency of the contribution and the subscription games

Endogenous Enfranchisement When Groups' Preferences Conflict

In their seminal paper, Aumann, Kurz, and Neyman found the surprising result that the choice of levels of public goods in a democracy is not affected by the distribution of voting rights. This implies that groups of individuals may not value the franchise. This conclusion, however, does not correspond to what we commonly observe. We propose a new model to address the question of enfranchisement. The main feature of our model is that it takes into account natural affinities, such as religion or class, that may exist between voters. This allows us to show that while individuals may not value the vote, they nonetheless value the franchise. We also show that in the presence of nonconvexities, it is more likely that the group in power will grant the franchise when preferences are severely opposed.

Coalition structure values in differential information economies: Is unity a strength?

The coalition structure (CS) value, introduced by Owen [9] and Hart and Kurz [5], generalizes the Shapley value to social situations where coalitions form for the purpose of bargaining. This paper introduces the CS value to economies with differential information. We show that the private CS values exists and is Bayesian incentive compatible. Moreover, we construct examples that go against the intuitive viewpoint that “unity is strength.” In particular, we consider a three person economy in which two agents bargain as a unit against the third agent. We show that bargaining as a unit is advantageous if and only if information is complete. This result sheds new light on bargaining under differential information.

Lotteries, Group Size, and Public Good Provision

We analyze the effect of group size on public good provision under the Morgan (2000) lottery mechanism. For a pure public good, the lottery performs quite well as public good provision is found to increase in group size, even when the lottery prize is held constant. By contrast, for fully rival public goods, per capita provision is found to decrease in group size, even when the lottery prize is proportional to group size. Further, the per capita level of provision will approach zero when group size is sufficiently large.

An Extension of the Trade Restrictiveness Index to Large Economies

The Trade Restrictiveness Index (TRI) introduced by Anderson and Neary (1994) provided the first theoretically satisfying measure of a countrys tariff structure by overcoming the problem of ad hoc specification of indexing weights and the related index number problem. We observe, however, that the TRI may not be unique when countries are large. As a remedy, we propose a simple extension.

Olson's Logic Revisited: The Role of Small Fixed Costs of Participation

Recent work by Pecorino (1998, 1999) and Esteban and Ray (2001) has called into question one of the central propositions of Olson (1965) relating public good provision to group size. Pecorino addresses this issue in a repeated game context, while Esteban and Ray introduce a technology under which there is an increasing marginal cost of effort in providing the public good in a framework that allows credit market imperfections and non monetary contributions. In this paper we analyze the robustness of these results to a simple, but realistic extension of the respective models. In particular, we consider small fixed costs of participation which must be borne by potential contributors before their contributions can have a marginal impact on provision of the public good. If the public good is nonrival, then the results of Pecorino and Esteban and Ray are robust to the consideration of these fixed costs. However, if the public good is fully rival (but nonexcludable), then the existence of small fixed participation costs will generally restore one of Olsons central propositions: public goods will fail to be provided in large groups.

Lotteries, Public Good Provision and the Degree of Rivalry

Under the standard summation technology, pure public goods can be provided via the direct contributions mechanism, even in an arbitrarily large group. However, if the public good exhibits any degree of rivalry, individual consumption of the public good will fall to zero as group size grows large. Thus, the direct contributions mechanism is not robust to the introduction of rivalry. By contrast, Morgan’s (Review of Economic Studies 67:761–784, 2000) lottery mechanism is robust to the introduction of rivalry when the lottery prize is proportional to group size. The lottery mechanism can provide public goods in a large group when the public good exhibits a degree of rivalry, provided that the degree of rivalry is not too high. This suggests that the lottery mechanism can provide a broader range of public goods in a large group than the direct contributions mechanism.

R&D Subsidies, Research Joint Ventures, and Industry Concentration

We show that the presumed incompatibility of R&D and competition in Spence (1984) is not fundamental, but hinges on a critical modeling choice. Specifically, we show that for a widely used class of R&D technology, that is, the functional form mapping R&D effort into cost reduction, the incompatibility disappears and Spences subsidy-based solution becomes a viable alternative to Research Joint Ventures (RJVs). This is the case especially if RJVs carry with them a risk of cartelization, a risk we show to be particularly high for the models used in this literature, if only their simplifying restriction to symmetric firms is dropped.

Federal grants and the flight to the suburbs1

Abstract Migration to the suburbs is a long-standing problem for cities in the United States. A central question in the literature is whether the improvement in public goods and services in the central cities will stop the flight to the suburbs. We would expect that if cities offer better services, it would persuade affluent residents to stay in the city. We find, paradoxically, that even if these reforms are exclusively financed by the federal or state government, and even if the grant money indeed goes towards improving the quality of public goods and not towards redistribution, the city may end up with more flight to the suburbs.