Christopher Bliss

Does Competition Kill Corruption

Corrupt agents (officials or gangsters) exact money from firms. Corruption affects the number of firms in a free‐entry equilibrium. The degree of deep competition in the economy increases with lower overhead costs relative to profits and with a tendency toward similar cost structures. Increases in competition may not lower corruption. The model explains why a rational corrupt agent may extinguish the source of his bribe income by causing a firm to exit. Assessing the welfare effect of corruption is complicated by the fact that exit caused by corruption does not necessarily reduce social welfare.

Dragon-slaying and ballroom dancing: The private supply of a public good

Many public goods typically are supplied by the efforts of a single individual. A purely selfinterested agent could provide a public good if his own participation in the benefits justifies his cost. In this paper we model the decision of how a private individual decides when to take the initiative and pay for the provision of a public good. As an application of the optimal auctions literature to the public goods problem, the emphasis is placed on the effect of additional agents on potential supply. The free rider problem is shown to be less important as the population size of potential volunteers increases; we demonstrate conditions in which the first best is attained in the limit as the population size approaches infinity.

Resilience in natural and socioeconomic systems

We, as a society, find ourselves confronted with a spectrum of potentially catastrophic and irreversible environmental problems, for which conventional approaches will not suffice in providing solutions. These problems are characterized, above all, by their unpredictability. This means that surprise is to be expected, and that sudden qualitative shifts in dynamics present serious problems for management. In general, it is difficult to detect strong signals of change early enough to motivate effective solutions, or even to develop scientific consensus on a time scale rapid enough to allow effective solution. Furthermore, such signals, even when detected, are likely to be displaced in space or sector from the source, so that the motivation for action is small. Conventional market mechanisms thus will be inadequate to address these challenges.

On Putty-Clay

Following on the work of Johansen [3] and Salter [8] a number of writers (e.g. [2], [4], [6], [7] and [10]) have investigated various properties of a model of economic growth which is characterized by a variable capital-labour ratio at the moment that investment occurs (putty), and a fixed capital-labour ratio thereafter (clay). Technical progress takes the form of a flow of new ideas for the construction of investments, but it does not include any new ideas for the more efficient employment of existing investments. In the now standard terminology, technical change is all “ embodied ”. The term “ putty-clay ”, coined by Phelps [7], neatly describes these assumptions. The aim of this paper is to provide a fairly complete and rigorous treatment of the balanced and the efficient growth paths of the model without recourse to unnecessarily restrictive assumptions such as Cobb-Douglas. This task, among others, has already been completed by Solow, Tobin, von Weizsacker and Yaari [9] for the case in which the capital-labour ratio is fixed even at the moment of investment. Such a case is a limiting and special case of the model of this paper, so that the results of Solow and his colleagues have provided a useful check on my results. The same is true of Phelps’ results on the Cobb-Douglas case.

Koopmans recursive preferences and income convergence

Abstract Stiglitz (Econometrica 37 (1969) 382) shows income convergence in a many-agent Solow growth model with integrated capital markets (ICM). The many-agent Ramsey model (MARM) without ICM also gives income convergence. With a MARM, equal discount rates, and ICM, convergence of incomes (as opposed to product per capita) cannot occur. These results depend upon fixed saving propensities (Stiglitz) or separable additive preferences (Ramsey). Non-convergence of incomes is shown when preferences are identical Koopmans separable (KS). Endogenous discount rates may violate KS. A model for that case is developed when, even under favourable assumptions, oscillations or chaotic dynamics may result.

The Cambridge Post-Keynesians: An Outsider's Insider View

The paper examines the so-called Cambridge post-Keynesians from the point of view of one who was exposed to them as an undergraduate, with the addition of some mature thoughts. As confirmed by Luigi Pasinetti in his 2007 book Keynes and the Cambridge Keynesians: A “Revolution in Economics” to Be Accomplished, there was never a unified school. A major theme, particularly for Joan Robinson, was the theory of investment advanced by Keynes in his General Theory. This in turn is examined critically. The post-Keynesian group, with the notable exception of Nicholas Kaldor, proved to be remarkably unproductive. This is explained by an essentially negative approach and by a tradition of self-righteous intolerance that goes back to Keynes himself.

A Specific-Factors Model with Historical Application

In 1971, Ronald Jones examined a three-factor two-good model under the assumption that two of the factors are specific to one sector (a different sector for each such factor). Working independently, in the same year Paul Samuelson developed a similar framework. In this paper that specification is weakened, so that only one sector (agriculture) has a specific factor (land). When land is a separable input into food production, factor price-equalization can no longer be shown, but Stolper-Samuelson magnification is still observed, although it is weakened. An application to the abolition of the corn laws is discussed. Copyright Blackwell Publishing Ltd 2003..

The labour market: theory and experience

So much has the term ‘the labour market’ become a part of the language of contemporary political debate that its meaning might appear to require no explanation. However, the phrase conceals important and interesting questions. Two issues in particular stand out.

Arrow’s Vision of the Economic Process

The concept of vision is due to Schumpeter (1954). A writer reveals his vision through his approach to economic problems and by the problems which he selects for close investigation. It follows that a vision is not typically located in the explicit assumptions of economic theory, although its trace can be seen there, but more typically it is to be found in the unstated assumptions, what critics often call the ‘implicit assumptions’, which characterize a writer’s work. As Schumpeter (1954, p. 41) puts it: Obviously, in order to be able to posit to ourselves any problems at all, we should first have to visualize a distinct set of coherent phenomena as a worthwhile object of our analytic effort. In this book, this preanalytic cognitive act is called Vision.

A Model of Cake Division with a Blind Player

A “cake” of random size is divided between two players. If they cannot agree on a division the cake is lost. One player is blind but can weigh the cake he receives. Both plavers are risk averse. Under the mixed strategy solution (MSS) the sighted player announces the size of the cake and the blind player accepts his allocation with a probability chosen so that the sighted player maximizes by telling the truth. This probability is derived and it is shown that with a sufficiently high degree of risk aversion the MSS produces the outcome that would pertain with sighted players.