Jacques Crémer

Federal Mandates by Popular Demand

This paper proposes a new framework for studying federal mandates regarding public policies in areas such as environmental quality, public health, highway safety, and the provision of local public goods. Voters have single-peaked preferences along a single policy dimension. There are two levels of government, federal and local. The federal level can constrain local policy by mandating a minimum (or maximum) policy. Localities are free to adopt any policy satisfying the constraint imposed by the federal mandate. We show that voters choose federal mandates that are too strict, which leads to excessively severe mandates. We show that similar results can obtain when federal provision of the public-provided good is more efficient than local provision.

In or out?: Centralization by majority vote

We present a positive theory of centralization of political decisions. Voters choose centralization or decentralization depending on their forecast of the political organization that will favor the policies they prefer. We study the induced preferences for centralization as well results of different forms of referenda.

Balanced Bayesian mechanisms

We present a new condition on beliefs that guarantee the Bayesian implementability of all efficient social decision rules. We show that this condition is easy to verify and is both more interpretable and more general than the conditions that are found in the literature. We also study conditions guaranteeing the Bayesian implementability of all social decision rules with balanced budget mechanisms.

The value of switching costs

We study a dynamic model with an incumbent monopolist and entry in every subsequent period. We first show that if all consumers have the same switching cost, then the intertemporal profits of the incumbent are the same as if there was only one period. We then study the consequences of heterogeneity of switching costs. We prove that even low switching cost customers have value for the incumbent: when there are more of them its profits increase as their presence hinders entrants who find it more costly to attract high switching cost customers.

Network externalities and universal service obligation in the internet

Abstract This article examines the shape of network externalities for the ‘broadcasting services’ that can be offered by the Internet. It argues that, because of these network externalities, the marginal value of an added participant to the network could be quite high as the percentage of the population that is connected approaches 100%. Lessons are drawn for the desirability of a Universal Service Obligation for the Internet, and it is shown that it is preferable to subsidize the senders of broadcasting messages rather than the receivers.

Correlation, independence, and Bayesian incentives

Our goal is to describe the state of the art on Bayesian mechanisms when utility is transferable and only balanced transfers are admissible. New results will be proved along the way, but they will be integrated to the overall picture. We first study a condition on the information structure of the agents (condition B) which is necessary and sufficient to guarantee implementation of any decision rule. We prove constructively that condition B holds generically. We further analyze another condition (condition C), sufficient to guarantee implementation of any efficient decision rule and provide a simple interpretation. Also, we build a counterexample showing that condition C is not necessary to guarantee implementation of any efficient decision rule and then provide a necessary and sufficient condition. A counterexample is constructed to show that there does not always exist efficient Bayesian mechanisms, with three agents. Finally, we exhibit conditions on the information structures that guarantee unique implementation, and show that they hold generically.

Towards an economic theory of incentives in just-in-time manufacturing

Abstract Just-in-time manufacturing is widely acknowledged as decreasing the costs of production, but also as increasing the quality. This is surprising: we would expect that adding a constraint on the supplier — that production be conducted at very specific times — would induce a decrease in quality. This paper argues that this paradox can be solved by noticing that the incentives of the buyer are changed by JIT manufacturing. He will be more willing to impose penalties on the supplier.

Employee Control and Oligopoly in a Free Market Economy

We study duopolistic markets where a profit-maximizing firm competes with an employee-controlled firm that maximizes value-added per employee. We first study an industry with Cournot competition. We show that the presence of an employee-controlled firm does not affect the equilibrium number of firms, lowers aggregate output, increases price and reduces social welfare. The employee-controlled firm has a smaller equilibrium output than its competitor. For Hotelling type competition in a market with diversified products, we show that equilibrium locations are not affected by employee control, that prices increase and that social welfare decreases. The market share of the employee-controlled firm is lower than that of its competitor. Surprisingly, the profits of both firms can increase when control is transferred from stockholders to employees in one of them. Finally, we show that employees would not want to buy a firm from its owners.

Switching Costs and Network Effects in Competition Policy

Bringing scholars and policymakers to the frontiers of research and addressing the critical issues of the day, the book presents original important new theoretical and empirical results. The distinguished contributors include: P. Agrel, K. Alexander, J. Cremer, X. Dassiou, G. Deltas, F. Etro, L. Filistrucchi, P. Fotis, M. Gilli, J. Harrington Jr, T. Huertas, M. Ivaldi, B. Jullien, V. Marques, M. Peitz, Y. Spiegel, E. Tarrantino and G. Wood.

Economic Principles for Efficient Public Procurement in Information Technology

This is the submission which we made to the United Kingdom Cabinet Office Open Standards Consultation. The aim of this submission is not to present new research findings, but to show what we believe are the policy consequences of recent progress in the understanding of the economics of Open Source Software and Open Standards.