Nicolas Sahuguet

Redistributive politics with distortionary taxation

We extend the discussion of redistributive politics across electoral systems to allow for taxation to be distortionary. We allow politicians to choose any tax rate between zero and unity and then redistribute the money collected. We build on the model put forward by Myerson (1993) and Lizzeri and Persico (2001 and 2005) to show that the use of distortionnary taxation can be understood as an analysis of the trade-off between efficiency and targetability. We derive the equilibrium taxes and redistribution schemes with distortions. We show that the presence of distortions makes full taxation unattractive. We also derive the size of the government, the deadweight loss and inequality as a function of distortions.

Volunteering for heterogeneous tasks

Abstract We model the search for volunteers as a war of attrition. Every player is tempted to wait for someone else to volunteer for the tasks. When tasks are not equivalent, it may be optimal to volunteer quickly to perform an easy task. We analyze the trade-off between volunteering for an easy task and taking the risk of having to perform a more strenuous task in order to get the chance of avoiding all tasks. When the cost of waiting is borne by agents until every task has found a volunteer, we show that it may be optimal to volunteer for the difficult task even if an easier task is available, in order to speed up the process and reduce the costs of waiting.

Assessing Racial Disparities in Parole Release

In a rational choice model of parole release, a color-blind parole board seeking to minimize violations would release all prisoners below a certain risk threshold. To test this prediction, we extend the outcome-test methodology used in assessing discrimination in police searches. We overcome the inframarginality critique by taking advantage of strategic timing of release: within each racial group, violation rates are equalized for a given sentence length. We use the National Corrections Reporting Program data, which record all parole-release decisions in the United States. We find that violation rates are consistently higher for African American parolees, a result not consistent with a parole board bias against African Americans. This conclusion is robust to a variety of tests, including ruling out postrelease discrimination. Evidence on the timing of release suggests a policy aimed at limiting racial disparities in time served rather than in violation rates, which favors fairness over efficiency.

Hub-and-Spoke Conspiracies: The Vertical Expression of a Horizontal Desire?

An increasing number of horizontal agreements involve both competitors and their common suppliers (or retailers). As vertical agreements, indirect horizontal agreements can help reduce coordination failures, but they also have the capacity to dampen competition. The negative welfare effect of these agreements generally dominates when undertakings try and raise prices.Competition authorities generally distinguish alleged infringements between competitors active on the same relevant market (horizontal information exchanges or agreements) and those between undertakings and their suppliers or their customers (vertical agreements). A rising number of infringements mix elements of vertical and horizontal concerted practices, because they are horizontal in nature, but involve competitors and their suppliers (or retailers). They are referred to as hub-and-spoke exchanges (or A-B-C exchanges), where the spokes are active on the same product market and interact indirectly through the hub.From an economics perspective, there is not always an indisputable motive to classify hub-and-spoke agreements as mainly vertical with an horizontal effect, or mainly horizontal with the involvement of a supplier. In the European Union, the legal standards for horizontal and vertical infringements differ significantly. While the Commission’s Guidelines on Vertical Restraints characterize vertical minimum resale price maintenance agreements as hardcore restrictions, relying on the presumption that such agreements have an anticompetitive effect, the legal test for indirect horizontal concerted practices developed by the UK Courts is more demanding. It requires that competition authorities prove that the spokes and the hub transmit the information with an anticompetitive intent.