Oscar Cristi

Right-to-Choose Auctions: A Field Study of Water Markets in the Limari Valley of Chile

Field experiments were conducted with farmers in the Limari Valley of Chile to test extant theory on right-to-choose auctions. Water volumes that differed by reservoir source and time of availability were offered for sale by the research team. The auctions were supplemented by protocols to elicit risk and time preferences of bidders. We find that the right-to-choose auctions raise significantly more revenue than the benchmark sequential auction. Risk attitudes explain a substantial amount of the difference in bidding between auction institutions, consonant with received theory. The auction bidding revealed distinct preferences for water types, which has implications for market re-design.

An Illiquid Market in the Desert: The Role of Interest Groups in Shaping Environmental Regulation

We present a lobby model to explain the adoption and persistence of seemingly costly environmental policies relative to the likely benefits generated. The arguments of the model are illustrated by water trade restrictions for mining firms in the Atacama Desert of northern Chile. The area is one of the driest in the world but also the world’s top copper producer. Due to regulation of access to local water in the region, firms have begun using desalinated water at a cost of up to

The bottom-up power of informal entrepreneurship

19,542 per m3/day while agricultural water trades at median price of

An Illiquid Market in the Desert: Estimating the Cost of Water Trade Restrictions in Northern Chile

343 per m3/day. We explore how governmental maintenance of environmental and indigenous water supplies through restrictions on water trades causes these large price differentials. We provide a simple framework that explains how this type of policy can be supported under reasonable assumptions about lobbying. Interest group lobbying, limited information to unorganized general citizens about policy costs and benefits, and their associated distribution can lead to strong regulation, even when the protected environmental areas and agricultural populations are small and isolated. Difference- in-difference modeling of sector prices indicates that after an abrupt increase in regulatory denials, prices diverged in a manner consistent with the lobbying model. Using market price and desalination cost data, policy costs are estimated at

Longitudinal Analysis of Entrepreneurship and Competitiveness Dynamics in Latin America

6.15 billion dollars or approximately

“Surfeiting, the appetite may sicken”: entrepreneurship and happiness

350 per citizen, which may or may not equate to perceived general benefits.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

‘Surfeiting, The Appetite May Sicken’: Entrepreneurship and the Happiness of Nations

Interest in the informal sector has a long history in economics (see Gerxhani, 2004 and Schneider and Enste, 2000 for a review of the literature), and is now receiving increasing attention in management (Bruton et al., 2008; Bowen and De Clercq, 2008; and Godfrey, 2012) and in entrepreneurship research (see the special issue of Strategic Entrepreneurship Journal, 2014). Traditionally, the informal sector is perceived as an inefficient and potentially negative side of the economy since its operations tend to be characterized by low productivity. Informal activities are also viewed as having negative social dimensions. For example, since workers in the informal sector usually lack the protection of safety nets existing in the formal labor market, they are considered to be exposed to the risk of exploitation. In addition, informality is perceived as producing unfair competition for formal companies, as well as imposing a burden on national finances since it allows for the avoidance of taxes (Schneider and Enste, 2000). Considerations about the opportunity costs of the informal sector are particularly significant when taking into account that, while an informal sector exists in virtually every country, in some of them it accounts for more than half of total GDP (Schneider et al., 2010; ILO, 2011). Yet De Soto (1989) suggested that the informal sector plays an important role in economic development and that such a role goes beyond its contribution to GDP per capita (Sen, 1999; Misturelli and Heffernan, 2008) and that, in fact, GDP alone does not capture the real contribution potentially provided by informal activity. Within this context, Gries and Naudé (2011), Gollin (2008), Maloney (2004) and Shane (2009) all have noted the relationship between informal activities and entrepreneurial activities and pointed out that much of the legal activity in the informal

Poverty and Entrepreneurship in Developing Countries

This paper estimates the cost of a policy to restrict water trades to mining firms in northern Chile to protect riparian ecosystems and indigenous agriculture. In response to the policy, mining firms have developed high-cost desalination and pumping facilities to secure adequate water supplies. We develop a methodology and estimate the cost of market transactions that fail to occur due to the policy. Lost trade surplus is estimated at

The Effect of Regulation Uncertainty on Water-Right Prices: The Case of the Loa Basin in the Antofagasta Region of Chile

52 million per year. Without trade restrictions, around 86% of the remaining agricultural water in the region would be transferred to mining.