On the Core of an Economy with Multilateral and Multidimensional Environmental Externalities

For simple economic models of transfrontier pollution, Chander and Tulkens (1995) and (1997) have offered a formula for transfers to sustain international cooperation on a voluntary basis and which deter coalitional free-riding under some reasonable behaviours of countries not in the coalition. Their scheme rests on the assumption that pollution is a scalar. Relaxing this assumption, interesting interactions among pollutations arise that call for a new formula. In this paper we extend Chander and Tulkens formula for this more realistic multidimensional context, and thereby enhance the practical and theoretical relevance of their seminal analysis.international pollutions, Nash equilibrium, partial agreement Nash equilibrium, international transfers

Matching Grants and Ricardian Equivalence

This paper questions the effectiveness of matching grants to correct for interjurisdictional spillovers in the light of Bernheim general neutrality result. Indeed this result suggests that the usual argument that matching grants are needed to internalize the externality arising from the existence of interjuridictional spillovers is an artifact of the assumption that jurisdictions neglect the impact that their decisions have on the federal budget. Relaxing this assumption and using a classical model where the arbitrage resulting from labor mobility implies that redistribution has the properties of a public good, we find that matching grants are relevant although much less effective. We also find that optimal matching rates are independent of the jurisdictions' choice of policy variable contrarily to the case where jurisdictions ignore the impact of their decisions on the federal budget.Fiscal federalism, Ricardian equivalence, Matching grants

Relative performance of two simple incentive mechanisms in a public good experiment

This paper reports on experiments designed to compare the performance of two incentive mechanisms in public goods problems. One mechanism rewards and penalizes deviations from the average contribution of the other agents to the public good (tax-subsidy mechanism). Another mechanism allows agents to subsidize the other agents’contributions (compensation mechanism). It is found that both mechanisms lead to an increase in the level of contribution to the public good. The tax-subsidy mechanism allows for good point and interval prediction of the average level of contribution. The compensation mechanism allows for less reliable prediction of the average level of contributions.public goods, voluntary provision, incentive mechanisms

FISCAL COMPETITION AND PUBLIC EDUCATION IN REGIONS

We explore an economy with two regions and independent local administrations. Local governments collect taxes to finance public education, but once educated agents can choose to migrate to the other region. The Nash equilibrium of the long-run game between the two governments is compared to a golden rule-type social optimum. Preliminary results show that the Nash equilibrium will result in over- or under-investment depending on the extent to which public education is subject to congestion.Successive generations, Public education, Federal and local government, Fiscal games.

Weak moral motivation leads to the decline of voluntary contributions

This paper provides a general framework that accounts for the decay of the average contribution observed in most experiments on voluntary contributions to a public good. Each player balances her material utility loss from contributing with her psychological utility loss of deviating from her moral ideal. The novel and central idea of our model is that people.s moral motivation is "weak": their judgement about what is the right contribution to a public good can evolve in the course of interactions, depending partly on observed past contributions and partly on an intrinsic "moral ideal". Under the assumption of weakly morally motivated agents, average voluntary contributions can decline with repetition of the game. Our model also explains other regularities observed in experiments, in particular the phenomenon of over-contributions compared to the Nash prediction and the so-called restart e¤ect, and it is compatible with the conditional cooperation hypothesis.

Vountary matching grants can forestall social dumping

The European economic integration leads to increasing mobility of factors, thereby threatening the stability of social transfer programs. This paper investigates the possibility to achieve by means of voluntary matching grants both the optimal allocation of factors and the optimal level of redistribution in the presence of factor mobility. We use a fiscal competition model a la Wildasin (1991) in which states differ in their technologies and preferences for redistribution. We first investigate a simple process in which the regulatory authority progressively raises the matchning grants sto the district choosing the lowest transfer and all districts respond optimally to the resulting change in transfers all around. This process is shown to increase total production and the level of redistribution. However, it does not guarantee that all districts gain, nor that an efficient level of redistribution is attained. Assuming complete information among districts, we first derive the willingness of each district to match the contribution of other districts and we show that the aggregate willingness to pay for matching rates converges to zero when both the efficient level of redistribution and the efficient outcome and guarantee that everyone will gain.Fiscal federalism, Adjustment process, Matching grants

Weak moral motivation leads to the decline of voluntary contributions

We develop a model that accounts for the decay of the average contribution observed in experiments on voluntary contributions to a public good. The novel idea is that people’s moral motivation is "weak". Their judgment about the right contribution depends on observed contributions by group members and on an intrinsic "moral ideal". We show that the assumption of weakly morally motivated agents lead to the decline of the average contribution over time. The model is compatible with persistence of over-contributions, variability of contributions (across and within individuals), and the “restart effect”. Furthermore, it offers a rationale for conditional cooperation. Cet article présente un modèle théorique qui permet d’expliquer le déclin des contributions observé dans les expériences de contribution volontaire au financement de biens publics répétés à horizon fini. Ce modèle s’appuie sur l’idée de motivation morale faible selon laquelle les agents auraient une motivation intrinsèque à contribuer un montant non nul au bien public et que cette motivation intrinsèque serait conditionnée à l’observation des contributions des autres membres du groupe. Ce modèle est compatible avec la persistance de la sur-contribution, la variabilité inter et intra individuelle dans les montants de contributions et l’effet de « restart ».Conditional cooperation, voluntary contributions, moral motivation, experiments on public goods games, coopération conditionnelle, contributions volontaires, motivation morale, expériences de biens publics

Banque Centrale Européenne, relations stratégiques internationales et stabilisation de la dette

Classification JEL : C73, D92, L16National audienceThe adoption of a common central Bank has modified the strategic relationships between fiscal and monetary authorities and raised in a new context the issue of debt stabilization. To study this problem, Van Aarle et al (1997) have proposed a two-country model with a common central bank. In a sense they obtained a neutrality result: the adoption of a common central bank does not modify the evolution of debt if the authorities can commit. This note reexamines this neutrality result by departing from the previous authors on three points: i) externalities are introduced between countries to account for the elasticity of the world interest rate to macro-economic policies, ii) the model features n countries, some of them remaining outside the monetary Union, iii) analytical results are given (many results of Van Aarle et al (1997) were numeric). In this extended context the neutrality result collapses: i) the institutional change introduces an asymmetry between countries, ii) countries inside the monetary union improve their long run welfare, iii) but the outside countries can win or lose under the new institutional setting.L’adoption d’une Banque centrale européenne a modifié les relations stratégiques entre les autorités fiscale et monétaire et pose sous un jour nouveau la question de la stabilisation de la dette. Pour étudier ce problème, Van Aarle et al (1997) ont proposé un modèle à deux pays avec une Banque centrale commune. Ils obtiennent un résultat de neutralité : le changement institutionnel ne modifie pas l’évolution de la dette si les autorités peuvent s’engager. Cette note réexamine ce résultat de neutralité en s’écartant des auteurs précédents sur trois points: i) des externalités entre les pays sont introduites en raison de l’élasticité du taux d’intérêt mondial aux variables macroéconomiques ; ii) le modèle comporte n pays dont certains restent en dehors de l’Union monétaire ; iii) les résultats sont analytiques (la plupart des résultats de Van Aarle et al (1997) étaient numériques). Dans ce nouveau contexte le résultat de neutralité s’effrondre : i) une asymétrie apparaît entre les pays ; ii) les pays de l’Union améliorent leur bien-être de long terme ; iii) en dehors de l’Union les pays peuvent voir leur bien-être s’améliorer ou se dégrader

Interactions Markoviennes dans une classe de jeux dynamiques

International audienceThis paper contributes to the understanding of economic strategic behaviors in inter-temporal settings. Comparing the MPE and the OLNE of a widely used class of differential games it is shown: (i) what qualifications on behaviors a markov (dynamic) information structure brings about compared with an open-loop (static) information structure, (ii) what is the reason leading to intensified or reduced competition between the agents in the long run. It depends on whether agents’ interactions are characterized by markov substitutability or markov complementarity, which can be seen as dynamic translations of the ideas of strategic substitutability and strategic complementarity (Bulow et al. 1985, Journal of Political Economy 93:488–511). In addition, an important practical contribution of the paper for modelers is to show that these results can be directly deduced from the payoff structure, with no need to compute equilibria first

[Exploitation durable d'une ressource naturelle : utilisation concluante du critère de Chichilnisky]

International audienceLes auteurs discutent et analysent le concept de durabilité dans le cas de l'exploitation d'une ressource naturelle. A partir du traité de Rio en 1992, plusieurs travaux ont fait l'effort de définir l'idée de la durabilité (voir Pezzey 1992 pour un résumé des différents concepts). Ils considèrent le critère de Chichilnisky. Si on accepte les axiomes de non dictature du présent et du futur (et des autres axiomes plus techniques), on est face à la non-existence de solution du critère. Dans le document, les auteurs proposent la restriction de l'ensemble d'exploitations possibles de façon à obtenir l'existence d'une solution optimale dans cet ensemble. Ils analysent la procédure à un simple modèle d'exploitation d'une ressource et ils étudient aussi la relation entre interaction, stratégique et coopération