CENTRALIZED OR DECENTRALIZED INFORMATION: WHICH IS BETTER FOR PROVIDING INCENTIVES?

A risk‐neutral ruler must invest in improving the quality of his country's infrastructures. Higher quality infrastructures increase the profitability of capital investment by foreign entrepreneurs. The ruler wishes to maximize the amount of capital investment that flows into the country. Before selecting their investment, entrepreneurs receive a signal on the quality of infrastructures. We consider two cases. First, all entrepreneurs observe the same signal (centralized information). Second, each entrepreneur receives an independently drawn signal (decentralized information). We compare the effectiveness of these two scenarios for incentivizing the ruler. We find remarkably clear‐cut results. When the entrepreneurs’ investments are strategic complements, centralized information does a better job in incentivizing the ruler. The opposite holds when investments are strategic substitutes. This may help understand the role of media, rating agencies, public announcements, and ambiguity. (JEL D82, D62)     

The Ebb and Flow of Environmentalism

This essay examines the pattern of ebb and flow in the environmental movement in the United States. Although the movement has experienced periods of expansion and contraction over the last century, environmentalism has sustained significant mobilization with the evolution of its organizational forms and tactics. Mass demonstrations and other forms of public protest defined the emergence of the modern environmental movement in the 1960s and early 1970s, and grassroots action remains important, particularly in response to the urgency of climate change. However, the movement has also relied increasingly on institutionalized organizational forms and conventional tactics such as litigation and lobbying. Some critics argue that decentralized networks and disruptive tactics are essential for inspiring a new era of impassioned environmental activism, while others contend that the complexity of current environmental problems requires more formalized structures and focused legislative advocacy. We conclude that the diversity of organizational forms and activities in the environmental movement has maintained the movement over many decades, and that this diversity can aid in effecting comprehensive change.     

CONTRACT DELEGATION WITH BARGAINING

In the theoretical literature on contract delegation, it is assumed that the contractor has all the bargaining power when contracts are proposed to the subcontractee. In this case, the principal prefers centralized to decentralized contracting structures. This paper analyzes the consequences of relaxing this assumption. It is shown that when contracts are determined by bargaining, the principal might prefer decentralization to centralization. Furthermore, it is shown that this can happen even when subcontractees have very little bargaining power. The results explain, for example, the coexistence of centralized and decentralized contracting in public procurement. (JEL D23, D82, L22)     

Wood energy production,sustainable farming livelihood and multifunctionality in Finland

Climate change and the projected depletion of fossil energy resources pose multiple global challenges. Innovative technologies offer interesting possibilities to achieve more sustainable outcomes in the energy production sector. Local, decentralized alternatives have the potential to sustain livelihoods in rural areas. One example of such a venture has emerged around heating businesses in rural Finland, and is referred to as heat entrepreneurship. Heat entrepreneurship entails a system where a local forest owner, usually a farmer, provides heat to a small community or local building, such as a school. Heat is produced using local forest resources that would otherwise be unutilized. The purpose of this study is to examine heat entrepreneurship as a potential sustainable alternative for energy production and its multifunctionality. The data was collected by interviewing 15 heat entrepreneurs in the area of Central Finland. The study demonstrates how multifunctional farming-related energy production can provide more sustainable livelihoods for farmers by increasing social, economic and environmental sustainability. This is achieved by diversifying farmers' economic options, enhancing rural areas economically, increasing farmers' social networks and well-being and, to some extent, by boosting local environmental capital. However, the study also points to differences among the farmers and sustainability trade-offs, suggesting for the need to better acknowledge the local perceptions in policy-making.     

Investor preferences for positive social externalities and state-owned enterprises’ facilitated access to capital

State-ownership of commercial companies exists around the world, and it is important to understand its effect on financing and investment decisions. Empirically, firms that are partially state-owned (SOE) usually profit from easier access to capital. We propose a novel explanation for this: investors’ social preferences can affect capital allocation if SOEs are perceived as socially beneficial. In support of this we found that people attribute social benefits more to SOEs than to private firms, and their propensity to invest depends on this attitude. Further, in an incentivized modified stochastic public goods game, participants invested in risky options with positive externalities even when the aggregate of private return and externality was lower than the return of an investment option with only private returns. For the case of the EU, we discuss alternative explanations such as state guarantees and political lending in the light of regulations of state aid. We conclude that even if these regulations prohibit direct or indirect state aid for SOEs, state-ownership can affect capital allocation through investors’ social preferences.     

MAKING FRIENDS TO INFLUENCE OTHERS: ENTRY AND CONTRIBUTION DECISIONS THAT AFFECT SOCIAL CAPITAL IN AN ASSOCIATION

We examine factors affecting entry and contribution to an association that provides different goods using social capital formed by heterogeneous firms that lobby in a political economy environment. We identify how associations attract the most productive firms or the least productive firms in an industry and explain how such associations differ in their intensive and extensive marginal contributions to social capital. We find that the level of regulatory stringency, association products including capital goods for members or lobbying to influence regulation, and government influenceability affect membership and contribution decisions. These results vary with firm productivity. Often, an increase in government influenceability increases social capital in associations composed of highly productive firms because they prefer to influence policy while less productive firms prefer more association‐produced production inputs. (JEL D71, D73)     

SUBSIDY AND TUITION POLICIES IN PUBLIC HIGHER EDUCATION

Although public appropriations to higher education and tuition rates are set under alternative arrangements, the optimal allocation is readily achievable. The decentralized linear-subsidy case produces an externality that reduces joint welfare below the centralized (first-best) case, but when vertical constraints are added or bilateral bargaining occurs, tuition maximizes joint surplus. Specifications differ in the subsidy's assigned role, which varies from affecting tuition directly to being indeterminate under Nash bargaining. When marginal cost of education is nondecreasing, the ratio of nonresident to resident tuition declines with increases in the demand for education and with decreases in the state budget. (JEL D4, I2 )     

Gender and income in pharmacy: human capital and gender stratification theories revisited

This is a case study of gender and earnings in pharmacy--a profession characterized by its rapid recruitment of female practitioners. We try to account for disparities in earnings between male and female pharmacists in Ontario with the aid of human capital theory and gender stratification theory. Data is drawn from a random sample of 463 Ontario pharmacists. We find a consistent sex gap in earnings regardless of occupational level of practitioners (i.e. owner, manager or employee) and net of such factors as hours worked, commitment to work, hours devoted to childcare, absences from the labour market, and years since graduation. Instead, the main reason why women in pharmacy earn less than males is because they remain employees throughout their careers. However, we are less successful at identifying the additional factors responsible for the depressed earnings of female practitioners. We discuss our findings in light of the claims of gender stratification and human capital theory.     

THE OPTIMAL TAXATION OF ASSET INCOME WHEN GOVERNMENT CONSUMPTION IS ENDOGENOUS: THEORY,ESTIMATION AND WELFARE

This paper derives the Ramsey optimal fiscal policy for taxing asset income in a model where government expenditure is a function of net output or the inputs that produce it. Extending work by Kenneth L. Judd, I demonstrate that the canonical result that the optimal tax on capital income is zero in the medium to long term is a special case of a more general model. Employing a vector error correction model to estimate the relationship between government consumption and net output or the factor inputs that generate it for the United States between 1948Q1 and 2015Q4, I demonstrate that this special case is empirically implausible, and show how a cointegrating vector can be used to determine the optimal tax schedule. I simulate a version of the model using the empirical estimates to measure the welfare implications of changing the tax rate on asset income, and contrast these results with those generated in a version of the model where government consumption is purely exogenous. The shifting pattern of welfare measurements confirms the theoretical results. I calculate that the prevailing effective tax rate on net asset income in the United States between 1970 and 2014 averaged 0.449. Hence abolishing the tax completely does generate welfare improvements, though only by the equivalent of between 1.103% and 1.616% permanent increase in consumption—well under half the implied welfare benefit when the endogeneity of the government consumption is ignored. The maximum welfare improvement from shifting part of the burden of tax from capital to labor is the equivalent of a permanent increase in consumption of between only 1.491% and 1.858%, and is attained when the tax rate on asset income is lowered to between 0.148 and 0.186. Allowing the tax rate to vary over time raises the maximum welfare benefit to 1.865%. All the results are very robust to a wide range of elasticities of labor supply. (JEL E62, H21, H50)     

Zentralisierung durch Dezentralisierung

Paradoxical slogans such as “controlled autonomy”, “externally organized self-organization”, “centralistic decentralization” and “regulated anarchy” point to strategies by the management which make use of two seemingly contradictory phenomena: the advantages in innovation and efficiency that are implied in decentralized self-organization on the one hand and the advantages in synergy and control that come with a centralized management on the other hand. Starting from this assumption on the combination of centralization and decentralization as a deliberate management strategy, the results of a case study are discussed which was conducted in a medium-sized German company. This leads to a re-consideration and partial reversal of the original assumption. It is shown that, rather than being a strategy intentionally employed by the management, “centralization by decentralization” was an unintended side-effect of the introduction of team structures on several hierarchical levels which originally was a part of decentralization.     

Public relations or “grassroots lobbying”? How lobbying laws are re-defining PR practice

This research examines the legal implications of having an expansive definition of public relations practice. Specific attention is given to the 2016 New York lobbying regulations that mandated traditional public relations practitioners register as lobbyists. The examination of this law and the lawsuit that followed highlights how the public relations practitioners may inadvertently be subject to restrictive laws because of modern definitions of PR practice.     

Advancing social inclusion in the neighbourhood for people with an intellectual disability: an exploration of the literature

The shift from segregated facilities to community settings did not automatically lead to social inclusion for people with an intellectual disability (ID). Policies are increasingly decentralized but little is known about the factors that are important to realize social inclusion in the neighbourhood. This literature study identifies five domains barriers and facilitators for social inclusion in the neighbourhood: individual characteristics, informal network, professional care, neighbourhood characteristics, and government policies. The findings suggest that social inclusion in the neighbourhood is a dynamic process that shows a series of complex interactions between environmental factors and personal characteristics to provide opportunities for people with an ID. It is recommended to include the perspectives of people with an ID and other neighbourhood residents in future research on social inclusion. Specific attention is needed for the role of neighbourhood social capital in achieving social inclusion in the neighbourhood.     

Habitual and Occasional Lobbyers in the U.S. Steel Industry: An Em Algorithm Pooling Approach

Using U.S. steel firm data, we find that lobbying for import protection appears to be habit-forming. To identify heterogeneity in lobbying behavior among firms, we use an expectation-maximization algorithm to sort our firms into groups with different propensities to lobby and estimate the determinants of lobbying in each group. A two-pool model emerges: occasional lobbyers' lobbying depends on their market performance, and habitual lobbyers' lobbying only depends on past lobbying. The latter tends to be larger steel firms whose business is more focused in steel. Our evidence is consistent with dynamic economies of scale in protection seeking breeding protection-dependent firms.     

PRIMARY AND SECONDARY REFORM

An import competing industry hires lobbyists to obtain protection, where binding quotas may be utilized in the trade regime. Rent seekers compete with one another to obtain valuable import licenses. Rent seeking and lobbying are assumed to involve similar skills, so that a reform of the rent-seeking sector will have feedback effects on lobbying and vice versa. We show that the feedback effects from reform targeting the lobbying activity (primary reform) often tend to reinforce the original reform, while reforms targeting the rent-seeking sector (secondary reform) tend to have negative feedback effects on the reform process. ( JEL D72, F13)     

Nurses' Pay Formation in Swedish Health Call Centres

This article analyses the pay formation process for nurses in the new organizational form of health call centres (HCCs) in Sweden. It finds that HCC tele‐nurses have gained a better labour market position than both the average call centre employees in other sectors and some other nurses. This specialization of the nursing occupation may thus have importance for gendered pay formation in public healthcare. In evaluating pay formation, the article draws on case studies carried out by the author. It analyses the shift from centralized bargaining towards more decentralized and individualized pay formation and the importance of union organization, economic and professional factors that have contributed to relatively higher pay for these workers. The article concludes with a discussion of the implications of this process for the gender pay gap in the state sector and limitations to future gains.     

German welfare organizations and the process of European integration

The process of European integration affects an increasing number of areas of life. The influence of the European single market on the social sector, including organizations providing human services, can no longer be denied. This article looks at the activities of the European Commission toward these organizations and argues that European regulations are relevant to the German system of social service delivery due to the introduction of market‐like features in the national context. Within this context, German welfare organizations have discovered an important field of interest representation and lobbying.     

The Politics of Randomness

Recent analysis of public policy is based on elaborate political-economic models. A major advantage of these useful models is that they have micro-foundations. Their main shortcomings are that they are usually based on drastic simplifications regarding the institutional setting and, more importantly, that the results they yield are not robust to the assumptions regarding the institutional setting, the policy space or the agents’ preferences. An alternative reduced-form modeling is the public-policy lobbying contest. This model can be applied to public-policy determination in representative democracies. However, its main drawback is that the notion of contest success function (CSF), a crucial component of the contest model, does not have micro-foundations and, therefore, the random behavior of the government seems ad-hoc. In the present paper we propose a partial micro-foundation for the public-policy contest. The possible rationalization of random government behavior is illustrated in the case of the most commonly studied CSFs: the function associated with the all-pay auction and Tullock’s lottery logit functions. We also clarify how stake asymmetry, lobbying-skill asymmetry and return to lobbying effort determine the relative desirability, from the government’s point of view, of these CSFs.     

“Water Is Life”—Farmer Rationales and Water Saving in Khorezm,Uzbekistan: A Lifeworld Analysis

Khorezm Province is located in the Amu Darya lowlands of Uzbekistan, where unsustainable use of irrigation water has led to the Aral Sea crisis. This study deals with the question of how farmers in Khorezm perceive water and its management and how this facilitates or prevents water conservation, or “water saving,” in irrigated agriculture. To answer this from the perspective of the water users, we apply Schütz's lifeworld concept to the study of natural‐resource management, thereby reconstructing the water lifeworld of Khorezmian farmers. We present the spatial and temporal boundaries of the water lifeworld; the different types of water, people, and land that farmers distinguish; and the institutions water management is based on. The analysis shows that religious values and the risk of being fined for water wasting facilitate water saving. However, the following barriers to water saving dominate farmer practices: (1) storage of saved water is not possible, (2) using much water creates social capital, (3) perceived water needs exceed the geographical realities, (4) the term “water saving” is not in use, and (5) farmers believe that water management is the state's responsibility. We conclude that water saving should be facilitated by environmental education, a strengthening of the water‐inspection department Uzsuvnazorat, and the creation of decentralized storage options.     

CYBERNETICS AND AMERICAN YOUTH SUBCULTURE

Similar shifts can be seen in the use of cybernetic modelling across a wide variety of scientific disciplines. This article will categorize these shifts in terms of three historical phases: (1) modern cybernetics, focused on digital hierarchical systems, which reached its high point in the late 1960s; (2) transitional postmodern cybernetics, focused on analogue decentralized systems, which started in the late 1970s; and (3) stable postmodern cybernetics, based on a synthesis between the analogue/digital and centralized/decentralized oppositions, which started in the late 1980s. While the shifts themselves can be explained by internalist narratives, the ways in which youth subculture closely parallels these changes suggests that there are causal links between cybernetics and popular culture which work in both directions.     

A Social Capital Basis for Environmental Concern: Evidence from Northern New England*

This study, based on a random‐digit‐dialing telephone survey of adults in Maine, New Hampshire, and Vermont, uses ordinary least squares regression to examine a relatively neglected element in the sociological literature on environmental concern, namely, the influence of an individual's social capital on the formation of environmental attitudes. We argue that it is those individuals with a greater diversity of social connections who are most likely to be influenced by ecological perspectives grounded in conservation and environmental protection. Controlling for other theoretically relevant variables, we regress an index of environmental concern that gives special emphasis to environmental‐economic trade‐offs on our measures of relational and community social capital. While confirming much of the earlier work in this area, our model provides evidence that connections to other people play an important role in determining individual concern for the environment. Specifically, the number of respondents' “weak ties”—that is, not their closest relationships—and the average occupational status of respondents' social ties, in general, were both positively correlated with environmental concern. Additionally, one of our three measures of community social capital, the number of visits from friends over the past month, was statistically significant and negatively correlated with environmental concern.