Intra-industry trade and protectionism: the case of the buy national policy

This article examines the factors that lead governments to open up their public procurement markets to international competition with a particular emphasis on the effect of intra-industry trade. Contrary to the conventional notion that intra-industry trade entails less political pressure for protectionism than inter-industry trade, I argue that such notion does not prevail in the case of discriminatory public procurement. Firms in a market with a high degree of intra-industry trade are more likely to resist the removal of discrimination than would firms in a market with a high degree of inter-industry trade. Empirically, I find support for the argument both at sub-national and cross-national settings.     

Interest-group analysis in economic history and the history of economic thought

This article reviews Bob Tollison’s conjoined contributions to the scholarly literature in the closely related fields of economic history and history of economic thought, underscoring his integration of public choice and interest-group analysis into the historian’s purview. It identifies the overarching themes of his research and summarizes the major findings of his key publications.     

Foundations of the Ostrom workshop: institutional analysis, polycentricity, and self-governance of the commons

This paper highlights important lessons gained from the research program of Elinor Ostrom, and demonstrates the close connection between public choice and the work on collective management of the commons for which Lin was honored by the Nobel Prize committee. Although our primary focus is on Lin’s research on self-governance and the “commons,” an overarching goal is to capture the intellectual journey of participants in the Ostrom Workshop, who continue to be guided by the inspiring examples set by Lin and Vincent Ostrom.     

Determinants of the probability and timing of commercial casino legalization in the United States

The adoption of lotteries by state governments has received significant attention in the economics literature, but the issue of casino adoption has been neglected by researchers. Casino gambling is a relatively new industry in the United States, outside Nevada and New Jersey. As of 2007, 11 states had established commercial casinos; several more states are considering legalization. We analyze the factors that determine a state’s decision to legalize commercial casinos, using data from 1985 to 2000, a period which covers the majority of states that have adopted commercial casinos. We use a tobit model to examine states’ fiscal conditions, political alignments, intrastate and interstate competitive environments, and demographic characteristics, which yields information on the probability and timing of adoptions. The results suggest a public choice explanation that casino legalization is due to state fiscal stress, to efforts to keep gambling revenues (and the concomitant gambling taxes) within the state, and to attract tourism or “export taxes.”     

Interest groups, public choice and the economics of religion

This article reviews Bob Tollison’s conjoint contributions to the burgeoning area of the economics of religion, underscoring his integration of public choice and interest-group themes into the microeconomic analysis of faith-based organizational architecture, institutional decision making and doctrinal innovation. Beginning with study of the medieval Catholic Church, moving forward to the Protestant Reformation and beyond, it supplies a timeline of developments and the major findings of each phase of his research program.     

A positive theory of the earnings relationship of unemployment benefits

In a wage bargaining model, a stronger earnings relationship of unemployment benefits may reduce wages. Therefore, the benefit structure significantly influences profits and trade union utility, raising the question as to how the benefit structure is determined in the political process. We consider a government that chooses the earnings relationship in order to maximize its political support. Our model predicts a strong earnings relationship under right-wing governments and a weak relationship when unions are influential. Using panel data for 19 OECD countries, we find support for these theoretical predictions. Moreover, we show that the earnings relationship varies negatively with openness.     

It’s all ‘bad’ news! Voters’ perception of macroeconomic policy competence

The purpose of the present paper is to consider how voters form perceptions about macroeconomic policy competence by focusing on the role of recent macroeconomic news: Do their perceived views of good news matter as much as bad news when they form beliefs about the incumbent government’s competence in managing the macroeconomy, in particular, with regard to their ability to control inflation and unemployment? We find that ‘bad’ news about unemployment persists when households are forming their perceived competence, whereas “good” news does not. That is, voters tend to display pessimistic bias when forming perceptions about the incumbent government’s competence.     

Uncertain candidates, valence, and the dynamics of candidate position-taking

This paper offers graphic illustration of so-called “valence” models of candidates responding to their perceptions of voter location in a two-party system. Models by Groseclose and others show how the combination of candidate uncertainty about the median voter location, nonzero candidate valence, and policy motivated candidates leads to departures from the median voter prediction. With one policy dimension, either there exists an equilibrium where the candidates do not converge to the median (or any other common position) or there exists no equilibrium. We offer illustrations based on plausible conditions. Under some conditions we show an equilibrium where candidates locate at separate policy positions. Under others, we illustrate the absence of equilibrium.     

The progress of the betting in a baseball game: A comment

In their article in the current issue of this journal, Sauer et al. compare the evolution of prices of in-game betting markets of baseball games to an empirical model of scoring based on the probability of various game events occurring. The authors correctly suggest this in-game betting market provides an opportunity to examine the efficiency of gambling markets, as the value of the security being examined can be known with a greater degree of precision than the fundamental value of securities being traded in general financial markets. While we appreciate the progress that has occurred, we believe that with some fairly simple changes, the authors may be able to improve the precision of their model to the point where a more powerful commentary on potential market efficiency could be developed. We offer suggestions on more precisely matching of the two sources of data, timing of the events, and dealing with games in which there is a clear pre-game favorite. We close with suggestions for extensions.     

Considering the council’s counsel: Advisor influence and political change

Comment on paper by Brian Goff regarding the influence of political advisors on observable measures of political outcomes.     

Fiscal decentralization and the size of government: a European country empirical analysis

This article is an original contribution to the understanding of the relationship between fiscal decentralization and government size. Using a panel data set of the EU-15 countries, we analyse the effect of decentralization on aggregate, national and subnational government sizes by separating the long run effects of decentralization from its short run dynamics. In the long run, tax autonomy reduces central expenditure but increases—and to a greater extent—subnational public expenditure, leading to higher aggregate public expenditure. We find also that vertical imbalances tend to increase the sizes of subnational, national and aggregate governments.     

After the fall: the impact of government regulation on church attendance in Eastern Europe, 1990–2004

Previous literature modeling the demand for religion has identified socioeconomic factors, religious human capital and religious market structure as being the fundamental determinants of the level of participation in religious services and practices. Building on the existing literature, this study analyzes the effect of government regulation and intervention on religious activity. Using religion-related data as well as demographic and economic data from 22 Eastern European countries after the fall of Communism, the existence of any form of religious restrictions is found to reduce church attendance rates.     

Does government ideology influence deregulation of product markets? Empirical evidence from OECD countries

This paper examines how government ideology has influenced deregulation of product markets in OECD countries. I analyze a dataset of non-manufacturing regulation indicators covering energy, transport and communication industries in 21 OECD countries over the 1980–2003 period and employ two different indices of government ideology. The results suggest that government ideology has had a strong influence on the deregulation process: market-oriented governments promoted the deregulation of the energy, transport and communication industries. This finding identifies remarkable differences between leftist and rightwing governments concerning the role of government in the economy and basic elements of political order.     

Strategic entry deterrence and terrorism: Theory and experimental evidence

Using a two stage rent-seeking framework, we present a simple model of strategic entry/terrorism deterrence and test the model using laboratory experiments. Our contest success function highlights the potential for strategic spillovers. The theory illustrates that, relative to a cooperative outcome, negative externalities lead to over-spending on deterrence and positive externalities lead to under-spending on deterrence. Our experimental results are broadly consistent; subjects in the negative externality treatment had higher expenditures. In contrast to theoretical predictions, participation decisions, while primarily driven by the probability of winning a contest, were influenced by a subject’s ability to participate in multiple contests.     

A commentary on “Does the Fed contribute to a political business cycle?”

Abrams and Iossifov (2006) find that during 1957–2004, monetary policy turned significantly more expansionary prior to U.S. presidential elections when the Federal Reserve chairman and the incumbent president belonged to the same political party. However, their long sample period obscures changes in trends during the period stemming from advances in macroeconomic theory and in the implementation of monetary policy. Indeed, when one considers only the Volcker–Greenspan era (1979–2004), there is insufficient evidence to accept the notion of a political business cycle effect.     

Fire over water: China's strategic engagement of Somalia and the Gulf of Aden crisis

Abstract

Since China agreed to join the international counter-piracy coalition in late 2008, a watershed development in Chinese strategic policy, Beijing's engagement in Somalia is now following two separate streams. First, China is seeking to engage Somalia as part of its expanding number of African diplomatic partners via its participation in the coalition. Second, China is attempting to demonstrate, on the international level, its growing commitment to developing its naval capabilities, and protecting its maritime trade interests, by engaging in multilateral and coalition-based operations, namely to combat piracy off the Somali coast, in order to deflect criticism from the United States and its allies of China's overall military expansion and modernization.     

Eminent domain power and afterwards: Leviathan’s post-taking opportunism

This paper investigates post-taking procedures, a research area not yet fully explored. It discusses the economic implications underlying the landowner’s ‘repurchase right (RR)’ which can be invoked upon the occurrence of a so-called ‘change in use after taking.’ RR is compared with the government’s discretion regarding such changes. The lack of post-taking accountability tends to create power ripe for abuse, and RR appears to be an effective device for constraining Leviathan’s opportunism. Finally, a parsimonious estimation supports that, under the overriding-RR regime, there exists the systematic post-taking opportunism whereby ‘original public projects are changed into inappropriate projects.’     

The Logic of the “Tutelary-Style” Monitoring System: An Assessment of State Policies on Social Organisations in the Past 30 Years

This article, concerning various state strategies in different periods since 1978, classifies the evolution of the government’s policy on administering social organisation into three phases. In particular, the state’s policy has gone through a series of shifts from laissez-faire to control, from a non-formal style of administration to using legal instruments as the main means, and with administrative focus from the central to the local level. The supervision mechanism thus formulated implies a totalitarian logic of exercising a “tutelary” style of monitoring—a logic that has to a certain extent revealed “opportunism” on the part of the state. Through an analysis of the state’s governance strategies on social organisations, this article argues that this “tutelary-style” monitoring system explains the interaction between the state and civil society in contemporary China.