U.S. interest groups prefer emission trading: A new perspective

Public Choice - If there is to be environmental regulation, what kind of regulation would the main interest groups then prefer? This political distortion must be taken into account when designing...     

Why does bureaucratic corruption occur in the EU?

Why does bureaucratic corruption occur in the EU system? Several examples suggest that bureaucratic corruption exists and that the Commission’s anti-fraud agency, OLAF, is not a fully independent authority. We thus develop a novel interpretation of the principal-supervisor-agent model to cope with non-independent anti-fraud units. This model shows that corruption is likely to occur when the expected value to the client from bribing the agent is larger than the expected value to the principal of truth-telling by the supervisor. Overall, this analysis points to the risks of flawed incentives and the lack of institutional independence among principal, agent, supervisor and client. Our main policy recommendations as a result of these findings are that OLAF should be placed outside the Commission, and that whistleblowers should receive adequate protection.     

How robust is the welfare state when facing open borders? An evolutionary game-theoretic model

How robust is the welfare state when confronting open borders? To answer that question, we develop an evolutionary game-theoretic model combined with an ingroup–outgroup model. The simulations reveal that welfare states in general will transform into low-welfare societies unless the societies in time generate a sufficiently large amount of social recognition of the reciprocators in such a crisis. The recognition implies that the “always cooperators” in favour of supportive policies towards free riders need to step down and hand over privileges to those willing to reciprocate, namely the “willing punishers”. The open-border society is modelled by letting a small amount of random types enter the society each year. Interestingly, it is not the defectors who compromise high-welfare societies. Instead, it is the excessive presence of cooperators who crowd out the reciprocators, thus making society increasingly vulnerable to free riding. This accentuates the need for timely recognition and actions against the risk of moving towards a low-welfare society.

     

Social Capital and Endogenous Preferences

In this paper we analyze whether social capital can emerge endogenously from a process of preference evolution. We define social capital as preferences that promote voluntary cooperation in a one-shot Prisoner’s Dilemma game. We investigate how the endogenous preferences depend on the amount of information individuals have about each other’s preferences. When there is sufficiently much information, maximal social capital emerges. In general, the level of social capital varies positively with the amount of information. Our results may add to an understanding of the factors that determine a society’s ability to generate cooperative outcomes.     

The globalization of intelligence since 9/11: frameworks and operational parameters

In the early 21^st century we are witnessing the increasing globalization of intelligence. The phenomenon of international intelligence liaison is central to this process, an area where intelligence and international relations connect. This article highlights the key themes that are currently developing within international intelligence liaison relationships. It asserts that we can identify a trend towards ‘homogenization’ of intelligence and other law enforcement and security initiatives. It even suggests we may speak of something close to ‘international standardization’ among a widening group of partners. These processes are underway to establish viable frameworks and operational parameters for the intelligence liaison arrangements, together with addressing counterintelligence and other security considerations. These convergent ‘regimes’ contribute to the important processes of trust and confidence building, as well as their subsequent maintenance over time. In short, a ‘best practice’ approach is becoming ‘normalized’ operationally, facilitating the optimization of intelligence liaison arrangements.     

Do Corruption and Social Trust Affect Economic Growth? A Review

Abstract

Two separate literatures suggest that corruption and social trust, respectively, are related to economic growth, although the strengths of the relationships, and the direction of causality, are still debated. This paper reviews these literatures and evaluates the evidence for causal effects of corruption and trust on economic growth, and discusses how corruption and trust are interrelated. The reviews show that absence of corruption and high levels of social trust foster economic growth. The literatures also indicate that corruption has a causal effect on social trust, while the opposite effect is more uncertain. The conclusion offers the suggestion that fighting corruption may yield a “double dividend”, as reduced corruption is likely to have both direct and indirect effects on growth.     

Connecting Intelligence and Theory: Intelligence Liaison and International Relations

Intelligence liaison increased exponentially during the so-called ‘War on Terror’. Today it continues as the most significant dimension of intelligence, including impacting on accountability and oversight considerations. Nevertheless, the intelligence liaison phenomenon remains largely under-studied and substantially under-theorized. In this article, preliminary suggestions are offered concerning how this dearth of theory can be addressed. Firstly, the relevance of international relations theory and other bodies of theory, together with significant approaches concerning how international relations – extending to how intelligence and intelligence-related phenomena (such as, in this article, intelligence co-operation) – can be studied, are explored. These theories, and equally, approaches, are arguably most appropriate when deployed in an arrangement of ‘complex co-existence plurality’ across the different interrelated levels of experience and analysis, and they offer more effective explanations when intelligence liaison is disaggregated into at least eight systemic attributes or variables. More broadly, the suggestion that international relations theory, and indeed theory generally, is ‘irrelevant’ to intelligence studies is simultaneously challenged.     

Fighting Windmills: The Coalition of Industrialists and Environmentalists in the Climate Change Issue

This paper extends the political economy idea developed by Ackerman and Hassler [Clean Coal/Dirty Air, or How the Clean Air Act became a Multibillion-Dollar Bail-out for High Sulfur Coal Producers and What Should Be Done About It. New Haven: Yale University Press], which suggested that a coalition of environmentalists and industrialists successfully lobbied the US Congress. More strict technology-based standards for new emitting sources than for existing sources was the resulting policy outcome serving the common interest of the coalition because it offered both a barrier to entry for new firms and improved environmental quality. We focus on the case of international climate negotiations and the promotion of wind-based energy. Along the lines of the Ackerman and Hassler approach, we suggest that one reason for EU eagerness to push forward ambitious reduction target levels (and thereby promote new green industries) could be a similar coalition between industrialists and environmentalists. Such a strategy can be seen in the context of the Bootleggers and Baptist theory developed by Yandle [Bootleggers and Baptists: the Education of a Regulatory Economist, Regulation, 7, 12–16], where the Baptists (in our case the environmentalists) demand changes in behaviour on moral grounds. In contrast, the Bootleggers (the producers of renewable energy), who profit from the very regulation, keep a low profile. The actual heavy subsidisation of renewable energy sources, such as wind energy, can be viewed as a successful policy outcome for the coalition of industrialists and environmentalists offering both market protection and improved environmental quality. Solving the current dead-lock in international climate negotiations may well imply fighting the strong coalition of industrialists and environmentalists. Such a political battle may turn out to be just as tough as fighting windmills and needs to be addressed in future and more rigorous empirical research. At the end of the day, transparent incentives of relevant stakeholders in the climate change issue are necessary preconditions for progress in the climate change negotiations.JEL Classification: Q28,H2, H4     

Rational Bandits: Plunder,Public Goods,and the Vikings

The paper applies and extendsinsights from Mancur Olson's study of statemaking to the Vikings. In a world ofroving bandits, a sub-optimal provision ofpublic goods exists, most notably ofsecurity. Roving banditry leads toover-plundering and zero profits for theplunderers, which makes stationary banditryprofitable. The most efficient banditsmonopolize violence, begin to tax andprovide some amounts of public goods inorder to stimulate economic growth. Theanalysis demonstrates how the Vikings'activities and settlements are consistentwith such an explanation, with the dynamicsof the process being reflected in thevariation in the number of raids and theamount of wealth extracted.