Government Outsourcing: Public Contracting with Private Monopoly

in Economic Journal (2009), 119

The article studies the impact of the government budget constraint on the regulation of natural monopolies in adverse selection contexts. The government maximises total surplus but incurs some cost of ... [more ▼]

The article studies the impact of the government budget constraint on the regulation of natural monopolies in adverse selection contexts. The government maximises total surplus but incurs some cost of public funds "à la" Laffont and Tirole (1993). Government outsourcing is proposed as an alternative to regulation in which firms freely enter the market and choose their prices and output levels. However the government can contract "ex post" with the private firms. This "ex post" contracting set-up allows more flexibility than regulation where governments commit to both investment and operation cash-flows. This is especially relevant in case of high technological uncertainties. Copyright � The Author(s). Journal compilation � Royal Economic Society 2009. [less ▲]

Welfare, home market effects, and horizontal foreign direct investment

in Canadian Journal of Economics (2007), 36(3), 523-545

We investigate the spatial distribution and organization of an imperfectly competitive industry when firms may choose to operate more than a single production unit. Focusing on a short-run setting with a ... [more ▼]

We investigate the spatial distribution and organization of an imperfectly competitive industry when firms may choose to operate more than a single production unit. Focusing on a short-run setting with a fixed mass of firms, we first fully characterize the spatial equilibria analytically. Comparing the equilibrium and the first-best, we secondly show that both organizational and spatial inefficiencies may arise. In particular, when fixed costs are low, when transport costs are high, and when products are close substitutes, the market outcome may well have to too many multinationals operating from a social point of view (`over-investment'). As a by-product, under-agglomeration of exporters in the larger market may arise. [less ▲]

Unions and Firms Agglomeration

in European Economic Review (2006), 50(3), 669-694

Economic geography models predict the agglomeration of manufacturing activies only if the workforce is mobile. Still, as the E.U.’s experience shows, core–periphery patterns exist even though the ... [more ▼]

Economic geography models predict the agglomeration of manufacturing activies only if the workforce is mobile. Still, as the E.U.’s experience shows, core–periphery patterns exist even though the workforce is rather immobile. The paper provides a theoretical explanation for such core–periphery patterns through the effect that unions have on firms’ incentive to agglomerate in a region. The paper offers fully analytical results about location equilibria and some interesting welfare properties. [less ▲]

Contracting out and labor demand elasticities

E-print/Working paper (2005)

We examine the relationship between contracting out and the wage elasticity of labor demand in outsourcing plants. A simple theoretical model suggests that firms engaged in contracting out have lower wage ... [more ▼]

We examine the relationship between contracting out and the wage elasticity of labor demand in outsourcing plants. A simple theoretical model suggests that firms engaged in contracting out have lower wage elasticities. Estimating plant level dynamic labor demand equations for Irish manufacturing we find evidence supportive of this. [less ▲]

Competition over piratable goods

E-print/Working paper (2004)

The effects of (private, small-scale) copying on the pricing behavior of producers of information goods are studied within a unified model of vertical differentiation. Although information goods are ... [more ▼]

The effects of (private, small-scale) copying on the pricing behavior of producers of information goods are studied within a unified model of vertical differentiation. Although information goods are assumed to be perfectly horizon tally differentiated, demands are interdependent because the copying technology exhibits increasing returns to scale. We characterize the symmetric Nash equilibria of the pricing game played by n producers of information goods. We show thereby how the producers' attitudes towards piracy are interdependent and evolve with the relative attractiveness of copies. [less ▲]

Endogenous Qualifications and Firms' Agglomeration

in Journal of Urban Economics (2004), 55(3), 458-477

This paper analyzes firms' location when workers endogenously choose to qualify for professional skills but when they remain uncertain about the potential match between their personal abilities and/or ... [more ▼]

This paper analyzes firms' location when workers endogenously choose to qualify for professional skills but when they remain uncertain about the potential match between their personal abilities and/or affinities and the firms' specific production tasks. By qualifying in a region where firms agglomerate, workers benefit from higher prospects of good match. At the equilibrium, we show that firms may locate in a single cluster, symmetric clusters or even asymmetric clusters. Comparative statics with respect to product market demand and labor supply parameters are provided. [less ▲]

Taxation and Labor Markets

in Journal of Economics (2002), 78(1), 29-56

We exploit the common features of models such as union-firm wage bargaining, search and efficiency wage models to develop a framework that can be used for analyzing the effects of any budget-neutral tax ... [more ▼]

We exploit the common features of models such as union-firm wage bargaining, search and efficiency wage models to develop a framework that can be used for analyzing the effects of any budget-neutral tax reform on employment in these models. We show that taxes paid by workers are not equivalent to taxes paid by firms when taxes are non linear. Moreover, increasing progressivity is good for employment in these models. [less ▲]

Job additionality and deadweight spending in perfectly competitive industries

in Journal of Public Economics (2001), 79(3), 521-541

This paper links the old literature on employment subsidies with the current theories of contract and regulation. One important source of inefficiency of employment subsidies is non-additional employment ... [more ▼]

This paper links the old literature on employment subsidies with the current theories of contract and regulation. One important source of inefficiency of employment subsidies is non-additional employment and deadweight spending which occur when private firms receive a subsidy for jobs that would have been created without the subsidy. We identify the asymmetry of information between the government and the private firm as the source of these problems. When the government proposes optimal incentive contracts to promote employment, we show that all employment creations are additional and that the deadweight spending is equal to the information rent, which may be null when firms’ types are discrete. [less ▲]

Optimal Employment Subsidies and Market Structures in Industries with Unemployment

in Oxford Economic Papers (2001), 53(2), 352-372

In this paper we analyze the issue of optimal employment subsidies in imperfectly competitive industries in which a distortion in the labour market generates involuntary unemployment. As a benchmark case ... [more ▼]

In this paper we analyze the issue of optimal employment subsidies in imperfectly competitive industries in which a distortion in the labour market generates involuntary unemployment. As a benchmark case, we focus on monopolies and duopolies and on complete information between firms and government. We characterize the levels and creations of employment in the subsidized industry and we check when such employment policies are more favorable to the least productive firms. [less ▲]