The Clean Development Mechanism in a Global Carbon Market

E-print/Working paper (2012)

This paper discusses the role of the Clean Development Mechanism (CDM) on the market for carbon quotas and countries' commitments to reduce their carbon emission levels. We show that the CDM contributes ... [more ▼]

This paper discusses the role of the Clean Development Mechanism (CDM) on the market for carbon quotas and countries' commitments to reduce their carbon emission levels. We show that the CDM contributes to an efficient funding of clean technology investments in least developed countries. However, the CDM is not neutral on the global level of carbon emissions as it entices countries to raise their emission caps. The CDM may also make inappropriate the inclusion of any country that takes no emission abatement commitment. It can even make inefficient a country's decision to commit to an emission target. [less ▲]

Commodity taxation and regulatory competition

E-print/Working paper (2012)

This paper studies competition in regulation and commodity taxation between trading countries. We present a general equilibrium model in which destination based consumption taxes finance public goods ... [more ▼]

This paper studies competition in regulation and commodity taxation between trading countries. We present a general equilibrium model in which destination based consumption taxes finance public goods, while regulation of entry determines the number of firms in the markets. We find (i) no strategic interaction in commodity taxes; (ii) regulation leads to lower commodity tax rates if demand for public goods is more sensitive to income than demand for private goods and (iii) regulation policy is a strategically complement instrument if consumers do not over value product diversity. In the empirical part of the paper, we test our predictions using panel data for 21 OECD countries over the period 1990-2008. [less ▲]

Bank secrecy, illicit money and offshore financial centers

in Journal of Public Economics (2011), 95(7-8), 942-955

International and national institutions regularly put pressure on offshore financial centers and their clients to enforce compliance with anti-money laundering regulations and that in spite of the ... [more ▼]

International and national institutions regularly put pressure on offshore financial centers and their clients to enforce compliance with anti-money laundering regulations and that in spite of the existence of bank secrecy. This paper discusses the winners and losers of such policies. Surprisingly, aggregate profits and tax revenues can increase under those policies. In addition, we show that offshore banks can be encouraged to comply with rigorous monitoring of the investor's identity and the origin of his/her funds when the pressure creates sufficiently high risk of reputational harm to this investor. Nevertheless, the efficient pressure policy is dichotomous in the sense that a social planner chooses zero pressure or the pressure that just entices offshore banks to comply. By contrast, the implementation of those pressure policies on an onshore institution may be inefficient. Finally, we show that deeper financial integration fosters compliance by the offshore center while it also gives better incentives for delegated organizations to effectively induce compliance. [less ▲]

On Spatial Equilibria in a Social Interaction Model

in Journal of Economic Theory (2011), 146(6), 2455-2477

Social interactions are at the essence of societies and explain the gathering of individuals in villages, agglomerations, or cities. We study the emergence of multiple agglomerations as resulting from the ... [more ▼]

Social interactions are at the essence of societies and explain the gathering of individuals in villages, agglomerations, or cities. We study the emergence of multiple agglomerations as resulting from the interplay between spatial interaction externalities and competition in the land market. We show that the geography of the spatial economy affects significantly the properties of spatial equilibria. In particular, when agents locate on an open land strip (line segment), a single city emerges in equilibrium. In contrast, when the spatial economy extends along a closed land strip (circumference), multiple equilibria with odd numbers of cities arise. Spatial equilibrium configurations involve a high degree of spatial symmetry in terms of city size and location, and can be Pareto-ranked. [less ▲]

Sustainable Migration Policies

E-print/Working paper (2011)

This paper considers whether countries might mutually agree a policy of allowing free movement of workers. For the countries to agree, the short run costs must outweighed by the long term benefits that ... [more ▼]

This paper considers whether countries might mutually agree a policy of allowing free movement of workers. For the countries to agree, the short run costs must outweighed by the long term benefits that result from better labor market flexibility and income smoothing. We show that such policies are less likely to be adopted for less risk averse workers and for countries that trade more. More surprisingly we find that some congestion costs can help. This reverses the conventional wisdom that congestion costs tend to inhibit free migration policies. [less ▲]

Patent Office Governance and Patent System Quality

in CEPR Discussion Papers (2011), 11-06

The present paper discusses the role of quality in patent systems from the perspective of patent offices' behavior and organization. After documenting original stylized facts, the paper presents a model ... [more ▼]

The present paper discusses the role of quality in patent systems from the perspective of patent offices' behavior and organization. After documenting original stylized facts, the paper presents a model in which patent offices set patent fees and the quality level of their examination processes. Various objectives of patent offices' governors are considered. We show that the quality of the patent system is maximal for the patent offices that maximises either the social welfare or its own proffit. Quality is lower for the self-funded patent office maximizing the number of patent applications and even smaller for the self-funded patent office maximizing the number of granted patents. A labor union improves examination quality and may compensate for the potentialy inappropriate objectives of patent office management. [less ▲]

A Harmonization Of First And Second Natures

in Journal of Regional Science (2010), 50(5), 973-994

This paper investigates the joint impact of the rst nature and the second nature forces on industry location. Towards this aim, we develop a two-region new economic geography model where local factor ... [more ▼]

This paper investigates the joint impact of the rst nature and the second nature forces on industry location. Towards this aim, we develop a two-region new economic geography model where local factor congestion and location advantages compete with demand linkages and product market crowding. In particular we study the case of absolute location advantage in a single industry model and the case of comparative advantages in a two-industry model. We characterize the structure of industries and discuss the possibilities of catastrophic changes, endogenous industrial asymmetries and specialization. We nd that absolute location advantage are associated with a smooth agglomeration process and comparative advantages with a catastrophic process. [less ▲]

The spatial selection of heterogeneous firms

in Journal of International Economics (2010), 82(2), 230-237

Empirical research on strategic alliances has focused on the idea that alliance partners are selected on the basis of social capital considerations. In this paper we emphasize instead the role of ... [more ▼]

Empirical research on strategic alliances has focused on the idea that alliance partners are selected on the basis of social capital considerations. In this paper we emphasize instead the role of complementary knowledge stocks (broadly defined) in partner selection, arguing not only that knowledge complementarity should not be overlooked, but that it may be the true causal force behind alliance formation. To marshal evidence on this point, we design a simple model of partner selection in which firms ally for the purpose of learning and innovating, and in doing so create an industry network. We abstract completely from network-based structural and strategic motives for partner selection and focus instead on the idea that firms’ knowledge bases must “fit” in order for joint leaning and innovation to be possible, and thus for an alliance to be feasible. The striking result is that while containing no social capital considerations, this simple model replicates the firm conduct, network structure, and contingent effects of network position on performance observed and discussed in the empirical literature. [less ▲]

City with forward and backward linkages

E-print/Working paper (2010)

This paper considers the spatial structure of a city subject to final demand and vertical linkages. Individuals consume differentiated goods (or services) and firms purchase differentiated inputs (or ... [more ▼]

This paper considers the spatial structure of a city subject to final demand and vertical linkages. Individuals consume differentiated goods (or services) and firms purchase differentiated inputs (or services) in product (or service) markets where forms compete under monopolistic competition. Workers rent their residential lots in an urban land market and contribute to the production of differentiated goods and inputs. We show that firms and workers co-agglomerate and endogenously form a city. We characterize and discuss the spatial distribution of firms and consumers in such cities on one- and twodimensional spaces (linear city and planar city). We show that final demand and vertical linkages raise the urban density and reduce the city spread. We finally show that a city is too much dispersed compared to the social optimum. [less ▲]

On monopolistic competition and optimal product diversity: workers' rents also matter

in Canadian Journal of Economics (2009), 42(4), 1347-1360

In the Dixit-Stiglitz model of monopolistic competition, entry of rms is socially too small. Other authors have shown that excess entry is also a possibility with other preferences for diversity. We show ... [more ▼]

In the Dixit-Stiglitz model of monopolistic competition, entry of rms is socially too small. Other authors have shown that excess entry is also a possibility with other preferences for diversity. We show that workers rents also contribute to explain excess entry through a general equilibrium mechanism. Larger wages indeed raises the aggregate earnings and rms sales and pro ts, which entices too many rms to enter. We discuss the possibility of over-provision of varieties by comparing the equilibrium to unconstrained and constrained social optima and to other regulatory framework where wages are not controlled. [less ▲]