Economics - Research Publications
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ItemCooperative R&D under uncertainty with free entry( 2007-08)In the last few decades, the effects of cooperative R&D arrangements on innovation andwelfare have played an important role in policy making. The goal of this paper is to analyzethe effects of cooperative R&D arrangements in a model with a stochastic R&D process andoutput spillovers. Our main innovation is to allow for free entry in both the R&D race andthe product market. To determine the desirability of cooperation in R&D environments,we compare three different ways of organizing R&D activities: R&D competition, R&Dcartels, and RJV cartels. In contrast with the literature, we assume that cooperative R&Darrangements do not have to include all of the firms in the industry. We show that sharingof research outcomes is a necessary condition for the profitability of cooperative R&Darrangements with free entry. The profitability of RJV cartels depends on their size. Theimpact of cooperative R&D arrangements on the aggregate level of innovation depends onwhether there are participants in the R&D race who are a part of the cooperative R&Darrangement. If some outsiders choose to participate in the R&D race, the aggregate rate ofinnovation remains unaffected by the formation of a cooperative R&D arrangement. Otherwise,it increases. R&D cartels may be welfare-improving in cases when they cause theaggregate rate of innovation to increase. In such cases, it may be desirable to subsidizethem. Since sharing of R&D outcomes affects the equilibrium number of firms in the productmarket after the R&D race, the consumer welfare effects of RJV cartels are sensitiveto the specification of consumer preferences. Subsidies may be desirable in cases of largerRJVs since they are the ones which are less likely to be profitable.
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ItemHorizontal mergers with free entryin differentiated oligopolies( 2006-10)Antitrust authorities view the possibility of entry as a key determinant of whether a proposedmerger will be harmful to society. This paper examines the effects of horizontalmergers in models of non-localized, differentiated Bertrand oligopoly that allow for freeentry. The analysis of the long run effects of mergers in differentiated products marketsraises issues that are significantly different from those in the short run or in homogeneousproducts markets due to the introduction of new varieties. Our analysis reveals that determiningthe properties of consumer preferences is crucial to the antitrust analysis of mergersin differentiated products markets. Specifically, we show that if the demand system satisfiesthe Independence from Irrelevant Alternatives (IIA) property and if the number of firms istreated as a continuous variable, mergers in differentiated products markets have no longrun effect on consumer welfare. Moreover, in this case, marginal cost savings are to a largeextent irrelevant to the consumer welfare effects of mergers. If the number of firms is treatedas a discrete variable, fixed or marginal cost savings are a necessary condition for mergersto have zero or positive effect on consumer welfare. Using the example of linear demand,we show that if the demand system does not satisfy the IIA property, mergers in differentiatedproducts markets can harm consumer welfare in long run equilibrium. Moreover, theamount of harm increases with consumers’ taste for variety.
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ItemSubject pool effects in a corruption experiment: a comparison of Indonesian public servants and Indonesian students.( 2006-10)We report results from a corruption experiment with Indonesian public servants andIndonesian students. Our results suggest that although both subject pools show a high levelof concern with the extent of corruption in Indonesia, the Indonesian public servantsubjects have a significantly lower tolerance of corruption than the Indonesian students.We find no evidence that this is due to a selection effect. The reasons given by the publicservants for either engaging in or not engaging in corruption suggest that the differences inbehavior across the subject pools are driven by their different real life experiences. Forexample, when abstaining from corruption public servants more often cite the need toreduce the social costs of corruption as a reason for their actions, and when engaging incorruption they cite low government salaries or a belief that corruption is a necessary evilin the current environment. In contrast, students give more simplistic moral reasons. Weconclude by arguing that experiments such as the one considered in this paper can be usedto measure forward-looking attitudinal change in society and that results obtained fromdifferent subject pools can complement each other in the determination of such attitudinalchanges.
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ItemSubject pool effects in a corruption experiment: a comparison of Indonesian public servants and Indonesian students( 2006-10)We report results from a corruption experiment with Indonesian public servants andIndonesian students. Our results suggest that although both subject pools show a high levelof concern with the extent of corruption in Indonesia, the Indonesian public servantsubjects have a significantly lower tolerance of corruption than the Indonesian students.We find no evidence that this is due to a selection effect. The reasons given by the publicservants for either engaging in or not engaging in corruption suggest that the differences inbehavior across the subject pools are driven by their different real life experiences. Forexample, when abstaining from corruption public servants more often cite the need toreduce the social costs of corruption as a reason for their actions, and when engaging incorruption they cite low government salaries or a belief that corruption is a necessary evilin the current environment. In contrast, students give more simplistic moral reasons. Weconclude by arguing that experiments such as the one considered in this paper can be usedto measure forward-looking attitudinal change in society and that results obtained fromdifferent subject pools can complement each other in the determination of such attitudinalchanges.
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ItemGender and corruption: insights from an experimental analysis( 2006-10)In recent years, a substantial body of work has emerged in the social sciences exploringdifferences in the behavior of men and women in various contexts. This paper contributes tothis literature by investigating gender differences in attitudes towards corruption. It departsfrom the previous literature on gender and corruption by using experimental methodology.Attitudes towards corruption play a critical role in the persistence of corruption. Based onexperimental data collected in Australia (Melbourne), India (Delhi), Indonesia (Jakarta) andSingapore, we show that while women in Australia are less tolerant of corruption than men inAustralia, there are no significant gender differences in attitudes towards corruption in India,Indonesia and Singapore. Hence, our findings suggest that the gender differences found in theprevious studies may not be nearly as universal as stated and may be more culture-specific.We also explore behavioral differences by gender across countries and find that there arelarger variations in women’s attitudes towards corruption than in men’s across the countriesin our sample.
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ItemDo Attitudes Towards Corruption Differ Across Cultures?Experimental Evidence from Australia, India, Indonesia andSingapore( 2005-07)This paper examines cultural differences in attitudes towards corruption by analysingindividual-decision making in a corrupt experimental environment. Attitudes towards corruptionplay a critical role in the persistence of corruption. Our experiments differentiate between theincentives to engage in corrupt behaviour and the incentives to punish corrupt behaviour andallow us to explore whether, in environments characterized by lower levels of corruption, there isboth a lower propensity to engage in corrupt behaviour and a higher propensity to punish corruptbehaviour. Based on experiments run in Australia (Melbourne), India (Delhi), Indonesia (Jakarta)and Singapore, we find that there is more variation in the propensities to punish corruptbehaviour than in the propensities to engage in corrupt behaviour across cultures. The resultsreveal that the subjects in India exhibit a higher tolerance towards corruption than the subjects inAustralia while the subjects in Indonesia behave similarly to those in Australia. The subjects inSingapore have a higher propensity to engage in corruption than the subjects in Australia. Wealso vary our experimental design to examine the impact of a more effective punishment systemand the effect of the perceived cost of bribery.