THE MONOPOLY OF VIOLENCE: EVIDENCE FROM COLOMBIA Acemoglu, Daron; Robinson, James A.; Santos, Rafael J.
Journal of the European Economic Association,
01/2013, Volume:
11, Issue:
Supp.1
Journal Article
Peer reviewed
Open access
Many states in Latin America, Africa, and Asia lack the monopoly of violence, even though this was identified by Max Weber as the foundation of the state, and thus the capacity to govern effectively. ...In this paper we develop a new perspective on the establishment of the monopoly of violence. We build a model to explain the incentive of central states to eliminate nonstate armed actors (paramilitaries) in a democracy. The model is premised on the idea that paramilitaries may choose to and can influence elections. Since paramilitaries have preferences over policies, this reduces the incentives of the politicians they favor to eliminate them. We then investigate these ideas using data from Colombia between 1991 and 2006. We first present regression and case study evidence supporting our postulate that paramilitary groups can have significant effects on elections for the legislature and the executive. Next, we show that the evidence is also broadly consistent with the implication of the model that paramilitaries tend to persist to the extent that they deliver votes to candidates for the executive whose preferences are close to theirs and that this effect is larger in areas where the presidential candidate would have otherwise not done as well. Finally, we use roll-call votes to illustrate a possible "quid pro quo" between the executive and paramilitaries in Colombia.
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BFBNIB, IZUM, KILJ, NMLJ, NUK, PILJ, PNG, SAZU, UL, UM, UPUK
We investigate the R&D portfolio of a monopolist investing in cost-reducing and quality enhancing R&D. Incentives along the two directions are inversely related to the size of market demand, and ...independent of each other. The stability analysis shows the existence of a unique stable steady state equilibrium, which is a saddle point. Finally, we show that the monopolist undersupplies product quality as compared to the social optimum, while its investment in the abatement of marginal cost is socially efficient.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UL, UM, UPCLJ, UPUK
Duhan se na području Hercegovine počeo uzgajati u 17. stoljeću. Proizvodio se za vlastite potrebe, dok su se viškovi koristili za robnu razmjenu. Turska je na ovim prostorima prva uvela jednu vrstu ...poreza na njegovu proizvodnju, da bi pred kraj svoje vladavine uspostavila monopol na duhan. Dolaskom Austrougarske uvodi se pravičniji monopolski zakon koji je doveo do uspona proizvodnje duhana u Hercegovini. Takvo stanje zadržalo se do 1918. godine kada prilike za hercegovačke proizvođače postaju manje povoljne. Nepravedna procjena duhana za vremena Kraljevine Jugoslavije, niske otkupne cijene, porezna opterećenja i takse na proizvodnju dovele su do pojave krijumčarenja duhana. U doba nove Jugoslavije također su zabilježeni usponi i padovi u produkciji duhanske sirovine, a takav trend se zadržao do Domovinskog rata. Premda su se carstva, vlasti i monopolski zakoni mijenjali, duhan je dugi niz godina predstavljao osnovicu hercegovačkog gospodarstva.
Tobacco began to be grown in Herzegovina in the 17th century. It was produced for its own needs, while surpluses were used for commodity exchange. Turkey was the first country to introduce a tax on its production, and at the end of its rule established a monopoly on tobacco. With the arrival of Austria Hungary, a more equitable monopoly law was introduced, which led to the rise of tobacco production in Herzegovina. This state of affairs persisted until 1918 when opportunities for Herzegovinian producers became less favorable. Unfair assessment of tobacco during the time of the kingdom of Yugoslavia, low purchase prices, tax burdens and taxes on production led to the emergence of tobacco smuggling. In the time of the new Yugoslavia, there were also ups and downs in the production of tobacco raw materials, and such a trend persisted until the Homeland War. Although empires, authorities and monopoly laws changed, tobacco was for many years the basis of Herzegovinian economy.
We propose a framework for analyzing transformations of demand. Such transformations frequently stem from changes in the dispersion of consumers' valuations, which lead to rotations of the demand ...curve. In many settings, profits are a U-shaped function of dispersion. High dispersion is complemented by niche production, and low dispersion is complemented by mass-market supply. We investigate numerous applications, including product design; advertising, marketing and sales advice; and the construction of quality-differentiated product lines. We also suggest a new taxonomy of advertising, distinguishing between hype, which shifts demand, and real information, which rotates demand.
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BFBNIB, CEKLJ, INZLJ, IZUM, KILJ, NMLJ, NUK, ODKLJ, PILJ, PNG, SAZU, UL, UM, UPUK, ZRSKP
We examine competition among ridesharing platforms, where firms compete on both price and the wait time induced with idled drivers. We show that when consumers are the only agents who multihome, ...idleness is lower in duopoly than when consumers face a monopoly ridesharing platform. When drivers and consumers multihome, idleness further falls to zero as it involves costs for each platform that are appropriated, in part, by their rival. Interestingly, socially superior outcomes may involve monopoly or competition under various multihoming regimes, depending on the density of the city, and the relative costs of idleness versus consumer disutility of waiting.
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FZAB, GIS, IJS, IZUM, KILJ, NLZOH, NUK, OILJ, PILJ, SAZU, SBCE, SBMB, UL, UM, UPUK
A well-known principle in economics is that firms differentiate their product offerings in order to relax competition. However, in this paper we show that information frictions can invalidate this ...principle. We build a duopolistic competition model of second-degree price discrimination with information frictions in which (i) an equilibrium always exists with overlapping product qualities, whereas (ii) an equilibrium with nonoverlapping product qualities exists only if both information frictions and the cost of providing high quality are sufficiently small. As a consequence, reasons other than an attempt to soften competition should explain why firms in some cases carry nonoverlapping product lines.
This paper was accepted by Matthew Shum, marketing.
This paper studies whether imposing carbon costs changes the supply chain structure and social welfare. We explore the problem from a central policymaker's perspective who wants to maximize social ...welfare. We consider two stakeholders, retailers, and consumers, who optimize their own objectives (i.e., profits and net utility) and three competitive settings (i.e., monopoly, monopolistic competition with symmetric market share, and monopolistic competition with asymmetric market share). For the monopoly case, we find that when the retailer's profit is high, imposing some carbon emission charges on the retailer and the consumers does not substantially change the supply chain structure or the social welfare. However, when the retailer's profit is low, imposing carbon costs optimally can lead to a significant increase in social welfare. Moreover, the impact of imposing carbon emission charges becomes more significant when the degree of competition increases. Additionally, the quantum of benefit may depend only on factors common across industries, such as fuel and carbon costs.
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BFBNIB, FZAB, GIS, IJS, IZUM, KILJ, NLZOH, NUK, OILJ, PILJ, SAZU, SBCE, SBMB, UL, UM, UPUK
I develop a multiproduct nonlinear pricing model where a firm sells both discrete and continuous services to consumers with multidimensional heterogeneity. I derive the optimal selling mechanism and ...provide primitive conditions under which different bundling strategies arise. Exploiting both the firm and the consumer's optimality conditions, I show that the model structure is nonparametrically identified and propose a semiparametric estimation procedure. An application to China Telecom data shows that mixed bundling of internet and landline phone services is more beneficial to both the firm and the consumer relative to component pricing.
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FZAB, GIS, IJS, IZUM, KILJ, NLZOH, NUK, OILJ, PILJ, SAZU, SBCE, SBMB, UL, UM, UPUK
49.
Pricing Network Effects FAINMESSER, ITAY P.; GALEOTTI, ANDREA
The Review of economic studies,
01/2016, Volume:
83, Issue:
1 (294)
Journal Article
Peer reviewed
Open access
The increase in the information that firms can collect or purchase about network effects across consumers motivates two important questions: how does a firm's pricing strategy react to detailed ...information on network effects? Are the availability and use of such information beneficial or detrimental to consumer surplus? We develop a model in which a monopoly sells a network good and price discriminates based on information about consumers' influence and consumers' susceptibility to influence. The monopoly optimally offers consumers price discounts for their influence and charges price premia for their susceptibility; the price premia and the price discounts are simple functions of the pattern of network effects. We determine under which conditions, relative to uniform price, consumer surplus increases, and we characterize the value of information on network effects for the monopoly.
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BFBNIB, INZLJ, IZUM, KILJ, NMLJ, NUK, PILJ, PNG, SAZU, UL, UM, UPUK, ZRSKP
We study a firm that makes new products in the first period and uses returned cores to offer remanufactured products, along with new products, in future periods. We introduce the monopoly environment ...in two-period and multiperiod scenarios to identify thresholds in remanufacturing operations. Next, we focus our attention on the duopoly environment where an independent operator (IO) may intercept cores of products made by the original equipment manufacturer (OEM) to sell remanufactured products in future periods. We characterize the production quantities associated with self-selection and explore the effect of various parameters in the Nash equilibrium. Among other results, we find that if remanufacturing is very profitable, the original-equipment manufacturer may forgo some of the first-period margin by lowering the price and selling additional units to increase the number of cores available for remanufacturing in future periods. Further, as the threat of competition increases, the OEM is more likely to completely utilize all available cores, offering the remanufactured products at a lower price.
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