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Does information regarding the economic consequences of a minimum wage affect the level of support for or opposition to minimum wage policy? We conduct an online survey of 2242 US respondents to study this question. We randomly assign differing, empirically plausible estimates of minimum wage impacts on three outcomes—employment, the distribution of minimum wage gains to households, and comparative impacts of a government transfer program versus a minimum wage— in order to explore the relationship between minimum wage consequences and political commitment. Our results show that while political commitment is indeed influenced by information on the policy’s consequences, such information rarely leads to fundamental changes in political commitment. This is consistent with findings in the larger literature on the effects of information provision on political commitment. We offer a novel explanation for such findings by surveying respondents on their moral beliefs regarding the minimum wage, focusing on the extent to which these beliefs are consequentialist or non-consequentialist in nature. We find that non-consequentialist moral beliefs are prevalent among survey respondents and that the more intense are these beliefs, the less likely people are to be swayed by the policy’s consequences.

This paper studies owners’ optimal designs of incentive schemes in a market with managerial firms competing in prices as well as in product research and development (R&D) investment in which owners use a linear combination of gross profits which are defined to be sales revenue minus production costs, sales revenue and R&D costs to evaluate managers’ performances. The main contribution of our research is showing that owners not only deflate R&D costs to induce managers to invest more in product R&D but also place different weights on production costs and R&D costs optimally. If product R&D is highly efficient, managerial delegation improves consumers’ surplus at cost of firms’ profits which is sharply contrasting to the standard conclusion of sales delegation under price competition. Moreover, managerial delegation may achieve Pareto efficiency if product R&D is mildly inefficient. Finally, we find that copyright protection benefits consumers’ surplus but could reduce social welfare.

This study divides health care expenditures into observable effects and structural shifts to explore the impacts of population ageing and high technology on the growth in outpatient service, inpatient service, and prescription drug expenditures in a health care system that has experienced a shift in payment schemes from a cost-based to a global budget system. By using the quantile decomposition method to examine data from Taiwan, the study shows that, in the short run, all expenditures exhibit an increasing trend in the higher percentiles. In the long run, an observable effect dominates the growth of health care expenditures. Specifically, population ageing leads to the growth of prescription drug expenditures in the higher percentiles. The adoption of high technology drives the growth of the top outpatient and inpatient service expenditures. These results suggest that while the government health care agency aims to control health care expenditures, improving the management of high-cost patients is likely to be one important avenue to improving the effectiveness of the cost control policy.

We are currently witnessing a shift in the approach to combat traffic and consumption of illegal harmful drugs, being cannabis legalization a prominent example. In this paper, we study how to optimally regulate the market for cannabis, in a setting where consumers differ in their utility from consumption of the psychoactive component of cannabis, THC, and suffer from misperception of the health damage it causes. We analyze this problem through a vertical differentiation model, where a black market firm and a public firm compete in prices and qualities (THC content). A paternalistic government would like to correct for the misperceived health damage caused by cannabis consumption, as well as to reduce the size of the black market. It is the undesirability of black market profits what explains that the first-best allocation cannot be decentralized. We find two possible equilibria, depending on whether the public firm serves those consumers with the highest or lowest willingness to pay for quality. Paradoxically, when the public firm serves those consumers with higher taste for THC, a lower average health damage is achieved together with a better economic result for the public firm.

Almost universally, crop insurance uptake has been very low in the absence of significant governmental subsidies. We proposed an explanation for the low uptake by analyzing farmers’ optimal behavior in the presence of subsidized crop insurance and incomplete financial markets. Under specific replication conditions, farmers’ valuation of crop insurance is lower than insurers’ valuation if farmers have access to fewer financial assets than insurers. A potential rationalization is that farmers and insurers have dissimilar price formation processes. Our model implies that subsidized crop insurance changes farmers’ production choices by altering both the relative returns across states of Nature and their risk choices. However, because of the separation between consumption and production decisions, farmers will use crop insurance in a manner consistent with profit maximization, independent of risk preferences.

This paper examines the network effect on income distribution and social welfare in a sharing economy with rural-urban migration. A rise in the urban network effect via an increase of the number of users attracts capital to the urban sector. Urban skilled wage rises but rural unskilled wage falls. Due to rising costs from capital rental and skilled wage, urban firms exit if the demand elasticity of urban goods is large. This business-dynamism effect via firm exit mitigates the skilled-unskilled wage gap in the long run. Furthermore, rural-urban migration is mitigated from business dynamism by relocating capital to the rural sector. Network effects thus serves as a mitigator to cope with urban unemployment. In addition, the role of network effects on the effects of changes in the endowments are examined in the sharing economy.

Employing global daily news coverage on interactions between stakeholders in G20 countries, this research offers a near-real-time analysis of changing interaction patterns between Russia and other G20 economies after the onset of open military conflict. Building on an event study over eight months, further analyses of reciprocal response dynamics point to potentially costly short-term consequences of sanctions, such as the breakdown and diversion of international cooperation amongst major economies in a broader sense. Once such a reciprocal cooperation decay has set in, re-establishing international cooperation between major societal actors may take considerable time.

This note presents a model of platform competition in a two-sided market, with one competing platform pursuing not only its own profit but also consumer surplus. We investigate how the presence of such a socially conscious platform affects market competition. Results indicate that greater emphasis as an objective put on consumer surplus by the socially conscious platform leads to higher market share. Creation of a larger network enhances the total benefits associated with indirect network externalities in the two-sided market. When the extent of indirect network externalities is sufficiently strong, increased network benefits can improve social welfare. By contrast, if indirect network externalities are weak, then the socially conscious platform might be detrimental to society.

This study aims to analyze the core in production economies with private benefits of control. We consider two types of shareholders in a firm: small shareholders and the controlling shareholder. Unlike small shareholders, the controlling shareholder’s utility increases not only with the consumption of goods but also with private benefits related to the production level of the firm and his controlling power. We observe that the private benefits of control are allowed in the core only when the transferred utility from the controlling shareholder to small shareholders is higher than the small shareholders’ utility loss from private benefits.

This article investigates the effect of a decrease in the speed limit for motor vehicles on bicycle commuting in French cities. I use a difference-in-differences event study design to measure a possible causal effect of motor vehicle speed limits on changes in bicycle traffic. I do not find any effect of the reduction of the speed limit from 50 km/h to 30 km/h on bicycle commuting. This result is important for public policy design, since increasing the number of bicycles is one of the benefits that politicians expect from decreasing the speed limit for motor vehicles.

This study investigates the impact of mass floods on children’s schooling in Pakistan. More precisely, it explores the effect of the 2010 floods that destroyed nearly 11,000 schools and left approximately half a million children out of school. Analyzing household data, we show that the flood resulted in children dropping out of school and plummeting education levels and literacy and school completion rates. Furthermore, the mechanisms behind these poor schooling outcomes are that employment and income levels fall drastically, and households adopt a self-insuring strategy—withdraw children from school and put them into child labor.

The match quality between a worker’s field of study in college and her occupation is an important labor market outcome. Yet this match quality is difficult to define and measure. We propose a new measure of major-occupation match quality based on relative productivity. A worker is well-matched if graduates from her major, working in her occupation, have high earnings relative to other major-occupation pairs. We show that some majors can be very well-matched or very badly matched (e.g. nursing), while others are never very well- or badly matched (e.g. humanities). Our measure has two desirable features: it is continuous, and it can be estimated in any data set including field of study, wage, and occupation.