This paper shows that a small open economy, which suffers from involuntary unemployment, should levy a positive source-based tax on capital income. A revenue-neutral tax reform, which increases the capital tax rate and reduces the labour tax rate will induce firms to substitute labour for capital. Such a tax reform will lower marginal cost of production, increase output, reduce unemployment, an...

This paper analyzes theoretically the effects on the quality of the labor force of the introduction of the program called ProUni (Programa Universidade para Todos), adopted by the Brazilian government in 2005. This program consists of giving tax exemptions to private universities that provide scholarships to students coming from low income families. The analysis suggests that the quality of the...

We analyze bargaining over international climate agreements in a setting with incomplete information about abatement costs. Incomplete information is known as one of the key reasons why negotiations may fail more generally, and why efficiency gains cannot be exploited. We ask whether unilateral commitment to high abatement reduces or increases the likelihood for an efficient negotiation outcome...

We look at privatization in a general equilibrium model of a small, tariff-distorted, open economy. There is a differentiated good produced by both private and public sector enterprises. A reduction in government production in order to cut losses from such production raises the returns to capital and increases the tariff revenue, which are welfare improving. However, privatization also leads to...

We use experimental methods to study the power of leading by words. The context is a voluntary contribution mechanism with oneway communication. One group member can send a free-form text message to his fellow players. Contrary to the commonly-accepted wisdom that the cooperation-enhancing effect of communication requires the mutual exchange of promises, we find that the introduction of one-way...

I use data from the South African Social Giving Survey to investigate the role of social capital and motivations for giving to formal charities and beggars. Results suggest that both impure altruism and inequality aversion positively influence giving to formal charities but they have no influence on giving to beggars. The role of social capital is varied. Members of informal insurance groups ar...

Recent work on public goods contributions has examined the relationship between gender and free-riding behavior in studies using laboratory public goods. This research furthers this line of inquiry by examining gender as a possible explanation of hypothetical bias, which occurs in valuation studies using real world public goods. Results show that gender differences exist in hypothetical valuati...

An environment is studied in which mechanisms suggest public goods allocations and individuals then choose whether or not to submit their requested transfer to the central planner. The set of allocations such that unanimous participation is an equilibrium is shown to be sub-optimal in a wide variety of environments and shrinks to the endowment as the economy is replicated. Optimal public goods ...

We study the effect of cultural differences on contributions in a public good experiment, analysing real-time interactions between Italian and British subjects in their home countries. In the first treatment, subjects play in nationally-homogeneous groups. In the second treatment, Italian and British subjects play in heterogeneous groups, knowing the nationality of the group members. In the thi...

This paper discusses the economic merits of direct or indirect governmental support for open source projects. Software markets differ from standard textbook markets in three important respects that may give rise to market failures: (i) large economies of scale, (ii) crucially important innovations, (iii) significant network effects and switching costs. We analyze the differences between proprie...