The marginal welfare cost of public funds: theory and estimates

Article Abstract:

An analytical approach was used to reconcile the differences between previously reported estimates of marginal welfare cost (MWC) by identifying the exact influence of distinct thought experiments and alternative parameter values. A single formula was derived for yielding accurate MWC estimates for any thought experiment without restrictive assumptions on technologies or preferences. Previously unsolved differences in MWC estimates are explained by suitable interpretations of the intended thought experiments and by alternative assumptions labor supply elasticity with respect to public spending.

Analysis

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The social value of hidden information in adverse selection economies

Article Abstract:

The acquisition of private information can have both positive and negative social value. In an economy where agents are in possession of hidden knowledge at the time of contracting, some individuals realize a reduced self-worth and reduce their signalling and thus adverse selection. On the other hand, the hidden nature of such knowledge also entails more costly signalling. Thus, the positive value of private information lies in more efficient resource allocation, while its negative effects depend on information exchange inefficiencies.

Economic aspects, Contracts, Rational expectations (Economics), Uncertainty (Information theory)

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Using markets to allocate pollution permits and other scarce resource rights under limited information

Article Abstract:

Government policy in distributing pollution permits and rights for other scarce resources under limited information is evaluated. Differences in level of information available to market agents generates varying resource valuations and affects any decision on how to optimize the resource. The development of a countervailing incentive for the benefit of uninformed agents helps government minimize information rents.

Markets (Economics), Environmental permits

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