Internet and telecommunication services are now available all over the world, and emphatically penetrating, still. Such growth in infrastructure invites interest of consumers and producers into foreign markets, which are not physically approachable, but virtually penetrable. Internet trade has grown in leaps and bounds; however, it has not reached the levels it can with the technology available today and the number of consumers and producers willing to trade. The primary reason for the situation is half-belief and distrust towards a foreign land and its products or its investors and consumers. Any dispute between transacting parties is still not resolved at party-to-party level and may reach the highest Appellate Adjudication levels of either region. Dispute resolution has become a part of State policy and the attitude towards it is also driven by national or domestic ideologies. Consequently, resolution of similar disputes in different societies becomes a hindrance to intended interaction over trade and commerce. Although, there have been attempts to create common resolution institutions and uniform laws, private disputes are either not resolved because of geographical differences or are lumped for the same reason. The convenience that electronic commerce offered and by which it lured the .dot com era has negligently been ignored. Any trader worth his salt will ensure enforceability of contractual obligations before raising hopes on attainable profits. Since the resolution practices adopted by international e-traders prove to be difficult to execute by the aggrieved party, many prospective transactions are not even considered. A system of decentralized resolution mechanism will conserve the convenience offered by e-commerce and will attract many more prospective traders. A system which can make the geographical differences inconsequential for fair enforcement of contractual obligations will bring back the convenience of trading across the seas. An ODR System could be an obvious choice for such a suggestion. However, a step-resolution mechanism, inclusive of party participation in decision making and guided negotiations and final adjudicatory options, will prove to be more viable than an ODR System. An organisation to ensure that conflicts are dissolved before they become disputes is required. Trading time and costs of resolution will be some of the starting few profits this system could offer immediately. The paper is an attempt to conceptualise such an organisation by identifying the various factors involved in the functioning and operations of this organisation.
In the paper, we put the foundations for studying asset pricing and finance as a stochastic and behavioral process. In such process, preferences and psychology of agents represent the most important factor in the decision-making of people. Individuals have their own ways of acquiring the information they need, how to deal with them and how to make predictions and decisions. People usually also do not behave consistent in time, but learn. Therefore, in order to understand the behavior on the markets, a new paradigm is needed.
Much fiscal analysis of developing countries is on the following pattern: the academic literature is drawn on to construct a model fiscal system; the existing situation in a particular country is examined to determine how it diverges from the model; and a fiscal reform is then proposed to transform what is into what ought to be. This approach is deficient because it does not require sufficient detailed examination of existing reality to ensure that the assumptions postulated in the model are congruent with reality, that the recommended changes can in fact be implemented, or that, if implemented, they will in fact produce the desired results. In contrast, my approach is first to study in detail exactly how the existing system works, and why it works that way, in order to have a firm basis for understanding what changes may be both desirable and feasible. My emphasis has thus always been more on what can be done than on what should be done (Bird 1992,x, emphasis in original).
Jens Leth Hougaard, Hervé Moulin, Lars Peter Østerdal
In the minimum cost spanning tree model we consider decentralized pricing rules, i.e. rules that cover at least the efficient cost while the price charged to each user only depends upon his own connection costs. We define a canonical pricing rule and provide two axiomatic characterizations. First, the canonical pricing rule is the smallest among those that improve upon the Stand Alone bound, and are either superadditive or piece-wise linear in connection costs. Our second, direct characterization relies on two simple properties highlighting the special role of the source cost.
We consider preventive transshipments between two stores in a decentralized system with two demand subperiods. Replenishment orders are made before the first subperiod, and the stores may make transshipments to one another between the subperiods. We prove that the transshipment decision has a dominant strategy, called a control-band conserving transfer policy, under which each store chooses a quantity to transship in or out that will keep its second-subperiod starting inventory level within a range called a control band. We prove that the optimal replenishment policy is a modified base-stock policy in which the order-up-to level depends on the initial inventory and capacity level at the other store. Finally, we prove that there does not exist a transfer price that coordinates the decentralized supply chain. Our research also explains many of the differences between preventive and lateral transshipments, including differences in the optimal transfer policies and the existence or nonexistence of transfer prices that coordinate the system.
This paper studies a decentralized, dynamic matching and bargaining market: buyers and sellers are matched into pairs. Traders exit the market at a constant rate, inducing search costs (frictions). All price offers are made by sellers. Despite the fact that sellers have all the bargaining power we show that they set competitive prices in the limit when frictions become small. Previous literature has restricted the sellers' bargaining power. We dispense with this restriction and show that the convergence result does not depend on the distribution of bargaining power. Our model allows us to isolate basic market clearing forces that ensure the competitive outcome in the frictionless limit. For the particular case of homogeneous sellers we characterize the equilibrium price by the familiar Lerner formula. We use this formula to provide comparative static results of the decentralized trading outcome with respect to the level of the search frictions.
We study tax evasion and decentralized tax enforcement in a federal economy with mobile capital and the endogenous formation of multiregional companies. Regions use their enforcement policy as a strategic instrument to engage in fiscal competition. Within this framework, we analyze the uncoordinated policy choice under formula apportionment (FA) and compare it to the incentives which derive from fiscal equalization (FE). As both systems redistribute collected revenues but not enforcement costs, they distort the regions' incentives to enforce taxes. At the same time, jurisdictions partially internalize the fiscal externalities caused by their enforcement policy. We show that the tradeoff between these two opposing effects differs between FA and FE, and crucially depends on the degree of interregional firm integration under FA. We discuss conditions under which FA, FE or a joint system of FA cum FE provides the 'best' incentives for decentralized tax enforcement.
The process of risk management for institutional investors faces two challenges. First, since most institutions are decentralized as opposed to being direct investors in assets, it is difficult to separate the risks of the assets in the portfolio from the risks generated by the investment decisions by the fund management to construct the portfolio. To address this issue, we propose a risk measurement methodology which calculates the risk contributions of individual securities and investment decisions simultaneously. This decomposition is applicable to any decentralized investor as long as its relevant risk measurement statistic can be additively decomposed. Second, statistics used to measure risk may not coincide with institution-specific investment risks, in the sense that the utility employed in asset allocation may be unrelated to the risk measure utilized. For example, an institution may do mean-variance asset allocation, but inconsistently measure the risk of the portfolio using Value at Risk. We apply this methodology to a particular type of decentralized investor, specifically, endowment funds where the relevant risk statistic is the downside risk of returns relative to actual payout levels, plus inflation. We show how downside risk can be decomposed and apply our simultaneous downside risk decomposition empirically on a sample of U.S. endowment funds. We find that an endowment's asset allocation to U.S. Equity, consistent with having the largest weight in the average endowment portfolio, generates about 50% of total endowment returns but almost 100% of total portfolio downside risk. We further find that tactical allocations (or timing) have economically small contributions to both returns and risk. Finally, we find that the allocations to U.S. Fixed Income and to Hedge Funds as well as active investment decisions (except for tactical) contribute positively to returns, while reducing portfolio downside risk. The risk contributions are sensitive to changes in payout levels and an increase in the latter may offset the risk reducing power of active investing.
We investigate under which conditions price competition in a market with matching frictions leads to sorting of buyers and sellers. Positive assortative matching obtains only if there is a high enough degree of complementarity between buyer and seller types. The relevant condition is root-supermodularity; i.e., the square root of the match value function is supermodular. It is a necessary and sufficient condition for positive assortative matching under any distribution of buyer and seller types, and does not depend on the details of the underlying matching function that describes the search process. The condition is weaker than log-supermodularity, a condition required for positive assortative matching in markets with random search. This highlights the role competition plays in matching heterogeneous agents. Negative assortative matching obtains whenever the match value function is weakly submodular.
A promisor is strictly liable for breaching a contract, according to the standard account. However, some cases and doctrines appear to recognize that a promisor will not be liable, or will face reduced damages, if the breach was the result of inadvertence rather than fault or willfulness. A negligence-based system of contract law can be given an economic interpretation, and it is shown that such a system is in some respects more attractive than the strict-liability system.
This essay provides a concise overview of the history of the constitutional status of freedom of contract in the United States, with particular attention to the rise and fall of the "liberty of contract" doctrine in the early 20th century.
This paper studies the design of optimal, privately-stipulated damages when breach of contract is possible at more than one point in time. It offers an intuitive explanation for why cancellation fees for some services (e.g., hotel reservations) increase as the time for performance approaches. If the seller makes investments over time to improve her value from trade, she will protect the value of her investments by demanding a higher compensation when the buyer breaches their contract at a time closer to when contract performance is due. Furthermore, it is shown that if the seller may be able to find an alternate buyer when breach occurs early but not when breach occurs late, the amount by which the damage for late breach exceeds the damage for early breach is increasing in the probability of finding an alternate buyer. (This result may explain why some hotels impose larger penalties for last-minute cancellations during the high season than during the low season.) When the probability of finding an alternate buyer is endogenized, the seller's private incentive to mitigate breach damages is shown to be socially insufficient whenever she does not have complete bargaining power with the alternate buyer. Finally, if renegotiation is possible after the arrival of each perfectly competitive entrant, the efficient breach and investment decisions are shown to be implementable with the same efficient expectation damages that implement the efficient outcomes absent renegotiation.
In view of increasing instances of cooperation between the state and private parties, it seams questionable at least that legal concepts focusing primarily on the needs of the administration and on traditional state‐derived legitimacy solve current and future problems for good. Taking the viewpoint of the civil law tradition with its long‐term experience with a state‐derived legitimacy of the administration, this text recognises the constant decline of state sovereignty in modern times and consequently the increasing diffusion of the state into society. On the level of state theory, this reflects in a shift from the great philosophical 'social contract' to many small legal contracts as its functional equivalent. Dealing with this phenomenon, the perspective of administrative law has to adopt in a fundamental way to the question of how law can sustainably support the unity of a society where the state administration and the various parts of society it has to govern are strange to each other and at the same time depending on mutual ad‐hoc cooperation time and again.
Economic analysis suggests that the hesitation to contractualize marriage creates a number of inefficiencies. This paper discusses these inefficiencies and then proposes an economic reconceptualization of Continental marriage law. By bringing in more contract into the statutes regulating marriage, we suggest that marriage law can become a more efficient vehicle for maximizing the utility of family members. Learning from the mistakes made across the Atlantic, Continental law can introduce more contract into marriage, thus clearing away many of its religious and idealistic connotations. Economic analysis can help legislators draft statutes that are structured on the basis of incentives. We recommend infusing marriage law with more elements of contract. We propose a new type of contract marriage and illustrate its key economic functions. We discuss the advantages of allowing the marital partners to stipulate the terms and details of their union, the compensation for the dissolution of that union, and so on. We argue that contract marriage can also be used by same-sex couples, given the trend to legalize same-sex marriage in several European jurisdictions. Problems of enforceability are also considered and other related caveats are addressed in the last section of the paper. Our conclusion is that the private ordering of family life is the last and crucial step in the long line of reforms that has swept across European family laws since the early 1970s.
The regulatory treatment of Distributed Antenna Systems (DAS) has received scant academic attention despite DAS' growing commercial viability and widespread use. This paper analyzes regulatory classifications for wireless deployments involving DAS. It emphasizes that DAS deployments are not monolithic and, particularly, that the existing regulatory framework fails to satisfactorily account for the diversity in practical implementations of DAS networks. This paper explores three instances of problematic application of conventional regulations upon unique DAS designs. DAS antennas differ from traditional cell sites because of design intricacies such as limited on site processing and a smaller form factor. Accordingly, the FCC should revisit its decision to impose a back up power rule on DAS antenna nodes at the federal level. Second, this paper questions the wisdom of state regulations that uniformly impose common carrier obligations upon DAS providers. Third, this paper also propounds that the current state of DAS-level municipal regulations is fractured and suggests a unified regulatory approach extended to all municipalities. The case studies investigated in this paper suggest modifications to the existing regulatory framework to achieve essential policy goals without hindering the growth of the incipient DAS technology.
This research paper is interested to propose an alternative distributed lag model from a multi-dimensional perspective. It is entitled "The Mega-space Distributed Lag Model". The main objective of the Mega-space Distributed Lag Model is to study different micro and macroeconomic scenarios simultaneously in the same graphical space. It is based on the application of a multi-dimensional econometric theoretical framework and a multi-dimensional graphical modeling scheme. The multi-dimensional graphical modeling is based on the application of the Mega-space Physical Space (Ruiz, 2008).
Sequential procedures of testing for structural stability do not provide enough guidance on the shape of boundaries that are used to decide on acceptance or rejection, requiring only that the overall size of the test is asymptotically controlled. We introduce and motivate a reasonable criterion for a shape of boundaries which requires that the test size be uniformly distributed over the testing period. Under this criterion, we numerically construct boundaries for most popular sequential tests that are characterized by a test statistic behaving asymptotically either as a Wiener process or Brownian bridge. We handle this problem both in a context of retrospecting a historical sample and in a context of monitoring newly arriving data. We tabulate the boundaries by fitting them to certain flexible but parsimonious functional forms. Interesting patterns emerge in an illustrative application of sequential tests to the Phillips curve model.
Evaluating the role of governance in distributed problem solving networks (DPSNs) and comparing the governance structures across a set of case studies. The paper proposes a basic taxonomy separating DPSNs in which problem solvers can modify the way the problem solving platform works from those where the intermediaries set the rules.
This article believed that the design of financial internal control system between mother and filiations corporation should be fully taken into account the nature, scale of assets, operating characteristics and distribution of shares and other factors. Group holding company's financial management model is the starting point and staying place for finance internal control system design of mother corporation and filiations. It's more feasible for relatively decentralized management under the guidance of the headquarters of the Group. The design of mother and filiations company's financial internal control system should cover fund management, fund-raising management, investment management, management and distribution of proceeds, OIA and evaluation of management, financial key personnel management, as well as financial information management, etc.
Financial-right and property right are closely related but they two should belong to two different levels. Financial governance right is the right-balancing relationship between financing agents in the process of financial right segmentation from the level of corporate governance.And financial control is established on the basis of the incomplete contract theory,but financial control has several different meanings because of the importance of ,the distinction between narrow and broad senses of decision-making power,and the power implementation process etc. Financial-right configuration follows the basic principles of contribution and risk-taking and is the centralized and decentralized symmetrical arrangement of residual claim and residual control under the co-restriction of knowledge cost and agency cost.
Analyzing parameters of efficiency of investments and the reasons of low interest of corporations in realization of researches and development in priority directions of development of a science and technics, the author proves that the most productive approach providing capitalization of the state and corporate assets enclosed in research and development the formation and development of integration forms of the state property management and gives a number of principles, allowing to raise their efficiency: joint financing of projects from the state while preserving management of the projects in the hands of business, decentralization of the state support and formation of a network of «institutes of development», formation of trust to new institutes through personal reputation of managing directors, realization of support functions through business-intermediaries, granting of services instead of money.
The foundations of government audit have close relationship with public governance.This paper,based on the theory of public governance,reconsiders and reconstructs foundations of government audit from four aspects.In the new epoch,we should make the best of incremental function of government performance audit in order to construct efficient government,make the most of assurance function of finance audit for macro adjustments and controls in order to construct limited government,take full advantage of restriction function of economic responsibility audit for power in order to construct decentralized government and strengthen state audit report system and make the best of assurance function of government audit in order to construct a transparent government.
As Chinese public finance reform deepening,Chinese rural public goods supply gradually form some new features in practice: one of the main supply,the main responsibility for decentralization,the management system of separation of powers,regional inequalities magnification,the supply of investment loss production of public goods and transfer the burden of the future,to further improve and enhance rural public goods supply level,we should strengthen the building of systems,and active input from the decision-making and performance management,and other important aspects,to promote China's rural public goods supply innovative institutional mechanisms.
Mineral resource tax is an old tax category,its taxation should fully embody the finance,equity and efficiency principles of modern taxation.The royalty of state-owned mineral resources possesses the nature of taxation and the developed countries usually obtained the state-owned mineral resource owner's income by the form of rent tax.In the model of financial decentralization,the local government should get compensation for its public service cost provided in mineral resource exploitation by mineral resource taxation,and share the rent income from mineral resource exploitation with the central government.
Geochemistry and Geochronology of Asian Mineral Deposits