This dissertation presents two essays on endogenous growth and renewable resources. The first essay explores the role of renewable resources in a tractable model of endogenous growth driven by horizontal and vertical innovation in the closed economy. The model is tractable in that it yields a complete, analytical characterization of the path of utility and the associated welfare level. This property is exploited to compare two cases of renewable resource management: open access and full property rights. The first case involves a common property problem in which agents ignore the long-term resource viability； the second fully internalizes the dynamics of the resource stock. Analysis shows that if the natural regeneration rate of the renewable resource is too low, the tragedy of the commons occurs. If, instead, the natural regeneration rate is sufficiently high, the steady-state growth rate of the economy is identical across the two management regimes. The reason is because there is no scale effect； that is, the steady-state growth rate of the economy does not depend on the labor or the resource endowment. However, the development path on which the economy transits from the developing stage no R&D activity) to the developed stage positive R&D activity) depends on the resource management regime. In particular, a developing economy under full property rights will cross its development threshold prior to one under open access. This threshold depends on the size of the manufacturing firms. When it becomes sufficiently large as a result of the decline in the number of firms over time, there will be an incentive for the remaining firms to conduct R&D. Given the same number of manufacturing firms, the firm size is larger under full property rights than under open access due to higher nominal expenditure per capita. Therefore, the development threshold will be reached sooner under full property rights. In other words, the economy will start engaging in R&D activities sooner and more quickly accumulate knowledge, which is the source of long-run growth. Moreover, switching from full property rights to open access is welfare reducing due to two effects. The first is through the price of the harvest good. Although the economy initially enjoys a lower price of harvest good, the price gradually increases as the resource becomes scarcer. Secondly, the competitive household instantaneously loses the resource income and thus spends less on manufacturing goods. This decreases the incentive for manufacturing firms to conduct R&D and results in a temporary deceleration of the growth rate of TFP relative to the baseline case of full property rights. The economy therefore experiences a cumulative loss of TFP relative to the baseline, which is the novel feature of our model of endogenous innovation. This mechanism has interesting and wide-ranging implications for the role of resources in development and growth. The second essay extends the model of endogenous growth and renewable resources into the open economy framework. The paper examines the effect of trade liberalization on resource-rich countries, based on a two-country model in which the difference in endowment of a renewable resource leads to asymmetric trade. In this model, the resource-rich economy trades its harvest good and final good for the final good from the resource-poor economy. Furthermore, the renewable resource is considered to be under open access, where there is no clear ownership over the resource, leading to overexploitation. Long-term productivity, in this case, stems from endogenously-determined knowledge accumulation. Under these circumstances, analysis shows that the resource-rich country will lose from trade due to two effects. The first effect is the instantaneous loss of income. Higher demand for the harvest good, from the combined domestic and international demand, diverts labor away from the production of technological goods to the harvest sector, where rent is zero. The second effect is a scarcity effect, which becomes more severe when trade results in a greater demand for the harvest good. Overexploitation of the renewable resource today leads to falling resource stock in the future, which is then reflected in the higher price of harvest good, other things being constant. Since the harvest good is an essential input to produce the final good, given the same amount of the other inputs, the amount of final good produced will also fall in the long run.

Late bidding is one of the key phenomena in online consumer auctions. Existing studies suggest that there is no strategic reason to bid late in soft-close auctions, and that late bidding should be much less prevalent in such auctions than in hard-close ones. This dissertation shows otherwise, both theoretically and empirically. In the first essay, I extend the existing hard-close sniping theories with an assumption such that each bidder has a positive probability to be absent at the end of an auction. I show that, in all the major existing theoretical models, strategic late bidding arises in equilibrium in soft-close auctions. In the second essay, I use a unique, year-long natural experiment consisting of jewelry auctions offered by a same seller on eBay and Overstock Auctions to investigate the effects of auction closing rules on late bidding. I show that late bidding is not only prevalent in the soft-close auctions but significantly more so during certain stages of an auction than in the hard-close ones. In the third essay, I use a separate large-scale natural experiment made possible by private listings on eBay to test the expert theory of sniping but find no consistent evidence.

There are many situations in which individuals have a choice of whether or not to observe the eventual outcome. In these instances, individuals often prefer to avoid observing the outcome. The standard von Neumann-Morgenstern (vNM) Expected Utility model cannot accommodate these cases, since it does not distinguish between lotteries for which outcomes are observed by the agent and lotteries for which they are not. I develop an axiomatic model that admits preferences for observing the outcome or remaining in doubt. I then use this model to analyze the connection between the agent’s attitude towards risk, doubt, and what I refer to as ‘optimism’. This framework accommodates a wide array of field and experimental observations that violate the vNM model, and that may not seem related, prima facie. For instance, this framework accommodates self-handicapping, in which an agent chooses to impair his own performance. Unlike other frameworks, this model accommodates self-handicapping without using notions of self-deception, cognitive dissonance and belief manipulation. It also admits a status quo bias without having recourse to framing effects or reference points. Furthermore, this framework accommodates behavior associated with anticipated regret, the Allais paradox and preferences for smaller menus, which are all difficult to reconcile with the vNM framework. In financial settings, this model accommodates a safe allocation bias, in which agents choose neither to buy nor short sell an asset for an interval of prices； this behavior has so far been explained using ambiguity aversion, which this model does not allow. Recently, experiments have been conducted in which dictators in dictator games who seem to exhibit preferences for fairness often switch to the selfish choice if they can avoid observing the recipients allocation. While the empirical findings of these experiments are difficult to reconcile either with models of Expected Utility or models of fairness, they fit the predictions of this model well. This framework accommodates all the well-known observations mentioned here and others described in the papers with a single, natural extension of the standard vNM model, and using the same assumption on preferences throughout.

Abstract not available.

In a perfect world, neo-classical economics and rational theory make sense. But in this imperfect world this paper has turned to Oliver Williamson and his understanding of New Institutional Economics to help us make sense. NIE helps explain institutions and organizations and their role in creating and shaping contracts that fit a very diverse institutional, organizational and human landscape. NIE provides a new lens to examine institutions as diverse as politics and as rigid as economics. Yet, one critical institution has yet to be examined through that lens. That institution is Public Education. It is that examination which this paper undertakes. By examining public education and seeking to explain it with NIE theory, it is my intent to provide fresh language and perhaps an alternative framework for viewing public education. The current debate in education revolves around schools and their productivity in turning out students who can master state and national exams. Understanding the need to start all discussion and debate with the personal transaction cost of education to students completely reverses that debate. Too little attention is paid to the individual student； where they come from, what they bring to the daily transactions they are faced with in education and how they will negotiate the implied contract into which they have unknowingly entered. By focusing on students rather than organizations and their component parts, we change the measurement of schools from that of organizational production functions to those that create environments where students needs and abilities have priority. Examining test data of individual student performance in a large urban school district over a nine year period provides the empirical foundation for this approach. And consistent with the NIE bounded rational approach, it will consider that data with the life experiences that students bring to the market place called school.

This dissertation consists of three independent essays using dynamic lifecycle analysis. In the first essay a general equilibrium model is constructed to study the macroeconomic effects and welfare implications associated with eliminating mandatory retirement in Canada, both in the long and the short run. Political feasibility is examined by measuring the popular support that this type of policy might have under two labour market scenarios: in transitions in which the wage rate clears the labour market and transitions with a sticky wage and youth unemployment. The second essay studies the welfare cost and distributional effects of a change in the pennanent rate of inflation in a model that incorporates both residential and nonresidential capital. The framework is a dynamic general equilibrium lifecycle economy populated by heterogeneous individuals with respect to age, income and homeownership status. A numerical analysis is provided based on parameter values from the U.S. economy. The results show that the burden of inflation is unevenly distributed across income groups and hurts low income individuals more than high income individuals. This outcome arises from a number of characteristics and tax provisions available in the housing market. In the third essay the Keynesian framework and the lifecycle model are combined to study the transitional effects of an exogenous shock on savings held by inhabitants of a small open economy. The focus is on studying impulse responses from the shock and convergence to a new equilibrium under different demographic scenarios. The results show that negative asset shocks are associated with a larger response of the aggregate demand in populations with a higher proportion of middle age and older consumers. However, when compared with economies with a stationary population, the larger initial reduction in demand is followed only by milder changes in transition.

Abstract not available.

Abstract not available.

In this dissertation, I investigate the core with asymmetric information (Chapters 2 and 3) and the Shapely value with externalities (Chapter 4). In Chapter 2 (jointly with Professor Roberto Serrano), we investigate to what extent the core convergence results hold for core notions with asymmetric information. We concentrate on the core with respect to equilibrium blocking, a core notion in which information is transmitted endogenously within coalitions, as blocking can be understood as an equilibrium of a communication mechanism used by players in coalitions. We identify conditions under which asymmetric information remains as an externality and non-market outcomes stay in the core, as well as those for the core to converge to the set of incentive compatible ex-post Walrasian allocations. In Chapter 3, I investigate the non-emptiness of the incentive compatible coarse core. I show that the incentive compatible coarse core is non-empty in quasilinear economies, if agents are informationally small and the strict core in each state is non-empty. This result means that in quasilinear economies, the non-emptiness result in Vohra (1999) is robust to the relaxation of non-exclusive information. In Chapter 4, I analyze a situation where several players entail cooperation in the presence of externalities by using games in partition function form. I concentrate on the axioms of anonymity, monotonicity, and weak dummy on a restriction operator, which is defined in Dutta, Ehlers and Kar (2008) for the potential approach. I connect the Shapley value of the associated characteristic function constructed from a restriction operator with values of games in partition function form proposed in previous literature.

In this dissertation, I present a Marxian analysis of class qua surplus in the informal manufacturing sector in India. I develop a framework to account for processes of production, appropriation, and distribution of surplus labor in informal enterprises, and apply this framework to analyze the disaggregated, unit-level data from National Sample Survey 62nd round, 2005-06). I show that the informal manufacturing sector is a site of heterogeneous class processes, encompassing capitalist, feudal, and ancient appropriative class processes. I further show that, under the given market wage rates and the corresponding living standards for informal sector workers, the enterprises both capitalist and noncapitalist) are capable of producing, appropriating and realizing surplus. I calculate the magnitude and rate of surplus value for enterprises with different appropriative class processes. The average amount of surplus produced and the rate of exploitation in the informal capitalist enterprises are substantially higher than in the noncapitalist enterprises. The noncapitalist — primarily “ancient” — enterprises, however, cannot retain any significant amount of net surplus for expanded reproduction and growth. Thus, the capitalist and noncapitalist spaces within informal manufacturing sector can be clearly delineated in terms of their capacity for realization and accumulation of surplus. The noncapitalist informal enterprises provide livelihood to much of the surplus population in India who are not absorbed into the formal capitalist sector. I show that the owners/workers of these enterprises have to subsist, on average, much below the customary standard of living for wage-workers in India. This difference between the notional based on minimum wages) and the actual standard of living demonstrates high incidence of relative poverty among the surplus population. The unity of the direct producers with their means of labor ensures the basic survival of the informal household enterprises. I show that even if these households retain the net surplus or net profit to augment their consumption funds, and not for accumulation, they still will not be able to attend the customary standard of living, and will continue to be in relative poverty.