International Review of Economics

In a duopoly network industry with decentralised union wage setting, this paper studies the impact of the firms’ engagement in consumer-friendly corporate social responsibility (CSR) on profitability and welfare. It is shown that, regardless of whether the wage setting occurs prior to or after the choice of the CSR levels, being a CSR-type firm rather than a simple profit-maximiser can lead to larger profits and thus higher welfare for their owners/stakeholders. However, the welfare analysis reveals that there is always conflict of interest between the firms’ owners on the one side and consumers, unions, and society on the other side, with respect for the timing of the decision about CSR relative to that of the wage setting.

The main objective of this study is to analyze the role of institutional quality in the effect of ethnic diversity on poverty. The empirical analysis covers a sample of 96 countries. The main results obtained using the Ordinary Least Square and Two-Staged Least Square approaches show that ethnic diversity has a positive effect on poverty, but the extent of this effect depends on the quality of institutions. Ethnic diversity contributes significantly to the increase in poverty in countries with poor institutional quality, while in countries with good institutional quality, its effect is not significant. When the quality of institutions is poor, ethnically diverse countries generally experience major problems of inequality arising from discrimination, social exclusion, and social polarization. One of the main consequences of these problems is the increase in poverty. As a key policy implication, policymakers in ethnically diverse countries should improve the quality of their institutions as a priority to address the issue of poverty.

The cognitive human capital approach assumes that cognitive abilities (CA) enable societies to be innovative and competitive and to achieve higher productivity and prosperity. However, does happiness enhance the effect of CA on economic growth? Our study views happiness as an intrinsic motivator that helps workers be more productive and get the most out of their CA. Regression analyzes using two different measures for CA showed strong evidence that CA generated economic growth from 1960 to 2017, even though it interacted negatively with happiness. These results were found to be robust after controlling for endogeneity bias using instrumental variable for happiness. In addition, the threshold regression analyses revealed significant evidence that the relationships between CAs and growth vary according to happiness levels. Two prominent ranges of threshold were established: γ1 = 4.75–4.96 and γ2 = 6.16–6.43 on the 0 to 10 happiness scale. Accordingly, the effects of CA were smallest in very unhappy countries (happiness < γ1), strongest in fairly happy societies (happiness of γ1 − γ2), and moderately strong among the happiest countries (happiness ≥ γ2). In summary, the pursuit of highest productivity growth seems to require an optimal level of happiness, where moderate level of happiness (likely indicative of existence of higher motivation with little emotional distress) could inspire and drive people to fully utilize their cognitive capital and achieve high economic growth.

The Coase Theorem is widely regarded as pointing to the importance of positive transaction costs for the analysis of economic institutions. Various interpretations of the Coase Theorem regard transaction costs as some set of impediments to contracting, or more broadly, as the costs of providing institutional solutions to conflicts over resource use. The abstract nature of the Coasean hypothetical tends to promote an abstract notion of property as a thin entitlement: a right in a designated person to take certain actions or derive value from a set of resource attributes. On this view, property is like a collection of tiny contracts. The property rights furnished by actual property law are much more coarse grained than this, and property is correspondingly “incomplete” for transaction costs reasons. Property and contract are substitutes in some situations, but they often are not interchangeable—because of Coasean transaction costs.

In this paper we study a particular case of “multiple” externalities associated to the production of a good/activity, whose external effects can change from positive to negative depending on the level of output (intersecting externalities). To analyze their impact on the public policy we propose a very simple two-agent partial equilibrium model in the technological context of externalities. In a static framework, the centralized solution always implies an optimal policy, which may consist of taxation or subsidization depending on the individual optimum and on the technology parameters. In a dynamic model with local knowledge of the efficiency function and instantaneous output adjustments, such an optimal policy can be structurally stable or unstable. In the latter case, under small changes of the parameters the policy may switch from low taxation/subsidization to high taxation/subsidization or vice versa, or even jump discontinuously from taxation to subsidization or vice versa. Furthermore, the decentralized solution based upon “tradable rights” can be economically equivalent to the centralized solution in the form of taxation policy but the two solutions may be not politically equivalent.

This essay wishes to address what is believed to be a central historical crossroad that allowed the development of economics, and other social sciences, in the modern era. Such development would not have been possible without the transformation of the fundamental ontology through which European and Christian societies understood the world around them and their own social structures. I identify the turning point of such transformation, as other scholars, philosophers and social scientists have done, with the Reformation, which was the center and cause of major cultural, political and scientific development. Philosophers and social scientists have developed such interpretation of the Reformation as the historical event in which the cultural and political landscape of western civilization has been utterly transformed. My interest in the Reformation as a religious, political and cultural upheaval lies in the fact that I identify Luther’s reforms not only as a shift in the landscape of political/religious authorities of the time, but also as a crucial moment in which the ontological landscape of western civilization has been radically changed. I am of the belief that the fundamental, ontological, assumptions of economics are based on the ontological revolution represented by Luther’s theology, and Reformation more generally, in a fundamental way. Such that economics would be unthinkable without the Reformation.

This paper applies the Nash Bargaining solution to wage setting in a vertically differentiated oligopoly and studies its welfare effects. The market outcome crucially depends on the bargaining power attributed to the agents. I show that the wage bargaining structure is likely to lead to another source of inefficiency that adds to the classical one derived by oligopoly pricing and quality choice. (JEL: L11, J51)

The purpose of this study is to assess different factors under the Bangladesh labour legislation for promoting work-satisfaction of the global garment workers in Bangladesh. A convenient sampling technique was used for collecting 208 employee responses through a five-point Likert scale structured questionnaire. The respondents were garments-manufacturing industry workers working in three hot spots known as towns of Savar and Ashulia (Dhaka District) and Gazipur Sadar (Gazipur District). The survey was conducted between November and December, 2019. This research study finds that seven factors significantly influence work-satisfaction of garment workers in Bangladesh. Among these, four are related to the non-pecuniary factors: supervisory treatment of the workers, working environment, hygienic canteen facility, and medical facility. The three other factors, namely, the amount of salary, timely payment of salary and increment policy for the workers, play a significant part in workers’ satisfaction. This study helps in assessing the opinions of the workers about their work-satisfaction as well as policy planning for the development of the garments-manufacturing industry. Also, this study will add value to the setting of South Asian developing countries and industries because of the similar socio-economic environment to Bangladesh.

A competitive model is attached to a particular market where several agents trade a same commodity. We focus on the stability of the price systems and define a solution concept, akin to the core, proving an existence result.