Tamer Cetin | George Mason University (original) (raw)

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Papers by Tamer Cetin

This paper presents a signaling model of constitution making in which strategic behavior and inst... more This paper presents a signaling model of constitution making in which strategic behavior and institutions matter. The paper includes the amount of rent available to the politician, the cost of deviation from commitment in the implementation of constitution, the extent to which the politician prioritizes the well-being of voter, and the prior probability distribution of politicians' types in the model. Two types of politician are examined: low-type (self-interested) and high-type (altruistic/benevolent). We argue that constitution cannot be designed so as to maximize public interest (the first-best outcome) as claimed in the conventional theory. The findings confirm that a first-best outcome is impossible in the making of constitution. Strategic behavior and institutional structure influence the equilibrium constitutions. The results suggest that the well-being of the society from the making of constitution would be better off if institutional setting leads politicians to be consistent with his commitment by removing rent and making deviation costly.

This paper examines constitutional review in Turkey. The aim is to empirically investigate the be... more This paper examines constitutional review in Turkey. The aim is to empirically investigate the behavioral characteristics of constitutional review in a political setting under conflict and thus, to reveal the role and importance of the judiciary in this conflict. To this aim, we include political variables to our econometric model to assess the extent to which these factors influence judicial behavior. Using a unique data at the level of both judges and the court, we estimate a series of logit models under different scenarios. The findings are threefold. First, the Turkish Constitutional Court and judges are politicized. Second, constitutional review has an ideological bias. Three, the judiciary is not independent. We conclude that the judiciary is an important part of political conflict in Turkey.

This paper studies whether institutions matter for economic performance. For this aim, we first c... more This paper studies whether institutions matter for economic performance. For this aim, we first construct a simple framework illustrating how to examine the interaction between institutions and economic performance from a different point of view. Then, using this framework, we introduce an innovative estimation approach including cutting-edge econometric techniques so-called Johansen et al. (2000) co-integration methodology with structural breaks to empirically investigate the interaction between institutions and economic performance in Turkey. Co-integration analysis finds a long-run relationship between institutions and economic performance in the presence of structural breaks. Also, the estimate of structural breaks reveals the effect of noteworthy changes in institutional structure on investments and economic growth. The findings confirm that institutions matter for economic performance in Turkey, even though the institutional quality of the country is not satisfactory. Lastly, the results suggest that approach employed in this paper is useful and convenient to empirically investigate whether institutions matter for economic performance in the study of a country-level time-series data.

This paper develops a novel approach to the analysis of market definition. The paper empirically ... more This paper develops a novel approach to the analysis of market definition. The paper empirically investigates the main components of market definition such as market power, substitution, and the simultaneous interaction between the demand and its determinants for the fixed and mobile voice services. For this aim, we employ the multivariate Johansen co-integration methodology and analyze the Turkish voice telecommunications industry. While the VECM analysis confirms the presence of a simultaneous long-term causality relationship among the variables, the Johansen normalization results reveal demand elasticities that enable to analyze market power and fixed to mobile substitution. The findings suggest that the fixed and mobile voice services that are traditionally defined as the separate markets can be defined as the products that compete in the single market.

This paper provides a brief history of the regulation of taxicabs and an analysis of the challeng... more This paper provides a brief history of the regulation of taxicabs and an analysis of the challenges that are posed by new ridesharing services emerging in cities worldwide. The regulation of taxicab markets has long been controversial. The economic literature provides theoretical arguments and empirical evidence challenging the commonplace regulatory framework which includes not only social regulations intended to protect public health and safety but also entry restrictions and fare controls. Nevertheless, most cities have continued to regulate market entry and fares, citing environmental concerns and consumer protection as justifications. The recent development of dynamic ridesharing services, which match drivers with riders using cell phone technology to handle matches and payments, is posing a major challenge to the traditional taxi markets. While some cities have chosen to ban the new services, many others have allowed the rideshare services to compete with taxis. This in turn has led to new policy issues: not only whether taxis and ridesharing services should be regulated differently, but more broadly, what regulations are appropriate given the new technologies that are being employed by both traditional taxis and the new services.

This paper empirically investigates the long-term dynamics of demand for cigarette in Turkey. The... more This paper empirically investigates the long-term dynamics of demand for cigarette in Turkey. The analysis focuses on the effect of excise taxes and regulations on cigarette consumption. Using monthly and quarterly data that include the pre- and post- anti-smoking policy periods, we estimate demand elasticities and compare the pre- and post- taxation and regulation terms. Evidence found in the paper confirms that taxation and regulation led the dramatic increases in the long-term demand elasticities and a remarkable decline in cigarette consumption in the last decade. Clearly, the demand for cigarette in Turkey responds to the changes in price, income, tax and regulations as in developed countries, even though it is a developing country.

This paper mainly studies the economic effect of deregulation and analyzes the Turkish airline in... more This paper mainly studies the economic effect of deregulation and analyzes the Turkish airline industry. We postulate that deregulation simultaneously decreases prices through the presence of actual competition and increases quantity demanded through accessibility to air transport. We define this simultaneous interaction as the economic effect of deregulation. In order to empirically investigate this effect, we employ cointegration methodology with structural breaks. While cointegration methodology enables to empirically investigate the simultaneous long-term relationship between deregulation, prices, and quantity, the estimation of structural breaks reveals the effect of removing price and entry restrictions. The findings confirm that airline deregulation in Turkey leads to the decrease in prices and the increase in quantity. through the presence of actual competition and increasing demand through accessibility to air transport. Later, we develop an innovative econometric methodology to test those hypotheses that were central to the arguments for the economic effects of deregulation. We employ a simultaneous cointegration approach with structural breaks. The findings confirm that deregulation affects demand and prices through accessibility and actual competition and thus improves market welfare.

Turkey is one of the countries that recently initiated regulatory reform in public utilities. Alt... more Turkey is one of the countries that recently initiated regulatory reform in public utilities. Although Turkey tried to introduce competition to many industries through a liberalization movement that started in the 1980s, utilities remained as monopolies until the early 2000s. In the beginning of the 2000s, reforms restructured the utilities through deregulation and competition policies and established independent regulatory agencies. Whereas the reforms have been successful in some aspects, they remain insufficient in others. This paper anecdotally investigates the effects of (de)regulation on selected public utility industries and analyzes the pros and cons of the reform process. Also, it presents a comparative analysis to better understand the current institutional and governmental issues in the reform process. The findings suggest that the recently changing stance of government towards the (de)regulatory process could thwart the success of reform.

The neoclassical economic theory presumes that public interest can be maximized through regulatio... more The neoclassical economic theory presumes that public interest can be maximized through regulation. Regulation is efficient since the first-best institutional design of regulation is possible. This approach has ignored the institutional foundations of regulation and has left the supply side of regulatory policy-making as a black box. Moving from the pure efficiency considerations to the role and importance of institutions, (old) institutional economics introduced a different approach to regulation. Then, (new) institutional economics rejected the notion of optimal regulation from a perspective of transaction costs.

Because energy dependence is an important issue for today's energy markets, understanding its eff... more Because energy dependence is an important issue for today's energy markets, understanding its effect on the long-term relationships in the markets has crucial implications.

For a long time, governments have delegated their regulatory powers to independent regulatory age... more For a long time, governments have delegated their regulatory powers to independent regulatory agencies (IRAs). The aim is to reduce transaction costs and to ensure a credible commitment in the regulatory institutional structure. This paper discusses transition to IRAs in Turkey in terms of independence and accountability. To this aim, we firstly analyze the institutional foundations of transition to IRAs in Turkey from a political economy perspective and then measure their formal independence levels. We find that the pragmatic policies of the incumbent government regarding IRAs negatively influence their independence. This injures the credibility of regulatory commitment and increases the political transaction costs of regulatory process in Turkey.

This paper empirically investigates the economic effects of government regulation in a regulated ... more This paper empirically investigates the economic effects of government regulation in a regulated taxicab market. We use a cointegration model with structural breaks to test the hypothesis that government regulation increases the price of the regulated good and/or causes the monopoly price. We examine the New York taxicab market and argue that regulation brings about artificial rents by increasing medallion prices, and an increase in medallion prices gives rises to upward pressure on taxi fares. The evidence presented shows that regulation of the New York taxicab market increases medallion prices, and this increase in medallion prices pressures on taxi fares.

Transportation Research Part A-policy and Practice, 2011

The economic literature shows that entry regulation in taxicab markets brings about a dramatic in... more The economic literature shows that entry regulation in taxicab markets brings about a dramatic increase in medallion prices or license values of taxicabs. However, there is no study estimating what the effect of regulation is exactly on real medallion prices. We develop a model to estimate the effect of entry restrictions in the Istanbul taxicab market over real medallion prices and inflation. Our findings contribute that entry regulation in taxicab markets increases medallion prices. Moreover, we find that entry regulation in Istanbul pressures inflation rates as well.

This chapter focuses on the effects of regulation, deregulation, and competition in the Turkish a... more This chapter focuses on the effects of regulation, deregulation, and competition in the Turkish airline industry that has long been dominated by Turkey’s state-owned airline company, Turkish airlines (THY). Before 2003, the industry was not yet open to competition. The necessary legal environment has not yet been established to ensure that private airline firms other than THY could also operate especially in the scheduled domestic flights and cargo transport. Thirteen firms along with THY that operated in the unscheduled flights were inadequate to trigger competition, to increase demand, and to attract investments in the entire industry. The airline deregulation movement in 2003 opened the market to competition. The movement released entry to the industry. Fares are beginning to be determined by competition. This chapter analyzes the pre- and postreform structure of the industry. Accordingly, we deal with this to reveal the effects of deregulation over industry structure and quality of service. Besides, by analyzing the developments in the industry, we aim to present how the postreform structure of the industry is reshaped.

This book is a stocktaking on the recent regulatory reform in Turkey. The fast transformation of... more This book is a stocktaking on the recent regulatory reform in Turkey. The fast transformation of the institutional structure of network and infrastructure industries has created many issues in the institutional analysis of regulatory and competitive issues.

Turkey has recently reshaped its own institutional structure by establishing Independent Regulato... more Turkey has recently reshaped its own institutional structure by establishing Independent Regulatory Agencies (IRAs). However, the political authority has not desired to delegate the political property rights to IRAs. Although IRAs is de jure established, the political conflicts occuring during the evolution of the traditional-patrimonial state to the regulatory state de facto impede IRAs to institutionalize. This paper observes recent policy changes during the transition and lessons from the energy regulation in Turkey. So, the paper reveals whether the change in the regulatory institutional structure of Turkey is an effective policy in terms of transition to the institutions of capitalism.

Economic Affairs, 2010

This paper discusses the regulation of the Istanbul taxicab market and its consequences. While pr... more This paper discusses the regulation of the Istanbul taxicab market and its consequences. While price and entry regulations are common to many taxi markets, there are significant differences in their institutional frameworks. We examine the problems of the Istanbul market and offer recommendations to improve its efficiency.

Transportation Research Part A-policy and Practice, 2011

Economic Affairs, 2010

Iktisat Isletme Ve Finans, 2005

1970’lerde doğal tekel kavramı modern perspektiften sorgulanana kadar, elektrik, telekomünikasyon... more 1970’lerde doğal tekel kavramı modern perspektiften sorgulanana kadar, elektrik, telekomünikasyon, doğal gaz gibi pek çok endüstri dikey bütünleşik yapı altında faaliyet göstermekteydi. Doğal tekel olarak kabul edilen endüstrilerin bu geleneksel yapısı, özellikle teknolojik gelişmeler ve beraberinde yeni piyasa teorileri ile birlikte büyük ölçüde değişmiştir. Bu süreçte ilgili endüstriler dikey olarak ayrıştırılmış, regülasyon yöntemleri daha rekabetçi uygulamalara yönelmiş ve pek çok endüstrinin geleneksel yapıda düşünüldüğü kadar doğal bir tekel olmadığı görüşü kabul edilmeye başlamıştır. Bu bağlamda günümüzde doğal tekel teorisi, modern yaklaşım dikkate alındığında önemli ölçüde değişmiştir. Bu değişim sonucunda doğal tekel endüstriler için, bir yandan getiri oranı regülasyonu yerine daha rekabetçi kazanımlara neden olan fiyat tavanı regülasyonu tercih edilmeye başlamış, diğer yandan, piyasa için rekabet ve yarışabilir piyasalar teorileri geniş ölçüde doğal tekel literatüründe uygulama alanı bulmuştur.

ÖZET İktisat, uzun yıllar boyunca iktisadi etkinlik olarak Neoklasik-Pareto etkinlik teorisini ku... more ÖZET
İktisat, uzun yıllar boyunca iktisadi etkinlik olarak Neoklasik-Pareto
etkinlik teorisini kullanmıştır. İktisadi hayatın etkinliğini-etkisizliğini açıklamaya
yeterli olmayan bu görüşe karşı bazı yaklaşımlar getirilmesine karşın, halihazırda
modern iktisat teorisinin kullanmış olduğu genel ve kapsayıcı bir iktisadi etkinlik
tanımlaması yapılamamıştır. İktisadi etkinlik üzerine devam eden tartışmanın
boyutları, X etkinlik yaklaşımından, modern firma teorilerine kadar uzanmaktadır.
Bu deneme, X etkinlik teorisinden yola çıkarak, gerçek iktisadi hayatta var olan
etkinsizlik kaynaklarını irdelemeyi ve iktisadi etkinliğin, günümüz piyasa
ilişkilerindeki belirleyicilerini modellemeyi hedeflemektedir.
Anahtar Kelimeler: Pareto Etkinlik; X Etkinlik; Çaba
JEL Sınıflaması: D23; D61; L23
ABSTRACT:
Economics has used Neoclassical-Pareto Efficiency Theory as economic
efficiency for a long time. However, this theory is not sufficient to explain the (in)
efficiencies of the real economic activity. Although some approaches have introduced
against the conventional theory, a more general and comprehensive explanation on
efficiency is that engaged by modern economic theory has not yet been in force. The
dimensions of ongoing controversy has reached from X (in) efficiency approach to the
modern theories of the firm. Departing X (in) efficiency approach, the aim of this essay
is to study the sources of efficiency existing in the real economic life and to model its
determinants within today’s market relations.

Özet Yeni kurumsal iktisat, son dönemlerde iktisat literatürüne hem teorik hem de ampirik olara... more Özet
Yeni kurumsal iktisat, son dönemlerde iktisat literatürüne hem teorik hem de ampirik
olarak çok farklı perspektiflerden katkı sağlayan ve bu anlamda, görece sıkışık durumdaki
Ortodoks algıya bir açılım imkanı tanıyan disiplinler arası bir iktisadi yaklaşım olarak
literatürde kendine ayrıcalıklı bir yer bulmayı başarmıştır. Yaklaşım, kurumlar, kurallar
ve organizasyonlar üzerine işlem maliyetleri, sınırlı rasyonalite, mülkiyet hakları, eksik
sözleşmeler ve fırsatçılık gibi yeni bir terminolojiyle farklı bir metodolojik perspektif
sunmayı başarmış ve böylece, iktisadi faaliyetin kurumsal temellerini pozitif araştırmanın
merkezine taşıyarak, günümüzde en canlı ve dinamik iktisat disiplini haline gelmiştir.
Bugün itibarıyla, yeni kurumsal iktisat, hakim iktisadi bilgeliği reddetmeden, ama gerçek
dışı Neoklasik varsayımları sert bir biçimde eleştirip, yerine gerçekçi teoriler üreterek,
yerleşik iktisadi gündemin tam merkezinde bulunmaktadır.

Abstract
Recently, New Institutional Economics has ensured its own privileged place in literature as an interdisciplinary approach that contributes both empirically and theoretically to economics literature and in that sense, that gives an opportunity to the stranded Orthodoxy perception. The approach has achieved to introduce a different methodological perspective
with a new terminology such as transaction costs, bounded rationality, property rights, incomplete contracts, and opportunity over rules, institutions, and organizations. Thus, by bringing the institutional foundations of economic activity to the center of the positive research, it has become the most dynamic and vital discipline in economics. As of today, New Institutional Economics is exactly at the center of the current economic agenda by
criticizing Neoclassical assumptions and instead, generating realistic theories, but not rejecting prevailing economic wisdom.