Gianni De Fraja | University of Nottingham (original) (raw)

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Papers by Gianni De Fraja

This paper investigates the effects of two speci®c forms of intervention in the market for educat... more This paper investigates the effects of two speci®c forms of intervention in the market for education: an ability test for admission to university and a subsidy to tuition fees ®nanced through general taxation. Both these measures enhance equality of opportunity, but their equity and ef®ciency effects are ambiguous. This ambiguity is re¯ected in the political economy equilibrium which would emerge as the result of voting on the level of the ability test and of the subsidy.

Education is a very expensive way of carrying out redistributive policies. This is because those ... more Education is a very expensive way of carrying out redistributive policies. This is because those who have been more favoured by nature/luck are also those who benefit most from the investment in education: if educational resources are distributed according to the ability to benefit, as efficiency would require, the better off should receive more, which is clearly inequitable. Some counterintuitive features of the provision of education can be understood in terms of this conflict between equity and efficiency: electoral preferences for the provision of university subsidies, the distributive consequences of admission tests, and the interaction between house prices and the quality of schools.

Review of Economics and Statistics, 2010

Educational Attainment* This paper is based on the idea that the effort exerted by children, pare... more Educational Attainment* This paper is based on the idea that the effort exerted by children, parents and schools affects the outcome of the education process. We test this idea using the National Child Development Study. Our theoretical model suggests that the effort exerted by the three groups of agents is simultaneously determined as a Nash equilibrium, and is therefore endogenous in the estimation of the education production function. Our results support this, and indicate which factors affect examination results directly and which indirectly via effort; they also suggest that affecting effort directly has an impact on results.

The Economic Journal, 1998

Research in Economics, 2004

We model a vertical relationship between two firms. Our main finding is that the downstream firm ... more We model a vertical relationship between two firms. Our main finding is that the downstream firm manipulates the extent of its debt in order to affect in its favour the contract offered by the upstream firm. Except for a very high interest rate, we find a conflict of interest between the two firms with regard to the extent of debt. This can be interpreted as a rationale for the constraint imposed by franchisors on the debt level of their franchisees. The theoretical analysis is tested using a dataset combining both survey and balance sheet data. We find evidence suggesting that debt may play a strategic role for those firms involved in close-knit vertical relationships.

Mathematical Social Sciences, 2011

This note shows that when the distribution of a variable in different populations is affected by ... more This note shows that when the distribution of a variable in different populations is affected by two or more factors, differences in population distributions may be due exclusively to differences in the distribution of one factor only.

Journal of Public Economics, 2006

This paper studies the e¤ects of incentive mechanisms and of the competitive environment on the i... more This paper studies the e¤ects of incentive mechanisms and of the competitive environment on the interaction between schools and students, in a set-up where their e¤ort a¤ects the students' educational attainment. We show that increasing the power of the incentive scheme and the e¤ectiveness of competition may have the counterintuitive effect of lowering the students' attainment. In a simple dynamic set-up, where the reputation of the schools a¤ects recruitment, we show that increased competition leads to segregation of pupils by ability.

Journal of Public Economics, 2008

This paper suggests that human capital externalities are important in determining whether goods a... more This paper suggests that human capital externalities are important in determining whether goods and services should be privately or publicly provided. We assume that the cost incurred by an individual provider for providing quality of goods such as health, education, legal services, police protection and so on is affected by the human capital of her colleagues (measured in the paper by their average level of training). The mode of provision (private or public) affects a supplier's incentive to undertake training and therefore her colleagues' cost of provision. The paper shows that either mode of provision may be preferable, depending on parameters. It also shows that whether market or private provision is preferable may depend on the mode of provision of the training.

Journal of Public Economics, 1997

This paper studies the optimal regulatory policy in a market where entry may occur. In the event ... more This paper studies the optimal regulatory policy in a market where entry may occur. In the event of entry, the regulator regulates the incumbent, but not the entrant. We show that the effect of entry on prices depends on the length of the interval between regulatory reviews: if the gap is long, then the market outcome following entry has a

Journal of Health Economics, 2000

Journal of Economics & Management Strategy, 2008

In situations where quality is fixed, the widely used RPI-X regulatory mechanism has a number of ... more In situations where quality is fixed, the widely used RPI-X regulatory mechanism has a number of desirable properties, such as convergence to a second best optimum. Theoretical analysis of this mechanism in the case of endogenous quality is limited and therefore regulators have typically imposed constraints on the firm's quality choice in ad hoc manners, either by mandating quality levels, or by including quality adjustment factors in the RPI-X mechanism. In this paper, we construct the rigorous theoretical counterpart of these manners of including quality measures in the constraints faced by a regulated firm. This mechanism converges to second best optimum. It works by offering the firm trade-offs between prices and qualities based on the choice it made in the previous period; however, reflecting the practical problem valuing quality, the informational requirement to select these trade-offs appropriately is qualitatively stronger than in the fixed quality case. Moreover, even when the informational problem can be overcome, we identify a further potential pitfall in the approach taken in practice by regulators, and show that, in order to avoid it, the regulated firm should be subject to an additional constraint, which we label the distance constraint, and which can be interpreted as requiring the firms to choose prices and qualities within a band in every period.

International Journal of the Economics of Business, 1996

The paper studies the behaviour of four oligopolistic firms in the Italian coffee market. We stud... more The paper studies the behaviour of four oligopolistic firms in the Italian coffee market. We study whether their behaviour is better represented by Bertrand behaviour or by collusive pricing. We also investigate the role of advertising in product differentiation.

Bulletin of Economic Research, 2002

We consider an environment where two education institutions compete by selecting the proportion o... more We consider an environment where two education institutions compete by selecting the proportion of their funding devoted to teaching and research and the criteria for admission for their students, and where students choose whether and where to attend university. We study the relationship between the cost incurred by students for attending a university located away from their home town and the equilibrium configuration that emerges in the game played by the universities. Symmetric equilibria, where universities choose the same admission standard, only exist when the mobility cost is high; when the mobility cost is very low, there is no pure strategy equilibrium. For intermediate values of the mobility cost, only asymmetric equilibria may exist; the final section of the paper provides an example where asymmetric equilibria do indeed exist for a plausible and robust set of parameters.