David Meza | UNAM Universidad Nacional Autónoma de México (original) (raw)
Papers by David Meza
Bulletin of Economic Research, 1987
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Bulletin of Economic Research, 1985
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Australian Economic Papers, 1978
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Journal of Public Economics, 1997
This paper shows that in the presence of costly state verification, directly or indirectly subsid... more This paper shows that in the presence of costly state verification, directly or indirectly subsidising entry to risky occupations may benefit everyone. The result holds even in the presence of private insurance. Indeed, it may be desirable to prohibit private insurance in favour of subsidies to hazardous activities. These findings do not depend on the government having an advantage over the private sector in observing outcomes. The explanation is that through its influence on equilibrium price, feasible fiscal policy can shift the return distribution so as to create collective insurance more cheaply than is possible through private contracting with its requirement of costly auditing. Amongst applications is a case for a loss-making state bank offering high interest-rate loans.
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Economic Journal, 1999
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Journal of Public Economics, 1995
This paper investigates the merits of statutory monopoly as a means of preventing wasteful market... more This paper investigates the merits of statutory monopoly as a means of preventing wasteful market fragmentation. The key result is that a public firm committed to price at cost may be unable to repel entry even when it is socially desirable that it should do so. Limited entry may be worse than either statutory monopoly or free entry. The robustness of results when competition stimulates a state firm to lower its costs is also examined.
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Rand Journal of Economics, 1986
This article analyzes the riskiness of the R&D strategies chosen ... more This article analyzes the riskiness of the R&D strategies chosen by firms engaged in a "winner-takes-all" patent race. In contradiction to Dasgupta and Stiglitz (1980) we show that, when the distribution of invention times is symmetric, the market equilibrium cannot be safer and may be riskier than is socially optimal. We identify the economic reason for the emergence but only
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Economic Journal, 2002
A mass of evidence suggests that aspiring entrepreneurs with low net worth or from disadvantaged ... more A mass of evidence suggests that aspiring entrepreneurs with low net worth or from disadvantaged social groups are excluded from capital markets. Asymmetric information potentially explains these findings, though whether aggregate lending is raised or lowered relative to the full information outcome is ambiguous. Whichever case occurs, subsidising credit may decrease efficiency. This is all the more true when, as the evidence suggests, potential entrepreneurs are prone to unrealistic optimism. Indeed, even though optimism may cause redlining and credit rationing and so lower lending, the case for policies to encourage lending is further undermined.
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The Economic Journal, 1999
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International Tax and Public Finance, 2004
Unrealistic optimism is a well documented phenomenon. This paper argues that it is important in m... more Unrealistic optimism is a well documented phenomenon. This paper argues that it is important in many economic contexts. Focusing on start-up finance for businesses, optimism may be responsible for or consistent with features such as credit rationing or redlining that are normally taken as symptoms of under-provision of finance requiring intervention to expand lending. Optimism leads to the opposite conclusion, at least if it is legitimate to use fiscal policy to counteract systematic error. The paper reports on an experiment in which, due to optimism, the lower the prizes to entrepreneurial activity the higher the subject's expected income.
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Journal of Public Economics, 2000
By combining hidden types and hidden action, this paper shows that the existence of credit ration... more By combining hidden types and hidden action, this paper shows that the existence of credit rationing need not imply that lending exceeds the full-information level. In this plausible class of models, the appropriate policy is not to subsidise or tax lending but to make alternatives to entrepreneurship more attractive. Doing so may actually increase the number of those borrowing to set up their own business and yield a strict Pareto improvement. The results extend to equilibria characterised by redlining. So, if interest rates fail to clear credit markets, it does not follow that policy should make loans easier to obtain.
Bookmarks Related papers MentionsView impact
Rand Journal of Economics, 2001
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Rand Journal of Economics, 2007
Exclusive contracts prohibit one or both parties from trading with anyone else. Contrary to earli... more Exclusive contracts prohibit one or both parties from trading with anyone else. Contrary to earlier findings, we show that investments that are specific to the contracting parties may be encouraged by exclusivity. Results depend on the nature of investments and the bargaining solution. The major part of the analysis shows that exclusivity deals designed to “assure” the supply of essential inputs promote investment. Infinite penalties for breach, even if ex post renegotiable, may result in excessive investment, in which case a positive but finite damage payment yields the first-best outcome.
Bookmarks Related papers MentionsView impact
Journal of Public Economics, 1997
This paper shows that in the presence of costly state verification, directly or indirectly subsid... more This paper shows that in the presence of costly state verification, directly or indirectly subsidising entry to risky occupations may benefit everyone. The result holds even in the presence of private insurance. Indeed, it may be desirable to prohibit private insurance in favour of subsidies to hazardous activities. These findings do not depend on the government having an advantage over the private sector in observing outcomes. The explanation is that through its influence on equilibrium price, feasible fiscal policy can shift the return distribution so as to create collective insurance more cheaply than is possible through private contracting with its requirement of costly auditing. Amongst applications is a case for a loss-making state bank offering high interest-rate loans.
Bookmarks Related papers MentionsView impact
Economic Journal, 1999
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Journal of Public Economics, 1995
This paper investigates the merits of statutory monopoly as a means of preventing wasteful market... more This paper investigates the merits of statutory monopoly as a means of preventing wasteful market fragmentation. The key result is that a public firm committed to price at cost may be unable to repel entry even when it is socially desirable that it should do so. Limited entry may be worse than either statutory monopoly or free entry. The robustness of results when competition stimulates a state firm to lower its costs is also examined.
Bookmarks Related papers MentionsView impact
Rand Journal of Economics, 1986
This article analyzes the riskiness of the R&D strategies chosen ... more This article analyzes the riskiness of the R&D strategies chosen by firms engaged in a "winner-takes-all" patent race. In contradiction to Dasgupta and Stiglitz (1980) we show that, when the distribution of invention times is symmetric, the market equilibrium cannot be safer and may be riskier than is socially optimal. We identify the economic reason for the emergence but only
Bookmarks Related papers MentionsView impact
Economic Journal, 2002
A mass of evidence suggests that aspiring entrepreneurs with low net worth or from disadvantaged ... more A mass of evidence suggests that aspiring entrepreneurs with low net worth or from disadvantaged social groups are excluded from capital markets. Asymmetric information potentially explains these findings, though whether aggregate lending is raised or lowered relative to the full information outcome is ambiguous. Whichever case occurs, subsidising credit may decrease efficiency. This is all the more true when, as the evidence suggests, potential entrepreneurs are prone to unrealistic optimism. Indeed, even though optimism may cause redlining and credit rationing and so lower lending, the case for policies to encourage lending is further undermined.
Bookmarks Related papers MentionsView impact
The Economic Journal, 1999
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International Tax and Public Finance, 2004
Unrealistic optimism is a well documented phenomenon. This paper argues that it is important in m... more Unrealistic optimism is a well documented phenomenon. This paper argues that it is important in many economic contexts. Focusing on start-up finance for businesses, optimism may be responsible for or consistent with features such as credit rationing or redlining that are normally taken as symptoms of under-provision of finance requiring intervention to expand lending. Optimism leads to the opposite conclusion, at least if it is legitimate to use fiscal policy to counteract systematic error. The paper reports on an experiment in which, due to optimism, the lower the prizes to entrepreneurial activity the higher the subject's expected income.
Bookmarks Related papers MentionsView impact
Bulletin of Economic Research, 1987
Bookmarks Related papers MentionsView impact
Bulletin of Economic Research, 1985
Bookmarks Related papers MentionsView impact
Australian Economic Papers, 1978
Bookmarks Related papers MentionsView impact
Journal of Public Economics, 1997
This paper shows that in the presence of costly state verification, directly or indirectly subsid... more This paper shows that in the presence of costly state verification, directly or indirectly subsidising entry to risky occupations may benefit everyone. The result holds even in the presence of private insurance. Indeed, it may be desirable to prohibit private insurance in favour of subsidies to hazardous activities. These findings do not depend on the government having an advantage over the private sector in observing outcomes. The explanation is that through its influence on equilibrium price, feasible fiscal policy can shift the return distribution so as to create collective insurance more cheaply than is possible through private contracting with its requirement of costly auditing. Amongst applications is a case for a loss-making state bank offering high interest-rate loans.
Bookmarks Related papers MentionsView impact
Economic Journal, 1999
Bookmarks Related papers MentionsView impact
Journal of Public Economics, 1995
This paper investigates the merits of statutory monopoly as a means of preventing wasteful market... more This paper investigates the merits of statutory monopoly as a means of preventing wasteful market fragmentation. The key result is that a public firm committed to price at cost may be unable to repel entry even when it is socially desirable that it should do so. Limited entry may be worse than either statutory monopoly or free entry. The robustness of results when competition stimulates a state firm to lower its costs is also examined.
Bookmarks Related papers MentionsView impact
Rand Journal of Economics, 1986
This article analyzes the riskiness of the R&D strategies chosen ... more This article analyzes the riskiness of the R&D strategies chosen by firms engaged in a "winner-takes-all" patent race. In contradiction to Dasgupta and Stiglitz (1980) we show that, when the distribution of invention times is symmetric, the market equilibrium cannot be safer and may be riskier than is socially optimal. We identify the economic reason for the emergence but only
Bookmarks Related papers MentionsView impact
Economic Journal, 2002
A mass of evidence suggests that aspiring entrepreneurs with low net worth or from disadvantaged ... more A mass of evidence suggests that aspiring entrepreneurs with low net worth or from disadvantaged social groups are excluded from capital markets. Asymmetric information potentially explains these findings, though whether aggregate lending is raised or lowered relative to the full information outcome is ambiguous. Whichever case occurs, subsidising credit may decrease efficiency. This is all the more true when, as the evidence suggests, potential entrepreneurs are prone to unrealistic optimism. Indeed, even though optimism may cause redlining and credit rationing and so lower lending, the case for policies to encourage lending is further undermined.
Bookmarks Related papers MentionsView impact
The Economic Journal, 1999
Bookmarks Related papers MentionsView impact
International Tax and Public Finance, 2004
Unrealistic optimism is a well documented phenomenon. This paper argues that it is important in m... more Unrealistic optimism is a well documented phenomenon. This paper argues that it is important in many economic contexts. Focusing on start-up finance for businesses, optimism may be responsible for or consistent with features such as credit rationing or redlining that are normally taken as symptoms of under-provision of finance requiring intervention to expand lending. Optimism leads to the opposite conclusion, at least if it is legitimate to use fiscal policy to counteract systematic error. The paper reports on an experiment in which, due to optimism, the lower the prizes to entrepreneurial activity the higher the subject's expected income.
Bookmarks Related papers MentionsView impact
Journal of Public Economics, 2000
By combining hidden types and hidden action, this paper shows that the existence of credit ration... more By combining hidden types and hidden action, this paper shows that the existence of credit rationing need not imply that lending exceeds the full-information level. In this plausible class of models, the appropriate policy is not to subsidise or tax lending but to make alternatives to entrepreneurship more attractive. Doing so may actually increase the number of those borrowing to set up their own business and yield a strict Pareto improvement. The results extend to equilibria characterised by redlining. So, if interest rates fail to clear credit markets, it does not follow that policy should make loans easier to obtain.
Bookmarks Related papers MentionsView impact
Rand Journal of Economics, 2001
Bookmarks Related papers MentionsView impact
Rand Journal of Economics, 2007
Exclusive contracts prohibit one or both parties from trading with anyone else. Contrary to earli... more Exclusive contracts prohibit one or both parties from trading with anyone else. Contrary to earlier findings, we show that investments that are specific to the contracting parties may be encouraged by exclusivity. Results depend on the nature of investments and the bargaining solution. The major part of the analysis shows that exclusivity deals designed to “assure” the supply of essential inputs promote investment. Infinite penalties for breach, even if ex post renegotiable, may result in excessive investment, in which case a positive but finite damage payment yields the first-best outcome.
Bookmarks Related papers MentionsView impact
Journal of Public Economics, 1997
This paper shows that in the presence of costly state verification, directly or indirectly subsid... more This paper shows that in the presence of costly state verification, directly or indirectly subsidising entry to risky occupations may benefit everyone. The result holds even in the presence of private insurance. Indeed, it may be desirable to prohibit private insurance in favour of subsidies to hazardous activities. These findings do not depend on the government having an advantage over the private sector in observing outcomes. The explanation is that through its influence on equilibrium price, feasible fiscal policy can shift the return distribution so as to create collective insurance more cheaply than is possible through private contracting with its requirement of costly auditing. Amongst applications is a case for a loss-making state bank offering high interest-rate loans.
Bookmarks Related papers MentionsView impact
Economic Journal, 1999
Bookmarks Related papers MentionsView impact
Journal of Public Economics, 1995
This paper investigates the merits of statutory monopoly as a means of preventing wasteful market... more This paper investigates the merits of statutory monopoly as a means of preventing wasteful market fragmentation. The key result is that a public firm committed to price at cost may be unable to repel entry even when it is socially desirable that it should do so. Limited entry may be worse than either statutory monopoly or free entry. The robustness of results when competition stimulates a state firm to lower its costs is also examined.
Bookmarks Related papers MentionsView impact
Rand Journal of Economics, 1986
This article analyzes the riskiness of the R&D strategies chosen ... more This article analyzes the riskiness of the R&D strategies chosen by firms engaged in a "winner-takes-all" patent race. In contradiction to Dasgupta and Stiglitz (1980) we show that, when the distribution of invention times is symmetric, the market equilibrium cannot be safer and may be riskier than is socially optimal. We identify the economic reason for the emergence but only
Bookmarks Related papers MentionsView impact
Economic Journal, 2002
A mass of evidence suggests that aspiring entrepreneurs with low net worth or from disadvantaged ... more A mass of evidence suggests that aspiring entrepreneurs with low net worth or from disadvantaged social groups are excluded from capital markets. Asymmetric information potentially explains these findings, though whether aggregate lending is raised or lowered relative to the full information outcome is ambiguous. Whichever case occurs, subsidising credit may decrease efficiency. This is all the more true when, as the evidence suggests, potential entrepreneurs are prone to unrealistic optimism. Indeed, even though optimism may cause redlining and credit rationing and so lower lending, the case for policies to encourage lending is further undermined.
Bookmarks Related papers MentionsView impact
The Economic Journal, 1999
Bookmarks Related papers MentionsView impact
International Tax and Public Finance, 2004
Unrealistic optimism is a well documented phenomenon. This paper argues that it is important in m... more Unrealistic optimism is a well documented phenomenon. This paper argues that it is important in many economic contexts. Focusing on start-up finance for businesses, optimism may be responsible for or consistent with features such as credit rationing or redlining that are normally taken as symptoms of under-provision of finance requiring intervention to expand lending. Optimism leads to the opposite conclusion, at least if it is legitimate to use fiscal policy to counteract systematic error. The paper reports on an experiment in which, due to optimism, the lower the prizes to entrepreneurial activity the higher the subject's expected income.
Bookmarks Related papers MentionsView impact