Extract Revenue Research Articles

Governing Agrarian Diversities

In a country as large and diverse as India, governance meant a welter of institutional and customary arrangements, particularly in the agrarian sector. Globally, the early modern state’s fiscal well being depended on agriculture. In India, the demands of an expanding maritime commerce made this more complex. Contrary to prevalent views of the state as an economic predator, this article shows how the sixteenth-century initiated novel and creative techniques of agrarian governance, which enabled it to consolidate power, extract revenue and protect diversities at the same time. This was a new dispensation, which cannot be explained by seamless notions of the ‘medieval’. These new strategies of governance can only be understood in the frame of an early modernity, which was a shared global experience. For India, agrarian governance involved, inter alia—the consolidation of private property and transactions based on contractual obligations. These were some of the important ways in which the state facilitated the making of an early modern economy in sixteenth-century India.

License Not Budgets: How Taxless Administrative Financing Isn't Corruption

What happens when local bureaucracies in China fail to receive sufficient state budgeted funds? Focusing on Zouping, a county in Northern China, this essay examines the strategies that empower local agencies to self-finance personnel and administrative costs. The overarching logic of these strategies, which I label taxless administrative financing, can be summed up in a colloquial Chinese phrase: “license not budgets” (gei zhengce bu gei qian). Instead of allocating budgeted funds from tax revenue to fund public administration fully, the state enacts policies that “license” local bureaucracies to self-finance, such as by collecting fees or earning revenue through market activities. An account of taxless administrative financing has two important implications. First, it is distinguished from popular perceptions of local bureaucracies as corrupt agents who extract revenue arbitrarily and in defiance of state policies. Instead, it emphasizes that the state makes policies that license agencies to generate revenue for self-financing. Second, it highlights the continuity and adaptation of prebendal practices in pre-modern China in a contemporary context of market reform, placing the self-financing measures of local bureaucracies in historical and comparative light.

Chinese State Responses to Pressures from Below: Old Methods for New Challenges?

Social Protest and Contentious Authoritarianism in China. By Chen Xi. Cambridge: Cambridge University Press, 2012. 241 pp., $95.00 hardcover (ISBN-13: 978-1-107-01486-2). Economic Openness and Territorial Politics in China. By Sheng Yumin. Cambridge: Cambridge University Press, 2012. 292 pp., $85.00 hardcover (ISBN-13 978-0-521-19538-6). How will the new leadership team in China cope with challenges from dissatisfied citizens and restive provinces? The two books under review approach these questions from the perspective of Chinese state institutions and investigate the tools they use to maintain political control and manage social protest. In Economic Openness and Territorial Politics in China, Yumin Sheng focuses on the fiscal and personnel policies the Chinese central government employs to maintain political control over the wealthier Chinese provinces that have benefited most from economic openness. Xi Chen's Social Protest and Contentious Authoritarianism in China examines the institutions and strategies that enable the Chinese party state to routinize social protest. Using an empirical cross-national analysis, Sheng takes issue with theories predicting that economic globalization leads to a decline in state power. Drawing on William Riker's (1964) work on federalism, the author argues instead that in political systems, where political power is centralized, the national government has economic and political incentives to control winner regions to extract revenue from them, redistribute wealth within the country, and prevent pressures for regional autonomy from diminishing central control. Turning to the Chinese case, Sheng first reviews the history of China's economic opening in the 1980s and 1990s. When the preferential policies that enabled coastal provinces to boom resulted in growing economic disparities, in the mid-1990s Chinese national leaders implemented fiscal reforms to redistribute wealth from the coastal winners to the inland losers. Another important goal of fiscal recentralization was to redress a growing power imbalance between the center and the provinces and restore control over corrupt local leaders whose policies were creating conditions for instability and rural protest (Oi, Singer Babierz, Zhang, Luo, and Rozelle 2012). How did the leadership in Beijing rein in recalcitrant provincial leaders from the …

The business model of patent assertion entities in IT: unilateral restraints of competition or business as usual?

This article aims to determine whether the business models of patent assertion entities (PAE) can qualify as restraints of competition under European competition law, and under which circumstance. To do so, the article highlights the main characteristics of the PAE business model and articulates a theory of harm compatible with the competition law of the European Union (EU). The article will consider the framework of the Treaty on the Functioning of the European Union, 2008 O.J. C-115/47 (TFEU), particularly Article 102 TFEU as regards unilateral restraints of competition. The framework of Article 101 TFEU on concerted practices remains relevant, but will not be the main focus of this article. In sum, a general theory of harm can be articulated as regards PAE activities. Assertions by PAEs take advantage of the hold-up value of a technology, ie PAEs extract revenues based on the prospect of an infringement suit. By doing so, PAEs hinder dynamic competition by reducing incentives to innovate. They also inhibit static competition by increasing prices and potentially removing products from the market. As such, European competition law is applicable within the framework described in this article.

Strategy for Fiscal Survival? Analysis of local extra-budgetary finance in China

Since the early 1980s, Chinese local governments have collected a significant amount of revenue outside the budgetary system. Fiscal shortage is commonly cited as the main reason for local extra-budgetary finance. However, a panel data analysis on provincial extra-budgetary practices reveals a different story. The findings suggest that extra-budgetary finance exists in China not as a strategy for local fiscal survival, but rather because local bureaucracies can conveniently exploit their administrative power to extract revenue from the local economy, and that extra-budgetary exactions fall disproportionately on peasants. Despite the constant calls by the central government to reform and regulate the extra-budgetary system, the centrally issued administrative directives have little impact on local practices.

Intellectual Property, Fee or Free?

Has the world really changed in the last three centuries? There is an abundance of information and bringing the public onto the internet has certainly brought a new boom to the technology sector, but has it changed our values for using another's creative works?After the Internet went public in 1995, easy access to data and images brought a shiftin the value of information. Instead of being a shared resource for academics, researchers, and government workers, anyone able to buy or use a connection to the network was able to share and contribute to the wealth of information that was accumulating in cyberspace. Over a very short time span, new interfaces for accessing the data were developed. The original culture of the Internet was one of and open access; this mind set continued as more people became connected. The Web software advancements made it easy to move text and graphics from one location to another and to download music, videos, and eBooks. Until very recently, little thought was given to purchasing the right to use materials posted to the Web. Free became an accepted norm for a vast majority of users. This sharing was fun. The amount of labor that originally went into creating the work that was being forwarded, posted, or repackaged was not considered. The idea that someone should get paid for the content being used did not enter most users' minds. The common perception was that it was there for anyone to use, a concept from earlier days when the Internet was a closed system accessed primarily by scholars openly their work. But there is a shifttaking place that holds the basic ideology that first brought copyright into existence.Now that the medium is established as another avenue of free market trading and entrepreneurship, the struggle to protect how one's original, creative work is being used and to extract revenue from that work, i.e., intellectual property rights, is resurfacing. A new appreciation for the need for an author or artist to be able to support him or herself through creative works is reemerging to challenge the viewpoint of those who believe that there is no originality, that all creativity comes from community activity, implying that each has an obligation to share those results, without cost, with everyone. Each view is a moral stand on freedom for the individual balanced against the needs of the community.Electronic access and social media have brought millions of creative people onto the scene who do not need the revenue or do not consider that using another's work as taking away someone's paycheck because everything is free and available to share if it's on the Internet. The battle may not have had its roots in the first mass printings with the invention of the printing press, but that era did struggle to find common ground between the concept of ownership for intellectual property based on the premise that originality exists and those who hold the opinion that originality is not possible because all ideas are based on the ideas of others and cannot be owned. There are many positives on each side of the issue of intellectual property and intellectual freedom. For example, being paid for the ideas and effort put into writing, composing, and artistic works is laudable and has the potential to inspire new works from that individual. Our society shows that something is of value by the monetary price the item has been given and the recognition given to the individual who created the work. Centuries have shown the importance for profit in freeing individuals to pursue their own passions. There is also value in mass distribution of works as a means to educate and inspire others to create. Originality, if there is such a possibility, stresses the importance of bringing information from a variety of sources and viewpoints and applying that knowledge to a new realm or problem; building on the knowledge of others is encouraged. It has value in our society. Today's electronic medium has provided an opportunity to blend building on the works of others to share with the community and creating original works to generate income. …

Sanctions, Smuggling, and the Cigarette: The Granting of Iran OFAC Licenses to Big Tobacco

This paper seeks to understand the political economy implications of nicotine addiction in Iran, focusing on the US Office of Foreign Asset Control's granting of Iran operations licenses to American tobacco companies. Presuming that tobacco taxes, levied both as import duties and ad valorem, would financially benefit the Iranian government, the introduction of a highly desired US product to the market would be antithetical to the sanctions regime currently in place. By comparing Iran's tobacco industry, and the attendant public health crisis that has arisen from high rates of nicotine addiction, to conditions in Turkey, it can be demonstrated that Iran is uniquely unable to extract revenues from the sale of tobacco products. The primary point of comparison between Iran and Turkey is smoking-attributable annual productivity losses of each country, as estimated through the use of Smoking-Attributable Mortality, Morbidity and Economic Costs Software (SAMMEC) and the available related literature. According to the calculations derived from the SAMMEC model, Iran is burdened with an astonishing economic cost due to the high prevalence of smokers. It is concluded that an awareness of this condition enables OFAC to award licenses to Big Tobacco without fear of undermining current foreign policy initiatives.

Global Oil Supplies: The Impact of Resource Nationalism and Political Instability

This paper looks at resource nationalism and political instability as potential causes of disruption to global oil supplies. It points to depletion preferences and strategies as one form of resource nationalism. In most cases, resource nationalism appears to be motivated by rent maximization. Hence, we see the adoption of more restrictive policies when prices rise. Conversely, when oil prices are low, increasing export volumes becomes more important. Restrictions on exports are common, especially for natural gas, which is sometimes reserved for national consumption. Export taxes are a tool used by some countries to extract revenue from oil producers. Domestic prices of gas and petroleum products are frequently much lower than international prices, also in some sense reducing availability for export. Political instability has a much more elusive impact on oil and gas exports, and historical experience points to contradictory potential outcomes. This paper concludes that political instability and resource nationalism are rarely associated with acute supply crises or shortfalls. Their effect is rather gradual and normally compensated by action in other parts of the system.

Extractive industries in fragile states and the role of market incentives and regulation

This article considers the so-called resource curse plaguing fragile states with abundant extractive resources. It critically assesses the assumption that nonstate actors such as extractive industries, civil society organizations, and investors have the ability to exert effective pressure on - and can significantly assist - governments in promoting transparency, accountability, and sound management of extractive revenues. As a contribution to this under-researched area, the role of economic actors (extractive industries, investors, financial institutions, consumers) and the effect of market incentives and regulation is examined.

The Role of Policy Logic in U.S. Climate Legislation

The Waxman-Markey climate bill, passed by the U.S. House of Representatives in June, 2009, is grounded on a cap-and-trade regulatory ideology that favors cost reductions over emission reductions even when costs are well within acceptable limits and when emission targets do not approach sustainability requirements. Carbon taxes, by contrast, could create stable emission-reduction incentives that are not limited by predetermined targets; but carbon taxes are politically handicapped by proponents’ insistence that tax policy function primarily to extract revenue from regulated industries. Greenhouse gas regulatory policy could be vastly more efficient if the dogmatic ideologies of both cap-and-trade and carbon taxes were eschewed in favor of rational and pragmatic policy logic, recognizing the overriding political constraint of cost acceptability and the efficiency advantage of using carbon pricing revenue to reduce regulated industries’ emissions.

Menu Pricing and Learning

We address the question of designing dynamic menus to sell experience goods. A dynamic menu consists of a set of price-quantity pairs in each period. The quality of the product is initially unknown, and more information is generated through experimentation. The amount of information in the market is increasing in the total quantity sold in each period, and the firm can control the information flow to the market by adjusting the level of sales. We derive the optimal menu as a function of consumers' beliefs about product quality, and characterize the changes in prices and quantities resulting from information diffusion. The equilibrium menu prices are the result of a dynamic trade-off between immediate gains from trade, information production, and information rents. The firm initially charges lower prices, in order to increase sales above the static optimum, sacrificing short-term gains in order to invest in information. As the market obtains more information, the firm gradually shifts to a policy designed to extract revenue from high-valuation buyers. This policy may eventually exclude low-valuation buyers from the market, even if the product's underlying quality is in fact high.

Circumventing California's Proposition 13 for the Public Collection of Rent

Prior to the passage of Proposition 13, local governments in California set their own property tax rates and received the revenues. California's Proposition 13, enacted in June 1978, severely limits the state's ad valorem real property tax. The measure limits the real property tax to one percent of the purchase price, and also limits the annual increase to two percent until the title is transferred. The proposition also shifted the allocation of the revenues from the counties to the state.However, state laws and local initiatives have enabled cities and counties to circumvent the limitations of Proposition 13 to extract revenue from real estate with parcel taxes, special assessment districts, developer charges, and other charges. Real estate is also tapped privately to by homeowner association assessments, which play an increasingly important role in providing civic services. This paper analyzes the impact of Proposition 13 and examines these statewide and local measures to get around the tax limitation.While the initial impact of Proposition 13 was a reduction in the state's fisc, increases in the sales and other taxes as well as local revenue sources have now restored the tax burden of Californians to slightly above the national average. Thus, the proposition has been largely an exercise in futility, centralizing government, greatly increasing the complexity of its public finances, and ultimately failing to constrain the size of government.

Modes of long-run development: Latin America and East Asia

In this paper, two models of long-run development are constructed, one for a unimodal agricultural structure and the other for a bimodal agricultural structure. The process of the evolution of state institutional capacity under these two structures is analyzed. Capacity is measured by the ability of the state to extract revenue in return for which services are provided. The development of such capacity is seen as the key factor in providing the human capital and infrastructure necessary for the shift from inward- to outward-oriented development. Latin America and East Asia are used as examples of these two modes of long-run development.

Political Development and Growth: Japan until World War II

It is hypothesized in this paper that the way by which a ruling elite extracts its resources significantly influences the evolution of state-related institutions. Specifically, if the ruling elite must construct a penetrating set of institutions to extract revenue and in order to encourage payment of taxes must also provide services in return (reciprocity), then states are likely to have institutions conducive to economic growth. Institutions restraining arbitrary decision making are likely to evolve and are likely to be effective. The process of economic and political development in Japan in the prewar period is used to illustrate this process. Specifically, the evolution of limited parliamentary democracy during this time period was the result of the process by which the ruling elite sought to extract revenue.

Global Market Integration and Central Political Control: Foreign Trade and Intergovernmental Relations in China

Prevailing economic theories predict that world market integration unleashes centrifugal forces from within and undermines domestic central political authority. Reversing the conventional bottom-up, demand-side approach, this article highlights the incentives of national-level political actors. It suggests that when institutionally empowered vis-à-vis the subnational units, the center will seek to enhance political control over regions thriving in the global market to extract revenues, remedy interregional disparity, and maintain central rule. Through analyzing pooled cross-sectional, time-series data for Chinese provinces during 1978 to 2002, it shows that the Chinese political center has manipulated its personnel monopoly power within the ruling Communist Party to exert a tighter grip over provincial party secretaries, the top officials in the provinces more exposed to the international market. Furthermore, provinces overseen by more controlled party secretaries actually received less favorable terms during fiscal contracting, implying their greater revenue submission to the center.

REVENUE TRAPS

When state officials care about tax revenue and factors of production are mobile across economic sectors, political economies organize themselves into equilibria where officials promote sectors to which resources are allocated, which in turn encourages that resource allocation. Differences across sectors in the ability of officials to extract revenues may result in a “revenue trap”: the persistence of a low‐productivity equilibrium even in the presence of large shocks to resource allocation. I argue that the failure of privatization in part of the postcommunist world to effect a shift toward new private economic activity resulted in part from such a trap.

A Simple Model of Inefficient Institutions

AbstractThis paper develops a simple model of economic and political institutions that lead to poor aggregate economic performance. In the model economy, groups with political power, the elite, choose policies to increase their income and to directly or indirectly transfer resources from the rest of society to themselves. The resulting equilibrium is generally inefficient because of three distinct mechanisms: (1) revenue extraction, (2) factor price manipulation and (3) political consolidation. In particular, the elite may pursue inefficient policies to extract revenue from other groups. They may do so to reduce the demand for factors coming from other groups in the economy, thus indirectly benefiting from changes in factor prices. Finally, they may try to impoverish other groups competing for political power. The elite's preferences over inefficient policies translate into inefficient economic institutions. The notable exception to this general picture emerges when long‐term investments are important, thus creating a commitment (holdup) problem, whereby equilibrium taxes and regulations are worse than the elite would like them to be from an ex ante point of view. In this case, economic institutions that provide additional security of property rights to other groups can be useful.

Transparency in Extractive Revenues in Developing Countries and Economies in Transition: a Review of Emerging Best Practices

Corruption and mismanagement of the extractive revenues have recently become burning issues in the extractive industry, as prevailing levels of poverty and underdevelopment in many resource-rich countries are largely attributed to lack of transparency and accountability in revenue management. Ensuring transparency and accountability in the management of extractive revenues requires concerted efforts of all stakeholders in the extractive industry. In view of the overall significance of transparency and accountability mechanisms in combating corruption in the extractive industry, there is a discernible trend towards adoption of contractual, legal policy measures at a national level of many resource-rich developing countries and economies in transition. At the international level, the stakeholder and civil society movement of developing a soft law norm also indicates an emerging consensus on the importance of transparency in the management of extractive industries.

Modeling Inefficient Institutions

Why do inefficient %uF818 non-growth enhancing %uF818 institutions emerge and persist? This paper develops a simple framework to provide some answers to this question. Political institutions determine the allocation of political power, and economic institutions determine the framework for policy-making and place constraints on various policies. Groups with political power, the elite, choose policies to increase their income and to directly or indirectly transfer resources from the rest of society to themselves. The baseline model encompasses various distinct sources of inefficient policies, including revenue extraction, factor price manipulation and political consolidation. Namely, the elite may pursue inefficient policies to extract revenue from other groups, to reduce their demand for factors, thus indirectly benefiting from changes in factor prices, and to impoverish other groups competing for political power. The elite%u2019s preference over inefficient policies translates into inefficient economic institutions. Institutions that can restrict inefficient policies will in general not emerge, and the elite may manipulate economic institutions in order to further increase their income or facilitate rent extraction. The exception is when there are commitment (holdup) problems, so that equilibrium taxes and regulations are worse than the elite would like them to be from an ex ante point of view. In this case, economic institutions that provide additional security of property rights to other groups can be useful. The paper concludes by providing a framework for the analysis of institutional change and institutional persistence.

Sport and Gambling

We review the relationships between gambling and sport. British sports and sports infrastructure have benefited considerably from funding through the National Lottery. We argue that there is an implicit sports tax on lottery products and that this policy may be neither efficient nor equitable. We suggest that further research, employing contingent valuation methodology, would be required before any firm conclusion could be made over whether the spending facilitated by the tax represents an efficient allocation of resources. Betting on events and outcomes in sport, especially team sports, has become a high-growth sector; we explore the potential for sports to capture some of this bettor spending and discuss associated public-policy issues. While sport may extract revenue from betting, there are also costs. We focus especially on betting corruption in sports, developing an expected utility framework to show where the risk of corruption is most likely to arise and what regulatory options are open to sports governing bodies and government. Copyright 2003, Oxford University Press.