Template-Type: ReDIF-Paper 1.0
Author-Name: Suman Ghosh
Author-X-Name-First: Suman
Author-X-Name-Last: Ghosh
Author-Email: sghosh@fau.edu
Author-Workplace-Name: Department of Economics, College of Business, Florida Atlantic University
Author-Name: Eric Van Tassel
Author-X-Name-First: Eric
Author-X-Name-Last: Van Tassel
Author-Email: vantasse@fau.edu
Author-Workplace-Name: Department of Economics, College of Business, Florida Atlantic University
Title: Microfinance, Subsidies and Dynamic Incentives 
Abstract: In this paper we develop a two period model of a credit market to study the interaction 
between a monopolistic moneylender and a subsidized microfinance institution. We assume that 
lenders face a moral hazard problem that is diminished as agents are able to take increased equity 
positions in their production projects. In this setting, we identify a range of subsidy levels 
for which the behavior of the moneylender complements the poverty reduction mission of 
the microfinance institution. We also explain why a policy of offering subsidized loans in the second
period to agents who are poor due to a project failure in the prior period, does not distort agents’ 
incentives to work hard and save in the first period. By varying the subsidy level available to 
the microfinance institution we discover that for small subsidies the moneylender may be better off 
with the microfinance institution in the market, and that when subsidies are excessive this can 
harm the poverty reduction mission of the microfinance institution.
Length: 30 pages
Creation-Date: 2007-11
Revision-Date:
Publication-Status: 
File-URL: http://home.fau.edu/sghosh/web/Ghosh-VanTassel(FinalVersion).pdf
File-Format: Application/pdf 
File-Function: First version, 2007
Number: 07001
Classification-JEL: O12, G21, D86
Keywords: microfinance, poverty, moral hazard, contracts
Handle: RePEc:fal:wpaper:07001




Template-Type: ReDIF-Paper 1.0
Author-Name: Eric Chiang
Author-X-Name-First: Eric
Author-X-Name-Last: Chiang
Author-Email: chiang@fau.edu
Author-Workplace-Name: Department of Economics, College of Business, Florida Atlantic University
Author-Name: Janice Hauge
Author-X-Name-First: Janice 
Author-X-Name-Last: Hauge
Author-Email: jhauge@unt.edu
Author-Workplace-Name: University of North Texas
Author-Name: Mark Jamison
Author-X-Name-First: Mark
Author-X-Name-Last: Jamison
Author-Email: mark.jamison@cba.ufl.edu
Author-Workplace-Name: University of Florida
Title: Subsidies and distorted markets: Do telecom subsidies affect competition? 
Abstract: There is general concern that producer subsidies distort competition. We examine a 
telecommunications subsidy system that transfers money from low cost regions to high cost regions 
of the U.S. Even though the system is designed to be competitively neutral, we find evidence 
that the system, combined with carrier of last resort policies, promotes cream skimming by 
entrants in low cost areas and deters entry in high cost areas, where incumbents are more 
likely than entrants to receive subsidies. We are unable to rule out the possibility that 
state regulatory policies favor incumbents in states that are net beneficiaries of the subsidy system.
Length: 37 pages
Creation-Date: 2007-11
Revision-Date:
Publication-Status: 
File-URL: http://www.ericchiang.org/files/Chiang_Hauge_Jamison_JRE.pdf
File-Format: Application/pdf 
File-Function: First version, 2007
Number: 07002
Classification-JEL: L52, L96, O11
Keywords: subsidies, Universal Service Fund, telecommunications, regulation
Handle: RePEc:fal:wpaper:07002