Blog

The New York Times: “As health care legislation moves toward a crucial airing in the Senate, the White House is facing a growing revolt from some Democrats and analysts who say the bills Congress is considering do not fulfill President Obama’s promise to slow the runaway rise in health care spending. … The debate underscores a fundamental tension inside the White House between cost-containment idealists and pragmatists.”

“Senator Susan Collins, the Maine Republican whose vote the administration is courting, convened a news conference on Monday with Senator Lamar Alexander of Tennessee, a member of the Republican leadership, to spotlight her concerns over cost containment. Ms. Collins said she had been meeting with a group of moderate Democrats who shared her views” (Stolberg, 11/9).

Democratic leaders in the administration and Senate have favored the pragmatic approach to keep health reform legislation moving, the The New York Times reports in a second story. “But if the flexibility shown by party leaders on issues like abortion and the proposed government-run insurance plan has kept the legislative process on track, it has also left many liberals off balance and risked alienating the party’s base as the midterm elections approach” (Nagourney and Herszenhorn, 11/10).

Republicans are continuing to argue that the bill will actually drive up costs, The Washington Times reports. They say “the health care bill includes two dozen programs whose funding is listed as ‘such sums as may be necessary.’ That amounts to legislative jargon, they said, for ‘We’ll bill you later’” (Dinan, 11/10).

For at least some people, the bill could easily increase costs, The Wall Street Journal reports. “The bill would limit how much insurers can vary premiums based on the age of the person buying the policy. The narrower the range, the lower the premiums for older people, a help to those who currently pay some of the highest rates for insurance and often need coverage the most. But such a limitation tends to raise premiums for younger folks, who are sometimes reluctant to buy coverage” (Mathews, 11/10).

Need a dirt cheap and somewhat underpowered notebook? Best Buy has you covered with a $249 Acer laptop. Netbook, what?

The exact model will be revealed tomorrow, but at least the key specs have been released today: an Intel Celeron 900 CPU, 2GB of memory, and a 160GB hard drive. Chances are the screen will be around 15-inches too and it will have the standard assortment of Wi-Fi, Bluetooth, DVD optical drive, webcam, and a 6-cell battery life. But for $249, who cares. It’s not like your mom is going to do anything but play Farkle on Facebook anyway.

The upcoming Resident Evil: Afterlife sees the return of the cast from the last movie, welcoming Wentworth Miller to play Chris Redfield. Wouldn’t b…

Google said Tuesday it is working with airports in the U.S. as well as Boingo Wireless, Advanced Wireless Group, Airport Marketing Income and others to provide free Wi-Fi as a "holiday gift" through January 15, 2010.

The free Wi-Fi is available in 47 airports, including Las Vegas, San Jose, Boston, Baltimore, Burbank, Houston Indianapolis, Seattle, Miami, Ft. Lauderdale, Orlando, St. Louis and Charlotte. As a result of this project, Burbank and Seattle airports will begin offering airport-wide free Wi-Fi indefinitely.

"We’re very happy to extend our Holiday Wi-Fi gift to the millions of people who will spend time in airports over the next few months," said Marissa Mayer, Vice President of Search Products and User Experience at Google.

"We know that this is a very hectic travel season for people, and we hope that free Wi-Fi will make both traveling and connecting with friends and family a little bit easier."

According to the Federal Aviation Administration, over 100 million people will pass through the participating airports between now and January 15, 2010. Travelers often have extra time on their hands after they pass through security for a variety of reasons, including bad weather.

A recent study by the Wi-Fi Alliance found 50 percent of business travelers take red-eye flights in order to be "reachable" during business hours, and the majority (82%) said that being connected via Wi-Fi would help solve that problem.

"Google gets this year’s Wi-Fi Santa award for sponsoring complimentary access in dozens of airports, both to the traveler’s and airport’s benefit," said Dave Hagan, president and CEO of Boingo Wireless.

"In addition to the obvious bonus holiday travelers will enjoy, sponsored access will increase overall Wi-Fi usage in the participating airports and help supplement the airport’s increasingly important non-airline incremental revenue."

In keeping with the spirit of the season, travelers who log on to networks of the participating airports will have the option to make a donation to Engineers Without Borders, the One Economy Corporation or the Climate Savers Computing Initiative. Google said it will match the donations made across all the networks up to $250,000, and the airport network that generates the highest amount per passenger by January 1 will receive $15,000 to donate to a local nonprofit of their choice.

In October, Google partnered with Virgin America to offer free in-flight WiFi to all passengers flying with the airline. Five of the airports participating in the program are also Virgin America destinations: Boston, Seattle, Las Vegas, San Diego and Virgin America’s newest destination launching November 18, Fort Lauderdale.

Related Articles:

>Google And Virgin America To Offer Free WiFi During The Holidays

>American Expands In-Flight Internet Service

>The American In-Flight Internet Revolution

 

 

LinkedIn has developed a reputation for being a rather sedate, professional site.  Twitter, on the other hand, is at the anything-goes, trend-of-the-minute end of the social networking spectrum.  But last night, the two companies announced a partnership that should see a bit of back-and-forth result.

A post on the LinkedIn Blog explained, "When you set your status on LinkedIn you can now tweet it as well, amplifying it to your followers and real-time search services like Twitter Search and Bing.  And when you tweet, you can send that message to your LinkedIn connections as well, from any Twitter service or tool."

The integration makes a fair amount of sense since so many people use Twitter for self-promotion.  Job hunters will now be able to more easily enlist their entire Twitter networks in the search.  And at the same time, potential employers will be able to more easily see how individuals operate on a day-to-day basis.

Folks who alternate work-related tweets with "this is what I had for lunch" material are covered, too, though, since the new feature will allow users to just select certain tweets to be shared.

As you can see in the above video, LinkedIn’s Reid Hoffman and Twitter’s Biz Stone seem rather pleased with the arrangement.  Bonus points may go to Hoffman for giving Twitter the first and largest part of the nickname "TwitterIn."

 

Related Articles:

> Twitter Analytics Service Gets Off To Great Start

> LinkedIn Tests A New Design

> Facebook Most Widely Used Network Among Businesses

Bloomberg are today reporting that in all likelihood, Motorola probably sold 100,000 Droid handsets over their opening weekend.

According to Mark McKechnie, an analyst at Broadpoint AmTech Inc, Verizon Wireless had 200,000 Droid phones available, with most stores managing to sell at least half of their stock over the past weekend.

McKechnie also predicts that overall Motorola will sell some 1 million handsets powered by Android in Q4, with a further 10 million sold in 2010.

I see the first few days as encouraging,” McKechnie said. “There seems to be pretty good demand — they’ve taken the right steps and picked a good partner with Google on the Android side.

The Motorola Droid was officially launched on November 6 priced at $199.99 with a two-year service contract with Verizon.

[via bloomberg.com]

If you’re looking for more info on the new Verizon Android phones, then be sure to check out Droid Forums & Droid Eris Forums

Motorola likely sold 100,000 Droid Handsets Over Opening Weekend

We’ve seen it over and over again: when the government can hide behind the veil of secrecy, it can abuse its power. That’s why we’re supposed to have checks and balances on power, but all too often governments figure out ways to get around that. The latest example is that US attorneys issued a subpoena to the person hosting the news website Indymedia, demanding a logfile of all visitors from a particular day and ordered the woman not to reveal the existence of the subpoena itself. Indymedia doesn’t keep its logfiles, so it simply had nothing to turn over, and after realizing this, the government withdrew the request. However, the requirement to stay silent about it still was there, and the woman asked the EFF for help. With the EFF involved, the government finally backed down and admitted that there was absolutely no legal basis for demanding that the woman not talk about the subpoena, and “chose not to go to court” over the matter, despite threatening to at an earlier time.

This is hardly the first time we’ve heard about the government using (and abusing) procedures like national security letters to not just demand all sorts of info, but also demand that the recipient not tell anyone about it. Every once in a while we’re able to hear about these situations because a group like the EFF or the ACLU pushed back and were able to get the US government to back down, but that’s likely only a fraction of the situations where this has happened. In many others, we likely don’t even know at all, because the recipient gave in, either because they didn’t realize their legal rights, or because it just wasn’t worth the fight. But when the government thinks that it can demand certain data and cloak the demand behind a related demand for secrecy, it makes it way too easy for the government to abuse the process. It basically guarantees no oversight, so why not ask for way more than the law requires, knowing that most people won’t push back and no one will ever find out about it?

Permalink | Comments | Email This Story

A solo dungeon crawl that puts you in control of a (quite literally) one man army, Vagrant Story’s weapons creation system, deeply intricate plot, an…

Roll Call: “Even as Senate Democrats continue to grope for a way forward on health care, the White House asserted Monday that its Dec. 31 deadline for final passage of the legislation is solid. ‘When we say the end of the year, we’ve got a pretty firm end-of-the-year deadline,’ White House Press Secretary Robert Gibbs said.” Last week, Senate Majority Leader Harry Reid implied that the legislation may lag beyond that time frame, but clarified his statement later to be in line with the president (Koffler, 11/9).

“Gibbs said millions of uninsured and under-insured Americans are counting on Congress to pass meaningful health insurance reform,” KOLR TV 10, a CBS affiliate in Arkansas, reports. “However, the issue faces an uncertain fate in the Senate, which is more moderate than the House. Things also tend to move much more slowly in the Senate, where 60 votes are needed to move key issues forward” (11/9).

Meanwhile, President Obama has offered a less solid position on one key controversy that threatens to delay the Senate vote, The Hill reports. Asked whether the administration supports a House amendment that would ban indirect public spending on abortions through insurance subsidies, Gibbs said, “Well, ask me that right before Christmas and the end of the New Year,” meaning, after the White House hopes the President will have signed a bill.

Obama also spoke to ABC News about the issue, saying the abortion compromise would take some more ironing out. “[W]e’re not looking to change what is the principle that has been in place for a very long time, which is federal dollars are not used to subsidize abortions,” Obama said, adding: “what that tells me is that there needs to be some more work before we get to the point where we’re not changing the status quo.”  But, he said, “This is a health care bill, not an abortion bill” (Tapper, Travers, Miller and Dwyer, 11/9).

GigOptix Inc. (OTCBB: GGOX) has agreed to acquire ChipX, Santa Clara, Calif.-based provider of ASIC products. ChipX investors will receive 3.5 million common shares of GigOptix stock, currently valued at approximately $12.25 million and representing a 26% stake in GigOptix. ChipX has raised approximately $65 million in total VC funding, including a recap in 2004. Current backers include Elron Electronic Industries, Needham Asset Management, Newlight Associates, Parker Price Venture Capital, UMC Capital, VantagePoint Venture Partners and Wasserstein Ventures.

PRESS RELEASE
GigOptix, Inc. (OTCBB: GGOX), a leading high speed analog semiconductor manufacturer specializing in electronic engines for the optically connected digital world, today announced that the company has signed a definitive agreement, and completed the acquisition of ChipX, Incorporated, a privately-held fabless supplier of analog and mixed signal custom Application Specific Integrated Circuits (ASICs) on November 9, 2009.

It is anticipated that on a consolidated pro-forma, non-GAAP basis, the company, with locations in the U.S., Switzerland and Israel, will have had combined revenues for the first nine months of 2009 of more than $25M. GigOptix and its subsidiaries will also have a work force of approximately 95 employees, down from 115 pre-merger, of which around 40% are in research and development, and approximately 15% are in sales and marketing. As demonstrated in its previous three acquisitions, the company believes it will achieve significant financial efficiencies after consolidation. Prior to the acquisition, GigOptix employees delivered approximately $230K annual revenue per employee, which the company plans to improve to over $300K annual revenue per employee in 2010.

“I am delighted with the strategic match we have found in ChipX which continues our vision of bringing complementary technologies together to increase value for our customers so that we can accelerate our growth engine and continue to enrich the features we offer while reducing the cost to our customers,” stated Dr. Avi Katz, Chairman of the Board of Directors and Chief Executive Officer of GigOptix. “ChipX brings a loyal portfolio of tier one customers who use the first class design services and IP of ChipX to create their own truly differentiated custom products. Similarly, we will bring our own IP together with that of ChipX to bring new standard products to market faster, and at a lower investment by leveraging their excellent design capability. This acquisition fits into our continuous rollup and consolidation growth strategy and will support continuous improvement of all our financial and business metrics. I am excited to welcome the new team and look forward to working together to continue to deliver excellent results for our shareholders.”

This acquisition is expected to bring a number of benefits to GigOptix’s current and future customers and investors, including:

a. A solid revenue stream from more than 60 active customers, over 100
custom mixed signal ASIC products in production and 5 products
currently in development.
b. Strong customer relationships due to the level of engagement
required during the joint development of custom ASICs. These are
particularly focused in the vertical markets of Defense & Aerospace,
Industrial, Communications, Medical and Test & Measurement, where
GigOptix can offer complimentary products for cross selling
opportunities.
c. A rich portfolio of intellectual property and complementary skills
that will enable GigOptix to develop new products to expand its
offering to the optically connected market. The alternative of
GigOptix organically developing and building such a rich portfolio
of approximately 70 silicon proven IP cores would take several years
and millions of dollars to achieve.
d. Increased presence in the Defense and Instrumentation market, which
is supported by ChipX’s ITAR certification and the addition of
ChipX’s subsidiary in Haifa, Israel, which is ideally located to
facilitate support expansion of GigOptix’ product sales to the
defense market there and around the world.
e. As a fabless high volume silicon integrated circuit supplier, ChipX
brings strong relationships with leading semiconductor foundries and
sub-contractors and increased purchasing power which may be
leveraged by GigOptix to further improve operating margins and
enhance supply chain accessibility.
f. Continuing the aggressive rollup of entities that have invested
millions of dollars in developing sophisticated technology and
products for a fraction of their investment, to support GigOptix’
cost-effective technology and product arsenal build-up.

“ChipX is a long time valued supplier to National Instruments and we look forward to continuing this collaboration with GigOptix,” stated Keith Odom, Research and Development Fellow at National Instruments (NASDAQ: NATI). “ChipX has a long track record of providing NI flexible, complex and cost-effective solutions such as mixed-signal ASICs for our USB 2.0 data acquisition products including NI CompactDAQ and advanced NI-STC3 PCI Express, timing and synchronization technology for our NI X Series DAQ devices. The joining of GigOptix and ChipX strengthens and broadens ChipX’s high-speed analog offering, another critical component for NI Multifunction DAQ and modular instruments. ChipX was honored with an NI 2009 Global Supplier Award after demonstrating commitment and results that set them apart from the rest of the industry and we look forward to continuing this high standard of innovation with GigOptix.”

With the acquisition, GigOptix brings high volume silicon design expertise into the company to complement its design excellence in the more specialist semiconductor technologies of III-V, Silicon germanium and of course its unique expertise in Electro-Optic (EO) polymer technology. This will support its strategic move into higher levels of integration of analog and mixed signal system-on-chip products, such as Clock Data Recovery (CDR) and Serializer/De-Serializers (SERDES). Similar to the acquisition of Helix Semiconductors in January 2008, the acquisition supports GigOptix’s plan to efficiently expand its product portfolio into high volume optically connected markets such as consumer electronics, data centers, high performance computing as well as significantly reducing the time and cost of developing new products, customer relationships and vertical markets. The transaction also delivers increased scale with an existing revenue stream from complementary product sales.

“This is a welcome and exciting move for the ChipX team,” commented Ophir Nadir, Vice President of Engineering at ChipX. “The combination of standard products and custom ASICs is an effective model in many successful semiconductor companies due to the ability to leverage the valuable customer channel and investment in IP across a larger number of products. It makes sense to add new intellectual properties to the custom ASIC tool kit from the GigOptix product base. ChipX has a healthy pipeline of new customer designs ongoing and expects to see growth in ASIC sales in 2010. The ChipX team is eager to work with everyone in the GigOptix corporate family to create additional new growth opportunities with this synergistic merger.”

While GigOptix has installed an efficient financial operating model, GigOptix anticipates that the scaled up company will be even better positioned financially to mitigate the infrastructure cost of being a publicly traded small cap company. Both companies’ headquarters are located in Silicon Valley, and, to bring organization and financial benefits, will be quickly consolidated into one location at the current GigOptix headquarters in Palo Alto, as the current lease of ChipX in Santa Clara, California, expires in two months. It is expected that costs synergies will contribute to improving the bottom line as soon as the first quarter of 2010.

The terms of the deal provide for the ChipX investors to receive approximately 3.5 million common shares, representing approximately 26% of the fully diluted share count of GigOptix. As well as the operational benefits, the acquisition is anticipated to have the significant effect of broadening the ownership of the GigOptix common stock with the addition of new strategic and institutional investors. In parallel with closing the acquisition, the company has entered into a new commercial banking relationship with Bridge Bank, N.A. (NASDAQ: BBNK), a full-service professional business bank based in San Jose, California, which will include a $4 million asset-based line of credit.

Dr. Avi Katz will continue as Chief Executive Officer and Chairman of the Board. The current GigOptix Management Team will continue to lead the combined company, and the new ChipX (CX) Product Line will be jointly managed, ad-interim, by Ophir Nadir, Vice President Engineering of CX Product Line, and Elie Massabki, Vice President Sales & Marketing of CX Product Line. Both Mr. Nadir and Mr. Massabki were formerly executive members of ChipX. The transaction was approved by the board of directors of both companies and became effective on November 9, 2009.

ShareThis

Last night the President signed an Executive Order creating an interagency Council on Veterans Employment to advise the President and Administration on how to set the bar for hiring and employing veterans. The Council will be chaired by Secretary of Labor Hilda Solis and Secretary of Veterans Affairs Eric Shinseki, with Office of Personnel Management Director John Berry serving as the Vice Chair and Chief Operating Officer of the Council.

In statements prior to the signing, all involved gave their reasons for why the initiative is so important to them. The ‘also about continuing to fill the ranks of federal employees with men and women who possess the skills, dedication, and sense of duty that Americans deserve from their public servants. And few embody those qualities like our nation’s veterans."

Secretary Shinseki also looked forward to integrating the unparalleled leadership and technical skills our veterans hold when they join the workforce, and noted that in terms of working in government in particular, "veterans have shown unmatched dedication to public service." Director Berry echoed that sentiment, noting that "the strong sense of patriotism and public service held by members of our armed forces doesn’t leave them when they exit from active duty." For her part, Secretary Solis saw the initiative as part of an enduring relationship between the federal government and vets: "Veterans are an important part of our nation’s past, present and future. They deserve our full support as they reintegrate into the civilian workforce."

TORONTO (Reuters) – Cossette Inc (KOS.TO), Canada’s largest homegrown advertising agency, said on Tuesday it will sell itself to private eqyity firm Mill Road Capital, spurning a lower bid from Cosmos Capital.

Mill Road will acquire all of Cossette’s issued and outstanding subordinate voting shares for C$7.87 a share in cash.

Based on about 12.4 million shares outstanding, the deal is likely to be worth about C$97.6 million ($92.2 million). The Mill Road offer is not conditional on financing or due diligence.

Last month, Cossette urged shareholders not to tender shares toward a sweetened bid from North American private equity group Cosmos Capital worth C$5.25 a share, or about C$88 million. [ID:nN29102296]

The advertising agency’s clients include McDonald’s Restaurants of Canada, Bell Canada, General Motors of Canada and Coca-Cola.

Cossette’s board unanimously approved the Mill Road offer and has agreed not to actively solicit competing acquisition proposals. However, the board retains the ability to consider any competing acquisition proposal. ($1= $1.058 Canadian) (Reporting by Euan Rocha; Editing by Derek Caney)

ShareThis

TORONTO (Reuters) – Activity in Canada’s venture capital market hit a 14-year low in the third quarter, tumbling 51 percent to $191 million from the same period a year ago as uneasy investors stayed out of the market.

According to data put out by the Canadian Venture Capital and Private Equity Association (CVCA) and Thomson Reuters, the province of Ontario saw the steepest fall in investment, sagging to $24 million from $179 million a year earlier.

For all of Canada, venture capitalists invested only $682 million in the first nine months of the year, compared with $1.1 billion in the January-September period last year.

“There is increasing frustration in finding co-investment partners to fully capitalize companies to be successful and compete globally,” said Greg Smith, president of the CVCA.

At the current rate, venture capital is seen coming in under $1 billion for the full year, something it has not done since 1995.

Canadian venture capital activity is also down abroad, with funds investing only $38 million around the globe in the third quarter, compared with $151 million a year earlier.

At the same time, U.S. venture capital funds and other foreign investors boosted their presence in the Canadian market, bringing $77 million to deals, accounting for a hefty 40 percent of total activity.

($1=$1.05 Canadian) (Reporting by Pav Jordan; editing by Rob Wilson)

ShareThis

Roll Call reports that the impending fight has also sparked the attention of the abortion-rights lobby. “Abortion-rights advocates, who were outmaneuvered in the House’s health care reform vote, are banking on tougher Senate rules and targeted lobbying to keep restrictive abortion language out of that chamber’s bill.” The House-passed bill includes “language that bars publicly subsidized health care plans from offering elective abortions, even if they only use private money to pay for the procedure” (Roth, 11/10).

The Los Angeles Times: “The Senate legislation contains looser restrictions on abortion coverage than were approved by the House. But already at least one Democrat, Sen. Ben Nelson of Nebraska, has signaled that he may be willing to work with abortion rights opponents on developing language similar to the House’s.” Others targeted by activists to support such a move include Democratic Sen. Bob Casey of Pennsylvania. Since Senate Democrats will likely need all their party’s votes to pass a health bill, the two Senators have “significant leverage in demanding tough language” on abortion, the LA Times reports (Oliphant and Geiger, 11/10).

The Wall Street Journal reports that Nelson said that if it’s not clear that federal money won’t be used for abortions then he won’t support a bill. Meanwhile, Senate Majority Leader Harry Reid “opposes abortion and faces re-election next year in a conservative state. He is often in a delicate position over the issue, since he leads a Democratic caucus that strongly supports abortion rights. … If Mr. Reid doesn’t include the (Rep. Bart) Stupak language in his bill, proponents are all but certain to offer it as an amendment” (Bendavid and Adamy, 11/10).

Politico: “Other key moderates didn’t go quite that far, but at least two others — Sens. Kent Conrad of North Dakota and Mary Landrieu of Louisiana — said they, too, want to ensure that the Senate bill prevents federal dollars from paying for abortion” (Budoff Brown and Allen, 11/9).

The Associated Press: Former President Bill Clinton is “expected to speak to Senate Democrats about health care legislation during their weekly caucus Tuesday, officials said.” The AP reports that “President Barack Obama wants to sign the legislation into law by the end of the year. But abortion opponents in the Senate are seeking tough restrictions in the health care overhaul bill, a move that could roil a shaky Democratic effort”  (Alonso-Zaldivar, 11/10). 

CongressDaily: “Sen. Christopher Dodd, D-Conn., said he does not expect Reid to include the House language in the Senate bill since it was not included in either of the two committee versions.” Reid is waiting for Congressional Budget Office scores on his plans before debate in the Senate can begin (Edney, 11/10).

“Teach Workers about the Perils of Debt,” in the November issue of Harvard Business Review, argues persuasively for financial education. And not a moment too soon: In a recent U.S. survey covering knowledge of basic finance, for example, 30 percent answered a question about the concept of compound interest by overestimating the amount of time it takes for debt to double. As Dartmouth professor Annamaria Lusardi and HBS professor Peter Tufano write, “Overall, U.S. households have twice as much debt, by virtually any metric, as they did a generation ago.”

Companies can help by adding a financial literacy component to employee assistance programs. They can also make it fun. A video game called Celebrity Calamity, created by the nonprofit Doorways to Dreams Fund, of which Tufano is the founder and president, puts users in the role of a celebrity’s financial manager and helps them learn about managing credit and debit cards.

This week also sees an article by professor Anita Elberse on strategic and marketing issues around music sales (“Bye Bye Bundles: The Unbundling of Music in Digital Channels”) and cases on financier J.P. Morgan, shoe and clothing retailer Zappos.com, and speed-dating service HurryDate, among many other publications and cases.

— Martha Lagace

Working Papers

Platform Envelopment (revised)

Authors:	Thomas Eisenmann, Geoffrey Parker, and Marshall Van Alstyne

Abstract

Due to network effects and switching costs, platform providers often become entrenched. To enter established markets, aspiring providers of new platforms generally must offer revolutionary functionality. We explore a second path to entry that does not rely on Schumpeterian innovation: platform envelopment. By leveraging shared user relationships and common components, one platform provider can move into another’s market, combining its own functionality with the target’s in a multi-platform bundle. Dominant firms otherwise sheltered from entry by standalone rivals can be vulnerable to an adjacent platform provider’s envelopment attack. We develop a taxonomy of envelopment attacks and analyze conditions under which they are likely to succeed.

Download the paper: http://www.hbs.edu/research/pdf/07-104.pdf

Stretching the Inelastic Rubber: Taxation, Welfare and Lobbies in Amazonia, 1870-1910

Author:	Felipe Tâmega Fernandes

Abstract

This paper examines the effect of government intervention via taxation on domestic welfare. A case study of Brazilian market power on rubber markets during the boom years of 1870-1910 shows that the government generated 1.3% of GDP through an export tax on rubber but that it could have generated 4.7% in total, had the government set the tariff at the optimal level. National, regional, and local constraints prevented the government from maximizing regional welfare. In a context of lobbies, government budget maximization may have differed from regional welfare maximization.

Download the paper: http://www.hbs.edu/research/pdf/10-032.pdf