Power and Public Authority

William D. Ferguson
Global Policy, May 2023

Public authority addresses how actors, ranging from officials to gang leaders, and cultural innovators, interact via cooperation, competition and conflict to generate shifting degrees of social order within territories. This paper summarises four key components that directly relate to power. First, power underlies public authority. Second, public authority entails and engenders institutional bricolage. Third, public authorities utilise functions, structures, ideas and symbols of statehood. Fourth, public authorities seek legitimacy. A systematic exposition of power informs analysing public authority—notably, the degree to which it facilitates inclusive or exclusive participation and distribution of benefits. This paper outlines a conceptual framework, with attention to basic elements of power, using a triadic approach that incorporates seven basic formats (or strategic templates) for exercising such power. This framework can inform subsequent inquiry and policy analysis.


Social Context and the Spread of HIV:  An Evolutionary Game-Theoretic Investigation on the Impacts of Social Stigma on Epidemic Outcomes

William D. Ferguson and Trang Kieu Nguyen
Economies 2014, Vol. 2, pp. 171-192.

We provide a theoretical foundation for analyzing how social stigma and adopted behavioral traits affect the transmission of HIV across a population. We combine an evolutionary game-theoretic model—based on a relationship signaling stage game—with the SIR (susceptible-infected-recovered)model of disease transmission. Our evolutionary model specifies how two types of social stigma—that which accompanies an HIV+ condition and that which follows associating with an HIV+ partner—influence behavioral propensities to honestly report one’s condition (or not) and to unconditionally accept relationships (or not). With respect to reporting an HIV+ condition, we find that condition stigma impedes the fitness of honest reporting, where association stigma impedes the relative fitness of concealing an HIV+condition; and both propensities can coexist in a polymorphic equilibrium. By linking our model to the SIR model, we find that condition stigma unambiguously enhances disease transmission by discouraging both honest reporting and a society’s acceptance of AIDS education, whereas association stigma has an ambiguous impact: on one hand it can impede HIV transmission by discouraging concealing behavior and unconditional relationship acceptance, but it also compromises a society’s acceptance of AIDS education. Our relatively simple evolutionary/SIR model offers a foundation for numerous theoretical extensions—such as applications to social network theory—as well as foundation for many testable empirical hypotheses.


Curriculum for the Twenty-First Century: Recent Advances in Economic Theory and Undergraduate Economics

William D. Ferguson
The Journal of Economic Education, 2011, Vol. 42 (1), pp. 31-50

Undergraduate economics lags behind cutting-edge economic theory. The author briefly reviews six related advances that profoundly extend and deepen economic analysis:game-theoretic modeling, collective-action problems, information economics and contracting, social preference theory, conceptualizing rationality, and institutional theory. He offers suggestions for incorporating these into the undergraduate classes at various levels. He argues that game-theoretic representation of collective-action problems offers a unifying framework, on par with supply and demand, for political economy. Blending in the other developments deepens our micro-level understanding of internal and external contract enforcement, with implications on non-clearing markets, power, and distribution. At the macro level, these concepts illuminate the role of institutions in economic development and long-term growth. Undergraduate curricula should incorporate these new approaches.

Keywords contemporary economic theory, undergraduate curriculum; JEL codes A10, A22, B52


Fair Wages, Worker Motivation, and Implicit Bargaining Power in Segmented Labor Markets

William D. Ferguson
Journal of Institutional and Theoretical Economics, 2005, Vol. 161 (1), pp. 126-54

This paper addresses implicit bargaining power within employment relationships using a versatile model of labor market segmentation that combines labor discipline, performance pay, insider power, and fair wage principles. In the primary sector, fair wage comparisons, firm-specific human capital, and less perfect monitoring engender bilateral bargaining power, yielding high compensation, sometimes including a bonus. Secondary-sector employers exert unilateral bargaining power, via credible dismissal threats with no replacement costs, and offer no bonuses.Differential determinates of implicit bargaining power can potentially explain various phenomena, including nominal wage rigidity, union wage differentials, job-specific wage differentials, and gender or race-based wage differentials. (JEL: J 40, J30, J 50)


Worker Motivation, Wages, and Bilateral Market Power in Nonunion Labor Markets

William D. Ferguson
Eastern Economic Journal, 2004, Vol. 30 (4), Fall

This paper develops a widely applicable model of bilateral market power in employment relationships along with some of its implications. The model combines concepts from two strands of the efficiency wage literature—labor discipline and labor turnover models—with concepts from insider power models.It indicates that systematic differences in the cost of job loss to workers and the cost of replacing workers to firms may contribute to explaining a wide variety of observed patterns of wage differentiation— ranging from interindustry or race- and gender-based wage differentials to impacts of technical change and international competition on the skill distribution of labor income, as well as regional and macroeconomic wage patterns. The model’s implications here are broadly consistent with results obtained in other portions of the literature. Moreover, by explicitly addressing the role of bilateral market power in wage determination, it adds explanatory dimension, allowing consistency with a broader range of phenomena than many other models.


Explaining the Rising Wage-Productivity Gap of the 1980s: Effects of Declining Employment and Unionization

William D. Ferguson
Review of Radical Political Economics, 1996, Vol. 28(2), pp. 77-115

This paper investigates causes of the dramatic increase in the wage-productivity gap- the divergence between the growth rates of aggregate productivity and real wages – in the post-1981 period. Using a two-step estimation procedure which incorporates three-digit industry wage regression coefficients into an aggregate wage growth identity equation, it finds that employment decline within unionized industries explains 18% of the post-1981 increase in the gap and that declining union ability to raise wages may explain as much as another 25%. Imports, on the other hand, do not appear to explain the gap independently of employment effects.


Union Bargaining Power in an Efficiency Wage Environment

William D. Ferguson
Eastern Economic Journal, 1994, Vol. 20 (4),Fall

This paper merges a cost-based model of union bargaining power, in which bargaining power reflects relative costs of agreement and disagreement facing unions and management,with an efficiency-wage model, in which effort per hour responds positively to the real wage. Union bargaining alters the effort/wage relationship to increase the wage for a given level of effort. The model predicts that employment decline or rising import penetration in unionized industries will diminish union bargaining power, reducing the union wage differential. This prediction is consistent with wage developments of the 1980s.


A Two-Sector Effort-Regulation Model with Implications for Wage Developments of the 1980s

William D. Ferguson
Reviewof Radical Political Economics, 1991, Vol. 23(1&2), pp. 38-47

Economic events of the 1980s reveal declining real wages for non-supervisory workers in goods sector industries accompanied by lesser declines in service sector industries. A simple two-sector effort-regulation model—which assumes that the cost of job loss responds to labor’s bargaining power and which acknowledges influences of institutional change, import penetration, and shifting employment—can account for these developments as well as the simultaneous decrease of unemployment and real wages in the late 1980s.


Review of Complexity and the Art of Public Policy: Solving Society’s Problems from the Bottom Up,
by David Colander and Roland Kupers, Princeton University Press, 2014