Fīrūz Tughluq created the biggest network of canals known in premodern India, wrote off the loans granted earlier to the peasants by Muḥammad ibn Tughluq, and, more significantly, enforced a policy of fixed tax, as opposed to the former proportional one, thus guaranteeing in normal times a larger share of surplus to the intermediaries.
Second, it ensures an equal sharing of the surplus that it induces.
12 An m=0 would lead to a 50 50 sharing of the surplus irrespective of the levels of investments (see supra note 11).
If the arbitrator's proceedings to determine the sharing of the surplus are lengthy, then third party decision making fails to remedy the under-investment problem.
Accordingly, this simple two-person Nash-bargaining without outside options (at t=2) leads to an equal sharing of the surplus (see Additional file 1): begin{array}rcl@ z a,b|text{US})=0.5 end{array} (6).
This means, that the arbitrator departs only marginally from a 50 50 sharing of the surplus even if the investment levels differ dramatically and hence the contest sets only limited additional incentives to invest.11 On the contrary, if m is very large, then the elasticity of the arbitrator's decision is very high.
But MBIA has raised $2.6 billion this year, including selling $1.1 billion of common shares, $1 billion of surplus notes and a $500 million investment from the private equity firm Warburg Pincus, which also bought some common shares.
Firstly, it increases their share of the surplus and secondly, it simultaneously increases the joint venture's surplus itself.
New York City also could establish a true rainy-day fund, requiring that a share of any surplus be saved -- instead of the city's current practice of using surpluses to prepay some of the next year's expenses.
There is talk of allowing farmers to keep a greater share of their surplus.
