The following text was prepared for a conference organized by the Kiel Institute and the pure player journal E-conomics on “The future of scholarly publication in economics”. It was originally intended to be a full fledged paper, but I only got to page 2. If time permits, I will write a sequel containing suggestions on how to improve the system.
When I started my career as a professional economist in the 1990s, I naively believed that publications were the means by which economists were communicating their ideas and findings. I could not imagine that the papers published in the journals were not actually meant to be read. I also naively thought that the final outlet of an academic paper did not matter so much – since the paper is read, it would get whatever influence and attention it deserves, regardless of where it is published, as long as it is a visible enough journal. Finally, I believed that the publication process resembled somewhat the publication process in a French book publishing house, with delays not exceeding three months. After all, it would not make any sense if it took years for a publication to be available to its public.
Of course I was wrong in all accounts. The publication process in economics is not a publication process, it is a validation process by which we acquire a certain rank in a certain pecking order. Submitting a paper to a journal has nothing to do with research dissemination, it is far more similar to taking an exam or participating in a sports competition. The actual dissemination takes place mostly orally, in seminars and conferences; these seminars and conferences are also important validation events, because they allow authors to signal some of their characteristics that may influence their position in the pecking order, while not being easy to infer from their papers.
Now, when you take an exam as a student, you are graded by your professor, not by a fellow student – who would be a competitor if this exam is actually a contest. If you participate in a tennis tournament, the referees do not participate themselves in the tournament. Would anybody take the winner of the French open seriously if in earlier round Federer had been eliminated by an arbitral decision made by Nadal?
Yet this is the way our own profession is organized. Each submission is “peer reviewed’, that is, it has to be accepted by anonymous referees who happen to be participating in the same beauty contest as the author(s), most often in the same subcategory. At a minimum, as believers of cost-benefit analysis, we should consider that the journal editors and referees themselves perform a cost-benefit analysis when deciding whether or not to publish a paper. I must say that if I apply such a theory to explain my own experience with acceptances and rejections, I easily get an R2 of 80 %.
So what are the costs and benefits of accepting a paper, when you maximize your own rank in the pecking order? The main cost is that if the paper is accepted, the author will gain ranks in the pecking order, and surely this cannot improve your own rank, at least if one focuses on a ranking by number of publications. You will be much more reluctant to accept a paper by somebody who is in the same league as you are, than a paper by an author who is much better or much worse ranked than you are. If the author is similarly ranked as you are, his progress will typically harm you: if behind, he will be more likely to overtake you, if ahead, you will be less likely to overtake him.
Another cost is the opportunity cost: instead of publishing this paper, you may prefer to publish another one whose net benefits to you are greater.
On the benefit side, publishing a paper may improve your own career to the extent that you are cited in the reference list; however there may be a trade-off here. You do not want to publish a paper that displaces your own work. A typical such paper is a paper that proves that you did something wrong, or proposes a more elegant method to do what you already did. This paper will probably cite your work, but if displaces it as the new reference paper on the relevant topic, you end up losing citations in the long run. You much prefer a minor extension of your work, or a paper that makes use of a methodology that you introduced and applies it to a different problem (such papers generally cite your work as an ad autoritatem argument to justify the use of that methodology, therefore you will get more citations if the methodology is somewhat dubious).
The other benefit is quid pro quo. The most important example of that is that one may be fortunate enough to be in a cooperative equilibrium in the game played with the referees. Smith may accept the papers by Jones, and vice-versa. Together they progress in the pecking order at the expense of the others, despite that each individual acceptance of Jones by Smith harms Smith. This is a standard case of repeated prisoner’s dilemma. While the referee reports are supposedly anonymous, it is very easy for Smith to signal to Jones that he wrote that favorable report: they meet each other all the time at conferences. And Smith’s reports generally cite the work of Jones with some emphasis.
Small subfields are better at solving the prisoner’s dilemma than large ones, because the same individuals match more often in the refereeing assignment game. Thus, the rumor has it that it is relatively easy to publish in the field of social choice, while macro is a cut-throat environment.
Such cooperative equilibria make it difficult for a researcher to change fields. First, you have no record of playing the game in the new field, and so you have to convince the incumbents that you will behave properly. Second, if you are perceived as a type who is likely to change fields, you may not be around any longer when it is time for you to reward your referees for having accepted your paper, by accepting theirs or otherwise. If you believe that it is a good thing for people to move across fields occasionally, this feature surely is a source of inefficiency.
There are other forms of quid pro quo. Some economists command resources, and they can offer in kind rewards to those who help them, for example by inviting them to very nice conferences in very nice places. The beauty of it is that this form of corruption is simply indistinguishable from good faith. After all, there is no reason why a conference would take place in an ugly, dangerous, and polluted city—it would harm the quality of the conference–and it is perfectly desirable to invite the most prominent people in the field, who also happen to control access to the best journals, a feature which is itself totally defensible on meritocratic grounds. It is also perfectly understandable for an economist who controls access to a nice conference in a nice place, not to invite as a keynote speaker somebody who sent him a nasty rejection letter: There surely is some equally notable candidate that one may want to select instead.
 To the extent that the distribution of papers published across authors follows a power law, it is very unlikely for somebody to overtake the leaders, even if he is extremely well ranked, because the leader will have so many more publications than he has. That is, it is much more difficult for the 20th ranked economist to overtake the leader, than for the 250th ranked economist to overtake the 150th ranked one. Therefore, the leaders’ papers are more likely to be accepted, which reinforces the power law and path dependence aspect of the distribution. In essence, the leaders are not much of a threat. At the other end of the distribution, the fact that laggards and newcomers are also not much of a threat, generates a mechanism for upward mobility in the ranking.
 Although rejection letters usually start and end with ”I like your paper…”