the prisoners dilemma in the invisible hand an analysis of intrafirm productivity this paper attempts to show that it is useful to view productivity as a prisoners dilemma problem that conventions are alternative solutions to the prisoners dilemma that effort conventions are usually nonoptimal and that a shock is necessary in order to shift from one nonoptimal solution to another within this framework the invisible hand does not produce a pareto optimal result it is consistent with any number of nonoptimal effort conventions

the proportional solution for economies with both private and public ownership abstract we ask how should a planner whose job is to respect public ownership of some productive assets in conjunction with private ownership of some inputs allocate resources we call our proposal the proportional solution it is characterized by the requirement that the final allocation be pareto efficient and by the condition of equal returns to the use of privately owned inputs we discuss this idea in a publicly owned firm a cooperative and a common pool resource our main result is the existence of proportional solutions in general convex economies journal of economic literature classification numbers d50 d51 d62 l32 h23 h82 p13

the response of labour effort to falling real wages the mexican peso devaluation of february 1982 abstract this paper reports empirical evidence on the effect of the february 1982 mexican peso devaluation with its concomitant reduction in real income on the output of individual workers using a set of pooled data for 46 workers employed in two textile plants in mexicali over a 22 week period the regression results show a significant increase in average output of about 15 in response to the 25 decrease in wages due to the devaluation the study also finds that there was no significant response in output to the legislated annual increase in money wages of january 1982

exploitation and time abstract this paper analyses exploitation and class formation in a dynamic context an intertemporal model of a subsistence economy is set up and among other results it is proved that in an interior equilibrium differential ownership of scarce productive assets is an inherent feature of a capitalist economy while exploitation tends to disappear in the long run asset inequality is therefore proved to be a normatively secondary though causally primary wrong it is also argued that these results raise several doubts about the possibility of providing robust micro foundations to marxian concepts by means of walrasian general equilibrium models

an efficient and almost budget balanced cost sharing method for a convex technology c we characterize cost sharing games where the nash equilibrium demands maximize total surplus budget balance is possible if and only if c is polynomial of degree n 1 or less for general c the residual cost shares are balanced if at least one demand is null a characteristic property if the cost function is totally monotone a null demand receives cash and total payments may exceed actual cost the ratio of excess payment to efficient surplus is at most min 2logn 1 for power cost functions c a ap p 1 the ratio of budget imbalance to efficient surplus vanishes as 1np 1 for analytic cost functions the ratio converges to zero exponentially along a given sequence of users all asymptotic properties are lost if the cost function is not smooth

a progress report on marxian economic theory on the controversies in exploitation theory since okishio 1963 a progress report on marxian economic theory

fair allocation of disputed properties we model problems of allocating disputed properties as generalized exchange economies in which agents have preferences and claims over multiple goods and the social endowment of each good may not be sufficient to satisfy all individual claims in this context we investigate procedural and end state principles of fairness their implications and relations to do so we explore procedural allocation rules represented by a composition of a rights assignment mechanism to assign each profile of claims individual property rights over the endowment and walrasian or other individually rational exchange rule using variants of fairness based on no envy as end state principles we provide axiomatic characterizations of the three focal egalitarian mechanisms known in the literature on rationing problems as constrained equal awards constrained equal losses and proportional mechanisms our results are connected to focal contributions in political philosophy and also provide rationale for market based environ mental policy instruments such as cap and trade schemes and personal carbon trading and moral foundation for the three proposals to allocate ghg emission rights known as the equal per capita sharing the polluter pays principle and the equal burden sharing the victims pay principle

surplus sharing with a two stage mechanism in this article we consider environments where agents jointly produce a private output good by contributing privately owned resources an efficient outcome may not be realized due to strategic behavior and conflicting interests of the agents we construct a two stage mechanism building on a varian mechanism the modified mechanism ensures an equilibrium for a large class of preferences and guarantees the feasibility of outcomes

incentive mechanism design for production economies with both private and public ownerships in this paper we dealwith the probl em of incentive mechanism design which yields efficient allocations for general mixed ownership economies when preferences individual endowments and coalition patterns among individuals are unknown to the planner we do so by doubly implementing the proportional solution for economies with any number of private sector and public sector commodities and any number of individuals as well as the coexistence of privately and publicly owned firms with general convex production possibility sets furthermore the mechanisms work not only for three or more agents but also for two agent economies journal of economic literature classification numbers c72 d61 d71 d82 2000 academic press

strategic implications of darwinian economics for selling efficiency and choice of integrated or independent sales forces most managers when confronted with a difficult strategic decision would like to know what is the prevailing practice in their industry prevailing practice interests managers in part because it may indicate which decisions are good even best the rationale is darwinian economics which proposes that competitive markets operate to force at least an approximation of optimal behavior because wrong decisions are extinguished by the market mechanism if so the bulk of survivors make good business decisions and their collective practice is worth knowing meaning it should be difficult to improve upon this paper tests whether prevailing practice represents good decisions the context is the decision whether to fill a sales district with a company integrated sales force or with outside agents independents the outcome of the choice is the ratio of sales to the cost of running the sales force i e selling efficiency a model is described which summarizes industry decisions and two propositions are developed proposition 1 a simple version states that efficiency declines as firms depart from the industry rule as to when they should integrate proposition 2 a contingent version states that efficiency declines as firms depart from the industry rule in unpredictable selling environments but that conforming to the rule has no impact in predictable environments the rationale is that firms learn the environment well enough to know when to depart from the rule in predictable settings but not otherwise the relationship between efficiency and conformity to prevailing practice is examined for 93 sales districts of 11 recognized electronic component manufacturers the results support proposition 2 the most efficient sales forces conform to prevailing practice and the least efficient deviate but only in uncertain environments in more certain environments conformity and efficiency are unrelated implications such as when it pays to be different and suggestions for future research are discussed

on constructing numeraire free measures of price value deviation a note on the steedman tomkins distance this paper argues that there exists an infinite number of numeraire free measures a la steedman tomkins of price value deviation on the empirical side it provides an illustration of those measures using input output data from the swedish economy copyright the author 2010 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

demand for food commodities by income groups in indonesia an analysis of the structure of demand was performed on household data classified into income groups for urban indonesia a demographically augmented linearized almost ideal demand system was used to estimate the structural parameters of the demand equations endogenous switching regression techniques yielded unbiased and consistent demand parameter estimates for the low income group which had a large number of zeros for some food groups standard seemingly unrelated equation techniques were used to estimate the demand parameters for the other income groups the results showed demands for the medium to high and high income households to be responsive to prices income and demographic variables demands for the medium to low income households were responsive to income and prices only demands for low income households were responsive to income and prices of rice and fish only

the tragedy of the commons revisited identifying behavioral principles abstract the theme of hardin s renowned the tragedy of the commons is that the common pool resource is dissipated to the level where the average value of extraction equals the wage rate in the long run when the number of appropriators is unlimited yet experimental results and rapid deforestation in tropical countries follow a contrasting pattern even though the number of appropriators is limited the common pool resource is dissipated more than the nash equilibrium predicts first given these market or experimental observations we identify two behavioral principles share maximization and difference maximization second we characterize these principles at nash equilibrium

organizational culture and performance abstract organizations are all around us culture is trickier to analyze and even to see we consider both the effect of management on culture and the effect of culture on performance we begin by describing an intervention that dramatically improved outcomes and conspicuously included a culture change component we then use details from this intervention to describe potential empirical analyses of the association between organizational culture and performance in this and similar settings finally we describe opportunities for theoretical models to explore how and why organizational culture might influence organizational performance

organizational economics and institutions as missing elements in economic development analysis abstract the main objective of this paper is to apply x efficiency theory to the analysis of organizations and state enterprises with special reference to developing countries in particular the black box relating to the internal operation of organizations is opened up to understand better the decision mechanisms operating within firms and institutions intrafirm conventions are explored as they relate to the impact of external and internal pressures on the decision making process implications are drawn to improve the internal efficiency of institutions in developing countries

demographic variables in demand analysis in this paper the authors discuss five procedures for incorporating demographic variables into theoretically plausible demand systems translating scaling and the gorman reverse gorman and implicit prais houthakker procedures these five procedures are used to incorporate a single demographic variable the number of children in a household into the generalized ces demand system using household budget data for the united kingdom for the period 1966 1972 excerpt

household food demand in turkey a two step demand system approach abstract demands for sixteen food products are investigated using data from the turkish household expenditure survey the linear approximate almost ideal demand system laids is estimated with shonkwiler and yen s two step procedure all own price elasticities are negative and expenditure elasticities positive bread other cereals bovine mutton giblets and cheese have high expenditure elasticities mutton bovine and several other protein rich products are price elastic results suggest a mix of gross substitutes and complements while net substitution is the dominant pattern demographic characteristics also play important roles in shaping food demand the elasticity estimates can inform policy deliberations

modeling the pattern of structural change in u s meat demand the hypothesis of structural change in u s meat demand is tested in a four meat almost ideal demand system with parameters following a gradual switching regression model the results support the notion that structural change partly explains the observed u s meat consumption patterns structural change is biased against beef neutral for pork in favor of chicken and fish and it does not affect estimated elasticities the estimated path of structural change implies a rapid transition to a new regime in the mid 1970s although a smooth path cannot be ruled out

implementation of balanced linear cost share equilibrium solution in nash and strong nash equilibria abstract this paper considers the incentive aspect of the balanced linear cost share equilibrium blcse which yields an endogenous theory of profit distribution for public goods economies with convex production technologies we do so by presenting an incentive compatible mechanism which doubly implements the blcse solution in nash and strong nash equilibria so that nash allocations and strong nash allocations coincide with blcse allocations the mechanism presented here allows not only preferences and initial endowments but also coalition patterns to be privately observed in addition it works not only for three or more agents but also for two agent economies

an econometric analysis of urban households animal products consumption in turkey people in developing countries are increasing their consumption from the very low levels of the past and they have a long way to go before coming near developed country averages in this study households animal products consumption patterns are analysed by using linear approximation of almost ideal demand system la aids and survey data collected from households in urban areas in turkey according to the results of the study annual per capita consumption of animal products were 48 18 kg for milk 26 89 kg for yogurt 18 55 kg for cheese 6 45 kg for meat 22 11 kg for poultry and 10 05 kg for fish price elasticities were found to be lower than 1 for milk yogurt cheese poultry and fish and higher than 1 for meat moreover the impacts of socio demographic factors on the demand for animal products were found to be very low determination of production targets and formulation of polices are possible by obtaining the proper information related to the livestock products

reward patterns of fair solutions abstract the solutions proposed in the literature on fair allocations are sensitive to the preference profiles of the agents as a consequence each of them displays a specific distribution pattern which may be interpreted as rewarding certain kinds of preferences at the expense of others in the basic models with private goods and decreasing returns the equal income competitive equilibrium tends to favor the eccentric preferences whereas most egalitarian equivalent solutions tend to reward the agents who like particular resources the identification of the rewarding pattern of each mechanism sheds light on its ethical content and may help select the adequate solution in concrete applications in this analysis a preference monotonicity property turns out to be satisfied by many solutions

the neglect of society in the theory of the firm a systems theory perspective the prevailing theories of the firm acknowledge the importance of trust and loyalty but neglect such behaviour in the substance of their analyses the present paper unravels this paradox by drawing on niklas luhmann s ground breaking insight that the complexity reducing function of social systems leads them to neglect their critical environmental dependencies thereby compromising their own sustainability if the firm is conceived as a social system luhmann s theory implies that the neglect of social behaviour by the predominant theories of the firm can be explained as reflecting the neglect of society by actual firms this argument promises to not only furnish the theory of the firm with a concern for sustainability but also render it more amenable to unconventional institutions such as cooperatives and non profit organisations that help compensate for the damage inflicted by conventional firms on the social environment

individual rationality and voting in cooperative production abstract suppose that a group of individuals owns collectively a technology which produces a consumption good from an input a sharing rule associates input contributions with a vector of consumption we consider sharing rules that are a convex combination of the proportional the equal share and the equal benefit rules we characterize the subset of sharing rules that satisfy pareto efficiency and individual rationality we also study the outcome of majority voting on this subselection of sharing rules

on the endogenous determination of the degree of meritocracy in large cooperatives abstract we consider a cooperative formed by a large number of workers differentiated by their initial endowment of wealth which is both primary input labor and consumption leisure the cooperative is characterized by its wealth distribution and produces a consumption good from labor which allocates among workers according to a convex combination of the proportional and the egalitarian rule in the first stage workers decide this combination by simple majority in a second stage they choose how much labor to provide to the cooperative we find that when in the cooperative s wealth distribution the median wealth is lower higher than the average the degree of meritocracy chosen by workers is lower higher than that of the optimum and coincides with it when both statistics coincide this choice has similar consequences on the cooperative s labor output since it increases with respect to the degree of meritocracy

toward a theory of induced institutional innovation in this paper we elaborate a theory of institutional innovation in which changes in the demand for institutional innovation are induced by changes in relative resource endowments and by technical change we illustrate from agricultural history how changes in resource endowments and technical change have induced changes in private property rights and in the development of non market institutions we also consider the impact of advances in social science knowledge and of cultural endowments on the supply of institutional change in a final section we present the elements of a model of institutional innovation that maps the relationships among resource endowments cultural endowments technology and institutions

kantian optimization a microfoundation for cooperation abstract although evidence accrues in biology anthropology and experimental economics that homo sapiens is a cooperative species the reigning assumption in economic theory is that individuals optimize in an autarkic manner as in nash and walrasian equilibrium i here postulate a cooperative kind of optimizing behavior called kantian it is shown that in simple economic models when there are negative externalities such as congestion effects from use of a commonly owned resource or positive externalities such as a social ethos reflected in individuals preferences kantian equilibria dominate the nash walras equilibria in terms of efficiency while economists schooled in nash equilibrium may view the kantian behavior as utopian there is some perhaps much evidence that it exists if cultures evolve through group selection the hypothesis that kantian behavior is more prevalent than we may think is supported by the efficiency results here demonstrated

some properties of egalitarian economies abstract it is argued that in strictly egalitarian economies there is an equilibrium in which social well being is maximized and that this is so whatever the nature of returns to scale and whether or not the economy is characterized by elements of monopoly externalities of consumption or production commodity taxes or subsidies or the private provision of public goods as a corollary the implications of distortions and increasing returns can be effectively studied only in a context of inequality

class and exploitation in general convex cone economies abstract in this paper we examine what appropriate formulations for labor exploitation are in order to explain the emergence of class and exploitation status in capitalist economies given the well known controversy pertaining to plausible formulations for labor exploitation in joint production economies we propose an axiom axiom for labor exploitation le which every appropriate formulation of labor exploitation should satisfy using this axiom the necessary and sufficient condition for plausible formulations of labor exploitation is characterized to verify class exploitation correspondence principle cecp roemer 1982 according to this cecp no longer holds in general convex cone economies if the well known formulations of labor exploitation such as morishima 1974 and roemer 1982 chapter 5 are applied therefore we propose two new definitions of labor exploitation each of which verifies cecp

china s economic system reform underlying factors and prospects abstract three important determinants of economic growth in the chinese context are the motivation of economic units the absorption of foreign technology and its diffusion and agricultural productivity the stalin model of the 1950s served china well especially when sustained by chinese sub models such as ties of trust with rural brigades workers innovation etc after that investment effectiveness declined and today the structural changes necessary point to the need to alter existing institutions which have become obsolete in agriculture the use of cash inputs is more common now and a sense of economic efficiency is increasingly required care should be taken in comparing china with east european countries given that china s per capita gross domestic product is much lower as is the percentage of agricultural output reaching the market the comprehensiveness of the economic reform likely in china means that it will only be possible to judge it over a time horizon longer than five years for such economic reforms to be wholly successful they need to continue to incorporate chinese sub models mentioned in the paper and must develop a network of supplying industries and inter dependent factories

institutional innovation and agricultural development abstract this paper elaborates a theory of institutional innovation in which shifts in the demand for institutional change are induced by changes in relative resource endowments and by technical change the supply of institutional innovations responds to advances in social science knowledge and changes in cultural endowments case studies drawing on 1 innovations in land tenure and labor relations in the philippines 2 export promotion and import substitution of agricultural commodities in east asia and 3 farm commodity policy in the united states are presented elements of a general institutional innovation model are outlined

elasticities in aids models in the literature a variety of approaches have been used to calculate demand elasticities in almost ideal demand system aids models of demand it is common to estimate the linear approximate almost ideal demand system la aids instead of the aids when the la aids is estimated all of the previously reported approaches to compute elasticities are theoretically incorrect this paper presents correct formulas for la aids elasticities and illustrates the potential errors from using incorrect computing the almost ideal demand system aids of deaton and muellbauer 1980a b has become popular in recent years anderson and blundell blanciforti and green 1983a b blanciforti green and king chalfant eales and unnevehr fujii khaled and mak fulponi heien and willett murray parsons ray a variety of approaches to computing elasticities has been used and some of the approaches may lead to significant errors this paper clarifies the differences between alternative approaches to estimating demand elasticities in aids models

managerialism revisited in the light of bargaining game theory abstract this lecture proposes to view the modern firm as a coalition of shareholders employees and business partners rather than to identify it with a single maximizer such as an entrepreneur this view may be thought of as a revival of the original thought of managerialism but tries to go further by analyzing implications of the interactions of those agents on the behavior of the firm in a bargaining game theoretic framework the lecture reviews the literature on game theoretic approaches to the theory of the firm and discusses a few important theoretical and institutional issues

heterogeneous labour and the fundamental marxian theorem as was pointed out by morishima at the end of his famous book on marx s economics the heterogeneity of labour is a serious dilemma for marx s theory of exploitation especially for the so called fundamental marxian theorem the problem which should be separated from the peculiarities of joint production consists in finding an appropriate reduction of the various types of labour to one common unit recently bowles and gintis have undertaken an interesting reformulation of the marxian theory of value with respect to heterogeneous labour by avoiding any reduction at all bowles and gintis 1977 1978 cf also steedman 1977 holliinder 1978 but for the purpose of the fundamental marxian theorem this only shifts the problem from the heterogeneity of labour to the heterogeneity of the respective rates of exploitation the aim of the present paper is to extend the fundamental marxian theorem without joint production from homogeneous to heterogeneous labour section 3 this extension is based on a new concept called the standard reduction of labour because of its dual relationship to sraffa s standard commodity section 2 for some arguments a certain type of matrices called sraffa matrices is needed which generalize the quasiirreducible matrices as introduced by bowles and gintis appendix standard reduction implies always a uniform rate of exploitation whereas the same is true for the reduction by wage rates only in special cases for example uniform consumption labour inputs only prices proportional to labour values for the first two cases cf morishima 1978 hence in general standard reduction and reduction by wage rates are different

a ricardian model of the tragedy of the commons abstract this paper revisits the tragedy of the commons when agents have different capabilities in both production and encroachment activities and can allocate their time between them under fairly general assumptions on production and encroachment technologies an individual s expected income is convex with respect to his actions so that individuals specialize consequently in equilibrium the economy is divided into at most two homogenous groups encroachers and producers the partition obeys a relative advantage criterion several equilibria may exist the tragedy of the commons equilibrium without production always does the pareto optimal allocation of activities may not be an equilibrium we show that minute changes in property right enforcement may lead to drastic improvements for society we argue that in convex games such as this paper s role choice game bounded rationality is a natural assumption and the concept of local nash equilibrium is the natural analytical tool to handle it

a progress report on marxian economic theory on the controversies in exploitation theory since okishio 1963 this report explores the development of exploitation theory in mathematical marxian economics by reviewing the main controversies surrounding the proper definition of exploitation since the contribution of okishio the report first examines the debates on the fundamental marxian theorem and class exploitation correspondence principle developed mainly in the 1970s and 1980s followed by the property relation theory of exploitation by roemer then the more recent exploitation theory proposed by vrousalis and wright is introduced finally the report introduces and comments on recent axiomatic studies of exploitation by focusing on the work of veneziani and yoshihara

downward nominal and real wage rigidity survey evidence from european firms it has been well established that the wages of individual workers react little especially downwards to shocks that hit their employer this paper presents new evidence from a unique survey of firms across europe on the prevalence of downward wage rigidity in both real and nominal terms the authors analyse which firm level and institutional factors are associated with wage rigidity the results indicate that it is related to workforce composition at the establishment level in a manner that is consistent with related theoretical models e g efficiency wage theory insider outsider theory the analysis also finds that wage rigidity depends on the labour market institutional environment collective bargaining coverage is positively related with downward real wage rigidity measured on the basis of wage indexation downward nominal wage rigidity is positively associated with the extent of permanent contracts and this effect is stronger in countries with stricter employment protection regulations

a proposal to unify some concepts in the theory of fairness so far the theory of distributive justice has tried to single out a unique criterion of justice in our opinion we live in a world in which different people hold conflicting ideas about justice we propose a procedure for representing these individual opinions by means of what we call aspiration functions and we present in this paper three different ways of aggregating such opposing opinions into a socially acceptable judgement furthermore we show that many well known concepts are special cases of our approach we study under a restriction on the form of the aspiration functions the conditions that are necessary and sufficient for a social choice correspondence to be generated from any of our concepts

the dynamics of inequalities and unequal exchange of labor in intertemporal linear economies abstract introducing a concept of fairness of economic allocations namely exploitation as the unequal exchange of labor henceforth ue exploitation by generalizing roemer s 1981 1982a seminal models this paper aims to answer the following two questions in the context of an intertemporal economy with linear technology how is income and wealth inequality related or unrelated to the existence and persistence of ue exploitation what are the mechanisms driving the persistent existence of ue exploitation in growing economies agents are ue exploited resp exploiters if the amount of labor that they contribute to the economy is bigger resp smaller than the amount of labor received by them via their income it is proved first that ue exploitation is monotonically correlated to functional income inequality second it is shown that unless agents discount the future asset inequalities are necessary but not sufficient for the persistence of ue exploitation and capital accumulation leading to the disappearance of ue exploitation cannot be ruled out in equilibrium third it is shown that regardless of whether agents discount the future labor saving technical progress may yield sustained growth with persistent ue exploitation by keeping labor abundant relative to capital which restrains wages from rising unlike in models with differentiable production functions this mechanism does not rely on changes in the marginal productivity of inputs and it is entirely driven by the interaction between innovation and labor markets