multiproduct short run hospital cost functions empirical evidence and policy implications from cross section data economists and policymakers have been interested in hospital costs and the structure of hospital technologies for several decades now early interest was focused on the possibility of scale economies which implied increased efficiency for larger hospitals 6 8 12 13 18 20 while more recent interest has been stimulated by the inflationary spiral of hospital costs 1 15 17 22 as hospital costs have risen important policy questions concerning the impact on costs of the hospitals diagnostic case mix the hospitals admitting physicians the hospitals size and the hospitals efficiency have emerged and researchers have attempted to deal with these issues within the context of increasingly complex econometric models 1 2 5 24 27 however in attempting to analyze these important policy issues researchers have been forced to make two major types of compromises on the one hand appropriate data are often not available for estimating a well specified cost function e g information on admitting physicians and diagnostic case mix are often missing so that problems of specification error often plague the econometric results conversely in using imaginative ways to deal with data problems e g weighting in patient and out patient care to form a single index of hospital services 1 27 or estimating separate cost functions for each department in the hospital 2 researchers sometimes place unrealistic and unnecessary constraints on their econometric models the purpose of this study is to analyze the impact of several of the primary hospital characteristics mentioned above on the short run costs of hospitals within a theoretically consistent framework in the following discussion we also develop the theoretical

import penetration and the politics of trade protection abstract in this paper we reconsider a key empirical prediction generated by an important class of political economy models of trade policy namely that trade protection should be higher in sectors characterized by lower import penetration we call this the standard prediction the existing empirical evidence offers little support for this prediction in this paper we argue that the standard prediction depends critically on the assumptions that trade taxes are the only policy instruments and that the government has access to non distortionary taxation we analyze a model in which the government can use quotas and vers in addition to trade taxes and raising public funds may be costly under a simple sufficient condition our model predicts that the protection level increases with import penetration both in sectors that are protected with tariffs and in sectors that are protected with quantitative restrictions

is protection for sale evidence on the grossman helpman theory of endogenous protection grossman and helpman 1994 present a theory of endogenous protection by explicitly modeling government industry interactions for which mere black box models previously existed they obtain a ramsey pricing type solution to the provision of protection which emphasizes the role of inverse import penetration ratios and import elasticities on the lobbying side the model makes predictions about lobbying competition and lobbying spending according to deadweight costs from protection the model not only makes for richer theory in terms of rigor and elegance but its predictions are directly testable whether the grossman helman model stands up to real world data is investigated in this paper predictions from both the protection side and lobbying side are tested using cross sectional u s nontariff barrier data we also compare the second generation grossman helpman model with a more traditional specification our results call for serious consideration of this model in the political economy literature

the determinants of equilibrium unemployment in britain a lot of energy is currently being expended in trying to understand what has been happening to unemployment in britain and the rest of the developed world in this paper we look at this question in the british context by trying to confront some possible explanations with the data since the data we use are quarterly over rather a short period we are setting the explanations a very hard test most explanations tend to be rather casual and the theories underpinning them ill developed thus for example the so called real wage argument is based on the idea that real wages affect labour demand and that the equilibrium real wage bears some relatively stable relationship to output per head but how stable is not clear thus whether or not we can expect a well defined stable ceteris paribus dynamic relationship between real product wages as a proportion of output per head and unemployment is equally unclear so if such a relationship does not show up in a quarterly regression model this may not be that serious for the theory nevertheless we must look for the relationship for how else are we ever to discriminate between a plethora of conflicting views the primary emphasis in this paper is on the secular factors affecting unemployment rather than the cyclical variables consequently we shall not be concerned with developing a coherent theory of cyclical fluctuations and in the empirical work we shall control for the cycle simply by making use of those exogenous or predetermined variables which other work in this field suggests are important 2 the remainder of the paper is set out as follows the next section is concerned with specifying a model which generates a definition of equilibrium unemployment the outline of this model is a pair of equations determining the flows into and out of unemployment and these are specified in section ii which looks closely at the possible variables involved section iii then deals with the results and presents some general conclusions

the political economy of international factor mobility we model the endogenous determination of policy towards international factor mobility in a common agency setting domestic interest groups bid for protection from the government and the incumbent politicians maximize a welfare function that depends both on domestic voters welfare and contributions collected we characterize equilibrium policies in the price space and show how the degree of complementarity among inputs determines the outcome we establish a similar result for quotas allowing for partial rent capturing for the strategic environment under consideration we also establish a general equivalence result between tariffs and quotas if capturing is complete d 2004 elsevier b v all rights reserved

hospital ownership and performance this study compares the performance of three ownership forms of hospitals for profit private nonprofit and public further classified according to whether or not the hospital is run by a hospital chain data come from a 1979 national survey of u s hospitals the authors find that hospital cost is quite similar among alternative ownership forms as is profitability the results do not provide much empirical support for standard property rights theory several reasons are suggested why this may be so

analysis of productivity efficiency and technological changes in hospital services in ontario how does case mix matter abstract in this paper we compare productivity efficiency and technological changes with and without case mix as output categories using panel data on ontario hospitals for the period 2002 2006 we use the malmquist productivity index mpi data envelopment analysis dea and non parametric density estimation and related statistical tests we also decompose mpi into efficiency change ech and technological change tch we found that productivity efficiency and technological changes were significantly different between two alternative models with case mix as a weighting device model 2 and without case mix model 1 on the other hand adding case mix as a separate output model 3 did not have any significant impact on the distribution of efficiency estimates compared to the model without case mix we also found that in model 2 productivity growth was driven mainly by improvements in technology rather than increases in efficiency while in model 1 and model 3 the two effects ech and tch almost balanced each other leading to no productivity change

academic earmarks and the returns to lobbying abstract in this paper we estimate the returns to lobbying by universities to motivate our empirical work we develop a simple theoretical model of university lobbying for academic earmarks our statistical analysis shows that universities represented by a house appropriations committee hac or senate appropriations committee sac member spend less money on lobbying than those that are not represented in addition using instrumental variables estimations we show that universities without hac or sac representation may receive some benefit to lobbying for earmarks although in many estimations this benefit is not statistically different from zero however for universities with hac or sac representation a 10 percent increase in lobbying yields an additional 2 8 percent or 3 5 percent increase in earmarks respectively this suggests that there are large returns to lobbying for academic earmarks if a university is represented by a member of one the hac or sac but little or no return if not

protection for sale the case of oligopolistic competition and interdependent sectors in grossman helpman s 1994 canonical protection for sale pfs model political competition among industry lobbies is driven purely by their interests as consumers this paper introduces demand linkages and oligopolistic competition into the pfs framework to address the rivalry among lobbies stemming from product substitutability it shows that increased substitutability weakens the interest groups incentives to lobby and reduces tariff distortions this may explain why empirical tests of pfs find surprisingly little impact of lobbies on the government s trade policy decision the paper also analyzes endogenous lobby formation suggesting that demand linkages may adversely affect the industry decision to organize resume proteger les ventes le cas de la concurrence oligopolistique et des secteurs interdependants dans le modele canonique de grossman helpman 1994 protection for sale pfs la concurrence politique entre lobbyistes est purement alimentee par leurs interets en tant que consommateurs ce texte presente dans ce cadre d analyse les enchainements de la demande et la concurrence oligopolistique pour prendre en compte la rivalite entre lobbyistes qui derive de la substituabilite des produits on montre qu une substituabilite accrue reduit l incitation des groupes d interets a faire du lobbying et reduit les distorsions tarifaires cela peut expliquer pourquoi les tests empiriques du modele pfs ont decouvert un impact etonnamment faible des lobbies sur les decisions des gouvernements dans le monde des politiques commerciales le texte analyse aussi la formation endogene des lobbies suggerant que les enchainements de la demande peuvent affecter negativement la decision de s organiser

preferential versus multilateral trade liberalization and the role of political economy abstract in this paper we analyze the effect of the freedom to pursue preferential trade liberalization permitted by article xxiv of the gatt on country s incentives to participate in multilateral negotiations and on feasibility of global free trade we present a model in which countries choose whether to participate in preferential or multilateral trade agreements under political pressures from domestic special interest groups we show that heterogeneity in political preferences across countries plays an important role in determining the relative merits of preferential and multilateral approaches to trade liberalization on one hand the opportunity to liberalize preferentially may be necessary to induce countries with strong political motivations to participate in multilateral free trade negotiations on the other hand when countries share similar political preferences multilateral free trade that would have been politically supported otherwise becomes unattainable if countries can pursue preferential liberalization

the efficiency of nursing home chains data envelopment analysis is used to estimate technical efficiency in for profit independent and for profit chain nursing homes the empirical findings suggestceteris paribus that significant mult

do interest groups affect us immigration policy while anecdotal evidence suggests that interest groups play a key role in shaping immigration policy there is no systematic empirical analysis of this issue in this paper we construct an industry level dataset for the united states by combining information on the number of temporary work visas with data on lobbying activity associated with immigration we find robust evidence that both pro and anti immigration interest groups play a statistically significant and economically relevant role in shaping migration policy across sectors barriers to migration are lower in sectors in which business interest groups incur larger lobbying expenditures and higher in sectors where labor unions are more important

union membership in the united states 1973 1981 this paper reports estimates of union membership gathered from may current population surveys from 1973 to 1981 the authors present data by occupation industry selected states and smsas race gender and educational attainment the paper both extends and differs from that by freeman and medoff which presents unionism estimates for the private sector for 1968 75 to facilitate longitudinal analysis this paper reports three year moving averages of occupational and industry data and annual estimates of demographic classifications the data include public sector as well as private sector workers and they exclude workers not covered by the national labor relations act also the authors provide only union membership estimates not estimates on workers covered by union contracts this paper suggests that the percentage of all workers that are unionized in the united states remained fairly constant over the 1973 81 period

lobbying and international cooperation in tariff setting abstract this paper develops a theory of tariff protection that incorporates cooperative behavior and lobbying governments use import tariffs or subsidies to maximize a weighted sum of lobbying contributions and general welfare governments do not use export taxes or subsidies and thus balance the interests of export and import competing lobbies in setting tariff levels in a symmetric model cooperation between governments is sustained by threats of punishment in future periods unless governments place too much weight on the future the result is a cooperative tariff otherwise the result is a reciprocal import subsidy

the role of importers and exporters in the determination of the u s tariff preferences granted to latin america abstract this paper investigates the role played by domestic importers and foreign exporters in improving preferential access to the domestic market to this end the framework used in this paper extends the protection for sale analysis to explicitly model the role of domestic importers and foreign exporters in the determination of preferential trade treatment the predictions of the model are tested using data on preferential trade between the united states and latin american countries the results suggest that latin american exporters and us importers lobbying efforts have a significant and important role in determining the extent of preferential access granted by the united states more interestingly these findings also show that u s importers capture a very substantial share of the rents generated by tariff preferences these results therefore shed a pessimistic view on preferential trade schemes as a reliable source of gains for developing countries

structural unempolyment in australia this paper examines whether structural unemployment increased in australia over the last two decades a simple regression model has been considered for testing the hypothesis of increase in unemployment of several segment of the labour force over time six dimensions of the labour force namely age sex region duration of unemployment occupation and industry have been taken into account analysis of the regression results reveals that the structural unemployment problem is substantial with respect to age sex duration of unemployment occupation and industry regarding region the evidence for structural symptom is not very strong

competition for foreign direct investments abstract this paper models international competition for foreign direct investment as a common agency problem using the theory of menu auctions developed by bernheim and whinston in the model national governments act as principals and a multinational corporation as the single agent governments are assumed to maximize the net wage income generated by the corporation s investment it is shown that in the equilibrium of this game a high wage country may be able to attract investment even though all countries use subsidies furthermore it is shown that a country may choose to pay the highest subsidies even if it attracts less investment than in the unsubsidized regime our framework can also be used to study interregional subsidy competition within a country

us non tariff barriers as privately provided public goods abstract the endogenous theory of protection is empirically investigated in a different light rather than emphasizing the determinants of the supply of protection the present study emperically investigates the micro level demand side behavior of firms predictions from bergstrom et al journal of public economics 1986 2 25 49 about the private provision of public goods provide a theoretical foundation for such a demand side econometric investigation if rational lobbies are observed to behave in a manner consistent with the theory of the private provision of public goods then it must be the case that they are able to influence trade policy the econometric specification is also consistent with the special interest models of olson the logic of collective action public goods and the theory of groups harvard university press 1965 stigler bell journal of economics and management science 1971 2 137 146 baron quarterly journal of economics 1989 1 45 72 and grossman and helpman american economic review 1994 84 833 850 hence evidence presented in this study from the demand side behavior of firms has the deeper implication that it validates the theory of endogenous protection an issue that is still controversial among trade theorists

trade wars and trade talks when governments meet in the international arena their actions reflect the political situations at home previous studies of trade relations have focused on governments that are immune from political pressures and that act as benevolent servants of the public interest here we introduce domestic politics into the analysis of international economic relations we study the interactions between national leaders who are concerned both with providing a high standard of living to the general electorate and collecting campaign contributions from special interest groups our analysis sheds light on the determinants of the structure of protection in non cooperative and cooperative policy equilibria

contestable markets an uprising in the theory of industry structure presents a transcript of the presidential address delivered at the 94th meeting of the american economic association on december 29 1981 discussion of developments in the theory of industry structure welfare attributes of contestable markets behavior characteristics of oligopoly equilibrium intertemporal vulnerability to inefficient entry ebsco

politicians decision making with re election concerns abstract we study the impact of elected officials re election concerns on their decisions on whether to undertake new projects the value of a project to a jurisdiction depends in part on its elected official s uncertain ability at providing some public goods our main result is that the elected official s willingness to pay for the project differs from voters willingness to pay if the incumbent official expects to lose win the election then she is willing to pay more less than the project s total value to voters we show how our analysis can be applied to bidding wars among jurisdictions for firms

factor movements and commodity trade as complements abstract several models are presented in which factor mobility leads to an increase in the volume of world trade the models share the common characteristic that the basis for trade is something other than differences in relative factor endowments these alternative bases for trade include returns to scale imperfect competition production and factor taxes and differences in production technology taken together the models suggest a more general idea the widely held notion that trade in goods and factors are substitutes is in fact a rather special result which is a general characteristic only of factor proportions models

the economics of special interest politics the case of the tariff this paper investigates the interaction of politicians and special interest lobbies the goal is to model the equilibrium levels of redistributive policies such as taxes subsidies tariffs and regulatory decisions the model is applied throughout to the setting of tariffs by contributing to political campaigns special interest lobbies generate economic returns higher tariffs generate revenue for import competing industries through higher product prices higher milk support prices raise dairy farm income and so forth the lobby invests to maximize these net economic returns in evaluating their chances of election politicians weigh the favorable effects of special interest money against the unfavorable association with the lobby and the social cost of the redistributive policy section i explores the lobby s problem it describes a formalization of mancur olson s discussion of the voluntary provision of public goods and optimal contributions by lobbies to political campaigns section ii describes determination of the equilibrium tariff positions of each politician in a political campaign

substitutability and protectionism latin america s trade policy and imports from china and india this article examines the trade policy response of latin american governments to the rapid growth of chinese and indian exports in world markets to explain more protection in sectors where a large share of imports originates in china and india the protection for sale model is extended to allow for region specific degrees of substitutability between domestic and imported varieties of a good the results suggest that more protection toward chinese and indian goods can be explained by the higher substitutability of chinese and indian goods with domestic varieties the data support the model which performs better than the original protection for sale framework in explaining latin america s structure of protection

the sufficiency of the lens condition for factor price equalization in the case of two factors factor price equalization fpe is a central theme in trade theory for which dixit a k norman v 1980 theory of international trade cambridge university press london establish the necessary and sufficient condition the dixit norman condition deardorff a v 1994 the possibility of factor price equalization revisited journal of international economics 36 167 175 provides a more intuitive condition the lens condition and establishes its necessity in general as well as its sufficiency for the case of two countries in this paper i prove that the lens condition is sufficient for fpe in the case of two factors this theorem has implications for empirical work 2001 elsevier science b v all rights reserved

on the political economy of immigration the authors study how immigration policies that impose capital and skill requirements would be determined under majority voting when native agents differ in their wealth holdings and vote to maximize their income the results of the model calculations indicate that the native population will be polarized between those who would like an immigration policy to maximize the domestic capital labor ratio and those who would like an immigration policy that would minimize it

migration and pension with international capital mobility abstract being relatively low earners migrants are net beneficiaries of the welfare state therefore in a static set up migration may be resisted by the entire native born population however it is shown that in a dynamic set up with a pension system which is an important pillar of any welfare state migration is beneficial to all income high and low and all age old and young groups

who is against a common market this paper develops a theory of the endogenous formation of a common market in a three country two factor political economy model in the status quo home and foreign implement nondiscriminatory policies toward international factor flows in order to maximize the domestic median voter s welfare then the two countries simultaneously hold referenda on a common market initiative leading to the removal of the pre existing policies for factor flows between the member countries while no coordination is imposed on policies vis a vis the rest of the world several interesting results emerge in a common market the returns on factors moving between the members are more likely to increase the larger is the import demand of one country relative to the factor supply of the exporting partner factors that do not relocate are more likely to see their returns decrease when flows are large and import demands are inelastic importantly for the common market to emerge as an equilibrium some factors must continue to experience enhanced protection when the integration process is completed this result highlights the potential tension between social desirability and the political feasibility of the integration process jel f1 f2 p16

endogenous lobby formation and endogenous protection a long run model of trade policy determination this paper provides a theory of lobby formation within a framework in which trade policy is determined through political contributions under certain conditions free trade turns out to be an equilibrium outcome either when the government has a high affinity for political contributions or when it cares a great deal about social welfare moreover greater inequality in asset distribution results in a greater number of lobbies and in most cases more protection for each of these lobbies furthermore industries with higher levels of capital stock fewer capitalists more inelastic demand and smaller geographical dispersion are the ones that get organized

the political economy of international trade and factor mobility abstract free trade in goods and factors is efficient when we move away from economic theory and consider the policies actually followed by governments we observe distortions being implemented both on goods and factors trades it is natural then to question the relative merits of the two types of intervention and the normative literature has provided only partial answers we ask then why is the international flow of goods and factors not free and the political economy literature has looked at the two issues only separately in studying the determination of trade policy a theoretical paradigm has emerged focusing on the role of influence driven contributions this approach has also found strong empirical support the literature on the political economy of factor mobility on the other hand is fragmented distortions in labor and capital flows are typically the subject of different studies and only recently a unified framework has been proposed more work has to be done in this area as well as in integrating the political economy of trade and factor movements

do countries free ride on mfn abstract the most favored nation mfn clause has long been suspected of creating a free rider problem in multilateral trade negotiations to address this issue we model multilateral negotiations as a mechanism design problem with voluntary participation we show that an optimal mechanism induces only the largest exporters to participate in negotiations over any product thus providing a rationalization for the principal supplier rule we also show that through this channel equilibrium tariffs vary according to the herfindahl hirschman index of export shares higher concentration in a sector reduces free riding and thus causes a lower tariff estimation of our model using sector level tariff data for the u s provides strong support for this relationship

wages policy and unemployment in australia it is generally accepted among australian economists that high rates of growth of wages at various times over the last decade have made the achievement of full employment and lower rates of inflation more difficult fear of a further acceleration of wage growth has also been a policy constraint it is when one attempts to go further that considerable disagreement becomes evident from a labour market viewpoint there does not seem to be a consensus as to the answers to the two broad questions that should be addressed first how important are wage changes relative to other factors that depress employment and add to the inflation rate second how does government policy impinge on the process that generates wage changes to do justice to both of these in a paper as short as this one is difficult so i shall focus most of the paper on the second question the relationships between government policy and wage changes are particularly important at this time for most of the last decade successive governments have operated a national wages policy which to a large degree has been based on the indexation of wages for past price changes the latest experiment the prices and incomes accord is the centrepiece of the current government s employment and inflation policy and after almost two years of wide community and media support the key principles upon which it is based are suddenly being questioned 1 our prime endeavour therefore will be to build up sufficient understanding of the wage determination process so that some evaluation can be made as to the effectiveness of these national wage policies this turns out to be a remarkably difficult task which generates considerable concern in our mind that the data may not be sufficiently rich to serve as a basis for sound judgments it does appear however that the effect of a given level of unemployment upon wage changes has consistently weakened over the last decade why this should be so is a major unresolved puzzle i offer a loosely constructed theory that is consistent with the facts but it is by no means the only possible explanation section i provides a description of wage setting in australia and some key facts of the economy in section ii the statistical analysis of wage changes focuses on two competing theories one is the phillips curve approach and the other stresses that wage outcomes may be to a significant degree independent of the level of unemployment and may depend instead on utilization rates of labour within the firm section iii considers the efficacy of incomes policies in australia some final comments areoffered in section iv

an empirical study of long term unemployment in australia this paper has two parts the first part concentrates on modeling transitions out of unemployment using aggregated gross flow data models are estimated using monthly transition probabilities for march april 1984 this analysis produces evidence consistent with negative duration dependence but sheds no light on the role of macroeconomic factors the second part focuses on this issue a time series analysis of the proportion of long term unemployment using data for four age and sex groups provides evidence that a proportionately greater increase in long term unemployment in australia in the 1970s has been associated with reduction in job availability and the effect of certain supply shocks

protectionism versus risk in screening for invasive species abstract i examine the extent to which enforcement of a biosecurity import restriction us border inspections for foreign pests and diseases is used as a protectionist trade barrier the parameters of a structural model of border inspection are estimated using a detailed dataset documenting the outcome of us agricultural border inspections i find that inspections are conducted in a manner that places an implied welfare weight on domestic producers relative to consumers ranging from 1 to 1 63 i also find evidence that the inspection agency takes terms of trade into account when inspecting agricultural imports these results suggest that border inspections are used as a protectionist non tariff barrier

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item