efficiency considerations and the exemption of food from sales and value added taxes we evaluate efficiency considerations underlying the widespread exemption of food from sales and value added taxes and the implications for tax policy household and restau rant meals and both constant and increasing returns cases are examined higher taxes on food offset the non taxation of time inputs into household production even under constant returns to scale with increasing returns gains from taxing food are higher and amplified by subsidizing restaurant food and all marginal cost components of restaurant meals on effi ciency grounds exemption of food from sales and value added taxes emerges as socially costly policy especially under increasing returns

complexity and path dependence in biotechnology innovation systems in commercial applications of biotechnology there is no international convergence on many critical dimensions the united states is pulling ahead vis a vis most other developed or emerging countries in spite of the efforts made by the potential catching up nations the article argues that the explanation lies in the institutional fabric that fosters commercial biotechnology this institutional structure is too complex and costly it exists mainly in the united states and the followers either do not understand it or are trapped with more inefficient institutions the paper builds on biotechnology in order to theorize about institutions and their evolution in sectoral innovation systems it also applies concepts and models from complex system theory copyright 2011 the author 2011 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

innovation and social probable knowledge in this paper some elements of keynes s theory of probability are used to under stand the process of diffusion of an innovation based on work done elsewhere it is argued that this process can be viewed as a process of dealing with the collective uncertainty about how to sort out a technological problem expanding the concepts of weight of argument and probable knowledge to deal with this kind of uncertainty we argue that the concepts of social weight of argument and social probable know ledge can be very helpful in understanding the process of diffusion of an innovation

the economic complexity of technology and innovation the nature of technology what it is and how it evolves brian w arthur free press new york ny 2009 v 247 pp us 27 00 hbk isbn 978 1 4165 4405 0 technology has been a problematic and

integration of spatial markets studies of spatial market integration draw their implications from a theory which assumes that there are no intraregional transport costs an alternative theory is offered based on the assumptions that buyers and sellers are spatially dispersed and intraregional transport costs are significant this implies that the market is a linked oligopoly or oligopsony and that market integration tests are tests of alternative oligopoly price formation processes for example collusive basing point pricing produces results typically assumed to imply efficiently integrated markets while competitive fob pricing does not the theoretical implications are illustrated with an analysis of hog prices in canada

the effects of taxation price control and government contracts in oligopoly and monopolistic competition abstract many government contracts with or policies towards oligopolistic sectors essentially involve private firms selling a given proportion or quantity of output to the government at a fixed price p r with the remainder being sold on the open market often this is combined with consumer rationing examples include cement and sugar in india and health housing and defence in many countries the paper investigates the effects of these schemes including sales and excise taxation on prices output and household welfare under oligopoly and monopolistic competition less government control reduced may raise prices and tax shifting can be above or below 100 percent

vintage technologies and skill constraints evidence from u s exports of new and used machines when countries import production machinery they must choose between new and used equipment this article looks at that choice in the presence of labor saving technical progress and complementarity between technologies and skills within the firm it develops a theoretical model of the market for used machines it then analyzes data on united states u s exports of metalworking machine tools by country of destination classifying machines according to their vintage and their technological characteristics the data show that the share of used equipment imported is higher if the importing country has a lower level of development as measured by income per capita econometric estimation of the determinants of this share shows that it also is higher the greater is the technological change embodied in the machine or the greater is the change in the skills required to run the machine efficiently these results indicate that technological factors and skill constraints may be as important as factor prices in determining the choice of technique in developing countries the policy recommendation emerging from this work avoid constraints on imports of used equipment is similar to that in the existing literature but the reasoning is different instead of emphasizing inappropriate capital labor ratios for low wage countries the results indicate that investment in advanced technologies is effective only if importing countries have the skills to use them

cross border shopping and the optimum commodity tax in a competitive and a monopoly market using a partial equilibrium model optimality rules for a commodity tax are derived for an economy that is exposed to cross border shopping in a competitive market the conventional inverse elasticity rule is shown to be valid with the qualification that it is the elasticity of domestic rather than total demand that matters with a foreign monopoly the inverse elasticity is modified by a tax shifting effect when the supplier is a multinational firm price repercussions abroad should be taken into account the implications for domestic taxation of the prices and taxes set abroad are also examined

academic research underlying industrial innovations there has been no systematic study of the characteristics of the universities and academic researchers that seem to have contributed most to industrial innovation nor do we know how such academic research has been funded this paper based on data obtained from sixty six firms in seven major manufacturing industries and from over two hundred academic researchers sheds new light on the sources characteristics and financing of academic research underlying industrial innovation the findings should be of interest to economists concerned with technological change and to policymakers attempting to increase the economic payoff from the nation s academic research copyright 1995 by mit press

the relationships between science technologies and their industrial exploitation an illustration through the myths and realities of the so called european paradox abstract this paper discusses first the properties of scientific and technological knowledge and the institutions supporting its generation and its economic applications the evidence supports the broad interpretation that we call the stanford yale sussex synthesis second such patterns yield important implications with respect to the so called european paradox i e the conjecture that eu countries play a leading global role in terms of top level scientific output but lag behind in the ability of converting this strength into wealth generating innovations some descriptive evidence shows that contrary to the paradox conjecture europe s weaknesses reside both in its system of scientific research and in a relatively weak industry the final part of the paper identifies a few normative implications much less emphasis should be put on various types of networking and much more on policy measures aimed at strengthening both frontier research and european corporate actors

job choice in academia the asymmetric international mobility of talented scientists is well documented yet there is little evidence about the reasons why scientists choose particular jobs building on an extended human capital model of science we unify a dispersed literature relevant for job choice to formulate hypotheses which we test in a unique international quasi experiment among more than 10 000 researchers we find that attractive jobs satisfy researchers taste for science and increase their expected scientific productivity responding to both intrinsic and extrinsic motivations in particular while salaries research funding and working with stimulating peers matter we provide unique estimates of the importance of organisational and institutional factors early stage researchers are willing to trade off a substantial amount of salary for early independence and tenure perspectives later stage researchers favour jobs which make it easy to take up new lines of research research only positions are considered as less attractive than jobs with a moderate amount of teaching our findings have important implications for the organisational design of research universities and the competitiveness of european science in light of the brain drain of highly talented scientists towards the u s

second best subsidies in monopolistic competition abstract in the spence dixit stiglitz model of monopolistic competition an output or input subsidy is welfare improving under competitive conjecture the significance of this result is that it holds even when the subsidy exacerbates the potential problem of excess product diversity

proprietary versus public domain licensing of software and research products abstract we study the production of knowledge when many researchers or inventors are involved in a setting where tensions can arise between individual public and private contributions we first show that without some kind of coordination production of the public knowledge good science or research software or database is sub optimal then we demonstrate that if lead researchers are able to establish a norm of contribution to the public good a better outcome can be achieved and we show that the general public license gpl used in the provision of open source software is one such mechanism our results are then applied to the specific setting where the knowledge being produced is software or a database that will be used by academic researchers and possibly by private firms using as an example a product familiar to economists econometric software we conclude by discussing some of the ways in which pricing can ameliorate the problem of providing these products to academic researchers

the evolution of the industrial organisation of the production of knowledge this work elaborates the notion of localised technological knowledge based upon the distinction between information competence and knowledge and analyses the emergence of the new knowledge industry the evolution of the organisation of knowledge production is analysed through four stylised modes scientific entrepreneurship institutional variety vertical integration and technological cooperation the new trends towards the growth of knowledge intensive business service industries are detected and underlined they are considered as the outcome of the institutional formation of a market for knowledge based upon a process of increasing appropriability of localised knowledge based on the blending of generic scientific information and competence and growing scope of applicability via computercommunication systems deverticalisation of research activities from the boundaries of corporations the specification of a demand for technological competence and the specialising of independent firms in the production of technological competence and knowledge

public policies to support basic research what can the rest of the world learn from us theory and practice and what they should not learn the information based theoretical model for public support of basic research developed in the usa at the end of the 1950s has held up well in practice in spite of its neglect of training benefits of necessary investment in research infrastructure and of its consequently limited relevance outside the usa at the same time us practice in basic research has often been misinterpreted as being driven by short term usefulness whereas its key features are massive and pluralistic government funding high academic quality and the ability to invest in the long term development of new often multi disciplinary fields challenges for the future include greater and often ill judged pressures from governments for demonstrable usefulness of the basic research it supports the entirely separate development of direct links to application in bio medical and software fields and more complicated links between basic research and application resulting from the changes in the internationalisation of corporate r d effective policies will depend on better understanding of what makes universities responsive to investments in promising new fields of research and teaching how and why basic fields of great practical usefulness emerge and how basic research requirements are conditioned by a country s level and pattern of economic development bibliometric data could make a considerable contribution if it was more widely recognised that they have informational properties similar to the output of basic research and therefore deserve public support this paper was prepared for the celebration of richard nelson s 70th birthday held in nyc from 13 15 october 2000 comments welcome

sources procedures and microeconomic effects of innovation fabio arcangeli paul david frank engelman christopher freeman massimo moggi richard nelson luigi orsenigo nathan rosenberg michele salvati g n von tunzelman two anonymous referees and the participants at the meeting of the committee on distribution growth and technical progress of the italian national research council cnr rome november 16 1985 have helped with various redraftings a particularly grateful acknowledgment is for the insightful and patient help of moses abramovitz this work has been undertaken at the science policy research unit spru university of sussex as part of the research program of the designated research centre sponsored by the economic and social research council esrc earlier support to the research that led to this paper by the italian national research council cnr is also gratefully acknowledged the statistical research has been undertaken with the assistance of stephano brioschi ilaria fornari and giovannu prennushi

a patent system for both diffusion and exclusion public policy analysis of optimal patent regimes is often framed as a tradeoff between static and dynamic efficiency in this analytical framework weak patent protection and strict antitrust policy are taken to be directed toward static concerns while protection of intellectual property through strong patent laws is taken as a reflection of broader social concerns for long run growth and technological progress this characterization has some truth but the magnitude of the conflict between static and dynamic efficiency can easily be exaggerated in this article i want to argue that weak patent protection need not be inimical to economic growth and conversely that strong patent protection need not be an enemy of diffusion appropriately structured patent law and antitrust rules can together ensure incentives for r d and also induce cooperation among firms in diffusing r d results through licensing and other means at the same time cooperation among firms at the r d stage can counterbalance weak patent protection by internalizing spillovers from ongoing r d programs and such cooperation may also produce additional spillovers from the existing knowledge

a growing trend toward knowledge work in canada abstract this paper answers three questions related to the growing trend toward knowledge occupations in canada i what was the magnitude of the trend between 1971 and 1996 ii was the trend a widespread phenomenon or was it restricted to specific industries iii what are the proximate causes of the trends using five censuses 1971 1981 1986 1991 1996 and the input output i o data the paper provides evidence that the canadian economy is becoming increasingly knowledge based although the upgrading trends differ across knowledge occupations moreover we find that this phenomenon is spread across all industrial sectors finally using a decomposition analysis borrowed from wolff and baumol three factors the substitution effect the productivity lag effect and the demand effect have been examined in order to shed some light on these trends we find that these effects vary according to the nature of the knowledge involved in these different groups of occupations thus reflecting not only the importance of the technological change skill bias but also the increasing complexity of controlling and managing the new economic activities

rents and the cost and optimal design of commodity taxes this paper numerically investigates the significance of rents for both the welfare costs and the optimal design of commodity taxes using a general equilibrium model calibrated to 1986 canadian data in the data we use ricardian rents are concentrated in agriculture and utilities with market structure rents concentrated in manufacturing different types of rents have different implications for the welfare cost of taxes and hence also for appropriate tax design ricardian rents lower the cost of taxes rents supported by imperfect competition with no free entry raise the cost of taxes rents supported by regulation generate rent seeking costs and if taxed improve resource allocation model results show a markedly nonuniform optimal tax structure and a substantial influence of the treatment of rents on the pattern of optimal tax rates by commodity

the switching effect of environmental taxation within bertrand differentiated duopoly we investigate second best optimal taxation of the polluting variety of a product in a bertrand duopoly with differentiated varieties the analysis provides novel insight on a useful social function of environmental regulation besides internalizing the environmental externality the taxation of the polluting variety improves the matching of consumers and product varieties and so creates a socially desirable business switching between the differentiated varieties

understanding the emergence of open science institutions functionalist economics in historical context this essay exposes the limitations of the logical origins approach that has found favour among economists who seek to understand the workings of institutions in the past present it pursues a different approach applying functionalism in historical context to explain the emergence of the characteristic ethos and institutions of open science the emergence during the late sixteenth and early seventeenth centuries of the idea and practice of open science represented a break from the previously dominant ethos of secrecy in the pursuit of nature s secrets it was a distinctive and vital organizational aspect of the scientific revolution from which crystallized a new set of norms incentives and organizational structures that reinforced scientific researchers commitments to rapid disclosure of new knowledge to understand how this came about it is necessary to examine the economics of patronage and the roles of asymmetric information and reputation in the early modern reorganization of scientific activities the rise of cooperative rivalries in the revelation of new knowledge is seen as a functional response to heightened asymmetric information problems posed for the renaissance system of court patronage of the arts and sciences pre existing informational asymmetries had been exacerbated by increased importance of mathematics and the greater reliance upon sophisticated mathematical techniques in a variety of practical contexts of application analysis of the court patronage system of late renaissance europe within which the new natural philosophers found their support points to the significance of the feudal legacy of fragmented political authority in creating conditions of common agency contracting in substitutes these conditions are shown to have been conducive to more favorable contract terms especially with regard to autonomy and financial support for the agent client members of western europe s nascent scientific communities some lessons may be drawn for contemporary science and technology policy debates in which the open science mode of pursuing knowledge often seems to be viewed a robust concomitant of the power of scientific research techniques whereas it is a fragile cultural legacy of western europe s history upon which rests the ascendancy of modern science as a driver of long term economic growth copyright 2004 oxford university press

exploring the dynamics of water innovation foundations for water innovation studies the urgent need for innovation to address multifaceted and intertwined water related challenges is becoming increasingly clear acknowledged and responded to with cumulating sources and amounts of funding nevertheless the water sector has been claimed to be less innovative than other sectors this special volume on the dynamics of water innovation is based on the realization that in general there is a striking absence of academic studies on the dynamics of water innovation this sv is therefore designed to lay the foundations for the field of water innovation studies in an effort to integrate the emerging insights together the contributions in this sv capture the current understanding of the dynamics of water innovation and provide insights into how the water innovation process can be fostered the purpose of this introductory article is threefold namely to frame the discussion on water innovation dynamics in order to contextualise the contributions of this sv to provide systematic guidance for studying water innovation dynamics and to suggest the way forward for water innovation studies it captures the extent of the field of water innovation studies with a review of the literature of the last three decades and frames water innovations based on five decades of innovation research and drawing on three areas management strategy and policy we provide an innovation studies taxonomy that consists of four organising dimensions type of innovation stage of innovation level of analysis and measurement this taxonomy enables researchers to study the dynamics of water innovation from different combinations of conceptual and thematic angles drawing on the field of innovation studies in a systematic fashion finally we reflect on the way forward for water innovation studies with suggestions for future research 2017 the authors

optimal taxation and heterogeneous oligopoly this paper examines the effects of firm specific taxes on an oligopoly composed of firms of unequal sizes holding different conjectures operating with nonidentical costs four types of effects are analyzed on profits on industry concentration on total tax revenue and on social welfare the author derives 1 the revenue maximizing taxes 2 the welfare maximizing taxes and 3 welfare maximizing taxes subject to a revenue constraint

forecasting vector autoregressions with bayesian priors the paper explores the justification for and application of bayesian priors in forecasting a vector autoregression a nonsymmetric random walk prior outperforms three alternative time series representations in forecasting five series of the u s hog market

the architecture of economic systems hierarchies and polyarchies the authors present new ways of looking at economic organizations andsystems individuals judgments entail errors they sometimes reject good projects and accept bad projects the architecture of an economicsystem specifying how the decision making units are organized togetherwithin a system who gathers what information and who communicates what with whom affects its performance both because it influences thenature of errors that individuals make within the system and becauseit has a critical effect on the aggregation of individuals errors theperformance of two polar architectures decentralized polyarchical versus centralized hierarchical decision making authorities are analyzed and compared copyright 1986 by american economic association

evaluating the integration of contiguous discontinuous markets this paper applies the concepts of structural models of markets market integration and market discontinuity to show that discontinuous markets alter the integration characteristics of continuous markets when analyzing systems of contiguous markets some of which are discontinuous it appears that the continuous markets are less well integrated when the discontinuous markets are operating than when they are not operating

the economics of invention incentives patents prizes and research contracts though public intervention in the market for research is virtually universal economists have paid surprisingly little attention to the choice of the form of research incentive in a given market structure many studies concentrate on patents but any assumption of their superiority over other incentives has been founded on intuition rather than on formal analysis in this paper i analyze the choice between three of the most common alternative means of public intervention in the research market namely patents prizes and direct contracting for research services i show why and under what conditions any one of the three may be preferred by a social welfare maximizing administrator in a competitive economy using a model that for the first time pays explicit attention to differences in the informational roles of each of these alternatives in the extensive literature on the economics of patents see arnold plant 1934 fritz machlup 1958 charles taylor and z a silberston 1973 morton kamien and nancy schwartz 1975 and f m scherer 1977 for valuable surveys formal analysis weighs the benefits of patents as a solution to the market failure associated with the inappropriability of knowledge against the welfare cost due to the restriction on the use of the knowledge generated and this tradeoff is optimized by patent life adjustment in william nordhaus 1969 scant analytical attention is paid to alternative incentive mechanisms an exception is ben yu 1981 who considers the role of prior contracting for inventions but as many writers for example dan usher 1964 yoram barzel 1968 joseph stiglitz 1969 carole kitti 1973 glenn loury 1979 partha dasgupta and stiglitz 1980a have pointed out in various contexts the incentive offered by an unlimited patent to competitive researchers may be excessive due to the common pool problem discussed further in section i below if the patent administrator and researchers share the same information as implicitly assumed in previous models then the patent life limitation can be adjusted to provide the optimal patent incentive given the common pool problem but in all such models patents would not be chosen in a fully optimized fiscal system researchers and the administrator are assumed to have identical information about the shadow price of potential inventions a patent is just a means of turning this shadow price into a monetary reward but monetary compensation can instead be offered directly to researchers by the state assuming that patent revenues incur a higher deadweight loss than an equivalent amount of public funds financed by less distortionary means for example a minimally efficient tax system appropriate prizes or government contracts are socially preferable to patents with optimal lives if the patent is ever to be the optimal incentive mechanism for research it must possess advantages not captured in existing models informal discussions of patents emphasize their informational role to include the latter as a justification for decentralized invention incentives i incorporate an ex ante imbalance of information about costs and benefits of research in the model presented in section ii but this alone is not quite enough it is further necessary to specify that the terms of the award must be fixed before department of economics economic growth center box 1987 yale station yale university new haven ct 06520 i thank with the usual caveat marguerite alejandro wright cindy arfken martin baily nuong brennan steven englander robert evenson richard levin richard nelson susan rose ackerman denis wright and two referees for assistance of various kinds

vintage human capital growth and the diffusion of new technology we develop a model of vintage human capital in which each technology requires vintage specific skills we examine the properties of a stationary equilibrium for our economy the stationary equilibrium is characterized by an endogenous distribution of skilled workers across vintages the distribution is shown to be single peaked under general conditions there is a lag between the appearance of a technology and its peak usage a phenomenon known as diffusion an increase in the rate of exogenous technological change shifts the distribution of human capital to more recent vintages thereby increasing the diffusion rate

on the nature of technologies knowledge procedures artifacts and production inputs in the most general terms a technology can be seen as a human constructed means for achieving a particular end such as the movement of goods and people the transmission of information or the cure of a disease these means most often entail procedures regarding how to achieve the ends concerned particular bits of knowledge artifacts and of course specific physical inputs necessary to yield the desired outcomes in fact the procedures and the underlying knowledge they draw upon the physical and intangible inputs implicated and the performance characteristics of outputs are different but complementary aspects of what technology is these things are the object of this short essay copyright the author 2009 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

endogenous market structures and optimal taxation this article provides optimal labour and dividend income taxation in a general equilibrium model with oligopolistic competition and endogenous firms entry in the long run the optimal dividend income tax corrects for inefficient entry the dividend income tax depends on the form of competition and the nature of the sunk entry costs in particular it is higher in market structures characterised by competition in quantities rather than those characterised by price competition oligopolistic competition leads to an endogenous countercyclical price markup as a result offsetting the distortions over the business cycle requires deviations from full tax smoothing

tax design in the presence of imperfect competition an example abstract this paper studies the effects upon price output and entry in an oligopolistic market induced by tax policy elsewhere in the economy the results derived are applied to a model of copying to find conditions for which subsidisation of the manufacturers of originals is welfare improving the critical factor is found to be the distribution of consumers tastes

optimal two part tariffs for inputs the case of imperfect competition abstract traditionally the analysis of optimal two part tariffs has assumed that the regulated firm is selling directly to final consumers in this paper the authors take account of the fact that many of the utility s customers are firms which use the utility s output as an input in their own production process and then sell to final consumers the downstream firms are assumed to be imperfectly competitive and the optimal two part tariff is affected by the need to correct for the consequent divergence between price and marginal cost in the downstream industry

the dynamics of household beef consumption in cameroon abstract recent changes in economic conditions have introduced notable changes in household beef consumption patterns in cameroon while consumers are concerned about the short and long run effects of these factors on beef consumption habits policy makers are more worried about the appropriate period necessary for households to make complete adjustments in consumption since this information is vital for planning production static and dynamic demand frameworks involving the nerlovian partial adjustment pa model are used to capture the dynamic nature of beef consumption parameters maximum likelihood estimates of the pa model reveal that the conditioning variables explain 79 of the variation in beef consumption income previous consumption own price and prices of fish and pork are jointly important in explaining beef consumption habits beef is a normal good with pork and fish as substitutes and chicken as a complement long run price and income elasticities are greater than but not significantly different from their short run values suggesting that adjustment in consumption is fast with above 80 of the difference between actual and desired consumption being completed in about 2 years projections show that demand for beef will reach 109 620 t by the year 2000 giving an incremental total and per capita demand of 31 730 tons and 1 84 kg respectively

in defence of the linear model an essay this essay discusses the strength and weaknesses of the so called linear model lm of innovation it is a reaction to the habit of criticising it as over simplistic mechanistic or simply blatantly wrong we argue that while some criticisms are of course well grounded many others are instead based on loose interpretations and unwarranted assumptions in order to separate the wheat from the chaff this essay first presents a comprehensive description of the linear model and differentiates it from the caricature many refer to second we discuss the main criticisms put forward and argue that many of them are not at all destructive but can be easily accepted within a refined version of the lm third we discuss the policy implications often derived or said to derive from the lm to argue that the lm itself is distinctively policy neutral other assumptions have to be added to justify alternative policy implications

oligopolistic competition and economic welfare a general equilibrium analysis of entry regulation and tax subsidy schemes abstract two contributions to the general equilibrium analysis of an oligopolistic economy with free entry are intended first we generalize the excess entry theorem to the effect that a marginal decrease in the number of oligopolistic firms from the free entry equilibrium level improves economic welfare second we explore the pareto improving tax subsidy schemes in an oligopolistic economy several self financing and pareto improving tax subsidy schemes will be identified in contrast with the preceding analysis by atkinson and stiglitz which focused on the long run incidence of corporate taxation we analyse the short run as well as long run welfare implications of various policies under generalized conditions

on the sources and significance of interindustry differences in technological opportunities abstract the set of technological opportunities in a given industry is one of the fundamental determinants of technical advance in that line of business we examine the concept of technological opportunity and discuss three categories of sources of those opportunities advances in scientific understanding and technique technological advances originating in other industries and in other private and governmental institutions and feedbacks from an industry s own technological advances data from the yale survey on industrial research and development are used to measure the strength of various sources of technological opportunity and to discern interindustry differences in the importance of these sources we find that interindustry differences in the strength and sources of technological opportunities contribute importantly to explanations of cross industry variation in r d intensity and technological advance

is the commercialization of european academic r d weak a critical assessment of a dominant belief and associated policy responses there is a widespread belief that eu underperforms in the commercialization of publicly funded research and that the appropriate policy response is to transfer the ownership of intellectual property rights to universities this paper assesses the validity of these twin beliefs in addressing the first we limit ourselves to sweden which still retains its teacher s exemption model in spite of confident statements made in the literature and by government we provide evidence to the contrary i e that swedish academia performs well in terms of commercialization we also have doubts about the usefulness of the medicine prescribed to cure the alleged problem largely drawing on us literature we argue that the medicine risks harming strong university industry networks biasing technical change reducing entrepreneurial activity and generating costs to universities which may be detrimental to technology transfer in conclusion we seriously question the validity of both beliefs

causality tests in livestock markets bivariate time series models and related topics of exogeneity and granger causal orderings have received much attention from economists over the last decade examples in the macroeconomic literature include relationships between money and income sims 1972 feige and pearce money and interest rates pierce and wages and prices geweke 1975 in agricultural markets research in this area includes the sorting out of leads and lags between farm wholesale and retail prices heien miller acreage allotments and acreage supply response weaver and alternative price quotes for eggs bessler and schrader the methods used in these studies are empirical because they allow the data to specify the dynamic relationship between two variables economic theory is used only to suggest the variables to be related often theory is ambiguous on the explicit lead lag relationships between important variables and the variables themselves in such cases one can or must rely on strictly empirical methods burks discusses the complementary relationship between empirical and theoretical methods in scientific investigations agriculturalists interested in explaining producer behavior and forecasting livestock price and quantity movements have long grappled with problems of leads and lags attempts to explain short run movements in live cattle and hog inventories or slaughter levels using price variables have at times yielded unsatisfactory results for example shortrun quantity response to price change was found to be negative for cattle nelson and spreen myers havlicek henderson however a positive relation begins to appear with longer lengths of run the theory of optimal investment under risk explains this type of relationship that is treating cattle as both investment goods and as final products will generate the negative short run response of quantity to price such theory however will not be explicit about the particular lead lag relationships to be encountered most modern theories of decision making under risk suggest that such lags are dependent upon subjective probabilities of individual economic agents if one is unwilling to accept the existence of a rational probability following definetti then he will not be able to specify a priori the explicit leads and lags in a particular investment problem one must look at the data and infer such relationships this paper examines the lead lag relationships between livestock prices and various causal variables suggested by theory it explicitly tests the exogeneity of cattle on feed cattle slaughter and income on live cattle prices and the exogeneity of sow farrowings hog slaughter and income on live hog prices although explicit dynamic multivariate models are not formulated the paper s results do provide background evidence useful for their ultimate construction granger and newbold 1977 chap 7

innovation and cooperation implications for competition and antitrust n k robel laureate robert solow and his colleagues on mit s industrial productivity commission recently noted dertouzos lester and solow 1989 p 7 undeveloped cooperative relationships between individuals and between organizations stand out in our industry studies as obstacles to technological innovation and the improvement of industrial performance and later p 105 that interfirm cooperation in the u s has often though not always been inhibited by government antitrust regulation these striking conclusions warrant further exploration unfortunately industrial organization textbooks still discuss horizontal cooperation and competition almost exclusively in terms of standard cartel theory on the other hand vertical cooperation contracting is viewed differently and some textbooks provide treatments of supplier buyer relationships in which cooperation is viewed as enhancing efficiency both in the textbooks and in policy discussion among economists cooperation among competitors is highly suspect being perhaps the last bastion of what was once referred to as the inhospitality tradition in antitrust as a result very little literature addresses how cooperation among competitors can promote competition notwithstanding that cooperation among competitors may sometimes be essential if innovating firms are to compete in today s increasingly global markets imai and baba 1989 such cooperation is already important in japan and in europe 1

vintage capital investment and growth abstract we study the dynamics of growth and investment in a continuous time model with vintage capital vintage capital models may be characterized by non exponential rates of depreciation and technical change and can incorporate gestation lags as well as learning by using we investigate the effect of such features on the dynamics of investment and growth and show how they can contribute to explaining the volatile nature of investment time series

optimal labour taxation and search abstract this paper explores the optimal role of the tax system in alleviating labour market imperfections and raising revenue for this purpose the standard search model of the labour market is extended by introducing scarce entrepreneurial talent and arbitrage between the supply and demand sides of the labour market we study how these extensions affect the following two major implications of the standard model 1 only the ad valorem component of the wage tax should be employed to raise revenue 2 the optimal tax system should not distort labour market tightness

impact of vat reform on swedish restaurants a synthetic control group approach var analys av den sankta restaurangmomsen visar pa positiva effekter pa lonesumma omsattning anstallningar rorelsemarginaler och foretagsstocken resultaten visar tydligt att foretagen har valt

entrepreneurial universities and overt opportunism entrepreneurial universities are a catalyst for regional economic development and growth yet the entrepreneurial university may not always capture the full gains made by the broader economy due to opportunistic behavior by its faculty scientists we expand agency theory to address conditions when opportunistic behavior persists in the face of substantial information symmetry and where principals appear to tolerate opportunism despite the authority to sanction their agents using a sample of 105 us research universities and 73 603 scientists we demonstrate that some scientists privately leak discoveries invented while working for their universities counter to prior prediction we find that universities acting as principals often do not retaliate even when having knowledge of such opportunistic behavior and the capability to punish non complying agents to extend theory we examined contexts that exacerbate and alleviate such overt opportunism high value discoveries and sizable entrepreneurial activity are associated with greater opportunistic behavior whereas efforts to empower those who have close professional ties with scientists their departments and technology commercialization offices are related to reduced opportunism to complement our empirical analyses we provide a stylized mathematical model that shows how agency theory can improve its predictive power once it formally recognizes certain conditions under which agents wield substantial bargaining power over their principals who in turn seem to tolerate agents overt opportunistic behavior

the nature and importance of economic competence this chapter takes on three tasks 1 to survey the study of economic competence as it appears in economic literature 2 to give a meaningful and operational definition of economic competence as one of the factors contributing to macroeconomic growth and 3 to suggest a methodology pursued in greater depth elsewhere to generalize and link economic competence as defined at the micro firm individual level to macroeconomic growth through simulation on the micro based macroeconomic model of the swedish economic system moses by introducing knowledge in the micro setting of firm organizational competence we arrive at a very different interpretation measured at the macro industry level from that of standard neoclassical theory

imperfect competition the marginal cost of public funds and public goods supply abstract this paper analyses the impact of changes in product market competition on the marginal cost of public funds mcpf and public goods supply when distortionary commodity taxes are used to raise revenue first less competition measured by a switch from bertrand to cournot conduct or a decrease in the elasticity of demand does not necessarily raise the mpcf second even if it does optimal public good supply does not necessarily fall the paper also presents a method for modelling bertrand and cournot competition in general equilibrium that may be of independent interest

firm types price setting strategies and consumption tax incidence abstract we analyze price responses to large restaurant vat rate reductions in two different european countries our results show that responses in the short and medium run were clustered around two focal points of zero pass through and full pass through differences between independent restaurants and chains is the key explanation for this pattern while nearly all independent restaurants effectively ignored the tax reductions and left consumer prices unchanged a substantial fraction of restaurants belonging to chains chose a rapid and complete pass through in the longer run prices converged but primarily through a price reversion among chain restaurants the stark difference in price responses does not appear to arise because of different market characteristics such as location initial price levels meal types and restaurant segment

the optimal organization of research evidence from eight case studies of pharmaceutical firms abstract in this paper we examine the results of interviews of scientists and executives in eight pharmaceutical companies on the issue of how best to organize the rd when the firm is playing catch up in an area of science where it is weak and when governmental policies force firms to carry out r d in particular locations

does environmental regulation create merger incentives this paper studies merger incentives for polluting cournot firms under a competitive tradable emission permits market we find that when firms are symmetric and marginal costs are constant an horizontal merger is welfare enhancing if efficiency gains are high enough for the merger to take place the presence of a competitive or monopolistic outside market that also trades in the permits market makes profitable a merger that would not happen otherwise when firms are vertically related in an input output chain an horizontal merger in one of the markets increases profits in the other market due to the permits price decrease finally we consider an oligopoly fringe model in which firms differ in their marginal production costs a merger between the dominant oligopolistic firms decreases the permits price and is always profitable such setting is relevant to assess the observed mergers between power generators in several market for permits like the regional greenhouse gas initiative rggi allowing us to derive some policy recommendations

asymmetric price risk an econometric analysis of aggregate sow farrowings 1973 86 aggregate sow farrowing response to price risk is estimated where price risk is defined as the difference between expected price at decision time and realized price at acquisition or selling time asymmetric unfavorable deviations and symmetric favorable and unfavorable deviations forms of price risk are estimated utilizing cash and futures prices statistical results suggest that an asymmetric form of risk analysis is preferred to a symmetric form for both cash and futures markets

the theoretical and policy implications of knowledge codification the purpose of the following contribution is to present the main consequences in terms of policy of firms and governments that emerged from the theoretical and empirical work achieved under the tipik project in a first part the introduction is devoted to a summing up of the main theoretical dimensions used in tipik that led in particular to a special issue of industrial and corporate change june 2000 then the discussion envisages the main consequences of the theoretical debate in terms of policy issues and addresses the new perspectives of a knowledge oriented policy of firms and governments finally we expose a selected series of policy implications that are derived from the empirical studies presented in this special issue

inside the black box technology and economics economists have long treated technological phenomena as events transpiring inside a black box and on the whole have adhered rather strictly to a self imposed ordinance not to inquire too seriously into what transpires inside that box the purpose of professor rosenberg s work is to break open and examine the contents of the black box in so doing a number of important economic problems be powerfully illuminated the author clearly shows how specific features of individual technologies have shaped a number of variables of great concern to economists the rate of productivity improvement the nature of learning processes underlying technological change itself the speed of technology transfer and the effectiveness of government policies that are intended to influence technologies in particular ways the separate chapters of this book reflect a primary concern with some of the distinctive aspects of industrial technologies in the twentieth century such as the increasing reliance upon science but also the considerable subtlety and complexity of the dialectic between science and technology other concerns include the rapid growth in the development of costs associated with new technologies as well as the difficulty of predicting the eventual performance characteristics of newly emerging technologies

multinational enterprises service outsourcing and regional structural change this paper offers a joint analysis of two phenomena characterizing most advanced economies in recent decades the rise of foreign ownership in manufacturing activities and the pervasiveness of the service economy the aim of the study is to examine the structural transformation of regional economic systems within the uk by focusing on the role played by foreign multinational enterprises mnes in manufacturing in facilitating the development of services from a conceptual perspective this research relies on different strands of literature on the impact of foreign direct investment fdi on recipient economies on outsourcing and regional structural transformation and on the identification of local multipliers the empirical analysis focuses on a specific demand side channel for structural change the forward linkage established by foreign manufacturing mnes with local service providers through outsourcing descriptive evidence shows that service outsourcing by foreign plants operating in manufacturing is pervasive compared to outsourcing by their domestic counterparts on this basic premise we estimate the multiplicative effects that foreign manufacturing activity has on the creation of service jobs in local labour markets in order to produce reliable estimates of a local multiplier the methodology adopts an instrumental variable approach our findings suggest that foreign presence in manufacturing can be a catalyst of regional structural change by stimulating the generation of new jobs in the tertiary sector via demand linkages

optimal fiscal regime in a spatial duopoly abstract we investigate a horizontally differentiated duopoly in which a public authority can either tax or subsidize firms in order to induce duopolists to choose the socially optimal locations the policy proposed here is such that welfare maximization is achieved by directly affecting firms location without explicitly modifying their price behavior

brave old world accounting for high tech knowledge in low tech industries abstract lower tech sectors are still commonly regarded as unusual suspects in the modern process of innovation and economic change in this paper we try to understand better how organisations specialising in traditional businesses have been transformed by a period of paradigm shift such as the one that characterised the final decades of the twentieth century we focus on a population of nearly 500 of the world s largest innovative companies to assess the extent to which companies belonging to old economy sectors have been developing cutting edge knowledge about clusters of new technologies such as ict new materials and biotechnology we find that non high tech corporations transformed their patent portfolios in a non trivial way companies in mature trades contributed significantly to the development of technologies that are at the core of the so called third industrial revolution

optimal taxes and the structure of preferences if optimal tax theory is to be the basis for calculating tax rates a close understanding is required of the relationship between the structure of preferences and the configuration of optimal tax rates otherwise hypotheses chosen by the econometrician for practical convenience may completely determine the results independently of measurement this paper explores the relationship between various types of separability particularly weak and implicit separability and optimal tax rates in the various models discussed in the literature the use of distance functions and the antonelli matrix provides a significant unification of previously disparate results in the final analysis optimal tax theory should be the basis for actual calculation of tax rates although recently there have been great advances in theoretical results and in our understanding of their meaning we are still some way from a working knowledge of whether uniform commodity taxes are in practice optimal or if not which commodities should be discriminated against present theoretical formulae do not yield clear cut results except in special cases and it has recently become clear that optimal rates depend crucially on the detailed structure of consumer preferences for example atkinson and stiglitz 3 show that with an optimal nonlinear income tax discriminatory commodity taxes are only necessary to the extent that individual commodities are not weakly separable from leisure more recently deaton 6 has shown that a similar result holds for what is perhaps the most interesting of the standard models that where there are many consumers and only a linear income tax and proportional commodity taxes are allowed in this case separability between goods and leisure together with linear engel curves for goods removes the need for differential commodity taxation in consequence nothing can be learned about commodity taxes from consumer demand studies in which commodity demands are explained conditionally on total expenditure and commodity prices and which assume linear engel curves all such studies require separability from leisure as a maintained hypothesis and so are consistent with uniform commodity taxation these results suggest that the prospects for meaningful empirical calculations of tax rates are bleak econometricians estimating commodity demand and labor supply equations make generous use of separability assumptions to enable estimation at all in consequence it is likely that empirically calculated tax rates based on econometric estimates of parameters will be determined in structure not by the measurements actually made but by arbitrary untested and even unconscious hypotheses chosen by the econometrician for practical convenience to remedy this situation and as a prelude to fruitful empirical work it is necessary to have a more explicit understanding of how preference structure affects optimal tax rates such is the object of this paper three different

elements of a schumpeterian catalytic research and innovation policy in this article we take a fresh look at research and innovation r i hereinafter policy and define a new notion schumpeterian catalytic r i policy such policy style amends and enriches the new mission oriented framework for innovation policy by assigning more weight to the microeconomic dimension of private actors actions and by being more concerned with the temporary nature of interventions we relate our argument to recent empirical trends in productivity dynamics and innovative activities these suggest that an innovation slowdown is taking place and consequently that a renewed interest in the re direction rather than on the intensity of innovative activities is key to the design of r i policy capable to tackle current challenges we use the evidence to build a schematic theoretical framework to inform policy design and we outlined the defining features of our proposed policy style

final and intermediate goods taxation in an oligopolistic economy with free entry abstract optimal tax rules are analyzed in an oligopolistic economy with free entry the initial market allocation has two types of distortion price is set above marginal cost by the oligopolistic behavior and the advantage of increasing returns to scale is left to be unexploited by excessive entry of oligopolists with production subsidy accompanied by a self financing lump sum franchise tax on oligopolistic firms pareto efficient allocation could be restored without a lump sum tax on oligopolists however the second best optimum requires taxing intermediate inputs used in the oligopolistic industry the optimal intermediate goods taxation follows the production side ramsey rule to encourage the use of intermediate inputs elastic to output level and vice versa

the national system of innovation in historical perspective contrary to some recent work on so called globalisation this paper argues that national and regional systems of innovation remain an essential domain of economic analysis their importance derives from the networks of relationships which are necessary for any firm to innovate whilst external international connections are certainly of growing importance the influence of the national education system industrial relations technical and scientific institutions government policies cul tural traditions and many other national institutions is fundamental the historical examples of germany japan and the former ussr illustrate this point as well as the more recent contrast between east asian and latin american countries introduction the national system of friedrich list according to this author s recollections the first person to use the expression national system of innovation was bengt ake lundvall and he is also the editor of a highly original and thought provoking book 1992 on this subject however as he and his colleagues would be the first to agree and as lundvall himself points out the idea actually goes back at least to friedrich list s conception of the national system of political economy 1841 which might just as well have been called the national system of innovation the main concern of list was with the problem of germany overtaking england and for underdeveloped countries as germany then was in relation to england he advocated not only protection of infant industries but a broad range of policies designed to accelerate or to make possible industrialisation and economic growth most of these policies were concerned with learning about new technology and applying it the racialist and colonialist overtones of the book were in strong contrast to the inter nationalist cosmopolitan approach of the classical free trade economists and list s belief that holland and denmark should join the german bund and acquire german nationality because of their descent and whole character reads somewhat strangely in the european community of today nevertheless despite these unattractive features of his outlook he clearly anticipated many contemporary theories after reviewing the changing ideas of economists about development in the years since the second world war the world bank 1991 concludes that it is intangible investment in knowledge accumulation which is decisive rather than physical capital investment as was at one time believed pages 33 35 the report cites the new growth theory

from market magic to calypso science policy a review of terence kealey s the economic laws of scientific research the current reconsideration of public research funding policies in the u s and u k and other industrialized economies makes it important that policy makers and the public understand the valid economic grounds for government support of science this review article of a book that which argues for the ending of all government support of non military r d provides an occasion to take stock of what is known about the subject the review concludes that the extreme laissez faire science policy arguments adroitly advanced by terrance kealey s book are analytically without foundation and are based upon distortions and misinterpretations of the evidence of economic history as well as on the misuse of econometric methods the problem is that mr kealey is an engaging writer and there still is in some policy circles an audience for his message hence to undo the damage will call for concerted and persistent efforts on the part of economists specializing in the economics of science and technology this abstract was borrowed from another version of this item

the mirrlees review and the state of public economics the mirrlees review of taxation in the united kingdom is a landmark in the analysis of u k fiscal policy and of wide interest to public finance economists around the world this review concentrates on what we can learn from the review about the current state of public economics and directions for future research jel e62 h20 h50

the social shaping of the national science base abstract innovation studies confirm de tocqueville s prediction that continuous technical change in business firms in modern society would require the development in close proximity of publicly funded basic research and associated training the rate and direction of the development of a country s science base is strongly influenced by its level of economic development and the composition of its economic and social activities in other words it is socially shaped

corrective tax and subsidy policies in economies with bertrand competition abstract this paper shows how we can correct market failure due to imperfect competition by using taxes and subsidies the analysis is carried out at the general equilibrium level and the importance of objective demand curves is stressed the main conclusions are first it is possible to tax the economy back to the walrasian equilibrium by using linear taxes and subsidies second the welfare theorem holds in an imperfectly competitive economy with corrective taxes and subsidies third a competitive equilibrium can also be achieved by the use of ad valorem taxes and specific output subsidies

technological paradigms past present and future the special issue is introduced and contextualised technological paradigms emerged as science push models of innovation were being displaced by demand pull models that justified a more international market focussed political economy technological paradigms help explain the strengths and weaknesses of both models and why the governance choice is not between either markets or governments but an appropriate mixture of both while technological paradigms have successfully shifted policy and management attention to building stocks of knowledge they still have substantial underexploited analytical potential

trade in used equipment with heterogeneous firms this paper examines the pattern of trade in used asset markets where firms have differing factor prices and utilization rates of capital goods depreciation is modeled as an increase in down time as machines age and a measure of comparative advantage is derived that will explain the pattern of trade when there are two types of firms it is shown that with heterogeneous firms the price of used machines will reflect the characteristics of firms as well as the productivity of used machines and the implications of this result for the study of depreciation are discussed finally the relationship between firm characteristics and choice between purchasing new and used truck tractors is presented as an illustration of the predictions of the model

adapting the uppsala model to a modern world macro context and microfoundations vahlne and johanson 2017 present the multinational business enterprise mbe as a new form of cross border organization that supersedes the multinational enterprise mne they offer a general model of the evolution of the mbe arguing that the mbe evolves through ongoing internationalization processes by proactively and entrepreneurially engaging in business exchange rather than production in this counterpoint we focus on two critical dimensions absent from vahlne and johanson s 2017 arguments the impact of the digital context as a defining macro level feature of our modern world and the role of the individual as a core microfoundation of the internationalization process we argue that a robust theory of the evolution of the modern firm must necessarily account for these dimensions to explicate these impacts we draw from a range of complementary research streams across international business entrepreneurship and international entrepreneurship we identify research implications for scholars seeking to further advance the uppsala model of internationalization and those who will use the revised model to study the modern multinational

contracting for tacit knowledge the provision of technical services in technology licensing contracts abstract recent research on the economic payoff from new technology has emphasized the importance of tacit knowledge or know how this paper shows that arm s length contract can overcome the problems in contracting for know how by bundling complementary inputs with know how in a technology package and leveraging the superior enforceability of contracts over the latter in the empirical part of this paper the relationship between bundling and transfer of know how is analyzed using indian data the results imply that tied sales of inputs may increase the efficiency of contracts involving the transfer of know how a striking result in the context of the current north south debates on intellectual property rights is the packaging of patents with know how

who captures value from science based innovation the distribution of benefits from gmr in the hard disk drive industry abstract we analyze the discovery of giant magneto resistance gmr and its development and commercialization by the global disk drive industry to answer the question of who captures the benefits from innovation in a global innovation system we assess the returns to the scientists firms and countries associated with gmr we find that the french and german scientists that discovered gmr and their labs benefited by receiving the nobel prize and small licensing fees the firm that first commercialized the technology ibm captured profits from selling hard disk drives and magnetic heads using gmr other hard disk drive and head manufacturers based in the u s and japan were able to quickly assimilate the technology and catch up with ibm france and germany reaped limited returns due to the lack of domestic firms with the absorptive capacity to commercialize gmr the u s and japan benefited from the success of their firms in commercializing gmr as did other countries which were part of the global value chains of those companies consumers and firms that incorporated hard drives in their products ultimately benefited from cheaper hard drives with greater capacity these findings illustrate the importance of absorptive capacity at the firm and national level in capturing benefits from innovation they also show that the benefits to first mover firms can be short lived in a competitive industry with open transfer of knowledge and limited appropriability regimes finally they show that the location of jobs and wages associated with innovative products depends on the structure of the global value chains of leading firms

ramsey tax rules for economies with imperfect competition abstract this paper derives optimal commodity tax rules for a general equilibrium model with imperfect competition to achieve this functions are constructed that describe the effects of taxation upon the equilibrium prices and profit levels of imperfectly competitive industries the use of these functions allows existing tax rules to be generalised to accommodate imperfect competition

estimating the effect of tax reform in differentiated product oligopolistic markets abstract the incidence of taxation has been extensively discussed in the public finance literature but mainly within a competitive market setting or within a homogenous good cournot type oligopoly in a differentiated product oligopoly the effect of taxation can be more complex as the rate of taxation may affect not only the prices but also the profile and quality of products that are sold in the market in this paper we examine the effects of changing tax regimes in a differentiated product oligopoly in order to illustrate our approach we employ data from one such market the automobile market in israel

heart of darkness modeling public private funding interactions inside the r d black box abstract this paper is a first step toward closing the analytical gap in the extensive literature on the results of interactions between public and private r d expenditures and their joint effects on the economy a survey focusing on econometric studies in this area reveals a plethora of sometimes confusing and frequently contradictory estimates of the response of company financed r d to changes in the level and nature of this category of public expenditures yet a theoretical framework seldom is provided within which the empirical results are to be interpreted some such structure is necessary in view of the multiple channels through which public research can affect private r d performance especially as not all the effects flow in the same direction a major cause of inconsistencies in the empirical literature is the failure to recognize key differences among the various policy experiments being considered depending upon the economy in which they are embedded and the type of public sector r d spending that is contemplated using a simple stylized structural model we identify the main channels of impact of public r d we thus can characterize the various effects distinguishing between short and long run impacts that would show up in simple regression analyses of nominal public and private r d expenditure variables within the context of our simple model it is possible to offer interpretations that shed light on recent cross section and panel data findings at both high i e national and low specific technology area levels of aggregation

optimum commodity taxation in pooling equilibria abstract this paper extends the standard model of optimum commodity taxation ramsey f 1927 a contribution to the theory of taxation economic journal 37 47 61 diamond p mirrlees j 1971 optimal taxation and public production ii tax rules american economic review 61 261 278 to a competitive economy in which markets are inefficient due to asymmetric information insurance markets are prime examples consumers impose varying costs on suppliers but firms cannot associate costs with individual customers and consequently all are charged equal prices in such a competitive pooling equilibrium the price of each good is equal to the average of individual marginal costs weighted by equilibrium quantities we derive modified ramsey boiteux conditions for optimum taxes in such an economy and show that in addition to the standard formula they include first order effects which reflect the deviations of prices from marginal costs and the response of equilibrium quantities to the taxes levied an explanation of the additional terms is provided it is shown that a condition on the monotonicity of demand elasticities enables to sign the direction of the deviations from the standard case

the origins of american industrial success 1879 1940 the united states became the world s preeminent manufacturing nation at the turn of the twentieth century this study considers the bases for this success by examining the factor content of trade in manufactured goods surprisingly the most distinctive characteristic of u s manufacturing exports was intensity in nonreproducible natural resources furthermnore this relative intensity was increasing between 1880 and 1920 the study then asks whether resource abundance reflected geological endowment or greater exploitation of geological potential it was mainly the latter jel 042 recent thinking about american economic performance has been marked by alarm over the country s loss of its competitive edge most of this discussion is not rooted in an understanding of the historical origins of the economic leadership now thought to be in jeopardy modern economists tend to assume that the american advantage has been technological and

the role of knowledge in r d efficiency past research has recognized that both demand and capability influence the allocation of r d resources scholars have had an easier time getting a grip on demand than on capability while it has been recognized that knowledge is an important part of capability to date formalization of knowledge and its role in r d activity has been unsatisfactory this paper models the role of knowledge in r d various sources of such knowledge are considered the model throws a different light on analyses that employ a knowledge capital stock and also illuminates the dual private and public nature of technological knowledge

quality based price discrimination and tax incidence the market for gasoline and diesel cars in europe the existing tax policies toward gasoline and diesel cars in european countries provide a unique opportunity to analyze quality based price discrimination and the implied tax incidence in my econometric framework consumers choose the type of engine based on their annual mileage prices are set by the manufacturers the relative pricing of gasoline and diesel cars appears to be consistent with monopolistic price discrimination effectively segmenting low mileage from high mileage consumers on average about 75 to 90 of the price differentials between gasoline and diesel cars can be explained by markup differences i draw implications for the effectiveness and the revenue effects of tax policy

methodological individualism and social knowledge it is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals our behavior in judging economic research in peer review of papers and research and in promotions includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals not of other social categories i want to argue today that a close examination of even the most standard economic analysis shows that social categories are in fact used in economic analysis all the time and that they appear to be absolute necessities of the analysis not just figures of speech that can be eliminated if need be i further argue that the importance of technical information in the economy is an especially