assessing market dominance abstract we propose a new measure to assess market dominance contrary to concentration measures such as the herfindahl hirschman index that characterizes the concentration of an industry our dominance measure suggests an approach that classifies when an individual firm has a dominant position in our measure the criterion for dominance is relaxed as the intensity of existing competition increases or as entry barriers are lowered we apply the dominance measure to a number of well known competition cases

the prospective of coal power in china will it reach a plateau in the coming decade abstract coal power holds the king position in china s generation mix and has resulted in ever increasing ecological and environmental issues hence the development of the electric power sector is confronted with a series of new challenges china has recently adopted a new economic principle of the new economic normal which has a large effect on the projection electricity demand and power generation planning through 2020 this paper measures electricity demand based upon china s social and economic structure the 2020 roadmap presents china s developing targets for allocating energy resources to meet new demands and the 2030 roadmap is compiled based upon an ambitious expansion of clean energy sources results show that electricity demand is expected to reach 7500 twh in 2020 and 9730 twh in 2030 coal power is expected to reach its peak in 2020 at around 970 gw and will then enter a plateau even with a pathway of active electricity substitution in place

common trends the government s budget constraint and revenue smoothing abstract the requirement that the government s budget be balanced in present value terms is shown to be equivalent to the condition that government expenditures inclusive of interest tax receipts and seignorage be cointegrated the condition is in fact stronger requiring that the deficit inclusive of interest be stationary stationarity of the net of interest deficit is neither necessary nor sufficient for intertemporal budget balance however it does have implications for barro s tax smoothing hypothesis data for the period 1890 1986 are consistent with intertemporal budget balance but not with tax smoothing

rational ponzi games when can a government run a rational ponzi game i e issue debt and never pay back any interest or principal the transversalit y condition of each individual implies that such schemes require an i nfinity of lenders given this horizons are unimportant ponzi games cannot be ruled out by assuming that agents have infinite horizons the authors point out both the basic similarity of and some key diff erences between rational ponzi games and asset price bubbles or fiat money regarding international debt the analysis implies that what matters for the feasibility of rational ponzi games are conditions in the lenders not the borrowers economy copyright 1988 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

an empirical analysis of canadian merger policy the merger provisions of the new competition act 1986 brought significant changes to canada s merger environment but little is known regarding the application of the provisions by the bureau of competition policy in this paper the decision making process has been approximated by an ordered probit model the estimated ordered probit results indicate that the director of investigation and research has applied the merger provisions in a consistent manner and in accordance with modern industrial organization economics although market share and concentration are important determinants of decisions they are not the only factors considered copyright 1993 by blackwell publishing ltd

panel cointegration tests of the sustainability hypothesis in rich oecd countries this study reexamines the sustainability hypothesis by testing whether government revenues and expenditures for eight rich oecd countries between 1977q1 and 2005q4 are cointegrated for this purpose a nonstationary panel data approach is adopted which is general enough to permit for cross country dependence as well as structural breaks representing major shifts in fiscal policy in contrast to many earlier studies the results reported in this study suggest that the sustainability hypothesis cannot be rejected

the cyclical behavior of the department of justice s antitrust enforcement activity abstract we study the cyclical behavior of antitrust enforcement as measured by the number of cases initiated by the us department of justice the key result is that antitrust case activity is countercyclical this finding is robust across alternate indicators of economic activity which include stock prices corporate profits and business cycles and across different types of cases the finding of countercyclical case activity does not appear to lend support to interest group theories that predict greater regulatory protection towards producers during economic contractions one interpretation of our result would be that antitrust violations tend to increase during economic downturns leading to an increase in the number of cases initiated the broad implication being that the antitrust division primarily acts as an antitrust law enforcement agency our results show that politics as measured by the party of the president and the republican versus democrat composition of the house and senate does not have a clear impact on case activity finally the number of cases initiated are significantly affected by the extent of funding

the sustainability of government deficits implications of the present value borrowing constraint this paper introduces a new methodology for evaluating the sustainability of fiscal policy the new methodology is distinguished from most existing tests in two important respects first it allows for stochastic real interest rates and second it is both necessary and sufficient results from the application of the new test suggest that recent fiscal policy in the united states has not been sustainable the paper contrasts its findings with those of james d hamilton and marjorie a flavin 1986 copyright 1989 by ohio state university press

assessing long term fiscal developments a new approach abstract we use a new approach to assess long term fiscal developments by analyzing the time varying behaviour of the two components of government spending and revenue responsiveness and persistence a feature not captured by automatic stabilisers we are able to infer about the sources of fiscal deterioration improvement drawing on quarterly data we estimate recursively these components within a system of government revenue and spending equations using a three stage least square method for eight european union countries plus the us the results suggest that significant changes in the fiscal stance including those related to the current crisis are reflected in the estimates of persistence and responsiveness

bubble finance and debt sustainability a test of the government s intertemporal budget constraint this paper tests whether the government s budget is intertemporally balanced in a number of ec countries by applying a method first developed to detect speculative bubbles in financial markets the test aims to establish whether the government can engage in buble finance and is based on a comparison between two sets of estimates the first is obtained directly by regressing the stock of outstanding debt on a distributed lag of the primary surplus the second is obtained indirectly from a pair of equations one relating the current debt stock to next period s primary surplus and debt stock the other specifying an ar process for the primary surplus in the presence of a bubble only the first set of estimates is inconsistent and hence the two sets differ it is found that the null of no bubble can be rejected in the cases of italy germany denmark and greece implying that the government is not intertemporally solvent in these countries the other ec member states appear to be on a sustainable path

an econometric analysis of the european commission s merger decisions abstract using a sample of 96 mergers notified to the european commission and logit regression techniques we analyse the commission s decision process we find that the probability of a phase 2 investigation and of a prohibition of the merger increases with the parties market shares the probabilities increase also when the commission finds high entry barriers or that the post merger market structure is conducive to collusion we do not find significant effects of political variables such as the nationality of the merging firms

the role of intergovernmental aid in defining fiscal sustainability at the sub national level the concept of fiscal sustainability has become increasingly used over the last 20 years however much of the literature on fiscal sustainability at the sub national level ignores the role of intergovernmental fiscal relations to address this gap this paper discusses a sufficient condition for sub national fiscal sustainability and examines the importance of intergovernmental aid in determining that sustainability using panel data of counties and municipalities in the us and using unit root and cointegration analytic techniques this paper finds different levels of fiscal sustainability between counties and municipalities we also find that intergovernmental aid plays an important role for fiscal sustainability for both counties and municipalities

the economics of coal power generation in china abstract the chinese government recently released the 13th fyp five year plan power development plan and proposed a capacity installation target of 1100 gw for coal power considering the weak demand growth of coal power since 2014 continuous decline in the annual utilisation hour and the coming market competition such a planning target is unwelcome and could further the economic deterioration of coal power in this paper we employ lcoe levelised cost of electricity and project evaluation models to conduct a nationwide survey on the economics of coal power the economic analysis has clearly indicated that the recent boom of coal power investment in china which is absurd in many perspectives is largely the aftermath of uncompleted market reform in the power sector however the fundamentals of electricity demand and supply are changing at a speed beyond the imagination of power generators and have foreboded a gloomy prospect for coal power our study shows that by 2020 with several exceptions in most provinces the internal rate of return for coal power will drop below the social average return rate or will even be negative in this regard the 13th fyp capacity planning target for coal power is economically untenable and requires radical revision

symposium on mergers and antitrust m x ergers and acquisitions spark ongoing controversy in the economics profession and in society at large this is not surprising billion dollar deals not only involve a great deal of money but they often raise economic issues implicating capital and labor markets as well as the markets for the products sold by the merger partners because of this merger enforcement is probably the most widely known area of antitrust however economists who do not specialize in industrial organization generally have little understanding of the type of competitive analysis that forms the basis for merger enforcement by the antitrust authorities and the courts this is unfortunate not only does this analysis have important social implications but when formulated rigorously the analytic model used in antitrust represents a simple yet quite sophisticated microeconomic model of competition in the past ten years economics and economists have become far more important in antitrust the so called chicago school of antitrust has provided the intellectual rationale for a considerable loosening of antitrust law its intellectual leaders for example robert bork richard posner and frank easterbrook have become judges and soon may ascend to or already have joined the supreme court economists like james miller and george douglas have become federal trade commissioners and the staff economists at the commission and the department of justice have gained considerable influence

are the heavily indebted countries solvent tests of intertemporal borrowing constraints abstract this paper investigates whether the heavily indebted countries hics in consideration of their external debt repayments remain solvent direct tests of the solvency condition derived from the usual intertemporal budget constraints shed light on the sustainability of their current policies the findings are twofold first the hics seem to have a debt overhang problem second in east and southeast asian countries except philippines the solvency conditions are satisfied these results give a rationale for the debt reduction plan a k a the brady plan and the empirical support of the debt overhang hypothesis

the impact of china s electricity price deregulation on coal and power industries two stage game modeling abstract the regulated price mechanism in china s power industry has attracted much criticism because of its incapability to optimize the allocation of resources to build an open orderly competitive and complete power market system the chinese government launched an unprecedented marketization reform in 2015 to deregulate the electricity price this paper examines the impact of electricity price deregulation at the industry level we first construct two stage dynamic game models to portrait the interaction between the coal and coal fired power industries using the models we compare analytically the equilibriums with and without electricity price regulation concerning electricity price electricity generation coal price and coal production the theoretical analyses find three regulated electricity price intervals that differentiate the reform impacts afterward we collect empirical data to estimate the model parameters the influences on the two industries in terms of market outcome and industrial profitability are simulated our results suggest that the current regulated electricity price falls within the medium interval which means deregulation will result in higher electricity price but lower coal price less coal production and less electricity generation the robustness analyses show that our results hold with respect to the electricity generation efficiency and price sensitivity of electricity demand

intertemporal budget constraint and public debt sustainability the case of italy the theory of intertemporal budget constraint is applied to test italian public debt sustainability with the finding that current fiscal policy has not been following a sustainable path in the 1980s in particular we find that i while primary surplus is stationary public debt is not ii permanent shocks explain about 90 of forecast error variance of public debt while playing a minor role in primary surplus and iii debt is not sustainable even if stochastic discount rates are accounted for

some empirical evidence on the effectiveness of antimerger relief in the united states the paper seeks to flll the void in the empirical economics literature of u s antimerger policy a new empirical measure of relief secured in a section 7 case is proposed the extent of obtained relief is modeled as a fraction of the competitive overlap subject to structural divestiture the model of determination of the relative size and scope of divestiture is applied to a sample of recent section 7 cases the estimated model is reasonably successful at predicting the outcomes of several out of sample cases

sustainability of the deficit process with structural shifts this article discusses the condition for deficit sustainability and searches for shifts in the structure of u s deficit policy i show that contrary to the current literature cointegration between revenues and expenditures inclusive of debt payment is not a necessary but a sufficient condition for a strict interpretation of deficit sustainability the necessary condition requires that debt grow slower than the borrowing rate for tests on structural shifts i use a test for structural change that searches for shifts in the rank of the cointegrating matrix i find that there is a shift in deficit policy in the early 80s so that cointegration between revenue and expenditure inclusive of interest payments holds only up to 1980 i show however that the deficit process is still sustainable despite the failure of cointegration in the 80s the finding of shifts in the deficit process is more uncertain when i normalize by gross national product or population but the deficit is shown to be sustainable regard

antitrust and merger policy a review and critique a ny antitrust policy that tries to put some restrictions on mergers must have a conceptual basis one such framework might be a populist approach in which only absolute or relative size of the merger partners and or the resulting entity would be the criterion political rhetoric often embodies this approach an alternative approach the one that underlies the 1982 department of justice merger guidelines concerns itself with the possible exercise of market power 1 i believe this second approach is more consistent with the language of section 7 of the clayton act itself which instructs the department of justice and the federal trade commission to prevent those mergers the effects of which may be substantially to lessen competition or to tend to create a monopoly this market power approach also places merger policy in a realm that is susceptible to economic analysis for this reason as well this approach appeals to me the merger guidelines are firmly rooted in the standard oligopoly theory developed by chamberlin 1933 fellner 1949 and stigler 1964 and strengthened

are bond financed deficits inflationary a ricardian analysis this paper considers the possible theoretical validity of the following monetarist hypothesis that a constant positive government budget deficit can be maintained permanently and without inflation if it is financed by the issue of bonds rather than money the question is studied in a discrete time perfect foresight version of the competitive equilibrium model of sidrauski modified by the inclusion of government bonds as a third asset it is shown that the monetarist hypothesis is invalid if the deficit is defined exclusive of interest payments but that it is valid under the conventional definition it is also shown that the stock of bonds can grow indefinitely at a rate in excess of the rate of output growth provided that the difference is less than the rate of time preference these formal conclusions do not take account of possible limitations on taxing capacity arising from default incentives that tend to grow with the stock of bonds

on the limitations of government borrowing a framework for empiricaltesting this paper seeks to distinguish empirically between two views on the limitations of government borrowing according to one view nothing precludes the government from running a permanent budget deficit paying interest due on the growing debt load simply by issuing new debt an alternative perspective holds that creditors would be unwilling to purchase government debt unless the government made a credible commitment to balance its budget in present value terms we show that distinguishing between these possibilities is mathematically equivalent to testing whether a continuing currency inflation might be fueled by speculation alone or is instead driven solely by economic fundamentals empirical tests which have been developed for this economic question lead us to conclude that postwar u s deficits are largely consistent with the proposition that the government budget must be balanced in present value terms this abstract was borrowed from another version of this item

us deficit sustainability revisited a multiple structural change approach in this article we re examine the long run sustainability of us budget deficits using bai and perron s multiple structural change approach while the deficit would have been weakly sustainable over the full sample 1947 1 2005 3 strong sustainability would appear only between january 1982 and february 1996

investment effects of departures from governmental present value budget balance the paper investigates whether departures from government borrowing constraints affect the relationship between fiscal policy innovations and changes in the investment level break points or apparent departures from present value budget balance are then identified next the investment deficit relationship is examined prior to and following identified break points in an effort to detect potential changes in behaviour the investment deficit relationship is quantified by examining posterior coverage bounds of impulse response functions britain appears to undergo such a break around 1973 data from this country suggest that significantly more crowding out occurred following the identified breaks in contrast data from other comparison countries that do not appear to have experienced breaks indicate stable investment deficit relationships

long run limits on the us federal debt abstract this letter distinguishes three nested long run constraints on the u s federal debt tests and rejects the strongest of the three and illustrates how hazardous it is to base inference regarding unit roots on misspecified test regressions

coal power overcapacity and investment bubble in china during 2015 2020 abstract electricity consumption growth in china has experienced radical adjustment from high speed to medium speed with the advent of new economy normal however the investment enthusiasm on coal power remains unabated and leads to continuous operation efficiency deterioration in recent years in this paper we quantify the rational capacity and potential investment of coal power in china during the 13th fyp period 2016 2020 by employing power planning model and fully considering the power sector s contribution in the 15 non fossil primary energy supply target by 2020 we estimate that the reasonable capacity addition space of coal power ranges between 50 gw and 100 gw depending on the expected range of demand growth we find that if all the coal power projects submitted for environmental impact assessment eia approval were put into operation in 2020 capacity excess would reach 200 gw such huge overcapacity will bring forth disastrous consequences including enormous investment waste poor economic performance of generators and more importantly delay of low carbon energy transition finally policy recommendations are proposed to address this issue

fight fold or settle modelling the reaction to ftc merger challenges i introduction scholars studying law and economics have identified four stages through which every legal dispute moves the first stage involves an alleged injury which leads to the legal dispute second the injured party decides whether to advance a claim once a claim is advanced the plaintiff and defendant may negotiate to settle the claim if the negotiation fails the dispute moves to litigation by subdividing the legal process into these four stages it is possible to study the interaction at any one stage in greater detail this paper models the third stage of this process in an antitrust setting the interaction between the federal trade commission ftc and private parties interested in consummating horizontal mergers that may adversely affect competition the ftc must decide whether to advance a claim against the merger and seek to block the transaction if such a claim is made the merging parties may fight forcing a resolution of the dispute through litigation by moving forward with the transaction they may also fold abandoning the transaction or settle entering into an agreement with the government to resolve the issues underlying the merger challenge this decision to fight fold or settle is somewhat more complicated than the standard settle or litigate question because the prospective nature of the alleged competitive injury gives the defendant an opportunity to abandon the transaction before the injury occurs our basic hypotheses with respect to this process are that firms decisions depend not only on the competitive merits of the ftc s case but perhaps more importantly on the political conglomerate and financial nature of the relevant transaction and how the nature of the case fits into the merger review process section ii presents the background for the analysis by discussing the institutional structure of the ftc explaining the merger review process and then presenting an overview of a firm s options when faced with a decision by the ftc to block a merger section iii models the decision faced by firms defines the equations to be estimated and surveys the data set of ftc merger challenges a multinomial logit model of a firm s fight fold or settle decision is estimated in section iv followed by an interpretation of the results and an application of the model using both historical data and information from mergers proposed during fiscal 1992 and 1993 we find that the level of the competitive overlap associated with the relevant transaction is an important determinant of firms fight fold or settle decisions in particular if the competitive overlap involves a small percentage of the transaction firms generally prefer to reach a negotiated settlement with the commission in such cases the settlement decision appears unaffected by the underlying merits of the ftc s legal position in other cases the merits of the case may play a role in the firm s litigation decision we also find that the potential efficiencies offered by the merger affect the firms decision making process with firms more likely to fight and less likely to settle if the merger is expected to generate efficiencies ii issues in merger enforcement background on the federal trade commission the ftc is a government agency charged along with the antitrust division of the department of justice with enforcing the antitrust laws much of the antitrust casework involves the evaluation of the competitive effects of proposed horizontal mergers 1 to interdict a proposed merger the ftc must obtain a preliminary injunction from a federal district court with possible review from the relevant court of appeals if the court declines to issue the injunction the firms are free to merge though the ftc can initiate a lengthy court process to attempt to obtain a permanent injunction against the merger commission decisions are made by a majority vote of the five commissioners each of whom are appointed by the president and confirmed by the senate for terms of up to seven years

cointegration and government borrowing constraints evidence for the united states testable implications are derived in a present value borrowing constraint model for the u s federal government critical values for unit root and cointegration tests are calculated with monte carlo studies cointegration techniques are employed to determine whether the government has been involved in perpetual debt financing in recent years the data reject this assertion

optimal fiscal and monetary policy in an economy without capital abstract this paper is concerned with the structure and time consistency of optimal fiscal and monetary policy in an economy without capital in a dynamic context optimal taxation means distributing tax distortions over time in a welfare maximizing way for a barter economy our main finding is that with debt commitments of sufficiently rich maturity structure an optimal policy if one exists is time consistent in a monetary economy the idea of optimal taxation must be broadened to include an inflation tax and we find that time consistency does not carry over an optimal inflation tax requires commitment by rules in a sense that has no counterpart in the dynamic theory of ordinary excise taxes the reason time consistency fails in a monetary economy is that nominal assets should from a welfare maximizing point of view always be taxed away via an immediate inflation in a kind of capital levy this emerges as a new possibility when money is introduced into an economy without capital

merger policy and competition an analysis of the monopolies and mergers commission s decisions the way in which the monopolies and mergers commission views effective competition when reaching decisions involving referred merger bids is examined the objective is to identify issues which the commission has highlighted as important and hence is concerned with subjective rather than objective characteristics it is argued that an expected decrease in competition was a critical reason for having a bid disallowed whereas bids which were expected to either increase competition or leave it unaffected were likely to be allowed the analysis then examines the cause of these differing competition conclusions in particular those relating to avoiding the commission concluding that competition was likely to decrease probit analysis was used to estimate the relationships and it was found that for the increase decrease competition sample the important variables were market share and price in the decrease no change in competition sample the significant variables were efficiency the balance of payments pr

early settlement in european merger control we analyse the determinants of early settlement between merging parties and the european commission over remedies that remove concerns of anticompetitive effects this extends the previously narrow range of econometric literature on early settlement consistent with the theory of early settlement our results confirm the importance of delay costs and of uncertainty measured by the complexity of the economic analysis required for each merger we also find a non monotonic effect of agency resourcing which raises questions about the commission s efficiency in times of high case load econometrically we select a sample of merger decisions in which the european commission intervened due to concerns of anticompetitive effects and our selection model provides estimates of the factors determining intervention by the commission conclusions are drawn for public policy

investigating transatlantic merger policy convergence abstract we propose a framework to examine convergence in the jurisdictional patterns of the american ftc and the european commission based on a sample of 595 merger cases scrutinized by either of these agencies in the 1995 2007 period we estimate logit models of the probability of intervening in a merger for both jurisdictions and use them to predict the decisions of the respectively other agency the results point to an increasing harmonization of merger regimes and corroborate the theoretical appraisal that the 2004 reform of eu merger law constituted a step towards the us system

monopoly in the uk what determines whether the mmc finds against the investigated firms this paper draws on data from 73 uk monopolies and mergers commission reports on monopoly between 1973 and 1995 it shows that there is a roughly two in three chance that the commission will come to an adverse conclusion against the investigated firms in a given case 75 80 of decisions can be explained purely in terms of the market share of the leading firm and knowledge of the broad nature of the alleged anti competitive practice an adverse finding is most likely in cases involving exclusive dealing and least likely where other vertical restraints are involved

empirical evidence on the strength of the monetary transmission mechanism in canada an aggregate approach abstract this paper examines the transmission of monetary policy in canada it emphasizes the transmission through interest rates and the exchange rate rather than through changes in monetary aggregates and provides empirical evidence on the strength of these channels using a highly aggregated structural model implications of these structural equations for the dynamic effects of monetary policy are explored through a simulation analysis

the stochastic implications of rent maximization an application to stumpage rates for timber in british columbia we construct a model of rent maximizing behaviour by a single seller of timber in the absence of a formal market deriving the stochastic implications of rent maximization for timber prices stumpage rates when other input and output lumber prices are random subsequently we examine the model s ability to describe monthly time series stumpage rate data from british columbia canada between january 1979 and october 1999 deviations of stumpage rates from their long run trend are also structured by an error correction model which suggests that between 13 and 20 of period to period changes in stumpage rates can be explained by an equilibrium adjustment term copyright 2004 john wiley sons ltd

monopolies and mergers commission merger reports and the public interest a probit analysis the extent to which specific elements of the public interest appear to influence the monopolies and mergers commission in its dealings with referred merger bids is examined using 77 merger reports covering the period 1974 1990 it was found that relatively few public interest issues had a significant impact on the commission s decisions these included competition price and balance of payments effects the results also show that apart from sucessfully arguing that competition will increase raider firms do not further their ambitions by concentrating on the positive aspects of proposed mergers

on the consistency of merger policy this paper presents a way to get around the information problem facing outside analysts who want to scrutinize competition authorities decisions a formal model of how decisions are taken is applied to infer information that is available to the authorities but not to the outside analyst if the information thus inferred from several decisions is incompatible it is claimed that the policy executed by the competition authorities is inconsistent a case study is presented of two recent decisions by the norwegian competition authority on proposed mergers in the norwegian insurance industry indicating they most likely were mutually inconsistent

has federal budget deficit policy changed in recent years this paper applies new tests for parameter instability in cointegrated regression models to the u s federal government s intertemporal budget constraint in order to detect whether there has been a regime change in spending and taxing policies some researchers have argued that fiscal policy under presidents reagan and bush moved the u s deficit onto an unsustainable path my results suggest that government deficit policy in the 1980s was not significantly different from policies during the three earlier decades however a diverging debt gnp ratio suggests that the government will run into problems marketing its debt if current policy continues

u s federal indebtedness and the conduct of fiscal policy abstract this paper examines whether the conduct of u s fiscal policy since the 1920s has been influenced by constraints on the accumulated stock of outstanding federal debt the evidence is affirmative during most of the inter and post war period policy in effect stabilized the federal debt relative to gnp but after 1981 large debt and debt service costs failed to produce deficit reductions consistent with the pattern of previous decades

the market value of government of canada debt a comment on the importance of correct valuation of non marketable debt previous attempts to provide market value estimates for both u s and canadian government debt have included nonmarketable debt items specifically savings bonds as part of total marketable debt inclusion of nonmarketable debt items as part of marketable debt presents a significant valuation problem this article demonstrates that previous studies on the market value of canadian government debt used valuation methodologies that significantly underestimated the value of nonmarketable debt a more accurate valuation methodology is provided

on the inefficiency of merger control abstract according to the merger guidelines the antitrust authority has to challenge an anticompetitive merger these guidelines however neglect the parties litigation costs during trial we analyze under which circumstances these costs are so high that the agency s intervention is inefficient

pricing efficiency under rate of return regulation some empirical evidence for the electric utility industry the authors test quasi optimal pricing rules for rate of return regulation for a sample of electric utilities they estimate the regulated cost function and demand equations by class of customer for the sample to yield the cost and demand parameters required to assess the utility rate structures the results indicate that the price structure of electricity by class of customer is not quasi optimal and that welfare improvement might be possible under alternative prices searching for the price structure which satisfies the criteria they find that commercial users rates have been too high relative to residential and to a lesser extent industrial rates they note that commercial uses tend to be less organized and more poorly represented in the rate making process 16 references 8 tables

the market value and maturity structure of government of canada debt 1967 83 the market value and maturity structure of outstanding government of canada debt are calculated at monthly frequency for the 1967 to 1983 period the data are disaggregated into general public chartered bank and government holdings the time series behaviour of market value and par value measures are examined to determine whether par value is a reasonable approximation for market value market value data are also used to construct an alternative measure of the deficit flow which is compared with conventional measures of the deficit la valeur au marche et la structure d echeances de la dette du gouvernement du canada 1967 83 la valeur au marche et la structure d echeances de la dette du gouvernement du canada sont calculees par les auteurs pour chaque mois au cours de la periode de 1967 a 1983 on a ventile les resultats en portions detenues par le grand public par les banques a charte et par le gouvernement les auteurs examinent ensuite la chronique des mesures de valeurs au march6 et de valeurs au pair afin de determiner si la valeur au pair est une bonne approximation de la valeur au marche on se sert alors des donnees precisant la valeur au marche pour construire un indicateur de rechange du d6ficit qu on peut alors comparer aux mesures conventionnelles du deficit

an investigation of ricardian equivalence in a common trends model abstract to empirically discriminate between ricardian and non ricardian behaviour we have to use a method that distinguishes between expected and unexpected as well as permanent and transitory changes in taxes and government consumption one method that provides these distinctions between different types of changes is the common trends framework used in this paper which is a var model with cointegrating constraints in the empirical study of us data there is some support for the ricardian hypothesis but there are also some deviations from its predictions however the differences do not lend support to a keynesian view of budget deficits but rather to the view of expansionary fiscal contractions this can be motivated theoretically by uncertainty about future taxes in combination with prudent households

persistent deficits and the market value of government debt summary this paper investigates whether postwar canadian public financial policy satisfies a borrowing constraint direct tests of the present value relation suggested by this constraint shed light on the sustainability of current policy we examine monthly data on canadian federal government finances using tests for cointegration the finding is that the joint behaviour of real debt and real surpluses is inconsistent with intertemporal budget balance for the government one interpretation of this finding is that the government is systematically paying real returns to bondholders by issuing further debt alternatively bondholders may expect the government to finance future interest payments from a source other than primary surpluses e g the sale of physical assets much empirical macroeconomics is concerned with the effects of public financial policies numerous studies have examined whether such policies affect interest rates inflation or national income and its components these examinations raise the question of the efficacy of government budget deficits they generally assume that a borrowing constraint holds in the public finances some positive theories of public debt creation also make this assumption examples include barro s 1979 history of us federal deficits and sargent s 1986 rationalizations of recent us budgetary policy lucas and stokey s 1983 discussion of optimal taxation also involves this assumption hansen roberds and sargent 1987 outline the testable implications of present value budget balance and hamilton and flavin 1986 investigate the feasibility of recurring deficits by directly testing the us federal government s borrowing constraint such tests seem natural given both the recent boom is testing more complicated first order difference equations in macroeconomics and the widespread discussion of current deficits this paper tests the present value borrowing constraint using recently constructed data on the market value of outstanding canadian federal government debt we use monthly rather than annual as in hamilton and flavin data and conduct tests of univariate integration and of bivariate cointegration to investigate the joint time series properties of debt and deficits one finding is that real debt and real surpluses are integrated processes evidence of their cointegration is mixed and point estimates of the cointegrating vector suggest that the expected real rate of return on debt is negative moreover the surplus measured to include interest payments as government spending is nonstationary these findings are inconsistent

separating economic from political influences on government decisions abstract the public interest theory is a poor predictor of government decisions relative to interest group theories but a sophisticated public interest theory is a more serious alternative to the former testing the sophisticated theory s predictions is problematic however when public interest is coincident with an interest group s interests a four step method is developed that disentangles public interest and interest group interests by separating economic from political incentives applying the method to the national forest service decisions about wilderness designations indicates whether interest groups were successful in influencing allocation decisions and whether allocation decisions were in the public interest

public choice theory and antitrust policy we survey the pioneering contributions of robert tollison to the theory and practice of antitrust law enforcement inspired by his period of service during ronald reagan s first administration as director of the federal trade commission s bureau of economics tollison was the first scholar to apply public choice reasoning to the question why antitrust frequently fails to achieve its stated goal of protecting consumers against unwarranted exercises of market power in supplying evidence that the outcomes of antitrust processes are shaped more by special interests than by the public s interest he was instrumental in launching a wholly new research program

empirical evidence on ftc enforcement of the merger guidelines the justice department s 1982 1984 merger guidelines identify various factors concentration entry barriers ease of collusion efficiency that would thereafter determine whether the government will challenge a merger analysts have criticized enforcement agencies however for not following the guidelines and criticize the guidelines themselves for not identifying the weights attached to the factors using a 1982 86 sample of seventy horizontal mergers we examine which factors influenced federal trade commission decisions to challenge mergers the relative importance of the guidelines and other factors in merger challenges is measured and related empirical issues are also explored i introduction the 1982 1984 merger guidelines adopted by the antitrust division of the department of justice doj and followed by the federal trade commission ftc marked important antitrust policy changes by the reagan administration the herfindahl index replaced the fourfirm ratios used in the old 1968 guidelines as the measure of concentration other non concentration factors barriers to entry ease of collusion were elevated in importance in the 1984 revision of the 1982 guidelines efficiency considerations were for the first time generally included as a relevant factor however commentators who applauded the newer guidelines have complained subsequently that the reagan administration did not apply them the objections of two veteran academic antitrusters krattenmaker and pitofsky 1988 232 are typical certainly in many respects the announced merger guidelines are a substantial accomplishment this accomplishment however has been almost completely undercut by the administration s behavior in ignoring those guidelines in practice and instead enforcing without any public explanation a merger policy that was not only exceptionally lenient but substantially at odds with professed standards in an earlier paper coate et al 1990 we along with coauthor richard higgins tested one hypothesis why merger policy at least at the ftc in 1982 86 has departed from mere enforcement of the guidelines politics we showed how external pressures imposed on the commission by congress to block mergers independent of the factors identified in the guidelines as meriting a merger challenge are a statistically significant factor in the ftc s decision whether to challenge a merger in the present paper we use the same data seventy horizontal mergers from 1982 to 1986 to examine in greater detail the charges that the ftc has not followed the guidelines plus several related issues not considered in our earlier article these include the extent to which various guidelines factors are either necessary or sufficient for the commission to vote to challenge a merger and the role of the new efficiency criterion in merger evaluation an econometric model is presented as one approach to determine how the ftc balances the various guidelines factors this allows an estimate of the relative importance and influence of lawyers and economists in the evaluation process finally the data also permit an appraisal of the extent to which a structuralist or chicago approach to competition issues dominated merger votes at the ftc during the relevant period section ii discusses briefly the factors identified in the merger guidelines and the process by which the commission determines whether to oppose a proposed merger that section also identifies several testable hypotheses concerning the commission s reliance on the guidelines variables section iii then explains the data to be used for testing section iv the bulk of the paper presents empirical evidence concerning the ftc s use of the guidelines and related issues ii evaluating mergers at the federal trade commission the merger guidelines the federal trade commission enforces along with the justice department the federal antitrust laws including those applicable to mergers