the price elasticity of u s shale oil reserves we formulate a model of shale oil development that identifies how much of the u s resource base is likely to be economically viable at various price levels and what share of potential drilling sites are likely to be exploited the analysis is driven by the lognormal variability in productivity of individual wells we find the volume of reserves to be highly inelastic with respect to price the number of viable drilling sites is less inelastic which may explain why reserve additions and production fell much less than drilling activity during the recent industry slump

competition in political and economic markets do anomalies play an important role in explaining economic and political choices are political decisions more prone to anomalies irrationality and inefficiency than economic decisions in their integration of results derived from experimental psychology and applied political economy frey and eichenberger 1990 argue that social scientists ought to answer these questions in the affirmative after examining a large body of choice data frey and eichenberger conclude that individuals deviate from the axioms of rational choice in their view the resultant anomalies in individual behavior are unaffected by the aggregation which occurs in the economic marketplace they conclude that political decision making systems correct no larger a proportion of these anomalies than are corrected by the economic market in many institutional settings outlined in their paper decision making systems can be expected to magnify individuals deviations from rational behavior system wide irrational behavior will then produce less frequent trading and a less efficient allocation of resources in this note we examine two components of frey and eichenberger s argument first we reconsider their evidence for irrational behavior in light of a larger body of experimental data which includes choices made in market settings second we argue that competition in political markets will tend to eliminate aggregate anomalies just as it does in economic markets experimental economists often generate data which distinguish between choices individuals indicate in unstructured environments and transactions individuals consummate in markets initial statements regarding choices are often inconsistent with subsequent trading behavior these data indicate that the economist s maximization paradigm based on tenets of rational choice is

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

foreign direct investment and exports with growing demand we explore entry into a foreign market with uncertain demand growth a multinational can serve the foreign demand by two modes or by a combination thereof it can export its products or it can create productive capacityvia foreign direct investment fdi the advantage of fdi is that it allows for lower marginal cost than exporting does the disadvantage is that fdi is irreversible and hence entails the risk of creating under utilized capacity in the case that the market turns out to be small the presence of demand uncertainty and irreversibility gives rise to an interior solution where the multinational under certain conditions both exports its products and does fdi

capture and ideology in the economic theory of politics the economic theory of regulation long ago put public interest theories of politics to rest these theories have correctly been viewed as normative wishings rather than explanations of real world phenomena they have been replaced by models of political behavior that are consistent with the rest of microeconomics anthony downs 1957 james buchanan and gordon tullock 1965 george stigler 1971 sam peltzman 1976 recently however debate has arisen over whether some version of a public interest theory of regulation will have to be readmitted to our thinking about actions and results in the political arena what is at issue is the empirical importance of the altruistic publicly interested goals of rational actors in determining legislative and regulatory outcomes james kau and paul rubin 1979 kalt 1981 peltzman 1982 this study assesses the nature and significance of publicly interested objectives in a particular instance of economic policymaking u s senate voting on coal strip mining regulations the existence of such objectives is of course no contradiction of the economic view of human behavior kenneth arrow 1972 gary becker 1974 and may well be rooted in genetic biological history becker 1976 jack hirshleifer 1978 generally however individuals altruistic publicly interested goals have been given little attention this reflects the judgment that such goals are so empirically unimportant as to allow the use of occam s razor in positive models or well founded apprehensions that these goals are unusually difficult to identify measure and analyze notwithstanding the latter problem we find that approaches which confine themselves to a view of political actors as narrowly egocentric maximizers explain and predict legislative outcomes poorly the tracking and dissecting of the determinants of voting on coal strip mining policy suggest that the economic theory of politics has been prematurely closed to a broader conception of political behavior

the multinational firm direct investment is incorporated into a simple general equilibrium model of international trade the analysis focuses on an attempt to endogenize the internalization decision it is argued that a reasonable approach assumes that arm s length contracts must be simple so that complex arrangements require internalization the model relates direct investment to the degree of underlying uncertainty and to fundamental trade determinants such as relative factor endowments the behavior of the model contrasts sharply with that of the markusen helpman model which takes internalization for granted

unionised labour market and strategic production decision of a multinational i show that a foreign firm may sell the same product through both foreign direct investment fdi and export and this decision depends on the size of the product market it happens irrespective of whether the labour market in the domestic country or in the foreign country is unionised unlike the existing works focusing on risk diversification in presence of demand or cost uncertainty i explain the co existence of fdi and export in a world with certainty the endogenous determination of the wage rate plays an important role for my results my analysis shows the effects of the fixed cost of fdi and competition in the product market on the production strategy of the foreign firm

east west joint ventures and buyback contracts abstract contractual joint ventures cjvs and the buyback form of countertrade are popular methods that socialist countries use to attract foreign investment in this paper we explore some reasons why this is so and also explain two predominant characteristics of these contracts the existence of sharing rules and minimum standard requirements on inputs the model stresses the incentive problems involved when a socialist host country which does not allow foreign direct investment uses a cjv to obtain the fruits of some knowledge based production process from a multinational enterprise

foreign direct investment and intellectual property rights evidence from hollywood s global distribution of movies and videos abstract traditional thinking about intellectual property rights ipr suggests that as a country strengthens its ipr standards firms will move their governance structures away from equity based institutions such as foreign direct investment fdi towards more market based relations such as licensing agreements this hypothesis is explored by examining the behavior of hollywood studios in both the feature film and video markets in 40 foreign countries the analysis reveals that the behavior of hollywood studios is more complex than this although moderate iprs are associated with a high degree of licensing both high and low standards of ipr encourage more integrated governance structures

towards an understanding of the role of standard setters in standard setting abstract we investigate the effect of standard setters in standard setting we examine how certain professional and political characteristics of fasb members and sec commissioners predict the accounting reliability and relevance of proposed standards notably we find fasb members with backgrounds in financial services are more likely to propose standards that decrease reliability and increase relevance partly due to their tendency to propose fair value methods we find opposite results for fasb members affiliated with the democratic party although only when excluding financial services background as an independent variable jackknife procedures show that results are robust to omitting any individual standard setter

the tax treatment of r d expenditures of multinational enterprises abstract this paper investigates the tax treatment by national governments of r d expenditures of multinational enterprises in a noncooperative world the international tax system is generally shown to discourage r d investments by multinational firms for the special case of symmetric corporate tax rates the multinational is allowed to expense less than the total of its r d expenses worldwide internationalization of the firm s operations and ownership is demonstrated to lead to less generous expensing rules within individual countries and may even eliminate r d tax deductions altogether

national tax policies towards product innovating multinational enterprises abstract this paper examines source and host country taxation towards multinational enterprises that engage in product development national tax policies are interdependent as they influence the range of products that the multinational enterprise develops worldwide for the case where private and public goods are perfect substitutes the source country optimally provides a tax credit and does not capture any tax revenue from the multinational s host country operations however the source country still gains from the multinational s foreign operations as they induce additional product development

the boundaries of multinational enterprises and the theory of international trade this paper begins with a review of empirical evidence on multinational firms conceptual underpinnings of a theory are developed relying in particular on the notion of knowledge capital as a mobile joint input into geographically separated production facilities this idea is embedded in a simple two country general equilibrium model that supports multinational production in equilibrium under conditions consistent with the empirical evidence the final section examines internalization and shows why certain properties of knowledge capital also imply a preference for transferring technologies internally within the firm rather than through arm s length markets

the eclectic paradigm of international production a restatement and some possible extensions this article reviews some of the criticisms directed towards the eclectic paradigm of international production over the past decade and restates its main tenets the second part of the article considers a number of possible extensions of the paradigm and concludes by asserting that it remains a robust general framework for explaining and analysing not only the economic rationale of economic production but many organisational and impact issues in relation to mne activity as well

intellectual property protection and the industrial composition of multinational activity in a north south model with endogenous fdi we examine the impact of southern ipr protection on the mode and industrial composition of international technology transfer a novel feature of the model is that due to technological reasons industries differ with respect to their susceptibility to imitation in equilibrium licensing occurs in industries where the risk of imitation is low and fdi where it is of intermediate magnitude stronger iprs in the south i alter the industrial composition of multinational activity towards licensing at the expense of fdi ii reduce local imitation and iii increase licensing and to a lesser extent fdi

the optimal timing of a foreign direct investment analyses of the optimal timing of foreign direct investment fdi decisions have been curiously lacking in the general literature on multinational enterprises cf buckley 1979a b although comparative static analyses exist comparing exporting to the host country with market servicing from a production unit sited in the host country horst 1971 hirsh 1976 the only attempt to predict the timing of the switch from exporting to foreign based production is that of aliber 1970 although vernon 1966 gives a cost based rationale for the switch this chapter attempts to fill this gap in the theory of fdi section 2 1 outlines and criticises previous attempts to deal with the problem sections 2 2 4 present a simple model which ignores set up costs and sections 2 5 and 2 6 give a more detailed analysis including such costs further extensions of the theory are considered in section 2 7 and the conclusions are summarised in section 2 8 the problem emerges as being more complex than had previously been appreciated

licensing versus direct investment a model of internalization by the multinational enterprise a firm must decide whether to serve a foreign market by exporting building a foreign branch plant or licensing the production to an existing foreign producer the existence of reputations implies that any licensing agreement must provide a licensee with the incentive to maintain the reputation this creates a motive for the firm to internalize transactions by building a branch plant i e by becoming a multinational the model reflects a more general notion that the inability of the firm to control a licensee s agent s actions can provide incentives for multinational activity the paper explores the determinants of the firm s mode of operation as well as the consequences of certain government policies

ideological conviction and persuasion in the rent seeking society abstract the paper develops a model of rent seeking in a democratic political context where voting as well as rent seeking matters in this context the paper demonstrates that voter ideology is a constraint on the rent seeking game as well as a possible avenue of rent seeking in a setting where there are both rent seeking and ideological interest groups rent seekers can free ride on the efforts of ideologues which tends to reduce rent seeking effort in a setting where complementary economic and ideological interest groups coordinate their efforts both rent seeking and ideological conflict tend to increase

term limits causes and consequences this paper consults multiple literatures to specify andevaluate the economic rationales for term limitation particularly on congress i first consider theories that aroseto explain among related issues why individual states mightunilaterally self impose term limits on their own delegationsto congress next i consider two main lines of argument foruniversal limits both of which begin with the empiricalphenomenon of high and rising congressional tenure first supporters of term limits argue that higher tenure biaseslegislatures toward inefficiency big government highspending second higher tenure creates inefficient anti competitive conditions in the legislative election market term limitation would remedy these inefficiencies by virtue ofdecreasing average tenure these claims are then evaluated inlight of the evidence amassed in the literature based on theliterature reviewed this paper finds that while term limitswill reduce average tenure there is no evidence to suggestthat term limits will affect the underlying causes of theseinefficiencies further research on a more general reform which would strike deeper at these underlying causes isimplied

multinationals multi plant economies and the gains from trade a general equilibrium model of a multinational enterprise based on economies of multi plant operation is developed these economies are modelled as arising from the existence of a joint input whose productivity in each production facility is independent of the number of facilities maintained by a firm the multinational thus offers the world increased technical efficiency by eliminating the duplication of the joint input that would occur with independent national firms since this technical efficiency may come at the expense of increased market power the full determinants of home country host country and world welfare are considered

competing destinations gravity model an application to the geographic distribution of fdi the competing destinations formulation of the gravity model ensues from the fact that unlike the classical version this approach explicitly acknowledges the interdependence of the flows between a set of alternative locations i e country recipients are competing for foreign direct investment fdi this article examines empirically a range of theoretical hypotheses about the determinants of fdi location in a panel data regression framework the results of the estimation of a gravity model lend support to the proximity concentration and internalization hypotheses also the fact that fdi has been found to be decreasing in the competition posed by alternative locations is suggestive of the superiority of the competing destinations version of the gravity equation over its classical formulation

trade quality reputations and commercial policy this paper extends recent developments on the role of firm reputations in markets where product quality is unobservable at the time of purchase to an international trading context its primary motivation is to demonstrate the implications of this approach to the problem of quality uncertainty for commercial policy particularly the role of potential nontariff barriers such as origin labeling requirements and minimum quality standards copyright 1989 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

a model of expropriation with asymmetric information abstract incomplete information about a multinational enterprise s mne s technology may induce a host country to expropriate the mne s subsidiary even if other policy instruments are available the threat of expropriation does not always deter foreign direct investment so that expropriation may actually occur with nonzero probability perfect sequential equilibria are derived for vertically and for horizontally integrated mnes the model provides predictions regarding the probability of expropriation based on observable mne and host country characteristics countries would be better off if they could commit never to expropriate mnes

internalization and the mne a note on the spread of ideas this paper examines the reasons for the impact of buckley and casson s the future of the multinational enterprise 1976 on research in international business ib earlier work concentrated on ownership specific advantages or locational determinants rather than the central concept of internalization the few exceptions were incomplete or not well known internalization as applied to the mne spread rapidly because of the appeal to ib researchers of an analytically powerful idea that was based on institutional economics and involved an accessible methodology the spread was also helped by the parallel growth of transaction costs in the domestic theory of the firm and the publication activity of the authors and their associates

learning by drilling interfirm learning and relationship persistence in the texas oilpatch author s kellogg ryan m abstract production in many industries such as construction and heavy manufacturing relies on inputs from both lead firms and contractors these firms joint productivity often hinges on their ability to share information and coordinate activities suggesting that they have strong incentives to learn about each other s personnel procedures and expertise this learning differs from standard learning by doing in that it is relationship specific its benefits are not appropriable outside the relationship in which the learning takes place in this paper i empirically examine the importance of relationship specific learning using high frequency data from oil and gas drilling i find that the joint productivity of a lead firm and its drilling contractor is enhanced significantly as they accumulate experience working together this result is robust to other relationship specificities i also find that firms appear to recognize the benefits of joint experience controlling for other specificities lead firms are more likely to work with contractors with which they have substantial prior experience than those with which they have worked relatively little

determinants of japanese direct investment in us manufacturing industries abstract a hybrid model of direct investment is developed from an asset portfolio model and an industrial organization model of investment encompassing tests using disaggregated data validate the hybrid model while its two component models are rejected by at least some of the data the exchange rate is found to be an important explanatory variable for direct investment in some but not all of us industries equity purchase is more likely in r d intensive industries in privately held companies and in highly concentrated industries plant and equipment investment is more likely in industries with increasing returns to scale and in industries experiencing large net export deficits with japan jel f21

more on the choice between public and private production of a publicly funded service overall the empirical findings we reported in our 1987 article are strongly suggestive of the importance of nonmonetary considerations in the production mode choice nonetheless professor pack is quite correct to note that our conclusion 1987 225 226 overstates the evidence we presented for the primacy of nonmonetary factors in the production mode choice when her full model is considered regarding the full model despite the statistically significant findings for some demographic variables a formal theoretical model of their effects on the production mode choice is lacking notwithstanding pack s comments concerning scale economies we are persuaded that the theoretic void regarding the effects of demographic variables on the production mode choice still exists

equity joint ventures and the theory of the multinational enterprise this paper extends the internalization approach to the theory of the multinational enterprise mne to include an expanded role for equity joint ventures using the transaction cost paradigm of williamson this paper explains why joint ventures may sometimes be preferred over wholly owned subsidiaries also presented is empirical work on joint venture performance in developing countries which demonstrates that under certain conditions joint ventures can be the optimal mode of foreign direct investment

the ideological component of senate voting different principles or different principals evidence exists on both sides of the question of whether or not legislator specific ideologically driven shirking of constituent interest occurs in this paper we use a well known model of such shirking by senators as our point of departure and add measures of inter state constituent interests the role of campaign contributions and hence the importance of whether or not senators are up for reelection we find some evidence that the model provides a stronger explanation for senators up for reelection than for those who are not and that campaign contributions help determine voting decisions by these legislators finally accounting for inter state constituent interests shirking is not a significant variable in the voting decisions of senators facing reelection thus it appears that the reelection interests of some senators have been mistaken for ideologically driven shirking

are weak patent rights a barrier to u s exports abstract this paper assesses whether how and to what extent u s exports are sensitive to national differences in patent rights i estimate bilateral trade equations that account for trade distortions related to patent rights using data on state to country manufacturing exports in 1992 i find that weak patent rights are a barrier to u s exports but only to countries that pose a strong threat of imitation e g china the stronger patent rights required under the wto agreement increase u s exports to these high threat markets alternatively strengthening patent rights in countries that pose a weak threat of imitation reinforces monopoly power and reduces u s exports to these markets

legislative voting and the economic theory of politics empirical studies of legislative voting have multiplied since the mid 1970s early work 13 distinguished two modes of representation delegates who vote as voters want and trustees who use their own judgment more recently researchers have considered only delegates claiming that legislators who use their own ideology are shirking following principal agent theory representatives are conceived as conduits through which citizens transmit and express interests empirical work on this question however has found that the legislator s ideology explains more variation in vote choices than is explained by measures of constituent interest the seeming contradiction has led some 9 10 17 to reject the economic theory of legislator behavior as erroneous the truth is that no such theory has ever been fairly stated much less tested estimating equations have been ad hoc and the usual approach to measuring ideology has imposed correlation between the equation error and an explanatory variable 8 in both cases the result is

legislator voting and shirking a critical review of the literature we set out to critically review the progress in answering two related questions what determines how legislators vote and how can shirking by legislators be measured in the first category the hypothesis that legislators shirk in order to indulge their personal ideological preferences has led researchers astray the theoretical underpinning is shaky on two counts first legislators who indulge their preferences at the expense of their constituents preferences put themselves at a competitive electoral disadvantage second the original two stage procedure used to measure ideological shirking is severely flawed among many other problems the residual measure of shirking implicitly assumes that the median voter is the relevant constituent principal for the legislator agent

reputational comparative advantage and multinational enterprise 1 introduction when cultivating a new export market or attempting to expand its share of an existing market an exporter is likely to find that it has been preceded by its reputation minus a readily identifiable brand name quality reputation may solely reflect the country of origin for example when consumers are presented with a large amount of complex product information they may use the country of origin as a heuristic in forming product impressions without considering other product attributes 1 in this article i show that this heuristic decision making process can affect a firm s quality decision and can therefore become self fulfilling hence any bias that consumers have may be well founded however it is only correct because firms respond rationally to it colombia s garment industry provides an interesting example of a self fulfilling unfavorable quality reputation in international trade as described by morawetz 1981 a single colombian garment firm took a contract for 50 000 men s suits that was beyond its capability the poor quality result so tarnished the american importer s name that other high quality importers become wary of colombian sewn garments with the payoff to high quality production reduced colombian garment firms then concentrated on low quality markets and the newly found unfavorable reputation was justified in the model constructed here consumers see only a noisy signal of the product s quality at the time of purchase therefore their posterior beliefs are based on this noisy signal and the country of origin reputations as will be made clear higher quality firms benefit more from an increase in their country s reputation so that a better reputation generates an increase in the percentage of high quality firms in this way the reputation becomes self fulfilling and ex ante identical countries can be correctly perceived as differing in their percentage of high quality producers i next introduce an economy with two sectors one sector produces more complex goods where high quality is not easily verified and is more essential to the product s performance these may be technology intensive products or they may consist of the design and marketing of the goods produced in the other sector in particular high quality production costs and the consumer s value for high quality goods is greater in this sector i show that this sector becomes more profitable as the country of origin reputation increases hence if one country s equilibrium reputation is low and the other country s equilibrium reputation is high then the pattern of specialization and international trade can be determined solely by reputational comparative advantage 2 finally i show that reputational comparative advantage can overshadow a small technological comparative disadvantage in determining the pattern of international trade given this pattern of trade and specialization based on reputational comparative advantage a high reputation firm may expend resources to establish a multinational enterprise mne in the low reputation country for example many mne products require the differing specializations of both the high and low reputation countries although differing in motivation this result accords well with more traditional models of vertical mne 3 however this impetus for mne as well as its more traditional counterparts does not explain why the mne would choose foreign direct investment fdi over a less costly licensing arrangement 4 the quality uncertainty in this model along with the difference in equilibrium reputations allows us to address this question in particular appropriable reputational rents are generated by fdi when the high reputation parent firm procures and internalizes production with a low reputation host firm this fdi breaks the low reputation equilibrium of the host firm and generates reputational rents

technology transfer with moral hazard abstract this paper develops an incomplete contract model of the licensing relationship that is susceptible to the moral hazard problem the optimal contractual form of licensing derived in the model generates predictions that seem to be consistent with actual practice for instance the introduction of inputs that are not contractible and costly explains the prevalence of royalty contracts in the licensing relationship moreover the model is able to relate the size of the royalty rate to the parameters that represent the environments under which the concerned parties operate finally the model can be naturally extended to analyze the choice of a technology holder between direct investment and licensing in an attempt to serve a foreign market

tax incentives for import substituting foreign investment abstract this paper constructs a game theoretic model to study host country policy to attract import substituting foreign direct investment fdi investors are assumed to be incompletely informed about local investment conditions and taxes and tariffs are determined endogenously we show that in certain situations countries will offer tax incentives while in others they will impose a tariff wall to induce fdi tax incentives are motivated by the need to signal favorable investment conditions the paper predicts that tax incentives are more likely to be used the larger is the investment risk the smaller is the local market the smaller is the stock of previous fdi and the lower are trade barriers moreover we conjecture that incentives are positively correlated with the number of jobs created by the investment we test these predictions using data from the us department of commerce benchmark survey of us foreign investment and find that they are supported by the empirical evidence

how trade related are intellectual property rights abstract there is little empirical evidence about whether differing international levels of patent protection influence trade flows if a nation strengthens its patent laws it could experience higher or lower imports we specify an empirical model in which deviations of bilateral sectoral imports from anticipated levels are related to income trade barriers and patent laws patent regulations in the importing country are corrected for endogeneity through the use of instrumental variables the results of the final equations indicate that increasing patent protection has a positive impact on bilateral manufacturing imports into both small and large developing economies

intra firm trade abstract the study analyses intra firm trade that is the estimated one third of world trade which is transacted between affiliated parties as firms realize the increasing potential for integrating their operations throughout the world they are contributing to significant shifts in the patterns of interntional trade and industrial development as emphasized here international trade is inextricably linked to the growing and substantial share of transactions between affiliated parties conveyed through multinational enterprises

the political class and redistributive policies we study the eect of the composition of the political class on the size of government first we use a citizen candidate model to show that the extension of surage may be inconsequential for government spending when there are pre existing stricter requirements for holding oce we then test this prediction empirically using data from the 13 u s original colonies we nd that the extension of the franchise did not aect government spending or the composition of the political class however the subsequent elimination of economic qualications to hold oce increased government spending and enriched the class heterogeneity

determinants of foreign direct investment a tale of nine theoretical models abstract this paper presents a review of nine theoretical models of foreign direct investment fdi discussed are early studies of determinants of fdi 1 as well as determinants of fdi based on the neoclassical trade theory 2 ownership advantages 3 aggregate variables 4 the ownership location and internalization advantage framework 5 horizontal and vertical fdi models 6 the knowledge capital model 7 diversified fdi and risk diversification models 8 and policy variables 9 from each of the nine theories the relevant determinants of fdi are derived empirical studies indicate the importance of these determinants in the real world the paper shows that there is not one single theory of fdi but a variety of theoretical models attempting to explain fdi and the location decision of multinational firms therefore any analysis of determinants of fdi should not be based on a single theoretical model instead fdi should be explained more broadly by a combination of factors from a variety of theoretical models such as ownership advantages or agglomeration economics market size and characteristics cost factors transport costs protection risk factors and policy variables

how do foreign patent rights affect u s exports affiliate sales and licenses abstract this paper analyzes how foreign patent rights fprs affect us exports affiliate sales and licenses our approach is distinctive in three ways we apply ownership location and internalization concepts to link fprs with servicing decisions we account for the simultaneity of servicing decisions we estimate the relative effects of fprs on exports affiliate sales and licenses empirical findings show strong fprs increase us affiliate sales and licenses particularly across countries with strong imitative abilities further fprs have a larger effect on us knowledge transferred outside the country and firm relative to knowledge located inside the country and internalized inside the firm

self interest agency theory and political voting behavior the ratification of the united states constitution two hundred years ago the united states constitution replaced the articles of confederation as the fundamental law of the land when new hampshire became the ninth state to ratify the constitution on june 21 1788 the document represented the successful culmination of a movement to strengthen the national government scholars long have debated the possible causes for this important change in political institutions see james hutson 1984 a change which was to have major consequences for the development of the nation douglass north 1981 ch 14 despite the intense debate few scholars have either offered any theoretical model of the delegates voting behavior or employed formal statistical analysis to test their hypotheses about voting behavior at the 13 state ratifying conventions these omissions are surprising particularly since charles a beard 1913 long ago stated that the contest over ratification represented the ultimate test of the role of economic interests in the making of the constitution a test he never conducted given the recent interest exhibited by economists in explaining political behavior the absence of a rigorous analysis of voting at the 13 ratifying conventions is even more surprising economists and economic historians have all but ignored the ratification process in a progress report on our study of the making of the constitution we robert mcguire and robert ohsfeldt 1984 recently provided a tentative theoretical model and summarized preliminary indications drawn from incomplete data of delegates voting behavior during the drafting and ratification of the constitution more recently we mcguire and ohsfeldt 1986 mcguire 1988 presented the final results of our econometric studies of the voting behavior during the drafting of the constitution at the federal convention of 1787 in the present paper we offer a principalagent model and econometric tests of voting behavior during the ratification of the constitution at the 13 state conventions an analysis of voting at the ratification stage allows for a stronger test of the factors influencing voting behavior than an analysis of the federal convention of 1787 because of a greater number of delegates over 1200 versus 55 and a more straightforward voting process the paper not only addresses an important and controversial issue in economic history the role of economic interests in the ratification of the constitution it also advances our general understanding of polit

strategic investments and the development of multinationals a model of multinational behavior is presented in which either the existence or absence of multinationals can be a nash equilibrium outcome the key determinant is the relationship between plant scale economies a force for geographic centralization and multiplant economies plus transport costs leading to multinationality the model predicts that multinational enterprise production arises when firm specific and transportation costs are large relative to plant scale economies the latter are both a technological and a strategic variable in the entry decision copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

intellectual property rights in china the changing political economy of chinese american interests we review the evolution of modern chinese intellectual property right ipr laws and enforcement and explore economic and political forces involved in international conflicts over chinese ipr protection our analysis considers why the us and china moved from conflict to cooperation over intellectual property rights structural and institutional aspects of the political economy of iprs within each country are considered and data on chinese us trade in intellectual property intensive goods are examined we conclude that although enforcement of iprs within china continues to be relatively weak chinese ipr institutions are converging on those in the oecd nations

hotelling under pressure we show that oil production from existing wells in texas does not respond to oil prices while drilling activity and costs respond strongly to explain these facts we reformulate hotelling s class

tight oil market dynamics benchmarks breakeven points and inelasticities abstract when comparing oil and gas projects their relative attractiveness robustness and contribution to markets various dollar per barrel benchmarks are quoted in the literature and in public debates among these benchmarks are a variety of breakeven points also called breakeven costs or breakeven prices widely used to predict producer responses to market conditions these analyses have not proved reliable because 1 there has been no broadly accepted agreement on the definitions of breakeven points 2 there are various breakeven points and other benchmarks each of which is applicable only at a certain stage of the development of a resource and 3 each breakeven point is considerably more dynamic than many observers anticipated changing over time in response to internal and external drivers in this paper we propose standardized definitions of each breakeven point showing which elements of field and well development are included in each we clarify the purpose of each breakeven point and specify at which stage of the development cycle the use of each becomes appropriate we discuss in general terms the geological geographical product quality and exchange rate factors that affect breakeven points we describe other factors that contribute to tight oil market dynamics including factors that accelerate the growth and retard the decline of production technological and legal influences on the behavior of market participants and infrastructure labor and financial inelasticities the role of tight oil in short term and medium term oil market stability is discussed finally we explore the implications of a broader more rigorous and more consistent application of the breakeven point concept taking into account the inelasticities that accompany it

intra industry trade and investment under oligopoly the role of market size this paper examines the factors which influence intra industry trade under oligopoly it argues that major determinants are the size of markets and the height of trade barriers if national markets are large and trade barriers high intra industry trade is replaced by cross investment between countries whereby firms serve the markets of their foreign rivals by investing abroad instead of exporting this result is established formally using a simple two country two firm game theoretic model the same model is also used to examine how barriers to trade influence prices and output the paper concludes with a brief discussion of how economic growth affects the volume of intra industry trade copyright 1992 by royal economic society

intellectual property rights and the mode of technology transfer abstract transferring technology in an environment where patent protection is uncertain can pose significant risks to an innovating firm s ability to appropriate rents this paper incorporates asymmetric information in a screening game where the innovating firm has the choices of licensing a new product at arm s length to a foreign firm exporting it or licensing it to a subsidiary subsidiary production avoids the risk of imitation but involves higher costs for the innovating firm the gains to the southern country from the lack of intellectual property right protection may be offset by strategic behavior by northern firms who opt for technology transfer via subsidiary or monopoly production

licensing versus direct investment implications for economic growth we develop a symmetric two country model of foreign direct investment fdi that captures the internalization decision and its implications for both the rate and magnitude of innovations when mode choice licensing versus fdi is fixed a subsidy to multinational production increases the rate but decreases the size of innovations when mode can switch the rate and size of innovations both increase provided the subsidy is not too large although innovation size decreases for industries where firms already were choosing fdi innovation size increases for industries where firms switch from licensing to fdi because multinationals choose larger innovations than licensors 2002 elsevier science b v all rights reserved