the political economy of inflation bargaining structure or central bank independence the causes of inflation are commonly analyzed as the function of either the organization of wage bargaining or the independence of the central bank although these explanations are widely treated as competing recent evidence suggests that there may be merit to both arguments this paper presents a game theoretic model of wage bargaining and monetary policy making that shows why the two institutional causes are not only complementary but elements of a more encompassing logic the empirical superiority of this synthesizing model is demonstrated by reanalyzing data used in al marhubi and willett 1995 and by presenting new evidence

measuring heterogeneous reservation prices for product bundles this paper develops a model for capturing continuous heterogeneity in the joint distribution of reservation prices for products and bundles our model is derived from utility theory and captures both within and among subject variability furthermore it provides dollarmetric reservation prices and individual level estimates that allow the firm to target customers and develop customized and nonlinear pricing policies our experiments show that regardless of whether the products are durables or nondurables the model captures heterogeneity and predicts well models that assume homogeneity perform poorly especially in predicting choice of the bundle furthermore the methodology is robust even when respondents evaluate few profiles self stated reservation prices do not have any informational content beyond that contained in the basic model the direct elicitation method appears to understate overstate the variation in reservation prices across consumers for low priced high priced products and bundles hence this method yields biased demand estimates and leads to suboptimal product line pricing policy the optimization results show that the product line pricing policy depends on the degree of heterogeneity in the reservation prices of the individual products and the bundle a uniformly high price strategy for all products and bundles is optimal when heterogeneity is high otherwise a hybrid strategy is optimal

the economics of worldwide stagflation the last fifteen years have witnessed dramatic changes in economics not only in the manner in which the economics profession views economics but also in the manner in which the general public views economics and economists by the late 1960 s there had emerged more or less a consensus macroeconomic framework that is an agreed upon structure to be used to study economic problems at the aggregate level robert solow stated as quoted in leijonhufvud 1968

the anti inflationary influence of corporatist structures and central bank independence the importance of the hump shaped hypothesis many studies have found strong negative correlations between central bank independence and inflation but the casual significance of this relationship is often challenged we find that the negative relationship remains even when a number of other explanatory variables are considered special attention is given to the role of corporatism following calmfors and driffell it is argued that both high and low levels of centralization should be associated with lower inflation we present empirical support for his hump shaped hypothesis and find that the inclusion of corporatism does not diminish the significance of central bank independence

cost structure and productivity growth in european railway systems the purpose of this paper is threefold first to empirically investigate the coststructure of the railway systems in ten european countries belgium denmark france germany greece italy luxembourg the netherlands portugal and the united kingdom of the european union second to provide measures of economies diseconomies of scale and fully investigate the manner by which economies of scale have affected the cost structure of the system and have been affected by the growth in input prices and technology and third to measure economic efficiency and identify its sources in achieving this purpose the translog technology has been used and the translog model was estimated using time series data covering the period 1969 1993 zellner s iterative method was used in estimating the translog model

foreign direct investment competition and industrial development in the host country this paper analyses the impact of foreign direct investment fdi on the development of local firms we focus on two likely effects of fdi a competition effect which deters entry of domestic firms and positive market externalities which foster the development of local industry using a simple theoretical model to illustrate how these forces work we show that the number of domestic firms follows a u shaped curve where the competition effect first dominates but is gradually outweighed by positive externalities evidence for ireland tends to support this result specifically applying semi parametric regression techniques on plant level panel data for the manufacturing sector we find that while the competition effect may have initially deterred local firms entry this initial effect has been outpaced by positive externalities making the overall impact of fdi largely positive for the domestic industry

the impact of deregulation on the production structure of the motor carrier industry empirical analysis of the motor carrier industry pre and post regulatory reform reveals that deregulation resulted in significant changes in firm production structure and lower real average costs translog cost functions for firms operating in 1977 and 1983 were estimated and compared for other specialized commodity carriers fitted average costs were computed from these functions the results indicate significant differences in the cost functions and real costs that cannot be attributed to technological changes but rather suggest efficiency gains the results also suggest that it is inappropriate to predict outcomes of deregulation using empirical analyses of firms in the regulated environment

contribution of new technology based firms to the strengthening of technological capabilities in intermediate economies this paper argues that the main contribution of new technology based firms ntbfs is their technological dynamism which invests them with two major roles a challenging role implicit in their creation whereby they break with the inertia of existing organisations and a more long standing technology transfer role acting as a source of new technologies which they acquire and deliver by several means the performance of these roles can be particularly valuable in less advanced economies contributing to a strengthening of the indigenous capabilities in new technologies empirical research on a sample of portuguese ntbfs has shown that these firms have indeed performed an important function by accessing new technological knowledge both from local public research and from more advanced countries which they further developed turned into marketable applications and commercialised but the conditions found in an intermediate economy such as portugal present ntbfs with particular problems the limited number of knowledgeable users prepared to adopt their products and the firms difficulty to reach other type of clients can be a major obstacle to their development therefore if the country is to profit from ntbfs challenging behaviour and technological competences their acquisition and diffusion efforts should be backed and complemented by demand oriented policies

the implications of institutional design for macroeconomic performance reassessing the claims of consensus democracy the choice between a proportional representation pr or plurality based electoral system is commonly assumed to involve a trade off the former is assumed to provide fairer representation but at a

labour market institutions and economic performance labour markets richard freeman do particular types of labour market institution hold the key to economic success should other countries try to emulate the flexibility of the american labour market or the centralization of swedish style corporatism since 1970 within the oecd there has been a sharp divergence both of economic performance and of indicators of labour market structure the paper uses union density and the degree of wage dispersion across industries to proxy a country s underlying labour market institutions in assessing economic performance it is argued that cross country differences in output growth were much smaller than differences in employment growth for given output growth there is a clear negative relationship between employment growth and real wage growth across countries why do different countries find themselves at different points on this trade off the final part of the paper examines the correlation between indicators of labour market structure and the position on the wage employment trade off it concludes that the degree of wage dispersion across industries is the most important indicator of market structure and that countries with very high or very low dispersion typically the countries with highly centralized or highly decentralized bargaining in the labour market have better employment performance than countries with intermediate degrees of centralization and wage dispersion

determinants of inflationary performance corporatist structures vs central bank autonomy studies by economists have shown that countries with autonomous central banks experience lower inflation than others banian laney and willett 1983 and bade and parkin 1987 one reason for this may be that countries with autonomous central banks are less likely to monetize their deficits burdekin and wahar 1990 studies by political scientists have used measures of the strength of corporatist structures to explain macroeconomic outcomes cameron 1984 however neither economics nor political science research has employed measures of both central bank autonomy and the strength of corporatist structures to explain comparative inflation rates the present paper tests whether measures of corporatist structures and central bank autonomy explain the comparative inflation performance of eighteen industrialized countries this issue is of great importance for students of piecemeal monetary reform in countries where the central banking structure is susceptible to reorganization the results of this paper should inform parties who are active in the reformation and reorganization of central banks in lesser developed and nascent market economics throughout the world

tourists acceptance of euro pricing conjoint measurement with random coefficients abstract pricing in the new european currency may have an influence on how consumers perceive a travel package and the company selling it the paper introduces a set of interconnected explanatory variables which determine the influence of euro pricing versus pricing in local currency an empirical study employs the second generation structural equation modelling to perform random coefficient estimates for the part worth coefficients in a conjoint measurement design

product line rivalry and market segmentation with an application to automobile optional engine pricing this paper addresses the questions whether and when the pricing practices on base products may differ from those of premium products sold with options or add ons various alternative models are considered a monopoly model a model of brand rivalry with full consumer information and a model of rivalry in which consumers are only well informed about base product prices only the brand rivalry model with limited consumer information predicts that premium products have larger percentage markups than base products provided that brand rivalry is sufficiently intense empirical evidence on base and premium product pricing in the automobile market is consistent with the limited information model and inconsistent with the other two models

a probabilistic approach to pricing a bundle of products or services the authors propose a probabilistic approach to optimally price a bundle of products or services that maximizes seller s profits their focus is on situations in which consumer decision making is o

how buyers evaluate product bundles a model of anchoring and adjustment how do buyers evaluate a bundle of items the most common approach in earlier economic analyses see e g adams and yellen 1976 schmalensee 1984 was to start with the additivity assumption the overall utility of a bundle equals the sum of the bundle items individual utilities the restrictiveness of this additivity assumption was later recognized and removes dansby and conrad 1984 guiltinan 1987 hanson and martin 1990 however the question of how buyers evaluation processes may account for additivity or a lack thereof has remained largely unexplored

the european central bank independence accountability and strategy a review this paper reviews research on central banking and monetary policy with special emphasis on the position of the future european central bank nowadays it is often thought that an independent central bank with an explicit mandate to aim for price stability constitutes an important institutional device to assure price stability indeed the ecb will be one of the most independent central banks as follows from the codings of various indicators measuring legal independence still it does not follow straightforwardly from the literature that the statute of the ecb is optimal it is also argued that the accountability of the ecb is poorly arranged for in comparison with that of several national central banks finally the discussion about the monetary strategy of the ecb is reviewed

research note competitive bundling and counterbundling with generalist and specialist firms bundling which is the practice of selling two or more products or services in a package is a pervasive marketing practice and is often used as a strategic competitive tool however there has not been enough consideration of competitive bundling situations in which exit of a competitor is not a concern in this paper we address this issue by identifying conditions under which strategic competitors may or may not resort to bundling when competitor exit considerations are absent we study competition between a multiproduct generalist firm and two single product specialist firms in two product categories one of which has undifferentiated products and the other has differentiated products in our model the specialist firms can form an alliance to bundle their products in competing with the generalist firm in contrast to the previous literature we find that concurrent bundling by competitors if it occurs in equilibrium is profitable we also find that when one competitor bundles and the other does not the bundling firm gains a greater share of customers and makes a higher profit however when conditions favor counterbundling by a competitor such counterbundling helps the competitor retain its customers finally we note that under other market conditions concurrent bundling by competitors escalates price competition to the extent that retaining customers through bundling is not profitable in such a case we show that strategic competitors are better off having asymmetric product lines with one competitor bundling and the other selling unbundled

central banking as a political principal agent problem i introduction conventional wisdom holds that during election periods political leaders have incentives to misuse policy instruments to enhance their chances of reelection rogoff and sibert 1988 construct a rational political economy model of monetary policy based on this theme 1 the results of their model can be interpreted in the following way 2 society elects a leader every other period whose competence affects the level of output in the economy and private agents will tend to vote for the incumbent if the level of output is expected to be higher than that which can be provided by an unknown challenger voters have imperfect information regarding the politician s true impact on output and exogenous shocks to output and consequently cannot disentangle the effects of one from the other in an election period this asymmetry of information gives the incumbent an incentive to expand output through the use of inflationary monetary policy in order to appear more competent than he really is however rational voters are aware of this incentive to inflate and adjust their expectations such that in equilibrium no gain in output occurs and the economy suffers from excessive inflation an implication of the rogoff sibert model is that unless a society does away with elections as a way to choose policymakers excessive inflation and a political inflation cycle will be an unavoidable cost of democracy however societies can try and have tried to avoid these ill effects by taking the power of money creation away from the elected officials and giving it to an appointed independent central banker who will presumably pursue the public good but can this approach actually work the problem with this proposal is that the central bankers well being in many respects reappointment post central bank employment opportunities avoidance of public criticism etc often hinges on pleasing their political benefactors giving the central bankers incentives to act in the interest of elected officials 3 as a result the central banker could pursue objectives different from society s and may actually function as a veil for the elected policymaker in the real world this veil is not complete but partial and hence we can characterize the relationship between the monetary authority and society as a principal agent problem the advantage of delegating power to an appointed central banker and then erecting appropriate institutions is that the inflation problems may be resolved without abandoning the electoral process in this paper we develop a rational political business cycle model that starts from the foundations laid down by rogoff and sibert we depart from their model by having monetary policy delegated to a central banker who is appointed by the elected leaden the concern about reappointment is what motivates the agency problem the central banker would like to be reappointed and this desire leads her to partially accommodate the wishes of the current administration which in turn may not coincide with the desires of the electorate we then analyze the problem faced by a central banker who is concerned about her own selfinterest as well as social well being it is this feature that turns the setting of monetary policy into a political principal agent problem the contributions of our approach to modelling the agency problem of central banking are 1 it explicitly incorporates reappointment concerns into the decision process of the central banker which heretofore has not been done in the literature and 2 we explicitly model the source of the agency problem unlike previous research that simply assumes an agency problem exists our key results are as follows in equilibrium the pursuit of her own self interest leads the central banker to create a socially inefficient inflation bias while rogoff and sibert also obtain this result our explicit functionalform model allows us to analyze this bias in more detail and tie it directly to the strength of the relationship between the central banker and the current administration

regulatory reform and technical change new evidence of scale economics in trucking economists have long argued against the regulation of motor carriers in the united states because the industry has been considered to be competitive in nature federal control of trucking has produced inefficiently high rates as well as costs advocates of regulatory reform have foreseen benefits accruing to shippers and consumers in general as greater rate freedom the entry of new firms and the removal of regulatory constraints lead motor carriers to reduce costs 16 and lower prices 17 many of these projected benefits were premised on the perceived competitive market structure of the trucking industry these perceptions have been largely supported by pre deregulation cost studies of general freight carriers which have found evidence of either constant returns to scale or diseconomies of scale friedlaender and wang chiang 8 find that for 20 interregional carriers over 1965 73 the typical firm operating at the sample mean is subject to mild scale diseconomies in a subsequent study of multiproduct economies of scale using 1976 proprietary data they 14 obtain the same basic results the typical firm has constant returns to scale while the representative large firm operates under moderate diminishing returns daughety nelson and vigdor 4 also find mild decreasing returns to scale for a panel of firms spanning 1953 58 in another study over 1974 79 friedlaender and bruce 6 find slight economies of scale for the typical firm based on simulations with the largest and smallest firms in their sample they suggest that over time large carriers have become more characterized by scale economies and small carriers by scale diseconomies however their evidence is far from clear cut given this conventional wisdom that the technology of the less than truckload segment of this industry was constant returns to scale before deregulation few if any economists doubted the desirability of the motor carrier act of 1980 the purpose of this paper is to determine empirically whether the sweeping legislative changes were justified on solely economic grounds it is possible that previous cost studies are biased as a consequence of the regulatory constraints facing the firms has deregulation itself corrected for distortions created by the regulatory environment and thus produced changes in the production choices of trucking companies was friedlaender and spady s 7 contention that truckload carriers may have experienced regulatory rather than technology based increasing returns to scale correct if so perhaps past results for general freight carriers are similarly due to regulation however in this case the reason may be regulatory

reconsidering the principal components of central bank independence the more the merrier we use principal component analysis to reassess the link between different attributes of central bank independence and inflation performance we suggest that coding problems may account for the fact that almost none of the attributes included in the cukierman index has a systematic plausible relationship with inflation the multi faceted cukierman index also seems to be out performed by a much narrower index focusing solely on policy independence these findings point to the importance of using public choice analysis to isolate the real problem here namely finding specific central bank structures that effectively insulate central bankers from political pressures

gaussian demand and commodity bundling in an important and widely cited essay adams and yellen 1976 examine the use of package selling as a price discrimination device they consider a monopolist producing two goods with constant unit costs and facing buyers with diverse tastes the marginal utility of a second unit of either good is assumed to be zero for all buyers the two goods are independent in demand for all buyers so that any buyer s reservation price for the first unit of either good is independent of the market price of the other thus the maximum amount any buyer would pay for a bundle consisting of one unit of each good is the sum of the two reservation prices and buyers are completely described by the values of those two prices 2 resale markets are assumed away in order to obtain comparative results for alternative pricing strategies the distribution of reservation prices in the adams yellen framework is assumed to be bivariate normal implications of gaussian demand are explored pure bundling is shown to operate by reducing buyer diversity thus facilitating the capture of consumers surplus it generally makes buyers worse off than unbundled sales it is more profitable if average reservation prices are high enough mixed bundling combines advantages of both pure bundling and unbundled sales and it is generally strictly more profitable than either bundling which treats goods symmetrically seems most attractive under symmetric reservation price distributions i am indebted to severin borenstein for superb research assistance to the ford motor company for research support through a grant to m i t and to the harvard economics department for housing me as a visiting scholar while most of this research was performed of course only i can be held responsible for this essay s shortcomings 1 the first clear recognition of this possibility seems to have been by stigler 1968 but also see burstein 1960 2 paroush and peles 1981 relax the assumption that consumers purchase at most one unit of each good but they consider only two types of buyers both with linear demand functions they retain the assumption that demands are independent for all buyers telser 1979 and phillips 1981 use different frameworks to analyze bundling policies spence 1980 explores the relation between bundling across commodities as here and bundling multiple units of the same

central bank independence and macroeconomic performance some comparative evidence this note uses information on a sample of sixteen oecd countries to assess the relationship between central bank independence and macroeconomic performance as previous work suggests politically controlled central banks are more likely to pursue policies that lead to high and variable inflation however the authors find little evidence that political control of central bank policy has any impact on measures of the level or variability of growth unemployment or the ex ante real interest rate copyright 1993 by ohio state university press

insiders vs outsiders in the hotel sector we investigate whether entering an official hotel classification system is as lucrative as suggested in the tourism management literature indeed in countries in which the official hotel classific

central bank independence and inflation corporatism partisanship and alternative indices of central bank independence a well developed theoretical literature suggests that central bank independence causes low inflation empirical work supporting this hypothesis is unsatisfactory however for two reasons statistical analysis has only recently begun to include control variables and important political variables that are related to inflation have not yet been included analysis has not yet undertaken a systematic comparison of alternative indices of central bank independence this paper addresses both weaknesses by testing the explanatory power of eight indices of central bank independence in a political economic model of inflation the results suggest that while support for the central bank independence hypothesis survives a relatively inclusive set of control variables support for the hypothesis is not independent of the particular index upon which analysis relies

inflation and central bank independence a meta regression analysis using 59 studies we perform a meta regression analysis of studies examining the relationship between inflation and central bank independence cbi the studies considered are very different with respect to the cbi indicator used the sample of countries and time periods covered model specification estimators used and publication outlet we conclude that there is a significant publication bias however we also find a significant genuine effect of cbi on inflation differences between studies are not caused by differences in cbi indicators used

a hybrid conjoint model for price demand estimation abstract recent developments in conjoint analysis include the introduction of hybrid models in which part worths estimated from self explicated data are combined with information obtained from full profile evaluations this paper extends the hybrid approach to conjoint problems entailing multiple suppliers with particular emphasis on competitive price relationships

regulation and industrial organization this paper examines the effects on firm behavior and industry structure of industry wide price regulation by the state such regulation wherein regulators set prices with regard to an industry wide aggregate performance measure has been and still is widely used and is shown to induce inefficiencies in firm operation in general such regulation can result in setting prices high enough to maintain inefficient firms and it encourages to inefficient firm operation due to incentives to inflate costs and averch johnson effects

the impact of unionization on motor carrier costs i introduction the increasingly competitive markets fostered by the motor carrier act of 1980 have forced motor carriers to focus on cost saving strategies intended to reduce operating miles fuel consumption and capital and labor expenses there are two reasons unions firms may be at a competitive disadvantage in these efforts first although the union nonunion wage differential has decreased following regulatory reform rose 1987 and hirsch 1988 find that union firms still pay higher wages second managers of unionized firms may have less flexibility in the use of inputs since union work rules restrict the activities and substitutability of drivers terminal workers and terminal facilities indeed harrington 1987 reports that post 1980 trucking expenses are still 40 higher for unionized motor carriers than for nonunion firms unionization may affect carrier cost both by increasing the price of labor and by potentially affecting cost function parameters if union rules make labor less productive the entire cost function will shift upwards for a given set of factor input prices further freeman and medoff 1982 argue that work rules may be expected to result in reduced elasticities of substitution between labor and other inputs in the unionized setting indeed they find that substitution between production labor and other labor in manufacturing is generally lower in unionized settings the impact of unionization on production has been investigated in industries such as construction coal mining hospitals and the cement industry by allen 1984 1986a 1986b byrnes et al 1988 and clark 1980a 1980b the results have been inconclusive with unionized firms being more productive than nonunion firms in some instances and less productive in others studies such as allen 1986c and addison and hirsch 1989 have utilized production function methodologies that use restrictive functional forms which impose homogeneity and identical elasticities of substitution between pairs of inputs allen 1986c examines the relative efficiency of union and nonunion firms with a translog cost function allowing for union effects using intercept and slope parameters that vary by union status in his study of different types of construction projects he finds significant differences between the cost functions for union and nonunion firms but no evidence of the inelasticity of factor substitutions as hypothesized by medoff and freeman in fact his estimates of factor demand elasticities show no discernible pattern for union versus nonunion firms leading him to conclude that work rules do not have the anticipated impact on elasticity the purpose of this study is to test whether unionization impacts motor carrier costs and if so to determine the direction of the impact of particular interest is whether the work rules imposed by the teamster s union have had a significant impact on factor substitutability in unionized firms as argued by freeman and medoff 1982 friedlaender and spady 1981 daughety et al 1985 mcmullen and stanley 1988 grimm et al 1989 and ying s 1990 studies of motor carrier industry costs have used translog cost functions which implicitly assume that union and nonunion cost functions arise from the same production technology this is equivalent to accepting the hypothesis that unionization does not affect the production structure of motor carrier firms if unionization does affect a firm s production process the results from these studies could be biased accordingly this study uses a translog cost function to test for differences in the cost structure of union and nonunion carriers not only is the translog cost function standard in the motor carrier literature permitting comparison of these results with those of previous work it also allows the flexibility necessary to examine the differential impact of unions on cost function parameters and elasticities of substitution between factors

products with branded components an approach for premium pricing and partner selection an increasing number of products are being sold with components that themselves are brand names examples are personal computers with intel microprocessors and diet soft drinks that use the nutrasweet formulation branded components may alter consumers valuation of the bundle necessitating changes in the ways firms identify and price such bundled products surprisingly the existing marketing literature is silent on this issue the purpose of our paper is to propose an analytical approach that helps marketers of products with branded components make optimal pricing and partner selection decisions our managerial objectives are twofold a to the seller of the bundled product we suggest the optimal bundled product offering optimal selling prices of alternative products revenues and profits and b to the branded component manufacturers we indicate the most favorable alliance partners and payoff gains losses of aligning with other branded components instead of unbranded alternatives our analytical approach is also likely to be helpful to academics researching bundling and ingredient branding issues the specific problem modeled assumes the bundled product has two components that are consumed jointly furthermore each component can be either a brand name or unbranded in this model the consumer has no control over the choice of the components in the bundle the seller decides what form of bundle components i e branded or unbranded to offer we assume that the product that is marketed eventually enjoys a monopoly drawing from research in signaling and brand alliance we posit each branded component may either enrich or suppress the value of the partnering component in the bundle as perceived by the consumers our approach has three methodological stages first we build an individual level model to assess the valuation of alternative products and their principal components at the level of a randomly drawn consumer to do so we rely primarily on the theory of reservation prices and weber s theory on price value changes second we aggregate such valuation across consumers to assess the market s overall valuation for this purpose we invoke parametric distributions based on integral transform theory third we develop payoff functions based on market valuation of alternative products and supply side costs the managerial objectives are met based on results from this stage our approach was successfully applied to the context of a university bookstore that intends to sell windows based laptop computers the two principal components of the laptop computer bundle are the microprocessor chip and the personal computer platform on which the chip is implanted the seller may choose either compaq with intel inside or a simpler bundle featuring one of these with an unbranded complementary component or an entirely unbranded bundle we used data collected from 192 potential consumers via a survey included in the survey were measures of consumers perceptions of functional aspects of the components and their reservation prices for alternative bundled products the approach identified the most profitable bundle for the seller and its optimal price it also provided estimates of the revenue impact of the gain or loss for each branded component by partnering the other branded component instead of the unbranded alternative as such the model facilitates the determination of the optimal price price premium and profits for products with branded components as well as the identification of the ideal partner for each branded component manufacturer it is apt to caution that products with branded components need not always lead to price premiums or lead to win win outcomes reasons such as incongruity between the branded components or domination of one of the components over the other may drive potential consumers away thus hurting profits implications of the results to negotiate component prices are discussed in the paper the study limitations and directions for future research are also presented

checks and balances and the supply of central bank independence abstract the paper analyzes the institutional conditions under which policymakers can credibly commit to an independent central bank and thereby mitigate the well known time consistency problem in monetary policy it is shown theoretically that granting independence via a statute is only credible for legislative systems with at least two heterogeneous decision making bodies which both have veto rights for example bicameral systems this thesis is supported by empirical evidence the legal independence of central banks is significantly higher in those oecd countries whose legislative processes are characterized by extensive checks and balances furthermore the negative relation between legal independence and inflation is larger in countries with checks and balances than in countries without checks and balances

small firm entry in us manufacturing a cross section empirical analysis examining the entry behavior of small firms is provided in this paper while the authors find that certain traditional market structure characteristics and entry barriers have a strong impact on small firm entry behavior the reliance upon innovative strategy by small firms also explains a significant amount of the variation in the pattern of entry by small firms they conclude that small firm entry is at least partially determined by entry barriers industry specific characteristics facilitating retaliatory conduct by incumbent firms and the reliance upon innovative strategy by small firms copyright 1989 by the london school of economics and political science

market structure and innovation a survey economics we all recite deals with allocation of limited resources towards satisfaction of unlimited wants resources are typically identified as land labor and capital plus a technology that determines their transformation into consumer goods disparity between the available goods and services and the desired gives rise to scarcity and the question of what how and for whom to produce the focus then shifts to description and evaluation of alternative resource allocation mechanisms for making the choices the pareto criterion by which an allocation of resources is deemed efficient if any reallocation improving the position of some individual worsens the position of others is a commonly employed gauge of a mechanism s performance in the absence of externalities increasing returns to scale and uncertainty a perfectly competitive market system yields a pareto optimal allocation of resources this underlies the view that individual self interest is compatible with society s interest the further conclusion that pareto optimality may not be achieved via the market system in the presence of monopoly elements provides an economic rationale for antitrust laws the objective of a resource allocation mechanism appears to be according to the analysis described above to make the best of available resources the alternative objective of relaxing constraints through expanding the resource base or developing new technology seems to be beyond its scope thus until rather recently technical advance had been regarded in the mainstream of economic theory as unmotivated by the quest for profits and substantially unaffected by resource allocation instead as j schmookler observed technology had been viewed as a parameter like the weather affecting the outcome of resource allocations but itself unaffected by them 84 1965 evidence that technological progress has significantly contributed to growth in productivity together with a substantial increase in research and development activity largely financed by government and carried out by industry see f machlup 51 1962 may have spurred reconsideration of this view once technical advance is regarded as an economic variable it is natural to in

determinants of firm start up size an application of quantile regression for ireland in this paper we provide empirical evidence on the determinants of firm start up size using data for the manufacturing sector in ireland and compare our results with recent findings for portuguese manufacturing industries mata and machado 1996 to allow for firm heterogeneity between firm entrants we use quantile regression techniques for our empirical estimation we find that the determinants of start up size differ in their importance for small and large scale entrants in particular industry size and industry growth seem to affect large scale entrants only

wage differentials of transportation industries deregulation versus regulation this article investigates the wage differentials of similar occupations in three for hire transportation carrier industries railroad truck and motor bus under regulation and deregulation the estimation results indicate that the union wage gaps among all occupations have widened under deregulation specifically the union wages of railroad occupations have increased relative to those of truck drivers and the union wages of truck drivers have increased relative to those of motor bus drivers further wage gaps for all occupations for this period are greater among nonunion than among union workers jel l92 i introduction economic regulation of u s transportation carrier industries has been classified into three distinct eras the monopoly regulatory era the competition regulatory era and the regulatory reform era beginning in the late 1800s the 1930s and the 1970s talley 1983 these eras addressed carrier abuses destructive intramodal and intermodal competition and the negative impacts of regulation respectively the 1887 interstate commerce act sought to prevent monopolistic abuses and limit discriminatory practices of railroads the motor carrier act of 1935 of the competition regulatory era placed motor carriers freight and passenger under federal regulation by the 1970s advocates for federal regulatory reform argued that economic regulation protected inefficient carriers promoted high rates and fares and in general fostered an inefficient allocation of resources subsequently a number of deregulation or regulatory reform acts were passed including the railroad revitalization and regulatory reform act of 1976 the staggers rail act of 1980 the motor carrier act of 1980 and the bus regulatory reform act of 1982 though shippers and passengers have generally benefited from transportation deregulation paying lower real rates and fares the impact on carrier labor earnings has been negative for example the real weekly wages of union railroad engineers have declined 11 7 talley and schwarz miller 1998 the real hourly wages of union and nonunion for hire truck carrier drivers have declined 23 and 10 hirsch and macpherson 1998 and the real hourly wages of both union and nonunion for hire motor bus carrier drivers have declined 17 schwarz miller and talley 1994 the impact of deregulation however on the relative labor earnings of transportation carrier industries is unknown specifically have wage differentials changed from those of the regulation period if so have these differentials widened narrowed under deregulation thereby increasing decreasing the gap in the labor earnings of one industry relative to those of another do the changes in wage differentials differ for union and nonunion labor the purpose of this article is to investigate occupational wage differentials among transportation industries under regulation and deregulation as intermodal competition intensifies such information is expected to play a more important role in industry wage negotiations wage differentials of similar occupations in three for hire carrier industries under regulation and deregulation are estimated the three industries are the railroad truck and motor bus industries and the occupations include railroad engineers conductors and brakemen switchmen truck drivers and motor bus drivers the estimation results indicate that the union wages of railroad occupations have increased relative to those of truck drivers and the union wages of truck drivers have increased relative to those of motor bus drivers during the postderegulation period further wage gaps for all occupations for this period are greater among nonunion than among union workers the remainder of this article is structured as follows section ii discusses railroad truck and motor bus for hire carrier industries and in particular their labor under regulation and deregulation

is regulation necessary for value of service pricing this article presents evidence for the existence of value of service pricing in the neverregulated market for trucking services to haul florida produce rates per truckload are found to increase by eleven to twelve cents for every one dollar increase in the average daily loss in the value of the cargo due to product deterioration ceteris paribus this result is at variance with the commonly held belief that value of service pricing in transportation is a form of price discrimination made possible by the policies of rate bureaus and regulatory agencies

mobile capital domestic institutions and electorally induced monetary and fiscal policy the literature on global integration and national policy autonomy often ignores a central result from open economy macroeconomics capital mobility constrains monetary policy when the exchange rate is fixed and fiscal policy when the exchange rate is flexible similarly examinations of the electoral determinants of monetary and fiscal policy typically ignore international pressures altogether we develop a formal model to analyze the interaction between fiscal and monetary policymakers under various exchange rate regimes and the degrees of central bank independence we test the model using data from oecd countries we find evidence that preelectoral monetary expansions occur only when the exchange rate is flexible and central bank independence is low preelectoral fiscal expansions occur when the exchange rate is fixed we then explore the implications of our model for arguments that emphasize the partisan sources of macroeconomic policy and for the conduct of fiscal policy after economic and monetary union in europe

conjoint analysis of price premiums for hotel amenities over the past decade or so conjoint analysis green and rao 1971 johnson 1974 appears to have become one of industry s most widely applied marketing research techniques for estimating consumer s multi attribute utility functions cattin and wittink 1982 however a continuing problem in application of conjoint analysis is how to handle the price attribute in the construction of stimulus profiles for presentation to respondents in many cases of practical interest the price level will be highly correlated with other product attribute levels if the researcher ignores this correlation by allowing the price levels to vary independently of other attributes the resulting profiles may appear sufficiently unrealistic to result in respondents discounting each profile s attractiveness thus reducing the validity of the results a related problem which adds to the complexity of new product pricing research is the bundling issue in the context of conjoint analysis the question is whether one can predict a respondent s evaluation of a bundle of product attributes and price as a simple linear function of the summed part worths of the entities making up the bundle when each entity is presented with its actual price metric hybrid conjoint models have received a fair amount of industry application to date the purpose of these models is to reduce data collection time while still retaining individual differences in part worth functions the present paper extends this class of models to include categorical conjoint analysis in which the criterion variable is classificatory this model is applied to an extremely large conjoint problem involving over 40 attributes and over 100 attribute levels the study results support the viability of the model for dealing with extremely large conjoint problems the study also shows evidence of the inability of simple functions of self explicated utilities for components of a bundle of hotel amenities to predict respondents preferences for the total bundle journal of business 1984 vol 57 no 1 pt 2 1984 by the university of chicago all rights reserved 0021 9398 84 5712 0019 0 1 50

small scale industry and technology in india the case of the computer industry this article finds that small firms in newly industrializing countries can serve as a conduit for technical change small firms in india s computer industry have helped narrow the technology gap between the domestic industry and its international counterpart successful innovator firms have grown larger changes in government policies were essential for the maturation of the nascent indian high technology industry

political and monetary institutions and public financial policies in the industrial countries institutions and policies vittorio grilli donato masciandaro and guido tabellini why do countries as similar as the industrialized oecd countries go through such different experience in terms of public deficits and debts or in terms of inflation the answer cannot come from macroeconomic policy responses to different disturbances nor from the principles of optimal taxation but rather from politics this article focuses on the role that particular institutions exert in providing constraints and incentives which shape the actions of policymakers the electoral process and political traditions affect the ability of governments to deal with deficits and mounting debts what seems to matter most it is found is the effect of the durability of governments governments with short horizons act myopically and never quite tackle the hard choices such governments typically exist in countries with an electoral system favouring many small political parties central bank independence promotes low inflation with no apparent costs in terms of real economic performance irrespective of the political institutions in fact there is no link between monetary and fiscal discipline these findings carry powerful implications for countries facing high indebtedness or stubborn inflation but also for the construction of the european economic and monetary union

the incidence of regulatory rents in the motor carrier industry this article focuses on two questions in the debate over motor carrier regulation first did regulation create eliminate or have no effect on monopoly rents in the trucking industry second ifthere were rents what was their incidence were they received by owners oftrucking firms dissipated through higher costs or captured by the teamsters union data on share price responses to deregulation announcements reveal declines in expected profits of 8 19 of totalfirm value this suggests that regulation created monopoly profits and indicates that at least some of these rents accrued to owners of trucking firms firms responses to regulatory change are modelled as functions of company s operating characteristics and measures of unionization operating efficiency and service characteristics are shown to affect the impact of deregulation on share values

how buyers perceive savings in a bundle price an examination of a bundle s transaction value although bundling the selling of two or more products and or services at a single price has a history of economic research marketing oriented investigations have appeared only recently this pap

freight charge variations in truck transport markets price discrimination or competitive pricing it is well known that truck freight rates for different commodities over a given route vary and that rates per unit distance for the same commodity over different routes vary in previous studies this variation has been attributed to noncompetitive behavior in this paper a hypothesis that observed variations in truck rates are consistent with competitive behavior is tested using conjoint analysis trade offs between costs or rates and other attributes of transport service are estimated from experiments using panels of truck brokers and carriers the results are consistent with competitive behavior in the trucking industry

a general choice model for bundles with multiple category products application to market segmentation and optimal pricing for bundles abstract the attribute based approach to study customer choices cannot deal with bundles of heterogeneous components which are usually drawn from different product categories the authors develop the comparability based balance model which is a unified framework for modeling bundle choices the model can be employed for any bundle regardless of the heterogeneity of bundle components under a pure bundling strategy the conjoint model and balance model are special cases of the general model the authors use mixture distributions in a hierarchical bayesian framework to incorporate consumer heterogeneity in a more flexible manner than the extant approaches such as latent class and random coefficient models the empirical tests of the model show that most attribute effects are significant and consistent with the model s predictions the model is superior to those that do not consider the issues of comparability of attributes latent class structure and heterogeneity among respondents the authors show how

comment on conjoint analysis of price premiums for hotel amenities firms are often faced with the problem of designing and pricing new products in durables such as houses cars and personal computers and also in services such as hotel accommodations there is a basic unit that the firm can offer at a base price in addition the firm can offer and the consumer may choose optional add ons at a premium the types of decisions to be made by a firm in this context are

compensation unionization and deregulation in the motor carrier industry abstract previous research on the deregulation of the motor carrier industry has concluded that firms have become more efficient under deregulation and that costs have fallen largely at the expense of labor most studies that examine the effects on labor use current population survey data and find that wage premiums to union labor have fallen as a result of deregulation this study uses firm data and finds that deregulation had a very small effect on the average compensation paid by surviving union firms for nonunion firms the impact of deregulation is much larger these results suggest that the compensation premium for the labor of surviving union firms has increased but this increase applies only to surviving union labor in the paper we also point to and note a major exodus of union firms with the result that union labor levels have fallen and fallen dramatically