using loopholes to reveal the marginal cost of regulation the case of fuel economy standards estimating the cost of regulation is difficult firms sometimes reveal costs indirectly however when they exploit loopholes to avoid regulation we apply this insight to fuel economy standards for automobiles these standards feature a loophole that gives automakers a bonus when they equip a vehicle with flexible fuel capacity profitmaximizing automakers will equate the marginal cost of compliance using the loophole which is observable with the unobservable costs of strategies that genuinely improve fuel economy based on this insight we estimate that tightening standards by one mile per gallon would have cost automakers just 9 27 per vehicle in recent years jel l51 l62 q48

identifying profitable self service markets a test in gasoline retailing the increased presence of self service products is explored a model is constructed that views service as an attribute of a product bundle that can be separated to create a self service substitute in terms of market elasticities and revenues we suggest an analytical measure of a seller s incentive to debundle service for retail gasoline markets we empirically estimate with reduced form equations the own and cross price elasticities of full and self service demand across standard metropolitan statistical areas in the united states to show that regional differences in sales of self service gasoline are explained by our measure

dynamics of output and employment in the u s economy this paper investigates the changing relationship between employment and real output in the u s economy from 1948 to 2010 both at the aggregate level and at some major industry grouping levels of disaggregation real output is conventionally measured as value added corrected for price ination but there are some industries in which no independent measure of value added is possible and existing statistics depend on imputing value added to equal income indexes of output that exclude these imputations are closely correlated with employment over the whole period and remain more closely correlated during the current business cycle this analysis oers insights into deeper

labour s shares and profitability crisis in the u s recent experience and post war trends extends work on u s rate of profit by t e weisskopf 1979 firstly the author finds by extending weisskopf s data into the early 1980s that continued downward pressure on profitability i s explained by capacity utilization in contrast to weisskopf s explanation of rising labor share secondly it is found that ri sing labor share in the post war period is largely composed of r ising levels of supplemental fringe benefits and is in the earl y part of the period also explained by rising nonproduction lab or costs production worker wage share falls secularly and this may be explained particularly in the 1960s by rising price mar k ups on direct cost copyright 1987 by oxford university press

a statistical equilibrium model of competitive firms abstract we find that the empirical density of firm profit rates measured as returns on assets is markedly non gaussian and reasonably well described by an exponential power or subbotin distribution we start from a statistical equilibrium model that leads to a stationary subbotin density in the presence of complex interactions among competitive heterogeneous firms to investigate the dynamics of firm profitability we construct a diffusion process that has the subbotin distribution as its stationary probability density this leads to a phenomenologically inspired interpretation of variations in the shape parameter of the subbotin distribution which essentially measures the competitive pressure in and across industries our findings have profound implications both for the previous literature on the persistence of profits as well as for understanding competition as a dynamic process our main formal finding is that firms idiosyncratic efforts and the tendency for competition to equalize profit rates are two sides of the same coin and that a ratio of these two effects ultimately determines the dispersion of the equilibrium distribution

interdependent international relations and the expansion of ethanol production and consumption the brazilian perspective abstract the global production and consumption of ethanol are expected to increase the growing interdependence of markets and nations producers and consumers of biofuels has led actors to seek and devise mechanisms intended to develop the sector this paper aims to analyze the interdependent international relations between brazil and other ethanol biofuel producer and consumer countries to do so the paper explores the theory of complex interdependence and the game theory a quali quantitative study was conducted involving the application of two questionnaires to experts on biofuels and documentary analysis aided by qda miner software the results show that brazil shares highly interdependent relations with the united states an intermediate degree of interdependence with europe and a low degree of interdependence with china the dimensions of those interdependent relations can be ranked according to importance in the following order first the political then the economic technical and finally the social environmental dimensions a number of actions can be envisaged that could lead ethanol to achieve an increasingly strategic position in the diversification of the energy matrix in different countries technological efforts to improve production efficiency the creation of globally integrated policies designed to provide security and develop the production and consumption infrastructure the reduction of international tariffs on the product and the transformation of ethanol into a global commodity with a large number of countries buying and selling the product this paper faced the challenge of integrating approaches and concepts from two complex theoretical areas complex interdependence theory and game theory the research methodology and the insights gained from the ethanol case contribute to the literature on the applicability of these two theoretical approaches

is the market biased against risky r d this article analyzes the riskiness of the r d strategies chosen by firms engaged in a winner takes all patent race in contradiction to dasgupta and stiglitz 1980 we show that when the distribution of invention times is symmetric the market equilibrium cannot be safer and may be riskier than is socially optimal we identify the economic reason for the emergence but only if there are few competitors

a ban on one is a boon for the other strict gasoline content rules and implicit ethanol blending mandates ethanol and methyl tertiary butyl ether mtbe were close substitutes in the gasoline additives market until mtbe was banned due to the concerns about groundwater contamination leading to a sudden and dramatic substitution toward ethanol as an alternative oxygenate and octane booster we use variation in the timing of mtbe bans across states to identify their effects on gasoline prices we find that state bans increased reformulated gasoline prices by 3 6 cents in non midwestern states for which the bans were binding with larger impacts during times of high ethanol prices relative to mtbe and crude oil we find qualitatively similar yet smaller effects for conventional gasoline we argue on the basis of a simple conceptual model and supporting empirical evidence that these bans functioned as implicit ethanol blending mandates in areas that were previously using mtbe to comply with strict environmental constraints overall our results are consistent with the theoretical prediction that mandating a minimum market share for a more costly alternative fuel either directly or implicitly through a ban on the preferred conventional fuel will inevitably increase fuel prices in a competitive market

efficient prizes in prototype development contests abstract a prototype has a specific payoff with technological uncertainty about the costs of development market uncertainty involves the issue of which developer has his prototype accepted by the sponsor an efficient prize induces the welfare maximizing amount of r d

a general model of r d competition and policy this article constructs a model of r d with heterogeneous firms each firm s probability of success is a function of its sunk and recurrent r d expenditures the social gains from an innovation are not fully captured by the successful firm the comparison of the social optimum and the market equilibrium involves balancing spillover and crowding effects pigovian corrective policies as well as strategic policies for a subset of colluding firms are discussed

gasoline demand revisited an international meta analysis of elasticities meta analysis is used to determine if there are factors that systematically affect price and income elasticity estimates in studies of gasoline demand four econometric models are estimated using long run and short run price and income elasticity estimates from previous studies as the dependent variables explanatory variables include functional form lag structure time span national setting estimation technique and other features of the model structure elasticity estimates are found to be sensitive to the inclusion or exclusion of some measure of vehicle ownership static models appear to overestimate short run elasticities underestimate long run price elasticities but pick up the full long run income responsiveness there is variation in the elasticity of demand across countries especially in the short run and gasoline demand appears to be getting more price elastic and less income elastic over time

clean air and renewable fuels the market for fuel ethanol in the us from 1984 to 1993 abstract ethanol made from corn has become an increasingly important fuel additive in the us over the past decade the market for ethanol has grown from 550 million gallons in 1984 to approximately 1 5 billion gallons in 1995 recent clean air legislation has mandated the use of cleaner burning fuels in the us in specific regions and seasons the fundamental role of fuel ethanol is changing from a gasoline substitute and octane enhancer to being one of a number of possible clean air additives in addition to these changing market conditions the institutional structure surrounding the ethanol market has changed while there is a uniform national subsidy for ethanol use each state has its own supplemental subsidy level which varied from zero to over 0 40 per gallon recently many state subsidy levels have been declining but significant incentives still remain including the federal 0 54 per gallon incentive this paper explores the economic characteristics of the us ethanol market the market supply and demand for ethanol are estimated econometrically the results highlight the importance of the state and federal incentives and mandates along with transportation costs in making corn based ethanol an attractive alternative to gasoline further investigation using a probit model to predict whether a state has an ethanol market or not reinforces the results of the supply demand market model the implications of the market characteristics for current and future us ethanol policy and clean fuels use are discussed

technology distribution and the rate of profit in the us economy understanding the current crisis this paper offers a synoptic account of the state of the debate among marxist scholars regarding the current structural crisis of capitalism identifies two broad streams within the literature dealing in turn with aggregate demand and profitability problems and proceeds to concentrate on an analysis of issues surrounding the profitability problem in two steps first evidence on profitability trends for the non farm non financial corporate business the non financial corporate business and the corporate business sectors in post war usa are summarised a broad range of profit rate measures are covered and data from both the us bureau of economic analysis nipa and fixed assets tables and the federal reserve flow of funds account are used second the underlying drivers of profitability in terms of technology and distribution are investigated the profitability analysis is used to offer some hypotheses about the current structural crisis copyright oxford university press

the interpretation of instrumental variables estimators in simultaneous equations models with an application to the demand for fish in markets where prices are determined by the intersection of supply and demand curves standard identification results require the presence of instruments that shift one curve but not the other these results are typically presented in the context of linear models with fixed coefficients and additive residuals the first contribution of this paper is an investigation of the consequences of relaxing both the linearity and the additivity assumption for the interpretation of linear instrumental variables estimators without these assumptions the standard linear instrumental variables estimator identifies a weighted average of the derivative of the behavioural relationship of interest a second contribution is the formulation of critical identifying assumptions in terms of demand and supply at different prices and instruments rather than in terms of functional form specific residuals our approach to the simultaneous equations problem and the average derivative interpretation of instrumental variables estimates is illustrated by estimating the demand for fresh whiting at the fulton fish market strong and credible instruments for identification of this demand function are available in the form of weather conditions at sea

characteristics of demand for pharmaceutical products an examination of four cephalosporins we model demand for four cephalosporins and compute own and cross price elasticities between branded and generic versions of the four drugs we model demand as a multistage budgeting problem and we argue that such a model is appropriate to the multistage nature of the purchase of pharmaceutical products in particular the prescribing and dispensing stages we find quite high elasticities between generic substitutes and also significant elasticities between some therapeutic substitutes

supply of cellulosic biofuel feedstocks and regional production pattern interest in cellulosic biofuels has grown due to recent concerns about the impact of expanding production of corn ethanol on food prices and the greater potential of cellulosic biofuels to mitigate climate change the energy independence and security act eisa of 2007 limits the production of corn ethanol to 56 billion liters after 2015 and mandates the production of at least 80 of the 136 billion liters of ethanol from non corn starch based cellulosic feedstocks by 2022 the biomass research and development act of 2000 had established an even more ambitious goal of using biomass to replace the equivalent of 30 of current petroleum consumption by 2030 and estimated that this would require 1 billion dry short tons of biomass annually u s department of energy usdoe 2003 biomass can be obtained from several different sources including forest resources crop residues woody biomass and perennial grasses a usda usdoe report perlack et al 2005 examined the technical feasibility of sustaining this supply of biomass and the land resources that would be required under alternative scenarios with yield enhancing and other technological changes in conventional crops and perennial bioenergy crops the study estimated that 0 54 to 1 billion dry tons of agricultural crop based biomass could be obtained annually from cropland idle cropland and cropland pasture with moderate to high productivity gains in crop productivity residue collection and tillage practices

measuring market power in the ready to eat cereal industry the ready to eat cereal industry is characterized by high concentration high price cost margins large advertising to sales ratios and numerous introductions of new products previous researchers have concluded that the ready to eat cereal industry is a classic example of an industry with nearly collusive pricing behavior and intense nonprice competition this paper empirically examines this conclusion in particular i estimate price cost margins but more importantly i am able empirically to separate these margins into three sources i that which is due to product differentiation ii that which is due to multi product firm pricing and iii that due to potential price collusion the results suggest that given the demand for different brands of cereal the first two effects explain most of the observed price cost margins i conclude that prices in the industry are consistent with noncollusive pricing behavior despite the high price cost margins leading firms are able to maintain a portfolio of differentiated products and influence the perceived product quality it is these two factors that lead to high price cost margins

on measuring the wealth of nations the us economy 1964 2001 this paper examines the methodology of shaikh and tonak measuring the wealth of nations 1994 underlying their calculation of estimates of productive labour in the us economy from 1964 to 2001 the focus is not on the results but on the methods that generate them the paper finds that the compromises made by shaikh and tonak because of data unavailability are unreliable and that better approximations are possible on this latter basis the shaikh and tonak methodology can be used to provide the labour and wage estimates needed for empirical investigations in the surplus based tradition copyright 2005 oxford university press

technology and distribution historical trajectories a la marx abstract in capital marx introduces a system of historical tendencies accounting for the trends of the major technological and distributional variables notably the profit rate quite distinct from the usual steady states marx s main insight is that of a difficulty to innovate it is difficult to find new processes allowing for the growth of labor productivity while not considerably reducing the productivity of capital the growth of the wage rate is stimulated by the rise of employment but the stabilization of the share of wages forbids a direct imputation of the decline of the profit rate to the excessive growth of the wage rate

biofuel subsidies versus the gas tax the carrot or the stick abstract this paper provides an analytical framework to examine the relative efficiencies of a revenue neutral biofuel subsidy and a gas tax in the presence of pre existing distortions and growing substitutability between fuels both policies are set to achieve a targeted reduction in gasoline use at the state level the model is then calibrated for a small open economy such as illinois which is one of the largest producers of biofuels such as ethanol in the u s the main result of the paper shows that raising the biofuel subsidy use reduces overall welfare by more than a higher gas tax both aimed to achieve a targeted reduction in pure gasoline the relative efficiency of the higher gas tax is primarily due to it exacerbating the pre existing distortion in the biofuel market by less than the subsidy moreover for current parameter estimates welfare improving policy combinations for achieving a targeted amount of energy security are higher gas taxes combined with lower biofuel subsidies and a lower tax on income however the preference for a gasoline labor tax swap shrinks as the elasticity of substitution between the two fuels rises

nonparametric regression techniques in economics this introduction to nonparametric regression emphasizes techniques that might be most accessible and useful to the applied economist the paper begins with a brief overview of the class of models under study and central theoretical issues such as the curse of dimensionality the bias variance trade off and rates of convergence the paper then focuses on kernel and nonparametric least squares estimation of the nonparametric regression model and optimal differencing estimation of the partial linear model constrained estimation and hypothesis testing is also discussed empirical examples include returns to scale in electricity distribution and hedonic pricing of housing attributes

short run long run and cross elasticities of gasoline demand in brazil gasoline is one of the most important of the oil derived products its importance is closely related to its participation in the value of imports of many countries and in a number of cases it is one of the determinants of their balance of payment deficit fiscal deficit and economic growth as opposed to most nations brazil has had a gasoline substitute since 1985 alcohol many studies have tried to estimate the income and price elasticities of the demand for gasoline in several countries this paper extends previous studies by estimating the cross price elasticity between gasoline and alcohol our findings indicate that alcohol is an imperfect substitute for gasoline even in the long run as a consequence the need for a new fuel substitution must be initiated long before petroleum reserves vanish

analysing gasoline demand elasticities a survey this paper is a survey of studies on gasoline demand although there are very many dxerent studies in this eld which sometimes appear to arrive at contradictory results we find that with proper stratification of studies by model and data type much of the contict turns to consensus in this survey we classtfy studies by data type and by ten d erent categories of model and with the exception of estimates on seasonal data which tend to be unstable and of certain inappropriate model formulations we find a fair degree of agreement concerning average short run and even long run income and price elasticities

the demand for ethanol as a gasoline substitute abstract this paper estimates household preferences for ethanol e85 as a gasoline e10 substitute i develop a theoretical model linking the shape of the ethanol demand curve to the underlying distribution among households of willingness to pay for ethanol i estimate the model using instrumental variables techniques and data from many retail fueling stations i find that a 0 10 per gallon increase in ethanol s price relative to gasoline leads to a 12 16 decrease in the quantity of ethanol demanded my findings imply that preferences for ethanol are heterogeneous and that a substantial fraction of households are willing to pay a premium for the fuel this reduces substantially the simulated efficiency cost of an ethanol content standard since some households choose ethanol without large subsidies mitigating deadweight losses

patent races optimal with respect to entry we introduce a patent prize which induces entry at a level which satisfies the basic condition of optimality with respect to the size of the race a second best patent we observe that for the lee wilde model of a patent race the second best prize induces approximately the socially optimal first best outcome the approach of the second best patent provides one explanation for why discoverers should only receive a fraction of the ex post social value of their discovery

values prices of production and market prices some more evidence from the greek economy this paper extends the empirical investigation of the relation between labour values and different price forms in the case of the greek economy subjecting the labour theory of value to empirical tests with data from various countries helps in the derivation of general conclusions regarding its empirical validity and practical usefulness our results on the closeness of values and prices as measured by their absolute deviation and correlation the shape of the wage profit curves the predictive power of labour values over market prices compared with other value bases and the comparison of fundamental marxian categories when estimated in value and price terms provide further support for the empirical strength of the labour theory of value

the economic effects of energy price shocks large fluctuations in energy prices have been a distinguishing characteristic of the u s economy since the 1970s turmoil in the middle east rising energy prices in the u s and evidence of global warming recently have reignited interest in the link between energy prices and economic performance this paper addresses a number of the key issues in this debate what are energy price shocks and where do they come from how responsive is energy demand to changes in energy prices how do consumers expenditure patterns evolve in response to energy price shocks how do energy price shocks affect u s real output inflation and stock prices why do energy price increases seem to cause recessions but energy price decreases do not seem to cause expansions why has there been a surge in the price of oil in recent years why has this new energy price shock not caused a recession so far have the effects of energy price shocks waned since the 1980s and if so why as the paper demonstrates it is critical to account for the endogeneity of energy prices and to differentiate between the effects of demand and supply shocks in energy markets when answering these questions

values prices and wage profit curves in the us economy this paper presents labor values and prices of production calculated for the postwar u s economy using a seventy one sector input output model with fixed capital as well as actual wage profit curves during the same period it is found that the cross sectional deviations of values and prices of production from market prices are quite small between 12 and 14 percent on average over time approximately 75 percent of the variation of market prices is accounted for by changes by both values and prices of production and 93 percent of the variation of prices of production is accounted for by changes in labor values wage profit curves exhibit near linearity casting some doubt on the significance of reswitching for actual economies copyright 1989 by oxford university press

on measuring the deviation of prices from values it has often been found useful to measure in some way the extent to which with profit prices diverge from zero profit values but it is not satisfactory to employ a measure which varies with the choice of numeraire for this element of arbitrariness has nothing to do with the central idea of asking how much the direction of the price vector differs from that of the value vector the authors develop a measure which involves no numeraire and then illustrate its use with data from the united kingdom the irish republic and australia copyright 1998 by oxford university press

simultaneous equations bias in disaggregated econometric models with the language of econometrics agents may be said to take prices as exogenously given which suggests that prices are econometrically exogenous in individual behavioural equations this involves semantic confusion between different meanings of the word exogenous simultaneity problems cannot generally be dispelled by working with disaggregated data in particular nothing is gained by disaggregating the dependent variable in a regression equation if the micro and macro equations use the same regressors however there may be substantial gains from disaggregation of the regressors in the theory of competitive markets agents act as if they do not affect equilibrium market prices by analogy with the language of econometrics agents may be said to take prices as exogenously given having thus stated the price taking assumption it may seem that prices are econometrically exogenous in behavioural equations for individual agents such as labour demand curves this involves semantic confusion between two different meanings of the word exogenous for example even if each buyer has a negligible influence on the market price there may still be an important correlation between the price and the disturbance in an individual demand equation so that treating price as econometrically exogenous gives biased coefficient estimates the price taking assumption has been used to justify ols estimates of import demand functions for small countries leamer and stern 1970 pointed out that the estimated slope in an import demand function is generally an average of the slopes of the demand and supply functions for imports but

labour time versus alternative value bases a research note this paper provides empirical support for the law of value understood as the proposition that embodied labor time is conserved in exchanges of commodities market prices are well correlated with the sum of direct and indirect labor content is it possible to produce equally good correlations by taking the sum of direct and indirect x content where x is some input other than labor time the authors repeat the analysis for electricity iron and steel and oil and show that the answer is no the high correlations in the case of labor time are therefore not a statistical artifact copyright 1997 by oxford university press

practical implications of game theoretic models of r and d the purpose of this paper is to survey recent game theoretic models of research and development and to ask whether they yield practical implications or testable hypotheses the papers i will be discussing have been written or published within the past five years they have a good deal in common relying upon similar assumptions and building upon each other because of this the literature surveyed here may seem narrow and some relevant work has probably been inadvertently omitted i apologize for these omissions for want of space i will not discuss the normative conclusions of this literature

automobile externalities and policies this paper discusses the nature and magnitude of externalities associated with automobile use including local and global pollution oil dependence traffic congestion and traffic accidents it then discusses current federal policies affecting these externalities including fuel taxes fuel economy and emissions standards and alternative fuel policies summarizing insofar as possible the welfare effects of those policies finally we discuss emerging pricing policies including congestion tolls and insurance reform and summarize the appropriate combination of policies to address automobile externalities

the market impact and the cost of environmental policy evidence from the swedish green car rebate we quantify the effects of the swedish gcr a program to reduce oil dependence and greenhouse gas emissions in the automobile industry we find the gcr to increase the market shares of green cars and its cost to be 109 tonco2 saved thus 5 times the price of an emission permit since the main green cars in sweden are ffvs flexible fuel vehicles which can switch between petrol gasoline and ethanol we also account for fuel choice which increases the cost of the program finally we show that consumers would have purchased ffvs regardless of the rebate provided by the gcr

the dynamics of competition a restoration of the classical analysis the main purpose of this article is to show that it is possible to construct a model of competition based on the classical perspective smith ricardo and marx an analysis of the work of the classics is presented and their views of the workings of competition is contrasted with neoclassical and keynesian approaches a simple model with two commodities is constructed in which the stability of the classical long term equilibrium is shown under certain conditions this first model is developed to include the treatments of gravitation rationing deficiency in demand choice of the technology and three commodities copyright 1987 by oxford university press

labour values prices of production and the missing equalisation tendency of profit rates evidence from the german economy during recent years several empirical studies have found that deviations from labour values to market prices are quite small however most of these articles do not offer a detailed reason for this result in this paper two theoretical justifications of the labour theory of value are brought together with some data concerning labour values prices of production and market prices on the basis of german input output tables from 2000 and 2004 in addition the statistical characteristics of profit rates are analysed both of the theoretical arguments are much in line with the empirical observations because there is only a slight transformation tendency and at the same time profit rates and capital intensity are negatively correlated moreover during the period under observation the german economy seems to be in a state of statistical equilibrium copyright oxford university press

quantitative empirical research in marxist political economy a selective review this paper surveys quantitative empirical research in some key areas of marxist political economy following an introductory section on the value controversy the paper surveys quantitative empirical research on the following topics a marxist national accounts b classical marxist theory of relative prices c probabilistic political economy d profitability analysis and e classical marxian theories of growth and technical change i end by highlighting two important puzzles in the extant literature

consumer theory and the demand for money the following sections are included introductionthe definition of moneythe microeconomic theory of a monetary economythe aggregation theoretic approach to money demandindex number theorythe links between aggregation theory index number theory and monetary theoryunderstanding the new divisia aggregatesthe optimal level of monetary subaggregationeconometric considerationsapproximating the monetary services subutility functionan exampleempirical dimensionsempirical comparisons of index numbersempirical results for the demand system approachextensionsconclusions this abstract was borrowed from another version of this item

nonparametric estimation of exact consumers surplus and deadweight loss we apply nonparametric regression models to estimation of demand curves of the type most often used in applied research from the demand curve estimators we derive estimates of exact consumers surplus and deadweight loss which are the most widely used welfare and economic efficiency measures in areas of economics such as public finance we also develop tests of the symmetry and downward sloping properties of compensated demand we work out asymptotic normal sampling theory for kernel and series nonparametric estimators as well as for the parametric case the paper includes an application to gasoline demand empirical questions of interest here are the shape of the demand curve and the average magnitude of welfare loss from a tax on gasoline in this application we compare parametric and nonparametric estimates of the demand curve calculate exact and approximate measures of consumers surplus and deadweight loss and give standard error estimates we also analyze the sensitivity of the welfare measures to components of nonparametric regression estimators such as the number of terms in a series approximation

the deviation of production prices from labour values some methodology and empirical evidence contrary to what is expected from indirect evidence and two commodity hypothetical examples the evdie nce provided in this paper supports david ricardo s empirical proposi tion that relative prices of production are mainly determined by labo r value ratios the results obtained indicate that a 1 percent change in profit rate will cause relative prices to change up to 2 percent and as the profit rate on gross capital is approximately 5 percent o ne ends up with a 90 percent labor theory of value the empirical evidence refers to the yugoslav economy but the factors that determ ine the deviations considered turn out to be of the same order of mag nitude as in other economies copyright 1987 by oxford university press