the speed of the invisible hand abstract very little attention has been devoted to incorporating dynamic elements into empirical models of market structure and performance consequently there has been little progress in settling the issue of whether the market structure profits relationship is more than just a temporary phenomenon in this study an estimation equation is developed which allows for incomplete adjustment of past profits from expected future profits where expected profits depends on present and expected future changes in market structure the model is estimated pooling panel data across industries the findings indicate that adjustment to abnormal profits is relatively quick market share adjustments are non instantaneous and that inclusion of industry specific effects is important the results suggest that previous studies are susceptible to specification bias from omitted variables

micro to macro simulation a primer with a labor market example simulation models now widely used in the physical sciences can also help economists in depicting the actions and interactions of individuals and firms through time such models can be built and run on any personal computer they can illuminate a wide variety of issues that are difficult to analyze with an economist s conventional tool kit and are especially useful in studying dynamic processes microsimulation models allow the analyst to produce simulated aggregate time series that are rigorously consistent with the assumptions made about behavior on the micro level thus simulations provide a means of bridging the micro macro split in economic analysis this article provides an introduction to microsimulation how it works how to do it its potential and its drawbacks it then allows readers even those with no experience in computer programming to work through the details of a simple microsimulation model readers can put this model on their pcs watch it run through its paces and experiment with their own modifications with this model as an example it should be fairly easy to create programs for new models on other subjects for use in theoretical exploration empirical research or classroom demonstrations the demonstration model i present depicts the experience of individual workers during recession and recovery in the labor market as the model runs its internal census bureau performs surveys on the microlevel and sums up to macrolevel variables the model is simple but it has some interesting applications after explaining how to set it up i use it to explore the effect of unemployment insurance on the level of unemployment and to point up a common fallacy in current labor market literature

the tradeoff between wages and employment in trade union objectives this paper demonstrates that contrary to a widely held opinion the determination of the goals of unions is fully amenable to empirical analysis a characterization of the wage and employment setting process in unionized markets is adopted and its qualitative implications examined the first order condition for this model is fitted to time series data on the newspaper industry from ten cities the international typographical union s objective function reveals very restricted opportunities for substituting wages for employment in response to a change in the slope of the employer s labor demand function larger union locals place greater emphasis on wages versus employment than smaller union locals

equilibrium selection and the dynamic evolution of preferences abstract a population of fully rational agents plays a symmetric 2 player game in biological fitnesses but each agent s play is determined by his payoffs which are free to evolve according to survival of the fittest pressures an equilibrium selection mechanism is assumed to exist and deliver a unique outcome for any given profile of payoffs this allows the evolution of payoffs to be modeled as a well defined replicator dynamics the existing static stability results that efficient strict nash implies stability and stability implies efficiency are translated to this dynamic context although the latter gives way to indeterminacy in the absence of a specific equilibrium selection mechanism a strong form of stability is established for the efficient outcome of games with common interests whilst a weaker stability result is provided for efficient mixed strategy equilibria of doubly symmetric games the results are illustrated using the equilibrium selection mechanism provided by global games

a study of cartel stability the joint executive committee 1880 1886 this article employs weekly time series data on the joint executive committee railroad cartel from 1880 to 1886 to test empirically the proposition that observed prices reflected switches from collusive to noncooperative behavior an equilibrium model of dynamic oligopoly with asymmetric firms together with explicit functional form assumptions about costs and demand determines the estimating equations and stochastic structure of the econometric model the hypothesis that no switch took place so that price and quantity movements were solely attributable to exogenous shifts in the demand and cost functions is then tested against this alternative and rejected

market structure and the empirical specification of profit margins we present evidence from a panel of u k manufacturing industries to test the sensitivity of the margins concentration relationship to specification changes in the dependent variable instrumental variable estimates demonstrate that a positive association between profit margins and concentration is contingent on how the margin is formulated

r d market structure and profits a value based approach this paper considers a complex relation among r d market structure and a market value based measure of profits perhaps of greatest interest a positive effect of r d on profits emerges as does a negative r d concentration interaction effect both appear robust and support an intangible capital and rivalrous view of r d despite substantial interest in the question little direct evidence on research and development r d market structure and profits relations has appeared in the literature an important exception to this rule is grabowski and mueller hereafter g m 1978 who reported a strong effect of r d on adjusted profit rate data in addition to an equally strong negative r dmarket concentration interaction effect g m interpret their findings as support for an intangible capital and rivalrous view of r d alternatively they are also consistent with the hypothesis that firms in highly concentrated markets pursue r d less efficiently or take on riskier projects in any event g m s findings seem inconsistent with a view of r d as a barrier to entry see kamien and schwartz 1975 this study extends previous research in at least four respects first we adopt a market valued based measure of profits in order to avoid any bias inherent in accounting profit data due to an expense as incurred rather than capitalization and amortization treatment of r d advertising and similar expenditures second we evaluate simultaneous influences among profits r d advertising and concentration suggested but not tested previously third estimation results are derived using leamer s search technique which illustrates the sensitivity of estimates to alternate model specifications and fourth we consider an n 390 firm fortune 500 sample which is substantially larger than in previous studies including firms responsible for nearly 90 of private sector r d during 1977 estimation results should therefore be broadly indicative of the economic consequences of r d

a theory of tolerance abstract we propose a theory of tolerance where endogenous lifestyles and exogenous traits are invested with symbolic value by people value systems chosen by parents for their children affect the esteem enjoyed by individuals in society intolerant individuals attach all symbolic value to a small number of attributes and are irrespectful of people with different ones tolerant people have diversified values and respect social alterity we study the formation of values attached to various types of attributes and identify circumstances under which tolerance spontaneously arises policy may affect the evolution of tolerance in distinctive ways and there may be efficiency as well as equity reasons to promote tolerance an empirical investigation of tolerance of homosexuality demonstrates that our theory helps to shed light on survey data of endorsed values

the intertemporal stability of the concentration margins relationship using a longitudinal data base we find that there has been a substantial narrowing of the spread between the price cost margins of concentrated and unconcentrated industries including measures of macroeconomic fluctuations into standard price cost margin regressions we find significant differences in cyclical behavior across market structure we also explore a possible explanation unionization for differences in cyclical behavior finally we investigate the degree to which our results are affected by the potential simultaneity of concentration advertising and the price cost margin

peer effects in the demand for housing quality abstract using detailed data on friendship networks within neighborhoods we investigate the importance of social interactions in one s own residential neighborhood in the demand for housing quality we find evidence consistent with the presence of peer effects especially for households living in urban areas our findings are in line with the prediction of a model where conformity preferences underlie economic outcomes that involve interactions with peers

social norms and moral hazard the probability of income loss depends on talent and effort effort has positive externalities and therefore individuals are awarded status in proportion to their perceived diligence the social no

a biological basis for expected and non expected utility abstract a biological model is developed here to determine the fittest attitude to risk with a fixed environment the type maximizing expected offspring is selected this yields the expected utility theorem when translated into a criterion for evaluating gambles over commodities with a random environment however the type selected is strictly less averse to idiosyncratic risk than to risk which is correlated across all individuals the implied criterion for choice over gambles does not satisfy the expected utility theorem and may induce choice of a gamble which is first order stochastically dominated journal of economic literature classification number d81

l investissement francais dans les colonies 1876 1940 une autre analyse de l enquete de gouvernement de vichy 1943 this paper presents an econometric model of trade union membership in the united kingdom the empirical model utilizes cyclical variables in the explanation of membership changes and separates the short and long run dynamics explicitly it proves to be a superior specification to previous business cycle models estimated for the united kingdom and predicts satisfatorily the recent decline in membership the inclusion of a dummy variable reflecting the political complexion of the government is the only secular variable which significantly improves equation performance but the composition of changes in employment plays no part in explaining the recent decline in membership copyright 1988 by the london school of economics and political science

pay and employment determination in britain what are labour contracts really like the recent growth of unemployment in western economies has prompted new research on the workings of the labour market there has been much interest in particular in the questions what determines the level of real pay and why is it apparently so insensitive to changes in aggregate demand and unemployment european economists now find it hard to take seriously the notion still taught to many undergraduate that wages are determined by the intersection of demand and supply curves roughly half of all british employees belong to trade unions a much higher percentage have their pay fixed by some kind of collective bargain in this country it is negotiations not impersonal com petitive markets which decide what most of us will be paid the difficult problem is that of how to understand this process or to put it differently of how to think up the right model of the world

estimating aid allocation criteria with panel data in 1990 the net amount of economic aid or official development assistance to all recipients from all multilateral and bilateral sources was about 62 billion an amount that exceeded the gdps of greece and portugal despite the size of this yearly transfer there has been no rigors modeling and estimation of the criteria by which it occurs as a result there is little agreement about the extent to which oda is allocated according to the needs of the recipient countries the purpose of this paper is to develop a rigorous theoretical model of oda allocation that can be used to provide consistent estimates of the importance of recipient needs copyright 1994 by royal economic society

the persistence of social strategies under increasing competitive pressure abstract in this paper we study the long run outcome if firms are repeatedly matched to play a n firm cournot oligopoly game and can select their type of business objective firms can either be profit maximizing or socially concerned also pursuing consumer welfare we use an indirect evolutionary approach to distinguish between the endogenous profit maximizing choice of the firms business objectives and their corresponding market behavior our main result is that the prospects of long run survival of firms pursuing social strategies strongly depends on the number of firms in the industry if a social strategy entails higher marginal production costs it is best suited if the number of firms in the industry is not too large in particular we demonstrate that the relation between long survival and the level of competitiveness of the industry is inverse u shaped we confirm this result by using the concept of coalition stability and further show that if a high number of firms adopt a social strategy welfare might be lower than with just profit maximizing firms

formal and informal interests of donors to allocate aid spending patterns of usaid giz and eu forest development policy in bangladesh summary whether aid serves the development needs of a recipient country rather than the interests of donors has been a topic of much debate and research in the field of development studies donor agencies have interests as does any political actor and bureaucratic politics theory states that any bureaucracy has a dual interest consisting of delivering on its formal mandate as well as informally increasing its power by maximizing budgets staff and fields for political responsibility this study aims to conceptualize the formal and informal interests of bilateral foreign donor bureaucracies in allocating aid using bangladesh forest development aid by usaid giz and the eu as a case study quantitative analysis of documents on actual spending in the context of forest development projects and qualitative analysis from detailed interviews with development aid experts are employed important informal interests of donor agencies were observed as follows 1 drawing on consultants as well as products and services from the donor s country 2 expanding favorable markets for the donor s economy 3 increasing the donor s geopolitical as well as policy influence in recipient countries 4 obtaining information that is independent from the recipient government and 5 shaping good governance as a prerequisite for investment from donor countries of the three donor organizations usaid was found to have allocated extensive aid to two activities consultancy and collaboration and networking that advance usaid s informal economic and political interests giz allocated major aid to recipient developmental interventions it also advanced its informal economic and political interests albeit to a smaller extent the eu allocated the largest amount of aid to developmental interventions though its informal economic and political interests were also served even if only to a limited extent this study concludes with key points regarding informal interests of donor bureaucracies as well as on future research fields

the assessment productivity and competitiveness in british manufacturing this issue of the oxford review examines productivity and competitiveness in british manufac turing the simplest and most widely used measure of productivity is output per head from this definition sprout at once the horns of a dilemma for an economy facing unemployment on the present scale for a given rate of expansion of output the higher the rate of productivity growth the greater the decline in employment or at least the smaller its growth on the other hand in an economy open to international competition a high rate of productivity growth relative to that of other countries is the long term key to achieving the favourable international competitive po sition necessary to sustain growth and a low level of unemployment

segregation in friendship networks we analyze a network formation model where agents belong to different communities both individual benefits and costs depend on direct as well as indirect connections benefits of an indirect connection decrease with distance in the network while the cost of a link depends on the type of agents involved two agents from the same community always face a low linking cost while the cost of forming a relationship between two agents from different communities diminishes with the rate of exposure of each of them to the other community we find that socialization among the same type of agent can be weak even if the cost of maintaining links within one s own type is very low our model also suggests that policies aimed at reducing segregation are socially desirable only if they reduce the within community cost differential by a sufficiently large amount

organizational costs sticky equilibria and critical levels of concentration jn the thirty years since joe bain s seminal i study 1951 many economists have attempted to determine whether or not there exists a critical level of market concentration at which a discontinuity occurs in the relation between industry concentration and profitability in this paper we develop and test a more general model based on organizational costs which posits the existence of two critical levels of market concentration one at which an existing cooperative equilibrium will break down as concentration declines and one at which a cooperative equilibrium will become attainable as concentration increases we show that the standard model of the critical level of concentration can be regarded as a special case of our more general model and also that the more general model attains a statistically superior fit in section ii we briefly review some of the previous literature in this area we develop our model in section iii and specify and estimate it in sections iv and v in sections vi and vii we summarize and interpret our results and present some policy implications of our findings

the union impact on profits evidence from industry price cost margin data this paper uses industry price cost margin data to estimate the extent to which unions reduce profits estimates allowing for the endogeneity of union status are contrasted with estimates that assume union status is exogenous and not determined in part by either profitability or industry structure endogeneity is found to be an important consideration in estimating the union impact on profits two stage estimates are considerably larger than ols estimates the final section explores the total estimated redistribution from capital to labor in the manufacturing sector an important conclusion is that unions raise prices less than was previously believed

wage pressure bargaining and price cost margins in uk manufacturing to the extent that union employer bargaining is efficient price cost margins in oligopolistic industries are predicted to depend on wage rents and on the elasticity of substitution between wages and employment in union preferences unanticipated wage inflation will also affect margins cross section and time series analysis of price cost margins in u k manufacturing industries finds that margins tend to be eroded by the level of wage rents and are invariant to the rate of wage inflation copyright 1990 by blackwell publishing ltd

social status and economic performance a survey abstract this survey combines ideas and results from sociology and economics recognizing that economic decisions are often shaped by social concerns and influences based on the sociological literature we define social status and describe its measurement we then describe the role of social status in economic analysis of saving and consumption wages and economic growth we review recent work on status determination in equilibrium including evolutionary models we conclude with some remarks on the need for further interaction between sociology and economics

social norms and random matching games abstract nash equilibrium has been tremendously useful in understanding economic problems in which strategic behavior is important the theoretical foundations of the solution concept often include the assumption that the game to be played is common knowledge an unrealistic assumption in games with many players we introduce the concept of norm equilibrium for random matching games a norm equilibrium is a nash equilibrium that relies on substantially less information than common knowledge of the game we use norm equilibria to provide a folk theorem for random matching games and to analyze increasing numbers of players in a random matching game journal of economic literature classification numbers c70 c72

the persistence of profits a european comparison this paper is concerned with modeling the movements in profits of firms over time at the heart of the emp irical model is a latent variables problem which arises from the fact that entry and imitation do not actually have to occur to have an ef fect on profits a solution to this problem is explored and then emp irical results are presented comparing a sample of firms from the uni ted kingdom france and west germany copyright 1988 by royal economic society

endogenous peer effects local aggregate or local average a b s t r a c t we develop a unified model embedding different behavioral mechanisms of social interac tions and design a statistical model selection test to differentiate between them in empirical applications this framework is applied to study peer effects in education effort in study ing and sport activities for adolescents in the united states we find that for education students tend to conform to the social norm of their friends while for sport activities both the social multiplier and the social norm effect matter

unemployment in britain male unemployment in britain has risen from around 2 per cent in the 1950s to around 17 per cent in 1985 see figure 1 the figures are for male unemployment because there is no consistent series for women 1 even more remarkably unemployment has fallen in only three years out of the last twenty 1973 1978 and 1979 to account for this we need a model that explains both changes in the natural or non accelerating inflation rate of unemployment nairu and deviations from it we use a three equation supply side model centred on the labour market this has two main features the first concerns the determination of employment in the short run the labour demand function that we use cuts through the fruitless debate now raging especially in europe as to whether current unemployment is classical or keynesian according to the classical view employment is too high because real wages are too high according to the keynesian view real wages are not binding and unemployment is high because the product market does not clear with prices too high relative to nominal demand the whole debate is set in the framework of perfect competition yet in perfect competition prices are set by impersonal forces and it is not clear what could possibly stop prices clearing the market it is much more reasonable to think of prices as being set by imperfectly competitive firms existing prices being the best they can think of given the demand they face in this context firms demand for labour will depend on both the real product wage and the level of real aggregate demand this is the demand function we estimate and it conforms both to common sense and to the data however this does not imply that employment can be made to grow without limit by pumping up real demand for in the medium term when price surprises are eliminated our model determines three variables employment real wages and real demand on the basis of three equations an employment equation a price equation and a wage equation thus in the medium term there is a natural level of employment and corresponding to this a natural level of real aggregate demand the second key feature of our model concerns the medium term determination of unemployment in the medium term the planned mark up of wages over prices in wage settlements must be consistent with the mark up of prices over wage costs in employers pricing behaviour for if wage setters try to set real product wages higher than is consistent with employers pricing behaviour this generates ever increasing inflation thus the key to understanding unemployment in the medium term is the behaviour of wage setters if events occur that push them towards too high real wages then unemployment has to rise to offset these influences we shall call these influences wage pressure variables or push factors and they are clearly crucial in understanding unemployment the variables here include the social security system employment protection

the allocation of aid among developing countries a multi donor analysis using a per capita aid index abstract this paper seeks to measure the relative aid giving performance of aid donors in terms of the inter recipient distribution of their aid performance is taken to be the extent to which a donor bases its aid allocation on the relative needs of recipient countries donor performance is measured by an income weighted per capita aid index formulated in this paper this index was calculated using the per capita allocations to a sample of 85 recipient countries in the years 1969 84 the performance of 17 dac members plus that of a number of multilateral agencies and that of the dac and these agencies combined is identified results indicate that the performance of four countries belgium finland denmark and norway was generally superior to that of other donors

on the evolution of attitudes towards risk in winner take all games abstract a long standing conjecture is that winner take all games such as patent races lead to the survival of risk takers and the extinction of risk averters in many species a winner take all game determines the males right to reproduce and the same argument suggests that males will evolve to be risk takers psychological and sociological evidence buttresses the argument that males are more risk taking than females using an evolutionary model of preference formation we investigate to what extent evolution leads to risk taking in winner take all environments journal of economic literature classification numbers c7 d8

social status education and growth this paper investigates the implications of social rewards on the allocation of talent in society and consequently on the process of economic growth we consider two sources of heterogeneity among workers nonwage income and innate ability a greater emphasis on status may induce the wrong individuals that is those with low ability and high wealth to acquire schooling causing workers with high ability and low wealth to leave the growth enhancing industries this crowding out effect taken alone discourages growth growth may be enhanced by a more egalitarian distribution of wealth which reduces the demand for status

reform of foreign aid policies the issue of inter country allocation in africa abstract the aim of this paper is to assess the inter country allocation of foreign aid by selected donors to 18 recipients in eastern and southern africa esa the five country cases discussed in this paper show that the aid environment has not been supportive of recipients reform efforts during the 1980s a comparison is made between international development agency ida allocation and other donors cross section and time series regressions demonstrate a variety of considerations influencing bilateral aid lastly in discussing present aid policies and coordination efforts three options are analyzed with respect to future aid policies it is suggested that new initiatives by ida in its allocation criteria and aid coordination efforts can yield some progress

work rules featherbedding and pareto optimal union management bargaining this article examines a model of semiefficient bargaining in which the union and the firm bargain over wages and various types of work rules the results are compared to the outcomes that are associated with fully efficient bargaining i e over wages and the level of employment and bargaining solely over wages

endogenous mobility reducing norms we present a model where a mobility reducing norm arises in response to adverse economic conditions our example is the classical farm problem of low returns a temporary transition barrier induces cognitive dissonance in farm youths which they try to reduce by developing a belief that revalues their position this involves an effort because existing beliefs are resistant to change the role of social support in effort cost reduction can be sufficient for the emergence and persistence of a norm which condemns leaving agriculture thus causing crowding and lower earnings

business cycles and the relationship between concentration and price cost margins using a newly constructed panel data base we examine changes in price cost margins in 284 manufacturing industries between 1958 and 1981 a key finding is a dramatic narrowing of the spread between the margins of concentrated and unconcentrated industries over this period we provide evidence that this narrowing is a result of the greater sensitivity of price cost margins in more concentrated industries to demand fluctuations this finding is robust to the inclusion of other industry variables and to measures of import competition the results indicate that cross sectional estimates of the concentration margins relationship are likely to be both biased and misleading

us politics and world bank ida lending this paper studies the role of us political factors in the allocation of world bank concessional lending where us political interests are proxied by voting similarity in the united nations general assembly on issues identified as important by the us department of state in contrast to previous studies we find that the us exerted a significant influence on ida lending during the period 1993 2000 we demonstrate that the influence was both statistically as well as economically significant finally we demonstrate that our result is robust with respect to the omission of the ida country performance rating index

a welfare analysis of the ec acp sugar protocol the sugar protocol laid down in the convention of lome has been an established instrument of commodity policy for nearly 20 years its basic rule is that the ec imports at guaranteed prices specified quantities of sugar from acp countries it is the objective of the article to provide an economic evaluation of the sugar protocol impacts on prices trade export earnings and economic welfare are elaborated the sugar protocol s impacts on the level and instabilty of sugar export earnings are jointly evaluated by computing transfer and risk benefits along the lines of newbery stiglitz a major conclusion is that the policy has to be evaluated differently from the donor s and the recipient s point of view the sugar protocol induces international income transfers that are untargeted in terms of per capita income it causes however rather strong risk benefits compared with other instruments of international commodity policy and sizeable welfare gains for individual recipient countries

the determination of profit margins in uk manufacturing this paper examines the determinants of profit margins in 91 u k manufacturing industries over the period 1983 86 it considers how the inclusion of labor market characteristics in empirical industrial organization specifications affects the estimated concentration margins relationship the empirical work pays detailed attention to the endogenous nature of variables derived from structural industrial organization models the authors report instrumental variables estimates of margins equations in which there emerges a significant role for labor market characteristics indeed both unionization and industrywide unemployment are found to depress profit margins the impact of concentration is seen to be biased downward when these variables are omitted

trust social capital and economic development many argue that elements of a society s norms culture or social capital are central to understanding its development however these notions have been difficult to capture in economic models here we explore ap ossible role for trustworthiness as corresponding to social capital individuals are trustworthy when they perform in accordance with promises even if this does not maximize their payoffs the usual focus on incentive structures in motivating behaviour plays no role here instead we emphasize more deep seated modes of behaviour and consider trustworthy agents being socialized to act as they do to model this socialization we borrow from a process of preference evolution pioneered by bisin and verdier 2001 the model developed endogenously accounts for social capital and explores its role in the process of economic development it captures in a simple formal way the interaction between social capital and the economy s productive processes the results obtained caution against rapid reform and provide an explanation for why late developing countries may not easily be able to transplant the modes of production that have proved useful in the west

social rewards externalities and stable preferences this paper examines the role of social rewards as a corrective mechanism for activities which generate externalities the focus of this paper is on the circumstances under which social rewards provide effective and feasible incentive mechanism that may replace laws and regulations in particular social mechanism is effective only in a society in which individuals who care about their standing in the society can survive in the long run we show that the nature of economic interaction between matched players influences whether the socially minded individuals survive in the long run and restricts the effectiveness of social rewards however circumstances exist where the socially minded survive even though relative fitness is determined only by economic payoff 1998 elsevier science s a all rights reserved

status and incentives this article introduces status as reflecting an agent s claim to recognition in her work this is a scarce resource increasing an agent s status requires that another agent s status be decreased higher status agents are more willing to exert effort in exchange for money better paid agents would exert higher effort in exchange for improved status the results are consistent with actual management practices i egalitarianism is desirable in a static context ii in a long term work relationship juniors compensation is delayed and iii past performance is rewarded by pay increases along with improved status within the organization s hierarchy

evolution of time preference by natural selection this paper entertains the hypothesis that human time preferences are in evolutionary equilibrium i e that no mutation changing time preferences could be favored by natural selection this hypothesis implies that the marginal rate of substitution mrs holding darwinian fitness constant must equal the mrs holding utility constant furthermore in a market economy the latter must equal the mrs in exchange exploiting these principles the author finds that the long term real interest rate should equal ln 2 per generation about 2 percent per year and that young adults should discount the future more rapidly than their elders copyright 1994 by american economic association

profit related pay prose discovered this paper estimates that in 1984 43 percent of british private sector establishments had some form of profit related pay regression results do not show that these establishments had statistically significant better financial performance cross ta bulations do not suggest that the establishments with income sharing schemes had noticeably greater employment growth or better industrial relations copyright 1988 by royal economic society

social norms in networks abstract although the linear in means model is the workhorse model in empirical work on peer effects its theoretical properties are understudied in this study we develop a social norm model that provides a microfoundation of the linear in means model and investigate its properties we show that individual outcomes may increase decrease or vary non monotonically with the taste for conformity equilibria are usually inefficient and to restore the first best the planner needs to subsidize tax agents whose neighbors make efforts above below the social norms thus giving more subsidies to more central agents is not necessarily efficient we also discuss the policy implications of our model in terms of education and crime

empirical results of aid motivations australia s bilateral aid program abstract this paper briefly surveys the existing literature on the motivations of overseas aid the emphasis is on the two competing models of recipient need and donor interest and the paper estimates these two models using data for australian bilateral aid both the recipient need model and the donor interest model are supported by the econometric analysis this is in stark contrast to the results of other studies for large states such as the united states and the united kingdom these prior studies show no support for the recipient need model whereas the donor interest model is supported the atypical result for the australian bilateral aid program requires further analysis in terms of non nested hypotheses

evolution and kantian morality what kind of preferences should one expect evolution to favor we propose a definition of evolutionary stability of preferences in interactions in groups of arbitrary finite size groups are formed under random matching that may be assortative individuals preferences are their private information the set of potential preferences are all those that can be represented by continuous functions we show that a certain class of such preferences that combine self interest with morality of a kantian flavor are evolutionarily stable and that preferences resulting in other behaviors are evolutionarily unstable we also establish a connection between evolutionary stability of preferences and a generalized version of maynard smith s and price s 1973 notion of evolutionary stability of strategies

effective aid how democracy allows development aid to improve the quality of life abstract research into foreign aid has mostly focused on its ability to affect economic i e gdp per capita growth conclusions have been mixed i consider aid s effectiveness differently by its ability to improve quality of life i find that though aid does not affect quality of life in the aggregate it is effective when combined with democracy and ineffective and possibly harmful in autocracies the results suggest that aid would be more effective if it were combined with efforts to encourage democratization

unions and the capture of economic rents an investigation using british firm level data this paper considers the relationship between unions and profitability in a sample of large british firms in 1984 and 1985 the initial finding is that unionised firms have significantly lower profit margins than otherwise comparable non union firms tests of whether the ability of unions to influence profit margins varies with the product and labour market characteristics of the firms in which they are located are then conducted the ability of unions to capture economic rents is seen to be significantly greater in firms which have a high market share and or operate in highly unionised industries

the evolutionary role of toughness in bargaining the experimental evidence on the endowment effect kahneman et al j polit economy 98 1990 1325 1348 and the self serving bias in negotiations babcok and loewenstein j econ perspect 11 1997 1337 1343 suggests that individuals enter a tough state of mind when they have to make a stand vis a vis somebody else in this work we show how a toughness bias in bargaining may indeed be evolutionary viable when the inherent toughness of the bargainer is observed by the opponent this opponent will adjust his behavior accordingly in a way which may enhance the actual payoff of the biased bargainer suppose then that a population consists initially of individuals with different inherent degrees of toughness or softness they are often matched at random to bargain and biases which are objectively more successful tend to appear more frequently in the society we characterize a salient class of bargaining mechanisms under which the population will consist asymptotically of individuals with some moderate degree of toughness

formation and persistence of oppositional identities we develop a dynamic model of identity formation that explains why ethnic minorities may choose to adopt oppositional identities i e some individuals may reject or not the dominant culture and why this behavior may persist over time we first show that the prevalence of an oppositional culture in the minority group cannot always be sustained in equilibrium indeed because the size of the majority group is larger there is an imposed process of exposition to role models from the majority group that favors the diffusion of mainstream values in the minority community in spite of this an oppositional culture in the minority group can nevertheless be sustained in steady state if there is enough cultural segmentation in terms of role models or if the size of the minority group is large enough or if the degree of oppositional identity it implies is high enough we also demonstrate that the higher the level of harassment and the number of racist individuals in the society the more likely an oppositional minority culture will emerge we finally show that ethnic identity and socialization effort can be more intense in mixed rather than segregated neighborhoods 2011 elsevier b v all rights reserved

market structure and market value while the use of market models to determine the sources of economic profits is quite new at least two empirical studies considering the market structure and market value relation have appeared to date interestingly they conflict thomadakis 1977 found a close positive relation between the four firm concentration ratio and relative excess valuation measured as the difference between the market value of the firm and the book value of tangible assets all normalized by sales as a result thomadakis argued that industry concentration plays a role in the determination of excess profits from currently held assets and those expected from the firm s investment options p 185 in contrast lindenberg and ross 1981 reported no significant relation between concentration and tobin s q ratio measured as the ratio of the market value of the firm to the replacement cost of tangible assets this result disputes thomadakis s findings and a purely structuralist interpretation of economic profits according to lindenberg and ross market power may or may not be evident in highly concentrated markets since high q s can occur in concentrated or unconcentrated markets and conversely low q s indicating no significant market power can occur in markets that have high degrees of concentration p 28

heterogeneity social esteem and feasibility of collective action abstract in the presence of individual heterogeneity a major problem with egalitarian partnership such as complete income pooling is that individuals of comparatively high ability are induced to exit the arrangement this is nevertheless ignoring the possible impact of social esteem considerations based on a comparison of members performances in this paper drawing inspiration from pooling experiences in a japanese fishery we show that the exit problem can be surmounted if sensitivity to social esteem is neither too strong nor too weak if it is too strong the lower ability agents will exit out of social shame whereas if it is too weak the higher ability agents will not consider it worthwhile to transfer income to their partners when the arrangement is sustainable the lower ability people strive towards limiting the income gap

the effects of risk preferences in mixed strategy equilibria of 2 2 games abstract we consider the effects of risk preferences in mixed strategy equilibria of 2 2 games provided such equilibria exist we identify sufficient conditions under which the expected payoff in the mixed equilibrium increases or decreases with the degree of risk aversion we find that at least moderate degrees of risk aversion will frequently be beneficial in mixed equilibria

profit margins and market concentration in uk manufacturing industry 1970 6 1984 profit margins and market concentration in uk manufacturing industry 1970 6 applied economics vol 16 no 1 pp 57 71

margins concentration unions and the business cycle theory and evidence for britain abstract a number of recent studies have examined the cyclical relationship between price cost margins concentration and unions u s data has concluded that unions reduce margins margins vary over the cycle and concentration unionisation and the cycle interact in their effect on margins however there is almost no theory to account for these results we propose a simple theory that assumes only that there is overhead labour present at the firm this produces theoretical predictions that can explain these results and discriminate between existing theories we present results of our own using u k panel data and show similar findings to the u s

homo moralis preference evolution under incomplete information and assortative matching what preferences will prevail in a society of rational individuals when preference evolution is driven by the resulting payoffs we show that when individuals preferences are their private information a convex combination of selfishness and morality stands out as evolutionarily stable we call individuals with such preferences homo moralis a t one end of the spectrum is homo oeconomicus who acts so as to maximize his or her own payoff at the opposite end is homo kantiensis who does what would be the right thing to do in terms of payoffs if all others would do likewise we show that the stable degree of morality the weight placed on the moral goal is determined by the degree of assortativity in the process whereby individuals are matched to interact

a new approach to the allocation of aid among developing countries is the usa different from the rest summary this paper attempts to explain the factors that determine the geographical allocation of foreign aid its novelty is that it develops a rigorous theoretical model and conducts the corresponding empirical investigations based on a large panel dataset we run regressions for different major donors united states canada france italy japan united kingdom and multilateral organizations with the explicit objective of establishing whether the united states in light of its geopolitical hegemony behaves differently from others we find that all the donors respond to recipient need in their allocation of aid but that the united states puts less emphasis on this than the other donors with the exception of japan we also find that the united states puts more emphasis on donor recipient linkages than do the other donors suggesting that the united states attaches greater importance to issues of donor interest for example geopolitical commercial and other links with specific recipients

biases in the allocation of foreign aid some new evidence abstract the purpose of the paper is to examine the pattern of bilateral and multilateral foreign aid allocations during the 1970s cross section and pooled regressions for a set of roughly 90 countries where aid allocations have been relatively free of gross political overtones confirm the well known bias in per capita aid flows against populous countries butdo not provide evidence of a middle income bias instead regressions on 1976 1978 aid flows and per capita incomes of recipient countries seem to suggest a low income bias i e low income countries received more aid per capita than middle income countries yet there was asample of extremely poor countries which remained neglected in foreign aid allocations

concentration and other determinants of bank profitability in europe north america and australia abstract this study reviews the performance of banks in twelve countries or territories in europe north america and australia and examines the internal and external determination of profitability to circumvent some of the difficulties in making comparisons between banks in different countries the concept of value added is introduced results parallel those in domestic u s studies and provide some support for the edwards heggestad mingo hypothesis of risk avoidance by banks with a high degree of market power

civil institutions and evolution concepts critique and models abstract the paper examines the relation between civil norms and evolution the survival of norms in the long run may depend on the evolutionary process and natural selection the sieve of natural selection may ensure that norms which persist must have minimal efficiency properties this paper begins with a general discussion of evolutionary processes and the survival of civil institutions it then presents an introductory account of the theory of evolutionary games it is argued that the model of evolutionary games is more suited to analyzing animal behaviour than the human one since it is the latter that is of interest to economists an attempt is made in this paper to develop some new solution concepts which are more apt for human games

individual well being in a dynamic perspective this paper explores the determinants of individual well being as measured by self reported levels of satisfaction with income making full use of the panel data nature of the german socio economic panel we provide empirical evidence for well being depending on absolute and on relative levels of income in a dynamic framework this finding holds after controlling for other influential factors in a multivariate setting the main novelty of the paper is the consideration of dynamic aspects individual s own history as well as the relative income performance with respect to the others living in the society under analysis do play a major role in the assessment of well being