contracts opportunism and trust self interest and social orientation this paper analyses the role of trust in facilitating efficient exchange relations when agents are vulnerable to opportunistic behaviour two distinct mechanisms supporting trust are distinguished self interested trust sit which is forwardlooking and socially oriented trust sot which has its roots in the past the former is the only source of trust recognised in the mainstream economics literature while the latter draws heavily from sociology we develop the implications of isolated and of repeated exchange for the existence of sit or sit and for the role of formal contracts in exchange relations the paper concludes with a discussion of the feasibility of empirical testing to distinguish sit from sot

the role of trust and contract in the supply of business advice the use of legal contract and personal trust are compared in this paper for the relationships between clients and their different advisers who supply business advice personal trust between client and adviser is found to operate as an exclusive means to manage relational exchange only for social and family relationships using a sample survey of small and medium sized enterprises results demonstrate that trust and legal contract are most commonly overlapping categories comparing different types of adviser the level of trust extent of legal contract service intensity service costs and client impact and satisfaction are each found to interact there are major differences between suppliers but except in the case of social and family relationships to advisers higher reliance on trust alone is generally associated with lower levels of client impact and satisfaction received the combination of trust with contract tends to be the route which is most associated with higher levels of client impact and satisfaction

note periodic review s s policies for joint replenishment inventory systems this note deals with the joint replenishment problem with stochastic demands a new class of policies called ps s policy is proposed for this problem the proposed policy uses independent periodic review s s policies for each item results on test problems show that the proposed policy is superior to other classes of policies for the problem

puzzles in the economic institutions of capitalism production coordination contracting and work organisation in the irish linen trade 1750 1850 pre famine ireland is a byword for market failure and path dependence production of flax yarn and linen cloth was highly regulated and coordinated by the market rather than by firms contemporary political economists suggested that these institutional features provided evidence of organisational inefficiency the historical evidence suggests that they were a rational response to transaction and production costs the irish case provides a test of the hypotheses that firms emerge to reduce the cost of market transactions it suggests that institutions other than the firm can modify transaction costs coordination of production can affect both transaction and production costs and that agents choose between market and firm coordination given technology and factor prices finally centralisation of production was driven by technology copyright 2005 oxford university press

coordinated replenishments in inventory systems with correlated demands abstract demand correlation among different inventory items is common in real life multi item inventory systems however this phenomenon has not received sufficient attention in the existing inventory literature in this paper we construct a markovian model for a two item inventory system with correlated demands and coordinated replenishments we obtain an expression for the long run total cost per unit of time under the can order replenishment policy for the scenario with independent replenishments the explicit formula for the long run total cost per time unit can be derived which leads to analytical solutions for the optimal policies we then present numerical examples of the optimal can order policies and discuss some managerial insights regarding demand correlation and replenishment coordination our numerical results also suggest a possible heuristic method for obtaining can order replenishment policies for multi item systems

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

the distributional effects of local labor demand and industrial mix estimates using individual panel data abstract this paper finds that increases in local labor demand have significant progressive effects on the income distribution and significantly reduce poverty the anti poverty effects of stronger demand have not lessened in recent years local labor demand s benefits are particularly great for younger less educated men labor demand s benefits are similar for blacks and whites and men and women the paper also finds that shifts in the local industrial mix toward manufacturing or other high wage industries do not have progressive effects and do not reduce poverty

long term effects of income specialization in oil and gas extraction the u s west 1980 2011 abstract the purpose of the study is to evaluate the relationships between oil and natural gas specialization and socioeconomic well being during the period 1980 to 2011 in a large sample of counties within the six major oil and gas producing states in the interior u s west colorado montana new mexico north dakota utah and wyoming the effects of participation in the early 1980s oil and gas boom and long term specialization were considered as possible drivers of socioeconomic outcomes generalized estimating equations were used to regress 11 measures of economic growth and quality of life on oil and gas specialization while accounting for various confounding factors including degree of access to markets initial socioeconomic conditions in 1980 and dependence on other economic sectors long term oil and gas specialization is observed to have negative effects on change in per capita income crime rate and education rate participation in the early 1980s boom was positively associated with change in per capita income however the positive effect decreases the longer counties remain specialized in oil and gas our findings contribute to a broader public dialogue about the consequences of resource specialization involving oil and natural gas and call into question the assumption that long term oil and gas development confers economic advantages upon host communities

deterministic eoq with partial backordering and correlated demand caused by cross selling abstract there has been much work regarding the deterministic eoq with partial backordering the majority of these studies assume no correlation in sales so independent demands across items is applied in the models however it is generally recognized that cross selling effects between items often appear in real contexts thus incorporating such effects in the inventory model in the form of correlated demands makes it of more practical relevance in this paper the authors address a two item inventory system where the demand of a minor item is correlated to that of a major item because of cross selling we firstly present a two item eoq model with identical order cycles where the unmet demand of the major item can be partially backordered with lost sales whereas the demand of the minor item must be met without stockouts this model is further extended to fit a more practical case where the order cycle of the major item is an integer multiple of that of the minor item the optimal solutions of the two models as well as the inventory decision procedures are also developed comparative analysis on these two eoq models has been drawn in the computational study which presents some insights into the parameter effect on the optimal inventory policy

perceived trustworthiness and inter firm governance empirical evidence from the uk printing industry the paper describes six representative theoretical positions regarding the impact of trustworthiness on the organisation of inter firm relations the positions are then assessed on the basis of a survey of 184 buyer supplier relationships in the uk printing industry the widely accepted transaction cost argument for trust as a parameter reducing hierarchy is dismissed instead the so called triadic forces argument based on bradach j l and eccles r g 1989 price authority and trust from ideal types to plural forms annual review of sociology vol 15 96 118 receives the strongest support market hierarchy and trust represent alternative mechanisms that can be combined in a variety of ways this pluralistic model is enriched further by the acknowledgement of variable roles for contracts and a sceptic stance regarding rationality in practice copyright 2002 oxford university press

do resource dependent regions grow slower than they should abstract a large literature documents a negative correlation between income growth and resource dependence this correlation has been named the resource curse we present evidence that suggests that the resource curse can be explained by a slow growing resource sector

potential contributions of political science to environmental economics while political science has much to offer at least some of its contributions might be difficult to incorporate into economic models nevertheless we argue that environmental economics might benefit from supplementing combining or sometimes even replacing the rational choice approach with other approaches commonly used in political science we develop our argument by examining three core components of political science analysis ideas power and institutions for each component we review political science approaches and propositions with a view to determining what s in it for environmental economics

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

periodic versus can order policies for coordinated multi item inventory systems the coordinated multi item inventory problem refers to the problem of managing inventories where there is a joint fixed cost for replenishing plus an item by item fixed cost for each item included in the replenishment order given that the optimal solution is likely to be too complex attention has focused on fixed heuristics and in particular can order or s c s policies this paper makes two contributions first a new lower bound on the cost of the optimal policy is proposed in order that the performance of heuristics may be measured second motivated by the lower bound a simple periodic policy is proposed and shown to be an improvement over can order policies for many data sets

the alaskan labor market during the pipeline era built between 1974 and 1977 the trans alaska pipeline was the largest privately financed construction project in world history the alaskan labor market during the pipeline era provides an ideal opportunity to view labor market responses to a large anticipated and temporary shock to labor demand the paper presents several theoretical models of market responses to temporary demand shocks and then assesses the ability of each model to explain the alaskan data among the findings are that alaskan wages were very flexible labor supply was quite elastic on both the intensive hours per worker and extensive number of workers margins and even a major short run demand shock need not have a long run impact

the distributional impacts of an energy boom in western canada in the energy rich region of western canada inequality rose over the past two decades while poverty declined begging the question of whether the recent energy boom was a contributing factor this study uses measures of inequality and poverty across local labor markets that vary in energy extraction intensity to identify these distributional impacts the evidence shows that overall the boom increased inequality and decreased poverty there are however a few notable cases where these relationships are reversed the significance and relative magnitude of growth across and between distributional segments were consistent with these findings

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

coordinated replenishments in a multi item inventory system with compound poisson demands in many practical applications or multi item inventory systems significant economies of scale can be exploited when coordinating replenishment orders for groups of items this paper considers a continuous review multi item inventory system with compound poisson demand processes excess demands are backlogged and each replenishment requires a lead time there is a major setup cost associated with any replenishment of the family of items and a minor item dependent setup cost when including a particular item in this replenishment moreover there are holding and penalty costs we present an algorithm which searches for a simple coordinated control rule minimizing the long run average cost per unit time subject to a service level constraint per item on the fraction of demand satisfied directly from on hand inventory this algorithm is based on a heuristic decomposition procedure and a specialized policy iteration method to solve the single item subproblems generated by the decomposition procedure the model applies to multi location inventory systems with similar cost structures for coordinated deliveries

predation reputation and entry deterrence abstract economists often argue that predatory practices are irrational since there exist cheaper or more certain means to gain or maintain a monopoly our gametheoretic equilibrium analysis suggests that if a firm is threatened by several potential entrants then predation may be rational against early entrants even if it is costly when viewed in isolation because it yields a reputation which deters other entrants asymmetric information plays a crucial role in our analysis since it provides the rationale for entrants to base their expectations of the firm s future behavior on its past actions the analysis also suggests methods to treat general reputational phenomena

the olympic effect why should countries offer to host costly mega events such as the olympic games we show that hosting a mega event increases exports this effect is statistically robust permanent and large trade is over 20 higher for host countries interestingly unsuccessful bids to host the olympics have a similar impact on exports we conclude that the olympic effect on trade is attributable to the signal a country sends when bidding to host the games rather than the act of actually holding a mega event we develop an appropriate formal model and derive conditions under which liberalising countries will signal through a mega event bid

uncertainties and risks in transitions to sustainable energy and the part trust might play in managing them a comparison with the current pension crisis abstract transition to a sustainable energy future carries uncertainties for all stakeholders including those who research it history does not repeat itself in detail yet comparison with analogous processes already completed or in train could give shape to how we project the future the author focuses not on the technical change required but rather on the institutional and cultural changes that would be necessary to generate the political will and the consumer demand that would drive technical change and its widespread adoption he examines a current crisis for most developed countries that of old age pension provision which though lacking a link with new technology might have similar social dynamics to an impending crisis in energy in the analysis of the pensions crisis the focus is upon both how risk has been encountered and also the part played by trust mistrust in engendering and prospectively resolving crisis between citizens and state between regulator and providers and between consumers and providers analogies are drawn from in a similar way for the impending energy crisis a refrain throughout is the dialectic between market and plan it is concluded that both the actual and the impending crisis have to be reviewed in a context of relations between states as well as relations within them

the effects of a natural gas boom on employment and income in colorado texas and wyoming improvements in technology have made it profitable to tap unconventional gas reservoirs in relatively impermeable shale and sandstone deposits which are spread throughout the u s mostly in rural areas proponents of gas drilling point to the activity s local economic benefits yet no empirical studies have systematically documented the magnitude or distribution of economic gains i estimate these gains for counties in colorado texas and wyoming three states where natural gas production expanded substantially since the late 1990s i find that a large increase in the value of gas production caused modest increases in employment wage and salary income and median household income the results suggest that each million dollars in gas production created 2 35 jobs in the county of production which led to an annualized increase in employment that was 1 5 of the pre boom level for the average gas boom county comparisons show that ex ante estimates of the number of jobs created by developing the fayetteville and marcellus shale gas formations may have been too large

local labor market impacts of energy boom bust boom in western canada abstract the impacts of energy price boom and bust are analyzed through the differential growth in employment and earnings between local labor markets with and without energy resources in western canada the estimated differentials attributed to the boom induced labor demand shocks show significant direct and indirect impacts on the earnings and employment within the energy extraction and other non energy local sectors respectively the local job multipliers indicate that job creation within the energy extraction sector leads to modest job creation within the non energy local sectors during boom periods for every ten energy extraction jobs created during a boom period approximately three construction jobs two retail jobs and four and a half service jobs are created

local labor markets and natural resources a synthesis of the literature a primary way that natural resources affect a locality is through the demand for labor with greater extraction requiring more workers shifts in labor demand can be measured through changes in employment and earnings the main labor market outcomes or through changes in the population and income more generally these changes may spillover into the nonresource economy leading to greater overall effects or possibly crowd out be spread unequally across the population thereby altering the distribution of income and the poverty rate or influence educational attainment as people choose between additional schooling and work in this review the literature linking natural resources to local labor markets is synthesized by organizing existing studies according to their resource measurement and the outcomes that they consider this synthesis provides an accessible guide to a literature that has boomed in recent years it also identifies promising avenues for future research and lays a foundation to further generalize the evidence through an eventual meta analysis

an association clustering algorithm for can order policies in the joint replenishment problem abstract many studies have shown that the total cost of employing joint replenishment for correlated items is less than the total cost of using single item replenishment savings increase dramatically when the demand between items is closely related although the benefits of joint replenishment are significant it is difficult to define the demand correlation among items especially when the number of items increases a large number of items reduces the efficiency and advantage of the multi item inventory control to overcome this difficulty an association clustering algorithm this paper proposes to evaluate the correlated demands among items the proposed algorithm utilizes the support concept in association rule analysis to measure the similarity among items based on these measurements a clustering method is developed to group items with close demand in a hierarchal way the can order policy is then applied to the optimal clustering result as decided by the proposed performance index to illustrate the benefits of the proposed association clustering algorithm for replenishment systems a set of simulations and a sensitivity analysis is conducted the results of the experiments show that the proposed method outperforms several replenishment models

changes in wage inequality in canada an interprovincial perspective this paper uses the canadian labour force survey to understand why the level and dispersion of wages have evolved differently across provinces from 1997 to 2013 the faster increase in the level of wages and the decline in wage dispersion in newfoundland saskatchewan and alberta are the starkest interprovincial differences we find that they are accounted for by the growth in the extractive resources sectors which benefited less educated and younger workers the most increases in minimum wages since 2005 are found to be the main reason why wages at the very bottom grew more than those in the middle of the distribution

innovation and integration in the agri food industry abstract we deal with the link between innovation and market structure using the empirical example of the danish agri food industry vertical integration may resolve hold up problems and here we test for the importance of vertical integration and networks on innovation we further examine the effects of network relationships on innovation behaviour we use data from an extensive survey of 444 danish firms over two years 2000 and 2005 to estimate a bootstrapped zero inflated poisson regression model the first and most significant result is that organization matters further we find that vertical integration as well as contractual arrangements are significant determinants for firms innovation behaviour the direction of integration is important as well also economies of size seem to play an important role similarly the export orientation of the firm is a significant determinant of innovation whereas the sector the firm is operating in is not significant for its innovation behaviour

income and employment effects of shale gas extraction windfalls evidence from the marcellus region abstract new technologies combining hydraulic fracturing and horizontal drilling in oil and gas extraction are creating a sudden expansion of production residents of places where deep underground oil and gas deposits are found want to know about the broader economic social and environmental impacts of these activities that generate windfall income for some residents we first review the literature on windfall spending patterns then using the marcellus region the earliest area to be tapped using the new techniques we estimate county level employment and income effects for robustness we employ two methods using a propensity score matching approach we find no effect of fracking on income or employment a panel fixed effect regression approach suggests statistically significant employment effects in six out of seven alternative specifications but significant income effects in only one out of seven specifications in short the income spillover effects in the marcellus region appear to be minimal meaning there s little incentive at the county level to incur current or potential future costs that may be associated with this activity we conclude with some ideas on how localities might employ policies that would allow natural gas extraction to move forward benefitting landowners while establishing some financial safeguards for the broader community

the regional economic impact of oil and gas extraction in texas abstract this paper empirically investigates the regional economic impact of oil and gas extraction in texas during the recent shale oil boom regressions with county level data over the period 2009 2014 support smaller multiplier effects on local employment and income than corresponding estimates drawn from popular input output based studies economic impacts were larger for extraction from gas wells than oil wells while the drilling phase generated comparable impacts estimates of economic impacts are greater in a dynamic spatial panel model that allows for spillover effects across local economies as well as over time

effects of correlation on intermittent demand forecasting and stock control abstract this study investigates the effects of three different types of correlation on forecasting and stock control of intermittent demand items applying appropriate forecasting and stock control methods to theoretically generated compound poisson demand data we show that correlation in intermittent demand does play a role in forecast quality and stock control performance negative autocorrelation levels lead to higher service levels than positive values while cost does not significantly change our results also show that high intermittency levels intensify these changes in service level we also show that cross correlation produces results in the opposite direction of autocorrelation in size or intervals that is positive negative cross correlation leads to higher lower service levels

a note on participatory decision making and rationality this paper addresses a particular issue of institutional choice it is concerned with one aspect of the argument for participatory decision making structures how to make sense of the claim that participation can raise productivity because it produces a change in motivation the argument of the paper turns first on distinguishing between the rational choice account of behaviour and a norm guided one and second on the thought that participatory structures give scope for norm guided behaviour to flourish in ways not found in hierarchies

the economic aftermath of resource booms evidence from boomtowns in the american west the current us oil and gas boom is injecting labour capital and revenue into communities near reserves will these communities be cursed with lower long run incomes in the wake of the boom we study the oil boom and bust cycle of the 1970s and 1980s to gain insights using annual data on drilling to identify western boom and bust counties we find substantial positive local employment and income effects during the boom in the aftermath of the bust however we find that incomes per capita decreased and unemployment compensation payments increased relative to what they would have been if the boom had not occurred

the economics of sports facilities and their communities since the 1950s taxpayers have been the primary investors in stadia built for the use of privately owned professional sports teams team owners have argued that sports facilities boost local economic activity however economic reasoning and empirical evidence suggest the opposite public support for stadia is also driven by demand for community image and owners of sports teams supply a scarce input into image enhancement participation in the major league for which they have been able to extract monopoly rents from dispersed taxpayers we suggest reforms to dissipate the monopoly sports leagues exercise when negotiating with host communities for their teams

shaping the national system of inter industry knowledge exchange vertical integration licensing and repeated knowledge transfer in the german plastics industry we will claim in this paper that it was in particular the above average propensity to share innovative information with customers and competitors which caused the exceptional international competitiveness of the west german plastics industry including chemical firms plastics fabricators and machine makers the system of knowledge exchange of this national cluster was shaped in two main steps in the first half of the 20th century cartellization and mergers were first tolerated and then even supported by the german government it was in this period when german chemical firms formed the vertically integrated i g farben concern which provided an optimal organisational framework to explore the new technological path of plastics after the breaking up of i g farben the firms of the west german chemical firms had to find new ways to maintain inter industry technological co operation in the second half of the 20th century it turned out that they became aware of both contractual and non contractual solutions of bundling standard good and information which were often placed somewhere between market and hierarchy it seems to be no accident that all these different institutions did primarily encourage knowledge exchange between firms in geographical and cultural proximity that is why the knowledge exchanging network of the plastics industry described in this paper has been in particular concentrated on german firms even so the question is still open whether this localisation is just a curiosity limited to a special industry cluster or part of a broader german system of knowledge exchange