the effect of household wealth on fertiliser use in the presence of uncertainty abstractprevious studies of wealth effect on fertiliser use have produced mixed results on the direction of the impact our article looks at this issue from a different perspective by considering the presence of doubts such as about the true content or general effectiveness of fertiliser we show theoretically that there could be different responses between the high wealth and low wealth farmers we analyse also the wealth effect empirically using household panel data from the hebei province of china the results indicate that the direction of wealth effect does indeed change across the different levels of farmers wealth

pressure groups and redistribution abstract the simple pressure group model of political redistribution can predict more with less restrictive assumptions instead of ready made pressure groups composed of individuals who vote their pocketbooks we posit heterogeneous agents each of whom decides which group to join and how much effort to expend on political activity our model then examines social affinity conditions that foster pressure group formation political sympathies based on social affinity imply testable effects of growth rate and income distribution on progressive transfers effects that prove substantial in pooled time series cross section regressions for 13 oecd countries 1960 1981

credit market constraints consumption smoothing and the accumulation of durable production assets in low income countries investments in bullocks in india in this paper we formulate and estimate a finite horizon structural dynamic model of agricultural investment behavior that incorporates the major features of low income agricultural environments income uncertainty constraints on borrowing and rental markets and the use of investment assets to generate income and smooth consumption the model is fit to longitudinal indian household data on farm profits bullock stocks and pump sets the estimated structural parameters are used to assess the effects on the life cycle accumulation of bullocks agricultural profits and welfare associated with complete markets and bullock liquidity and with second best policies that provide assured sources of income to farmers and weather insurance

specific experience household structure and intergenerational transfers farm family land and labor arrangements in developing countries data from indian rural household survey was used to test th hypothesis that the coexistence in traditional rural societies of extended intergenerational families infrequent land sales and high reliance on family members as farm laborers is the result of the economic advantages which accrue from the knowledge gained by farming a particular ploy of land over a long period of time the land specific experience of elderly members of a intergenerational household who farmed the land as a child and then as an adult are expecially critical in adverse weather years most previous investigators attributed the existence of multigenerational households the use of family members rather than hired laboreds and the infrequency of land sales to deficiencies in the market i e labor market imperfections and an absence of capital insurance and asset markets in the present investigations these same characteristics are viewed as having an economic advantages a model for estimating the contribution of the experience of the elderly household members to agricultural profits was developed and applied to data from a 3 year panel study of 2900 indian rural farm households the data was collected between 1968 71 by the national council of applied economic research the survey collected information on farm profits farm inputs demographic characteristics and the effects of weather conditions on profits a major limitation of the study was a lack of information on the duration of land ownership age of household members was substituted as a proxy for duration of ownership findings were consistent withe the hypothesis in poor agricultural years gross returns for households which contained an elderly household member were greater than the gross returns for comparable households which did not contain an elderly member the economic advantages of specific knowledge embodied in the experienced elderly farmer were comparable to the economic advantages which accrued to households whose members were more educated the hypothesis cannot fully explain the existence of intergenerational families since there is a relatively large proportion of such families among nonfarm families in many countries including india findings suggest that intergenerational families may provide for more occupational diversity and thereby reduce income risks the specific experience hypothesis has policy implications if technological changes are introduced the value of specific experience may be lost and the frequency of intergenerational households may decline the hypothesis may also explain why farmers are reluctant to agree to land redistribution and consolidation schemes this reluctance may disappear after sufficient technological change has occurred

child fostering in africa when labor and schooling motives may coexist abstract the paper proposes a theoretical framework for understanding purposive child fostering in africa whereby a non orphaned child is sent to live temporarily with relatives in the model adults decide whether to foster in or out a child in conjunction with other household choices e g own time allocation between market and non market activities children s amount of work and schooling by allowing for positive externalities from fostering and thus asymmetric motives for fostering in labor and out human capital the proposed framework predicts that school age children are sent to better off households and that some families may foster in and out simultaneously the model identifies the conditions under which all actors involved children included may benefit from fostering arrangements but also points to situations where fostering may become an opportunity to marginalize a subset of children the paper aims to provide a sound theoretical foundation that sheds light on why there exists mixed empirical evidence on the effects of fostering on children s well being and cautions against demonizing non parent residence as unequivocally detrimental to children

ex ante and ex post labor supply response to risk in a low income area abstract this paper tests for ex ante and ex post labor supply responses to weather risk for rural indian farm households the analysis uses panel data on 2115 households spanning 13 states in rural india merged with a 22 year series of district level rainfall data ex ante households facing riskier distributions of rainfall are more likely to participate in the labor market ex post unexpectedly bad weather and low rainfall increase labor force participation

nutrition information and household behavior experimental evidence from malawi incorrect knowledge of the health production function may lead to inefficient household choices and thereby to the production of suboptimal levels of health this paper studies the effects of a randomized intervention in rural malawi that over a six month period provided mothers of young infants with information on child nutrition without supplying any monetary or in kind resources a simple model first investigates theoretically how nutrition and other household choices including labor supply may change in response to the improved nutrition knowledge observed in the intervention areas we then show empirically that the intervention improved child nutrition household food consumption and consequently health we find evidence that labor supply increased which might have contributed to partially fund the increase in food consumption this paper is the first to study whether non health choices particularly parental labor supply might be affected by parents knowledge of the child health production function

asset stock accumulation and sustainability of competitive advantage given incomplete factor markets appropriate time paths of flow variables must be chosen to build required stocks of assets that is critical resources are accumulated rather than acquired in strategic factor markets barney barney j 1986 strategic factor markets expectations luck and business strategy management sci october 1231 1241 sustainability of a firm s asset position hinges on how easily assets can be substituted or imitated imitability is linked to the characteristics of the asset accumulation process time compression diseconomies asset mass efficiencies inter connectedness asset erosion and causal ambiguity

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

incorporating risk in production analysis risk is the farmer s perennial problem unfortunately agricultural economists have made little progress in analyzing or measuring production risk in ways that provide useful information for farm management therefore it is fair to say that the social returns to existing research on production risk are probably low it is from this perspective that i will discuss incorporating risk in production analysis my purpose is not to survey the literature or to catalog all the ways risk concepts have been incorporated in production models rather i intend to evaluate critically some of the basic concepts and approaches in the literature and to indicate the directions i believe research must take to arrive at a paradigm for incorporating risk in production analysis that could yield higher social returns in my view the conventional conceptual framework used for risk analysis has not led agricultural economists to ask the most important questions about the effects risk has on agricultural decision making the extension of the static neoclassical production model to incorporate price and production uncertainty has led agricultural economists to rationalize observed behavior in terms of the arrow pratt risk aversion concept this approach has led in turn to qualitative comparative static theorems which are appealing to theorists but have little relation to the decision problems farmers face to increase the relevance of their models and methods i believe agricultural economists need to understand specifically how risk affects agricultural production this in turn will suggest how risk affects agricultural decision making and why farmers are or should be concerned with it my analysis of these issues leads me to discount the hypothesis that risk matters primarily because of the psychic disutility it causes rather i hypothesize that risk matters primarily because production is a dynamic phenomenon and therefore production and price uncertainty affect expected productivity and expected income i hypothesize that these firstorder effects are why farmers are and should be concerned with risk the analysis of dynamic uncertain models shows that farmers optimal decisions are affected by risk whether they are risk neutral or risk averse this suggests that dynamic risk neutral models may be more useful than conventional static risk averse models for understanding the role production risk plays in farm management

precautionary behavior migrant networks and household consumption decisions an empirical analysis using household panel data from rural china abstract we develop a test of precautionary behavior in the consumption decisions of rural agricultural households among surveyed households facing a median level of consumption risk 10 of savings can be attributed to a precautionary motive and this increases to 15 for households with consumption per capita below the poverty line we next use distant lags of local rainfall shocks uncorrelated with current consumption growth to identify the size of migrant networks outside the village and then present evidence that both poor and nonpoor households engage in less precautionary saving as the size of the village migrant network increases

adoption of agricultural innovations in developing countries a survey this paper reviews various studies which have provided a description and possible explanation to patterns of innovation adoption in the agricultural sector the survey points out that the tendency of many studies to consider innovation adoption in dichotomous terms adoption nonadoption may not be appropriate in many cases where the actual decisions are defined over a more continuous range more attention needs to be given to the socio cultural and institutional environment in area studies so that their interrelation with economic factors affecting adoption can be inferred the presence of several interrelated innovations is another aspect that needs to be considered more carefully in future research since a number of simultaneous decisions may be involved furthermore the possibility of regular sequential patterns in adopting components of a new technological package should be specifically addressed in future studies finally the impact of differential adoption rates on land holding distribution merits attention in future research

the crowding out effect of formal insurance on informal risk sharing an experimental study abstract this paper investigates the crowding out effect of formal insurance on informal risk sharing arrangements via theory and laboratory experiment our model and simulation predict that the crowding out of private transfers is often more than one for one and will reduce the total risk coverage furthermore the existence of a moderate degree of altruism exaggerates the crowding out effect especially when there is an ex ante income inequality these predictions are mostly supported by the laboratory experiment except that the crowding out effect is not more than one for one and hence the total risk coverage is not significantly reduced by formal insurance

storm damage and risk preferences panel evidence from germany individuals risk preferences may change after experiencing external socio economic or natural shocks theoretical predictions and empirical studies suggest that risk taking may increase or decrease after experiencing shocks so far the empirical evidence is sparse especially when it comes to developed countries we contribute to this literature by investigating whether experiencing financial and health related damage caused by storms affects risk preferences of individuals in germany using unique panel data we find that household heads were more risk seeking after they experienced storm damage we do not find evidence of exposure to storm per se regardless of damage experience which suggests that household heads have to suffer damage for their risk preferences to be affected these results are robust across a battery of alternative model specifications and alternative storm damage measures magnitude of financial damage we rule out other potential explanations such as health related and economic shocks the self reported storm damage data is broadly confirmed by regional storm damage data provided by the insurance industry while we cannot identify the channels through which experiencing storm damage affects risk preferences from our data we suggest and discuss some potential channels the results may have important policy implications as risk preferences affect for instance individuals savings and investment behaviour adoption of self protection and self insurance strategies and technology adoption

agricultural technology choice and transport this paper addresses an old and recurring theme in development economics the slow adoption of new technologies by farmers in many developing countries the paper explores a somewhat novel link to explain this puzzle the link between market access and the incentives to adopt a new technology when there are non convexities the paper develops a theoretical model to guide the empirical analysis which uses spatially disaggregated agricultural production data from spatial production allocation model and living standards measurement study survey data for nigeria the model is used to estimate the impact of transport costs on crop production the adoption of modern technologies and the differential impact on returns of modern versus traditional farmers to overcome the limitation of data availability on travel costs for much of africa road survey data are combined with geographic information road network data to generate the most thorough and accurate road network available with these data and the highway development management model minimum travel costs from each location to the market are computed consistent with the theory analysis finds that transportation costs are critical in determining technology choices with a greater responsiveness among farmers who adopt modern technologies and at times a perverse negative response to lower transport costs among those who employ more traditional techniques in sum the paper presents compelling evidence that the constraints to the adoption of modern technologies and access to markets are interconnected and so should be targeted jointly

assortative matching and risk sharing abstract this paper explores the sorting patterns in a two sided matching market where agents facing different risks match to share them when preference belongs to the class of harmonic absolute risk aversion hara the risk premium is perfectly transferable within each partnership thus a stable match minimizes the social cost of risk in the systematic risk model where agents are ranked by their holdings of a common risky asset the convexity of the joint risk premium in joint risk size leads to negative assortative matching nam in the idiosyncratic risk model where agents are ranked by their independent riskiness in the sense of second order stochastic dominance ssd nam arises when preference exhibits decreasing absolute risk aversion dara in the sense of ross and riskier background risk leads to more risk averse behavior however nam may fail to arise when riskier background risk leads to more risk tolerant behavior

periodic high risk as a cause of fertility decline in a changing rural environment survival strategies in the 1980 1983 south indian drought in the attempt to explain persistent high fertility in much of the third world attention has been drawn both to current returns from child labor and to the mitigation or avoidance of future risks the latter can be subdivided into meeting emergencies while the parental generation is still of working age and providing for old age or even safeguarding the transmission of family property on parental death the problems of old age have recently received most attention and they may well be of paramount importance in many societies yet in a research program that we have conducted in rural south india since 1979 the reasons given for demographic behavior have more frequently emphasized the need to plan strategies to meet periodic crisis than to ensure old age support 2 nevertheless one should not underemphasize the latter merely because the problem is predictable and the solutions understood in the study area for the great majority of the aged the support system still worked well 3 in contrast in our investigations of marriage fertility control and education we repeatedly discovered that a fundamental consideration with regard to parental decisions in these areas was to strengthen the ability of the family to withstand periodic crises 4 by far the most important type of crisis in this dry drought prone area was recurrent famines resulting

on the economics of nonmarket transfers the role of altruism abstract we examine altruistically motivated consumption transfers in an effort to account for nonmarket transfers we find that altruistic linkages lead to autonomous negotiation free transfers and that such transfers positively respond to stronger altruism we also find that given fairly natural assumptions concerning the altruism parameters mutual altruism does not necessarily result in group social harmony even though its rise narrows the conflict range in spite of enhanced transfers prompted by such a rise both parties may end up worse off these results help explain why in some social environments a shift toward market oriented transfers and exchanges may be quicker than in others as the disadvantages decline in utility associated with intragroup altruistic linkages outweigh the advantages

organizational constraints to adaptation intrafirm asymmetry in the locus of coordination we assemble a panel data set of firms in the u s defense industry between 1996 and 2006 to examine the drivers of heterogeneous incumbent firm adaptation following the industry wide demand shock of september 11 2001 this shock entailed not only an increase in aggregate demand but more importantly a shift in the relative attractiveness of individual product areas resulting in the need for firms to reshuffle their product portfolios in response to changing demand conditions the exogenous nature of the shock allows us to empirically identify the effect of preshock interdependence structures on postshock adaptation outcomes we find that the locus of coordination inside a firm can explain differential postshock adaptation performance because interdependencies spanning organizational boundaries are more difficult to manage than those contained within such boundaries coordination across product areas creates greater adaptation challenges compared with coordination within product areas we further inves

consumption and income seasonality in thailand many households in developing countries rely on seasonal agriculture for their incomes this paper investigates whether household consumption expenditure tracks income across seasons using data from thailand i contrast the seasonal consumption patterns of households with different seasonal income patterns and estimate the responsiveness of seasonal consumption to seasonal income i find little evidence that consumption tracks income over the course of the year the findings suggest that observed seasonal consumption patterns are the result of seasonal variations in preferences or prices common to all households rather than an inability of households to use savings behavior to smooth consumption

does migration raise agricultural investment an empirical analysis for rural mexico the effect of remittances on capital accumulation remains a contested topic this paper uses a panel data set from rural mexico to investigate the impact of remittances on agriculture and livestock investments after controlling for the endogeneity of migration through an instrumental variable estimation our empirical results show that international migration has a significantly positive effect on the accumulated agricultural assets but not on livestock capital this suggests that households use the capital obtained from international migration only to overcome liquidity constraints for subsistence production whereas migration itself seems to be the superior investment option compared to other productive activities such as livestock husbandry

is it a car or a truck managerial beliefs the choice of product architecture and the emergence of the minivan market segment new markets segments are a common setting for studies in technology strategy these studies generally assume that new segments already exist or have formed following the introduction of a product innovation by an entering firm thus theory on the role of established firms in the emergence of new market segments is underdeveloped this study informs current research by explaining the product innovation decisions of established firms during the emergence of a new market segment the results of a case study on the development and commercialization of the minivan at chrysler ford and general motors between 1970 and 1985 indicate that existing theories based on managerial cognition firm capabilities economic incentives and organizational structure are insufficient to explain the decisions this article develops theory based on the interrelationship of these four mechanisms

motivations to remit evidence from botswana in this article a theory of motivations to send remittances is described and tested with data from botswana altruism is one of the motivations tested and found to be an insufficient explanation for remittances among migrants in botswana a refinement of the model stipulates a modified altruism or enlightened self interest in this model the relationship between the migrant and family is tempered by an implicit understanding of mutual benefit the household strategy may be to encourage some members to migrate as a means of spreading risk and sharing gains the household strategy is similar to an insurance policy where migration is to places where market potential is high the risks incurred might be high the example is given of migration during a drought in botswana migrant remittances were greater in households with more cattle or households with more to lose drought alone was not statistically related to remittances increases in remittances were related to increased levels of education it is suggested that repayment was the motive for parents investment in migrants education migrants gains are identified as the potential for an inheritance the security of channeling investments through a trusted family member and security in having a home to return to it is pointed out that the altruism and family remittances from urban migration were strategies that bridged the simple dynamic of either urban development or rural development impacting on family welfare it is suggested that household models of economy adopt some measure to express the relationship of household wealth to remittances from urban migrants

no toilet no bride intrahousehold bargaining in male skewed marriage markets in india abstract haryana state in india is characterized by widespread discrimination against women including a severe population level sex imbalance in this context an innovative social marketing campaign which targeted pro sanitation messages to households active in local marriage markets was implemented with the goal of increasing toilet ownership this paper estimates the impact of this program known colloquially as no toilet no bride on household level latrine ownership private sanitation coverage in haryana increased by 21 specifically among households with boys active on the marriage market this effect is larger and concentrated in marriage markets where women are relatively scarce and absent when women are relatively abundant which together suggest the program operated by successfully linking sanitation outcomes with marriage market competition induced by local scarcities of women due to male biased sex ratios

regionalization of r d activities dis economies of interdependence and inventive performance abstract this paper examines the impact of the extent of the regionalization of mnes r d activities on their inventive performance by joining the regionalization theory with the recombinant view of invention we challenge the implicit assumption that all foreign knowledge seeking activities will necessarily offer new knowledge to the firm we introduce the dis economies of interdependence defined as the dis advantages that the firm derives due to the interdependence among countries within a region as a new theoretical mechanism explaining the benefits and costs of regionalization our analysis of global pharmaceutical firms shows that an inverted u shaped relationship exists between the number of regions in which a firm has r d activities and its inventive performance our results also indicate that a firm s recombinant capability moderates the inverted u shaped relationship in such a way that when a firm s recombinant capability is high it reaches its turning point in a larger number of regions and the inverted u shaped relationship is flatter these results underscore that recombinant capability significantly influences the firm s ability to derive benefits and reduce costs from the regionalization of its r d activities our findings suggest that it is through the consideration of the dis economies of interdependence that offers the essential reasoning needed to unwind the inferred assumption that all foreign knowledge seeking activities will offer access to new knowledge

strategic pricing of new pharmaceuticals this paper provides empirical evidence on the leading factors affecting the prices of new pharmaceuticals both at introduction and after 4 6 and 8 years most important is the extent of therapeutic advance embodied in a new product for drugs which represent important therapeutic gains launch prices can be two or three times those of existing drugs used for the same purposes while drugs that largely duplicate the actions of currently available products are typically priced at comparable levels in addition the number of branded substitutes has a substantial negative effect on launch prices which reflects the importance of competitive pressures duplicate products thereby play an important economic role in pharmaceutical markets

extended families and child well being studies of household behavior have established the distribution of resources among household members predicts spending and savings patterns however there is a paucity of evidence on the relationship between the well being of individual family members and the distribution of resources within an extended family including non co resident family members given the central role the family plays in many models of economic behavior this is an important gap in the literature using rich longitudinal survey data from the indonesia family life survey ifls evidence is presented on the relationship between three measures of health and education related human capital of children and the distribution of resources among extended family members ifls is ideally suited for this research since the survey collects detailed information about income and wealth from both coresident and non co resident family members the empirical model is founded on a natural extension of the collective model of household decision making chiappori 1988 1992 to the extended family the model is particularly appealing in this context because it places few restrictions on preferences of individual family members and does not specify a specific bargaining mechanism that underlies negotiations the collective model yields empirical tests of whether the behavior of family members is pareto efficient a special case of the model allows all family members to be completely altruistic which is observationally equivalent to a unitary model of family behavior that special case is rejected by the data however the restrictions of the efficient model are not rejected indicating that non co resident family members are able to co ordinate allocation decisions with respect to child human capital investments in such a way as to make no family member better off without another member being worse off

income smoothing and consumption smoothing one way that risk averse households protect consumption levels is to borrow and use insurance mechanisms another way common in low income economies is to diversify economic activities and make conservative production and employment choices households thus tend toward limiting exposure only to shocks that can be handled with available credit and insurance typically both types of mechanisms are studied independently but much more can be learned by studying them together first we obtain a more complete picture of risks costs and insurance possibilities second it opens the way to considering biases in standard tests of credit and insurance

know how and asset complementarity and dynamic capability accumulation the case of r d dynamic capabilities enable firms to create new products and processes and respond to changing market conditions this empirical investigation of dynamic r d capabilities deals with the role of complementary know how and other assets in the context of changing conditions in the u s petroleum industry during the 1970s and early 1980s the analysis suggests that in response to rising oil prices firms with larger amounts of complementary technological knowledge and physical assets also undertook larger amounts of r d on coal conversion a synthetic fuels process 1997 by john wiley sons ltd

fertilizer use risk and off farm labor markets in the semi arid tropics of india a two period model is developed in which a risk averse farmer uses off farm labor to smooth consumption leading to greater use of fertilizer fertilizer demand is shown to increase with the depth of the off farm labor market controlling for exogenous weather risk farmers use more fertilizer the lower the unemployment rate and the higher the share of nonagricultural work in total off farm labor the results suggest that off farm labor markets and own farm production may be complementary in risky production environments so that policies which promote the depth of the off farm labor market in low income areas may also bolster farm productivity copyright 2003 oxford university press

dominance by birthright entry of prior radio producers and competitive ramifications in the u s television receiver industry the u s television receiver industry evolved to be an oligopoly dominated by firms that produced radios prior to tvs data on the experience of all u s radio manufacturers and on the length of survival and rate of innovation of all u s tv entrants are collected to analyze how radio experience influenced entry firm performance and the evolution of market structure in the tv industry consistent with a model of the evolution of an oligopolistic industry more experienced radio firms were more likely to enter tv manufacturing had higher innovation rates and in turn had greater market shares and longer survival suggesting that firm capabilities and the evolution of the tv industry s market structure were critically shaped by firms experience prior to entry copyright 2000 john wiley sons ltd

wealth weather risk and the composition and profitability of agricultural investments despite the growing evidence that farmers in low income environments are risk averse there has been little empirical evidence on the importance of risk in shaping the actual allocation of production resources among farmers differentiated by wealth the authors use panel data on investments in rural india to examine how the composition of productive and nonproductive asset holdings varies across farmers with different levels of total wealth and across farmers facing different degrees of weather risk income variability is a prominent feature of the experience of rural agents in low income countries the authors report evidence based on measures of rainfall variability that the agricultural investment portfolio behavior of farmers in such settings reflects risk aversion due evidently to limitations on consumption soothing mechanisms such as crop insurance or credit markets the authors results suggest that uninsured weather risk is a significant cause of lower efficiency and lower average incomes a one standard deviation decrease in weather risk measured by the standard deviation of the timing of the rainy season would raise average profits by up to 35 percent among farmers in the lowest wealth quartile moreover rainfall variability induces a more unequal distribution of average incomes for a given distribution of wealth wealthier farmers are willing to absorb significant risk without giving up profits to reduce production risk smaller farmers have to invest their limited wealth in ways that reduce their exposure to risk at the cost of lower profit rates the authors found that at high levels of rainfall variability differences in rates of profit per unit of agricultural assets were similar across classes of wealth but over the sample range of rainfall variability these rates of profit were always higher for the poorer farmers than for the wealthier ones suggesting that the disadvantages of small farmers in risk diffusion are more than offset by their labor cost advantage

using shadow wages to estimate labor supply of agricultural households with few exceptions most studies of the labor demand and supply decisions of agricultural households in developing countries have relied on the empirical advantages of separability given the questionable nature of some of the assumptions sufficient for separability i apply a recent methodology that accounts for the simultaneity between the production and consumption decisions of a farm household using data from rural india direct estimates of the marginal productivities shadow wages of family male and female labor are derived from a cobb douglas agricultural production function the estimated shadow wages and income are then used as regressors in a structural model of labor supply

how does risk management influence production decisions evidence from a field experiment weather is a key source of income risk especially in emerging market economies this paper uses a randomized controlled trial involving indian farmers to study how an innovative rainfall insurance product affects production decisions the authors find that insurance provision induces farmers to invest more in higher return but rainfall sensitive cash crops particularly among educated farmers this shift in behavior occurs ex ante when realized monsoon rainfall is still uncertain the results suggest that financial innovation can mitigate the real effects of uninsured production risk

migration risk and liquidity constraints in el salvador abstract this article utilizes panel data from el salvador to investigate the use of transnational migration as an ex post risk management strategy i show that adverse agricultural conditions in el salvador increase both migration to the united states and remittances sent back to el salvador i show that in the absence of any agricultural shocks the probability that a household sent members to the united states would have decreased on average by 24 26 i also show that the 2001 earthquakes reduced net migration to the united states a one standard deviation increase in earthquake damage reduced the average probability of northward migration by 37 11 the evidence suggests that the effects of the earthquakes had more to do with households retaining labor at home to cope with the effects of the disaster than with the earthquakes disrupting migration financing

application specific r d capabilities and the advantage of incumbents evidence from the anticancer drug market this paper examines the proposition that during competence destroying technological changes incumbents are incompetent in researching in house a radically new technology they only retain market leadership if their undestroyed proprietary complementary assets compensate for their research incompetence in contrast to prior research i propose that there is not one but two sets of capabilities necessary to execute research and development r d sets that differ in their market specificity a technology specific set i e technological platforms that are non market specific and an application specific set i e knowledge of the application that is therefore market specific although all markets require both sets of capabilities to execute r d prior research has analyzed cases where the application was not as complex and therefore application specific capabilities did not represent strategic factors because at the start of a technological discontinuity application specific capabilities are undestroyed and have accrued only to incumbents when complex enough these capabilities can represent a source of competitive advantage for these firms even in the face of competition from diversifying entrants reusing previously acquired technological platforms i find evidence consistent with my proposition based on data on outcomes from drug discovery as estimated through clinical endpoints in phase i trials for firms competing in the anticancer drug market one of the most complex markets within pharmaceuticals as the market transitions into the biotechnology revolution the proposition in this paper implies that although technological platforms can help firms move across markets application specific r d capabilities can help firms retain leadership within a market across technological discontinuities

are rents fully dissipated students of rent seeking have erred in focusing their attention exclusively on the analysis of competitions for exogenously specified transfers when redistributive policies are treated as endogenous choices it is clear that there are both incentives and opportunities for policymakers to design them in ways that prevent the wasteful dissipation of a large proportion of the intended transfers an analytical framework that treats policy design in this way is capable of explaining a variety of common attributes of redistributive policies that are apparent anomalies under the traditional approach to rent seeking furthermore we predict and find supporting evidence that authoritarian regimes tend to be associated with higher ratios of government revenue to total income than do democracies we attribute this tendency to the substantially greater potential for dissipative competition for revenues under democracy than under dictatorship finally available estimates of lobbying expenditures and rents transferred under the recent federal crude oil controls contradict the hypothesis that rents are fully or almost fully disspated through political competition

credit constraints job mobility and entrepreneurship evidence from a property reform in china this paper provides new evidence on the impact of private property rights on entrepreneurship i explore this issue in the context of a housing reform in urban china that allowed state employees renting state owned housing the opportunity to buy their homes at subsidized prices using the reform as an exogenous change in the capital constraints and mobility costs that inuence individuals entry

choosing an appropriate alliance governance mode the role of institutional cultural and geographical distance in international research development r d collaborations we identify a variety of r d alliance modes in a knowledge intensive industry e g pharmaceuticals and classify them into four ordered categories which go beyond the traditional binary equity vs non equity alliance classification this enriches our understanding of alliance governance structures and broadens the application of alliance modes in what is today a more complicated international r d collaboration setting we then explore national industry and firm factors that determine the selection of an appropriate r d alliance governance mode using a sample of 237 international alliance deals the likelihood of using a more integrated alliance governance mode decreases as the difference or distance between nations of the partner firms increases in terms of human capital and cultural distance on the other hand a greater geographic and institutional difference is positively associated with the selection of more integrated alliance governance modes furthermore firms in the research stage are more likely to use a more integrated governance mode as opposed to firms in the development stage these findings advance research on alliance governance structure they reveal the factors affecting the r d alliance governance mode choice

capturing knowledge within and across firm boundaries evidence from clinical development how do firm boundaries influence employees acquisition of information using detailed project level data and qualitative evidence i document that pharmaceutical firms are more likely to outsource the coordination of data intensive clinical trials while they are more likely to assign knowledge intensive trials to internal teams managers do not choose between market and hierarchy but between the hierarchy of the firm in which subjective performance evaluations are combined with flat explicit incentives and the hierarchy of its subcontractor whose virtue stems precisely from the ability to provide high powered incentives on a narrow set

constitutional prohibitions in a rent seeking model i extend the standard rent seeking model to allow lobbying fora constitutional prohibition on wealth transfers i examinetwo issues 1 the ability of special interests withsignificant political capacity to block constitutional change and 2 the effect of adding a constitutional stage on totallobbying expenditures defeating a prohibition on wealthtransfers is a public good for rent seekers success inconstitutional politics merely allows them to lobby for wealthtransfers the resulting collective action problem for rentseekers in constitutional politics offsets the generalinterest s free rider problems reducing the probability oftransfers and expected total lobbying expenditures compared tothe traditional rent seeking contest introduction of aconstitutional stage also reverses several comparative staticsresults from the rent seeking game an increase in the numberof rent seekers or the general interest s consumers abilityto organize increase lobbying in the rent seeking game butgenerally reduce expected lobbying in the constitutionalprohibition game

asset stock accumulation and the sustainability of competitive advantage reply authors reply to comments regarding their paper dierickx i k cool 1989 asset stock accumulation and the sustainability of competitive advantage management sci

productivity credit risk and the demand for weather index insurance in smallholder agriculture in ethiopia the article explores the relationship between fertilizer use and the demand for weather index insurance wii among smallholder farmers in ethiopia we examine whether fertilizer use is profitable under current smallholder production conditions whether risk related factors affect fertilizer use and we estimate the returns to inputs in the agricultural production function in the absence of insurance we then study how these primitives of agricultural production functions relate to insurance demand the study compares a survey based estimate of willingness to pay with actual uptake for the weather insurance finding the stated and actual demand to be almost completely uncorrelated while those with high marginal returns to inputs say they would purchase insurance only those with low marginal returns actually do consistent with the stated purpose of the product as input insurance insurance demand proves to be highly responsive to the existence and amount of randomly allocated insurance vouchers jel classifications c83 g22 q12

intergenerational hybrids spillbacks spillforwards and adapting to technology discontinuities during technological discontinuities incumbents frequently develop hybrids of competing technical generations although some prior work implies that such intergenerational hybrids may be the result of organizational dysfunction we propose that in some cases hybrids may be sophisticated learning tools that shape organizational adaptation to a technological discontinuity in this paper we suggest two mechanisms through which intergenerational hybrids may affect organizational adaptation spillbacks and spillforwards in an empirical test among the population of automobile carburetor manufacturers during a technological discontinuity we observe that organizations developing intergenerational hybrids capture spillback benefits knowledge spillovers from an emerging technology generation to the current generation furthermore we find that these same organizations also capture spillforwards spillover benefits from developing higher performing intergenerational hybrids that improve their product performance in the future technology generation these results suggest that intergenerational hybrids may be stepping stones for organizations to learn about and adapt to technology discontinuities

interest group politics under majority rule abstract we develop a model of interest group politics in which the groups and coalitions that arise and the form of redistributive policies sought are jointly determined the model generates three key results first programs intended to reduce income inequality are more likely to involve direct payments than are programs that redistribute wealth across groups with similar incomes second nonequalizing redistribution is unlikely unless the various participants in the political process face significantly different political and economic costs of obtaining transfers third many policies that induce asymmetries among interest groups also impose significant deadweight costs stable nonequalizing redistribution will therefore tend to involve indirect and economically inefficient methods of transferring income

heterogeneous returns to chemical fertilizer at the intensive margins insights from nepal increased fertilizer use is considered important for agricultural development in low income countries promoting increased use of chemical fertilizer by lowering its price may be ineffective if demand is price inelastic in theory the price elasticity of demand depends on the returns to its use but the evidence is scarce furthermore while returns are often estimated for small changes in chemical fertilizer use returns to larger changes in its use intensive margins are less understood through the inter zonal comparisons in nepal we provide indicative evidence that greater returns to chemical fertilizer are associated with greater price elasticities of demand moreover the evidence suggests that returns at the intensive margins rather than returns to small changes may largely account for inter zonal differences in returns to chemical fertilizer within nepal the results suggest that better understanding the returns at the intensive margins is critical for effective agricultural inputs policies in developing countries

nonstructural risk attitude estimation this paper presents an econometric approach to risk attitude estimation that does not require joint estimation of the structure of the firm s technology and input decision rules the nonstructural approach replaces optimal input choice with the assumption that farmers optimally manage their portfolios of productive activities by thus shifting the focus from the detailed production decisions of the farm manager to the net returns of the whole farm operation the modeling problem is simplified the nonstructural approach is used to estimate risk attitudes in three indian villages the results are compared to previous experimental and econometric estimates from the same villages

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

unraveling the process of creative destruction complementary assets and incumbent survival in the typesetter industry when radical technological change transforms an industry established firms sometimes fail drastically and are displaced by new entrants yet other times survive and prosper drawing upon an unusually rich data set that covers the technological and competitive history of the typesetter industry from 1886 to 1990 this paper uses a combination of quantitative and qualitative analysis to unravel this process of creative destruction it argues that the ultimate commercial performance of incumbents vs new entrants is driven by the balance and interaction of three factors investment technical capabilities and appropriability through specialized complementary assets in this industry specialized complementary assets played a crucial role in buffering incumbents from the effects of competence destruction and an analysis that examined investment or technical capabilities in isolation would have led to misleading results this work thus highlights the importance of considering multiple perspectives when examining the competitive implications of technological change 1997 by john wiley sons ltd

female migration for marriage implications from the land reform in rural tanzania summary using the longitudinal household panel data drawn from rural tanzania 1991 2004 this study investigates impacts of the land reform on women s marriage motivated relocation during the period under study several villages that initially banned a widow s land inheritance abolished this discrimination taking a differences in differences approach this study finds that the probability of males marrying in a village increased by altering its customary land inheritance rule in favor of widows in the light of the traditional system favoring exogamous and patrilocal marriage this finding indicates that females relocate at marriage in response to the favorable land tenure system at the destination

legislators and interest groups how unorganized interests get represented this paper derives a supply price for public policy using a constrained maximization model in the model three sets of agents each have preferences over outcomes organized interest groups offer campaign contributions to improve their own wealth voters offer votes to obtain outcomes closer to their most preferred outcomes and legislators seek both campaign contributions and votes to obtain reelection a given legislator s supply price for policy is shown to depend on the productivity of his effort as determined by committee assignments priority and ability and by the preferences of his unorganized constituency in the home district two extreme assumptions about the effectiveness of campaign spending in eliciting votes are used to illustrate the comparative statics properties of the model the prediction of the model is that interest groups will in general seek out legislators whose voters are indifferent to the policy the interest group seeks thus voters who do have preferences over policy are in effect represented even though they are not organized

the complex dynamics of smallholder technology adoption the case of sri in madagascar this article explores the dynamics of smallholder technology adoption with particular reference to a high yielding low external input rice production method in madagascar we present a simple model of technology adoption by farm households in an environment of incomplete financial and land markets we then use a probit model and symmetrically censored least squares estimation of a dynamic tobit model to analyze the decisions to adopt expand and disadopt the method we find that seasonal liquidity constraints discourage adoption by poorer farmers learning effects both from extension agents and from other farmers exert significant influence over adoption decisions

off farm labor market decisions and agricultural shocks among rural households in kenya using household level data from rural kenya this article explores whether and how farm households respond to unfavorable agricultural production environments including any ex post adjustments in off farm labor supply in response to unexpected weather shocks while controlling for a wide range of educational demographic and other locational factors we examine how long term weather conditions and specific rainfall shocks influence a household s decision to engage in and their earnings from the off farm labor market we find that rural households engage in off farm work as a long term strategy to deal with the effects of anticipated weather conditions on their farming operations the analysis does not reveal major short term adjustments in off farm engagement as a result of specific unexpected rainfall shocks these households do however rely on remittance income and petty agricultural wage labor under these circumstances holding other factors constant and conditional on participation households in areas with a more productive local agriculture tend to earn more from off farm work especially in the informal business sector than their counterparts in regions with a less productive agriculture as expected a vibrant local economy in the form of public investment increases the probability of off farm participation

diversification ricardian rents and tobin s q according to prevailing theory firms diversify in response to excess capacity of factors that are subject to market failure by probing into the heterogeneity of these factors we develop the corollary that firms that elect to diversify most widely should expect the lowest average rents an empirical test with tobin s q as the measure of rents is consistent with this theory

collective agricultural production a solution for transition economies abstract the paper examines theoretical reasons and provides examples for productivity differences between agricultural service cooperatives and collectives service cooperatives can utilize economies of scale enhance competitiveness and provide technical information advantages that often outweighed problems of free riding low investment and excessive political intervention agricultural collectives while not adding substantial advantages are in addition associated with problems of supervision and effort supply tendencies to substitute casual workers or mechanization for regular members and low investment incentives while collective forms of organization in transition economies respond to high risk and market imperfections they do so inefficiently policies that create conditions for service cooperatives to compete may lead to large productivity gains

consumption smoothing migration and marriage evidence from rural india a significant proportion of migration in low income countries particularly in rural areas is composed of moves by women for the purpose of marriage we seek to explain these mobility patterns by examining marital arrangements among indian households in particular we hypothesize that the marriage of daughters to locationally distant dispersed yet kinship related households is a manifestation of implicit interhousehold contractual arrangements aimed at mitigating income risks and facilitating consumption smoothing in an environment characterized by information costs and spatially covariant risks analysis of longitudinal south indian village data lends support to the hypothesis marriage cum migration contributes significantly to a reduction in the variability of household food consumption farm households afflicted with more variable profits tend to engage in longer distance marriage cum migration the hypothesized and observed marriage cum migration patterns are in dissonance with standard models of marriage or migration that are concerned primarily with search costs and static income gains

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item

the underemphasized role of established firms as the sources of major innovations we argue that established firms including industry incumbents and diversifying entrants play vital all underemphasized roles as the sources of major innovations in many industries the study presents empirical evidence showing that established firms are often sources of major innovations in the telecommunications and medical sectors we conduct an exploratory investigation of how variation in the types of technical and market change influence whether industry incumbents diversifying entrants or nets companies are the sources of major innovations copyright 1996 by oxford university press

consumption risk technology adoption and poverty traps evidence from ethiopia much has been written on the determinants of input and technology adoption in agriculture with issues such as input availability knowledge and education risk preferences profitability and credit constraints receiving much attention this paper focuses on a factor that has been less well documented the differential ability of households to take on risky production technologies for fear of the welfare consequences if shocks result in poor harvests building on an explicit model this is explored in panel data for ethiopia historical rainfall distributions are used to identify the counterfactual consumption risk controlling for unobserved household and time varying village characteristics it emerges that not just ex ante credit constraints but also the possibly low consumption outcomes when harvests fail discourage the application of fertilizer the lack of insurance causes inefficiency in production choices