endogenous market structures and the gains from foreign direct investment abstract this paper discusses the gains from liberalizing foreign direct investment fdi in a two country setting with endogenous market structure we investigate two different scenarios in the first scenario headquarters costs are large in the foreign country so that the industry is located in the domestic country only in this case multinational and national firms may coexist and market concentration may make fdi welfare improving for the foreign country and welfare reducing for the domestic country in the second scenario headquarters costs are symmetric and firms will be located in both countries here profitable fdi activities lead to mutual welfare gains irrespective of market structure effects

do better schools matter parental valuation of elementary education the evaluation of numerous school reforms requires an understanding of the value of better schools given the difficulty of calculating the relationship between school quality and student outcomes i turn to another method and use house prices to infer the value parents place on school quality i look within school districts at houses located on attendance district boundaries houses then differ only by the elementary school the child attends i thereby effectively remove the variation in neighborhoods taxes and school spending i find that parents are willing to pay 2 5 percent more for a 5 percent increase in test scores this finding is robust to a number of sensitivity checks

lone inventors as sources of breakthroughs myth or reality are lone inventors more or less likely to invent breakthroughs recent research has attempted to resolve this question by considering the variance of creative outcome distributions it has implicitly assumed a symmetric thickening or thinning of both tails i e that a greater probability of breakthroughs comes at the cost of a greater probability of failures in contrast we propose that collaboration can have opposite effects at the two extremes it reduces the probability of very poor outcomes because of more rigorous selection processes while simultaneously increasing the probability of extremely successful outcomes because of greater recombinant opportunity in creative search analysis of over half a million patented inventions supports these arguments individuals working alone especially those without affiliation to organizations are less likely to achieve breakthroughs and more likely to invent particularly poor outcomes quantile regressions demonstrate that the effect is more than an upward mean shift we find partial mediation of the effect of collaboration on extreme outcomes by the diversity of technical experience of team members and by the size of team members external collaboration networks supporting our meta argument for the importance of examining each tail of the distribution separately experience diversity helps trim poor outcomes significantly more than it helps create breakthroughs relative to the effect of external networks

the indirect effects of foreign direct investment on trade a network perspective the relationship between international trade and foreign direct investment fdi is one of the main features of globalisation in this paper we investigate the effects of fdi on trade from a network perspective since fdi takes not only direct but also indirect channels from origin to destination countries because of firms incentive to reduce tax burden to minimise coordination costs and to break barriers to market entry we use a unique data set of international corporate control as a measure of stock fdi to construct a corporate control network ccn where the nodes are the countries and the edges are the corporate control relationships network measures as the shortest path length and the communicability are then computed on the ccn to capture the indirect channel of fdi empirically we find that corporate control has a positive effect on trade both directly and indirectly the result is robust with different specifications and estimation strategies hence our paper provides strong empirical evidence of the indirect effects of fdi on trade moreover we identify a number of interplaying factors such as regional trade agreements and the region of asia we also find that the indirect effects are more pronounced for the manufacturing sector than for primary sectors such as oil extraction and agriculture

identifying the impacts of rail transit stations on residential property values abstract prior studies that have empirically investigated the impact of rail station proximity on property values have not fully investigated the factors that may account for this relationship stations may raise the value of nearby properties by reducing commuting costs or by attracting retail activity to the neighborhood possibly countering these positive effects are negative externalities emitted by stations and the access to neighborhoods that stations provide to criminals this paper sorts out these effects by presenting the results from estimating a hedonic price model and auxiliary models for neighborhood crime and retail activity results show that all four effects play a role in defining the relationship between property values and rail stations but the relative importance of these effects varies with distance from downtown and the median income of the neighborhood

reverse importing and asymmetric trade and fdi a networks explanation abstract this paper considers the impact of business and social networks on international trade and fdi i propose that differences in the strength of network effects across countries can produce asymmetric trade and investment flows that may lead to trade friction a firm from a country with strong network effects has a cost advantage in selling to buyers from its own country this advantage results in lower inward fdi lower total imports but larger volumes of reverse imports into the country with strong network effects the model s predictions match observed asymmetric trade and investment flows that sometimes lead to us japan trade friction

technology as a complex adaptive system evidence from patent data this paper develops a theory of invention by drawing on complex adaptive systems theory we see invention as a process of recombinant search over technology landscapes this framing suggests that inventors might face a complexity catastrophe when they attempt to combine highly interdependent technologies our empirical analysis of patent citation rates supports this expectation our results also suggest however that the process of invention differs in important ways from biological evolution we discuss the implications of these findings for research on technological evolution industrial change and technology strategy 2001 elsevier science b v all rights reserved

information technology and transnational integration theory and evidence on the evolution of the modern multinational enterprise reflecting amplified hazards in cross border exchange and imperfections in markets for intangibles internalization has been central in multinational enterprise mne theory this centrality notwithstanding the fact is that internalization coheres with lower powered incentives and carries an implicit drawback namely higher realized production costs with the emergence and deployment of information and communication technology ict modern mnes are reshaping their transnational governance to address this cost the modern mne uses ict to mitigate transaction costs and evolves more to arm s length exchange to incentivize lower production costs a testable prediction is that mnes in industries more susceptible to and employing more ict will exhibit a reduced propensity for transnational integration we examine this hypothesis using available data from 1982 to 1997 for us mnes across all manufacturing sectors regression results and robustness tests are strongly congruent with the prediction this study a first to explore empirically the role of ict in the evolution of transnational exchange suggests that mne theory until now founded primarily on transaction cost economics and a cross border control theory of value capture is more likely to keep pace with developments in mne practice by opening up to incentive theories of exchange governance and a cross border coordination theory of value creation

taxes tariffs and transfer pricing in multinational corporate decision making three interrelated aspects of u s multinational corporation activity are analyzed here the ability to shift profits from high tax countries to low tax countries the impact of host country taxes and tariffs on the distribution of real capital and the influence of these policies on international trade patterns of the united states and host countries the cross sectional empirical analysis indicates that the observed pattern of reported profits in high and low tax countries is consistent with income shifting behavior and that real investment responds to host country effective tax rates and tariffs the united states appears both to import more from and export more to low tax countries where mnc investment is greater but this bilateral focus must be amplified to consider multilateral effects if trade benefits are to be projected copyright 1991 by mit press

foreign direct investment and exports with growing demand we explore entry into a foreign market with uncertain demand growth a multinational can serve the foreign demand by two modes or by a combination thereof it can export its products or it can create productive capacityvia foreign direct investment fdi the advantage of fdi is that it allows for lower marginal cost than exporting does the disadvantage is that fdi is irreversible and hence entails the risk of creating under utilized capacity in the case that the market turns out to be small the presence of demand uncertainty and irreversibility gives rise to an interior solution where the multinational under certain conditions both exports its products and does fdi

the internationalization of production by italian industrial districts firms structural and behavioural determinants mariotti s mutinelli m and piscitello l the internationalization of production by italian industrial districts firms structural and behavioural determinants regional studies the paper argues that structural and behavioural determinants combine to influence internationalization of production through foreign direct investment fdi by industrial districts firms as far as the former leadership effects represented by the presence of large firms within the district and porterian effects denoted by the intensity of domestic rivalry positively influence the likelihood that district firms will start internationalize through fdi moreover spillovers induced by the presence of foreign owned multinational corporations positively impact on the district s degree of internationalization provided it has already autonomously developed the ability to grow internationally as far as behavioural features previous export relationships increase the district firms likelihood of undertaking fdi while innovat

driving to opportunity local rents wages commuting costs and sub metropolitan quality of life we examine variation in local rents wage levels commuting costs household characteristics and amenities within metropolitan areas for 2071 areas covering the united states by density and central city status we demonstrate the sensibility of estimating wage levels by workplace not residence and recover decentralized rent gradients that fall with commuting costs we construct and map a willingness to pay index which indicates the quality of life typical households receive from local amenities when households are similar mobile and informed this index varies considerably within metros and is typically high in areas that are dense suburban sunny mild safe entertaining and have elevated school funding

capitalization and the theory of local public finance the tiebout literature is incomplete this paper argues because it has not fully accounted for the capitalization of local fiscal variables into house values the paper explains why capitalization arises why it persists in long run equilibrium how it affects both residential location and the outcome of local voting and why it interferes with the efficiency of a system of local governments the analysis which is based on the main tiebout assumptions plus a property tax combines a model of household bids in a housing market with a median voter model of local public service determination

unionised labour market and strategic production decision of a multinational i show that a foreign firm may sell the same product through both foreign direct investment fdi and export and this decision depends on the size of the product market it happens irrespective of whether the labour market in the domestic country or in the foreign country is unionised unlike the existing works focusing on risk diversification in presence of demand or cost uncertainty i explain the co existence of fdi and export in a world with certainty the endogenous determination of the wage rate plays an important role for my results my analysis shows the effects of the fixed cost of fdi and competition in the product market on the production strategy of the foreign firm

estimating the marginal willingness to pay function without instrumental variables abstract the hedonic model of rosen 1974 has become a workhorse for valuing the characteristics of differentiated products despite a number of well documented econometric problems including a source of endogeneity that has proven difficult to overcome here we outline a simple likelihood based estimation approach for recovering the marginal willingness to pay function that avoids this endogeneity problem using this framework we find that marginal willingness to pay to avoid violent crime increases by sixteen cents with each additional incident per 100 000 residents accounting for the slope of the marginal willingness to pay function has significant impacts on welfare analyses

in search of substitution between foreign production and exports abstract are foreign production and exports substitutes or complements standard theory of the multinational corporation mnc assumes substitution while previous empirical work examining the relationship has generally found strong evidence of complementarity this study examines product level data which more closely fits the assumption of a single product firm often used in mnc theory and finds substantial evidence for both a substitution and a complementarity effect between affiliate production and exports with japanese automobile parts for the us market i also test for and find evidence of substitution using product level data on a set of japanese produced final consumer goods

foreign direct investment and intellectual property rights evidence from hollywood s global distribution of movies and videos abstract traditional thinking about intellectual property rights ipr suggests that as a country strengthens its ipr standards firms will move their governance structures away from equity based institutions such as foreign direct investment fdi towards more market based relations such as licensing agreements this hypothesis is explored by examining the behavior of hollywood studios in both the feature film and video markets in 40 foreign countries the analysis reveals that the behavior of hollywood studios is more complex than this although moderate iprs are associated with a high degree of licensing both high and low standards of ipr encourage more integrated governance structures

voluntary export restraints on automobiles evaluating a trade policy the authors evaluate the voluntary export restraint that was initially placed on exports of automobiles from japan in 1981 they evaluate the impact this policy had on u s consumer welfare firm profits and foregone tariff revenue from its initiation through 1990

foreign direct investment exchange rate variability and demand uncertainty variable real exchange rates influence the location of production facilities chosen by a multinational with risk averse investors and fixed productive factors parent companies should not be indifferent to production location even with identical expected costs of production across countries if a nonnegative correlation exists between export demand and exchange rate shocks the multinational optimally locates some productive capacity abroad the capacity share abroad increases as exchange rate volatility rises and becomes more correlated with export demand shocks these results are confirmed using quarterly u s bilateral foreign direct investment flows with canada japan and the united kingdom copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

tariff jumping dfi and export substitution japanese electronics firms in europe abstract analysis of micro data on japanese electronics firms establishes that the rapid increase in japanese manufacturing investments in the late 1980s has for a substantial part been induced by ec antidumping and other trade restricting measures targeting japanese firms evidence is found at the firm level that such tariff jumping investment has substituted for exports from japan on the other hand firms which invested in ec distribution activities acquired ec firms or produce components within a vertical keiretsu export relatively more to europe the latter finding suggests that subcontractor firms were able to expand components exports by supplying the european manufacturing plants of their parent firms

do capitalization effects for public goods reveal the public s willingness to pay this article develops a welfare theoretic framework for interpreting evidence on the impacts of public programs on housing markets we extend rosen s hedonic model to explain how housing prices capitalize exogenous shocks to public goods and externalities the model predicts that trading between heterogeneous buyers and sellers will drive a wedge between these capitalization effects and welfare changes we test this hypothesis in the context of changes in measures of school quality in five metropolitan areas results from boundary discontinuity designs suggest that capitalization effects understate parents willingness to pay for public school improvements by as much as 75

directional heterogeneity in distance profiles in hedonic property value models abstract in environmental economics hedonic property value hpv models have often employed distance from a localized environmental disamenity as a proxy for perceived risk the magnitude of a distance effect on housing prices however may depend upon the direction in which it is being measured we generalize conventional distance models to allow for continuously varying directional effects by converting from cartesian to polar coordinates a simple empirical example for housing prices around woburn massachusetts between 1988 and 1996 illustrates how failure to allow for directional heterogeneity can obscure otherwise statistically significant distance effects in hpv

interjurisdictional sorting and majority rule an empirical analysis the goal of this paper is to provide a comprehensive empirical analysis of majority rule and tiebout sorting within a system of local jurisdictions the idea behind the estimation procedure is to investigate whether observed levels of public expenditures satisfy necessary conditions implied by majority rule in a general equilibrium model of residential choice the estimator controls for observed and unobserved heterogeneity among households observed and unobserved characteristics of communities and the potential endogeneity of prices and expenditures as well as the self selection of households into communities of their choice we estimate the structural parameters of the model using data from the boston metropolitan area the empirical findings reject myopic voting models more sophisticated voting models based on utility taking provide a potential explanation of the main empirical regularities

the boundaries of multinational enterprises and the theory of international trade this paper begins with a review of empirical evidence on multinational firms conceptual underpinnings of a theory are developed relying in particular on the notion of knowledge capital as a mobile joint input into geographically separated production facilities this idea is embedded in a simple two country general equilibrium model that supports multinational production in equilibrium under conditions consistent with the empirical evidence the final section examines internalization and shows why certain properties of knowledge capital also imply a preference for transferring technologies internally within the firm rather than through arm s length markets

on the choice of funtional form for hedonic price functions this study examines how errors in measuring marginal attribute pric es vary with the form of the hedonic price function in simulations consumers with known utility functions bid for houses with given attributes various forms of the hedonic function are estimated using equilibrium housing prices errors in estimating marginal attribute prices are calculated by comparing each consumer s equilibrium marginal bid vector with the gradient of the hedonic function when all attributes are observed linear and quadratic box cox forms produce lowest mean percentage errors however when some attributes are unobserved or are replaced by proxies linear and linear box cox functions perform best copyright 1988 by mit press

on the nature of technologies knowledge procedures artifacts and production inputs in the most general terms a technology can be seen as a human constructed means for achieving a particular end such as the movement of goods and people the transmission of information or the cure of a disease these means most often entail procedures regarding how to achieve the ends concerned particular bits of knowledge artifacts and of course specific physical inputs necessary to yield the desired outcomes in fact the procedures and the underlying knowledge they draw upon the physical and intangible inputs implicated and the performance characteristics of outputs are different but complementary aspects of what technology is these things are the object of this short essay copyright the author 2009 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

ideas for rent an overview of markets for technology this article surveys some of the recent literature on technology markets and summarizes its main issues and insights we structure our analysis in three parts the supply and demand of technology the factors that condition the formation and growth of technology markets industry structure and dynamic issues in addition we summarize some of the studies that have tried to document the size and growth of these markets we find that the literature has focused mainly on the supply of technology but several other aspects of these markets remain under studied including the demand for external technology the role of uncertainty in technology markets and the dynamic interaction between industry structure and the market for technology understanding these will illuminate whether markets for technology will continue to grow or remained confined to pockets of the economy copyright 2010 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

a knowledge based theory of the firm the problem solving perspective in this paper we develop a knowledge based theory of the firm while existing knowledge based theory focuses on the efficiency of hierarchy in economizing on knowledge exchange we develop a theory of the firm that focuses on the efficiency of alternative organizational forms ingenerating knowledge or capability our theory begins with the problem as the basic unit of analysis arguing that a problem s complexity influences the optimal method of solution search and the optimal means of organizing that search the distinguishing feature that differentiates among organizational alternatives is the different way each resolves conflict over the selection of solution trials that is the way it chooses the path of search our theory predicts that efficiency demands that these governance alternatives be matched in a discriminating way to problems based on their associated benefits and costs in governing solution search thus our theory is among the first to simultaneously treat both the boundary choice i e internal versus external and the choice among alternative internal approaches to organizing

knowledge capital international trade and foreign direct investment a sectoral analysis the knowledge capital kc model of mnes is now a widely adopted empirical approach to explaining the location and production decisions of global firms based on both horizontal and vertical motivations while most of the existing studies have focused on highly aggregated national data we extend this model to sectoral data consisting of broad manufacturing industries and explicitly account for the dynamic nature of international investment data the empirical results from a dynamic panel data analysis indicate that that the predictions of the kc model regarding mne behavior vary by the type of industry production processes in electronics and transportation equipment are more characterized by efficient vertical specialization of r d activities and assembly while other sectors display more complex motivations

the structure of constant elasticity demand models the demand model with constant price and income elasticities has been used extensively in applied agricultural economics this paper analyzes the structure of incomplete systems of constant elasticity demand functions it is demonstrated that there is a duality theory for incomplete demand systems that is analogous to the duality theory for complete systems this theory permits the recovery of that portion of the direct and indirect preferences pertaining to the goods of interest and we can calculate exact welfare measures for changes in income and in the prices of these goods for an incomplete system of constant elasticity demands the slutsky symmetry restrictions for integrability are presented and the implied structure of the direct and indirect preferences with respect to the prices and goods of interest is derived

deriving benefit measures with higher precision a study of economic values of air quality a calibration strategy using ridge regression to generate more precise estimates for a particular parameter in a model is proposed formulae to compute the proposed ridge estimates from standard ordinary least squares ols results are provided the strategy is applied to recomputing marginal effects of air pollution on property values for 30 housing studies results show that ridge estimates are superior to the ols estimates under the mean squared error criterion the same strategy can be used to reestimate key parameters of interest in other applications such as price elasticities for demand forecasts or the value of a statistical life from hedonic wage regressions

characteristics of patent litigation a window on competition we examine the patenting behavior of firms in an industry characterized by rapid technological change and cumulative innovation recent survey evidence suggests that semiconductor firms do not rely heavily on patents to appropriate returns to r d yet the propensity of semiconductor firms to patent has risen dramatically since the mid 1980s we explore this apparent paradox by conducting interviews with industry representatives and analyzing the patenting behavior of 95 u s semiconductor firms during 1979 1995 the results suggest that the 1980s strengthening of u s patent rights spawned patent portfolio races among capital intensive firms but it also facilitated entry by specialized design firms copyright 2001 by the rand corporation

labour market rigidities and international risk sharing across oecd countries abstract in this paper we examine the role of labour market rigidities in the context of international consumption risk sharing stronger labour market regulation may make it easier to borrow against future income thus allowing shocks to be smoothed to a greater extent in addition rigid labour markets may help to enforce implicit contracts that shift risk from employees to owners of firms who in turn may diversify risk internationally using data for 19 oecd countries we show that labour market rigidities significantly increase consumption correlations and reduce the exposure to country specific shocks these results suggest that labour market rigidities improve the international sharing of consumption risks by fostering a more efficient intra national allocation of risk

interjurisdictional housing prices in locational equilibrium abstract in this study we discuss how to construct interjurisdictional housing price indexes that are consistent with locational equilibrium theory in theoretical models housing is assumed to be homogeneous which provides problems in empirical analysis we provide conditions that allow us to treat heterogeneous housing as if it were homogeneous the same conditions that allow us to develop a quantity index for housing also imply that we can estimate interjurisdictional housing price indexes using hedonic price regressions locational equilibrium models impose a number of restrictions regarding the co movement of housing price indexes local public goods and mean income levels we propose to use these properties of locational equilibrium models to evaluate the different price index estimates we estimate a variety of price indexes using a unique panel data set of housing transactions in southern california our empirical results by and large support our approach

residential segregation and socioeconomic outcomes when did ghettos go bad abstract cutler and glaeser 1997 show that urban residential segregation has a strong adverse effect on labor market and social outcomes of young african americans relative to whites we show that this effect is a fairly recent historical phenomenon there is little evidence of such an effect from 1940 to 1970 rather it emerged between 1970 and 1980 and it grew stronger during the 1980s

strategic second sourcing by multinationals multinationals often serve foreign markets by exporting as well as by investing directly in foreign production facilities we argue that if the multinational competes in an oligopolistic market characterized by strategic complements then there are strategic reasons to use two production facilities committing to a second source allows the firm to keep average cost low while increasing its marginal cost the increase in marginal cost softens product market competition resulting in higher profits we argue that this theory also has implications for the make or buy literature in production management and the literature on second sourcing in industrial organization

multinationals multi plant economies and the gains from trade a general equilibrium model of a multinational enterprise based on economies of multi plant operation is developed these economies are modelled as arising from the existence of a joint input whose productivity in each production facility is independent of the number of facilities maintained by a firm the multinational thus offers the world increased technical efficiency by eliminating the duplication of the joint input that would occur with independent national firms since this technical efficiency may come at the expense of increased market power the full determinants of home country host country and world welfare are considered

country competition and us overseas assembly to examine the role of international competition in outsourcing production decisions i study the decisions of producers who used the u s overseas assembly program oap to conduct assembly operations in developing countries the evidence which is based on u s oap imports between 1991 to 2000 shows that production costs and corporate tax policies both shaped production decisions while increases in own country costs reduced the size of a developing country s oap shipments increases in competitor costs helped to increase a country s shipments the effects of competitor country cost changes were relatively large as the analysis suggests that a ten percent increase in competing country costs would increase a country s oap outsourcing activities by 5 8 percent while a ten percent increase in competitor country taxes would increase a country s oap exports by 1 6 percent

estimating the demand for the characteristics of housing a hstract estimates of the demand for the characteristics contained in a differentiated product such as housing can be based on hedonic regressions however previous studies have not dealt with several potential problems in such estimation a more appropriate framework for the estimation is provided in this paper also data from a number of cities are used to eliminate the identification problem and the endogeneity of the marginal prices derived from non linear hedonic equations is considered in the estimation the results on own and cross price elasticities expenditure elasticities and the effects of socio economic vafiables accord well with expectations

market entry and foreign direct investment abstract the welfare economics of foreign direct investment fdi are addressed in a model of two countries and two periods in the first period firms enter markets as national firms in the second period fdi is possible the paper demonstrates that fdi reduces market entry in the first period and equilibrium profits in the second period compared to a trade regime without any fdi prices are higher in the first period but lower in the second period fdi unambiguously improves the sum of discounted consumer surplus if demand functions are linear or log linear and entry is free in the first period

hedonic markets and sorting equilibria bid function envelopes for public services and neighborhood amenities abstract hedonic regressions with house value as the dependent variable are widely used to study public services and neighborhood amenities this paper builds on the theory of household bidding and sorting across communities to derive bid function envelopes which provide a form for these regressions this approach allows for household heterogeneity and multiple amenities yields estimates of the price elasticity of amenity demand directly from the hedonic without a rosen two step procedure and provides tests of hypotheses about sorting an application to cleveland area data from 2000 yields price elasticities for school quality and neighborhood ethnic composition and supports the sorting hypotheses

does economic development impact the foreign direct investment trade relationship a gravity model approach the purpose of this study is to examine the relationship between foreign direct investment fdi and trade in a bilateral context that is home source country s exports and fdi to a host recipient country are analyzed using a gravity model approach the fdi trade relationship has been a centerpiece of the international economics literature over the past decade the home country s primary concern here is on the possible loss of employment due to more fdi than trade lipsey of late there have been concerns on knowledge spillovers and the erosion of technological leadership market failure due to capital outflows for a host country the focus is on the effects of fdi on economic growth and development and technology transfer prior theoretical studies have used mostly imperfect competition models to identify the fdi trade relationship helpman and krugman markusen and venables a majority of the empirical studies has used regression techniques with one period lagged trade and fdi as an argument in current trade or fdi equations barrell and pain gopinath pick and vasavada egger aggregate firmlevel data and industry product specific data have been used in many of these studies blonigen lipsey and ramstetter some have used cointegration methods to infer on the long run association between trade and fdi pfaffermayr however few fdi trade

directional heterogeneity of environmental disamenities the impact of crematory operations on adjacent residential values a hedonic study of residential house sales in rawlins wyoming was conducted to estimate the impact of an environmental shock from a new point source upon adjacent residential property values we use a unique data base of house sale prices and associated house attributes including structural and neighbourhood characteristics and geographic distances and directions from the source of the shock atmospheric emissions from a new crematory our data spans 27 months of house sales 7 months before and 20 months after the startup of crematory operations results indicate that proximity measured both in terms of direction and distance from the crematory imparts a statistically significant negative impact on average house sale prices an increase of 0 3 to 3 6 of average sale price for every one tenth mile increase up to one half mile in distance away from the crematory but depending on direction from the crematory this distance benefit increases somewhat with calendar time only for houses located west of

factor movements and commodity trade as complements abstract several models are presented in which factor mobility leads to an increase in the volume of world trade the models share the common characteristic that the basis for trade is something other than differences in relative factor endowments these alternative bases for trade include returns to scale imperfect competition production and factor taxes and differences in production technology taken together the models suggest a more general idea the widely held notion that trade in goods and factors are substitutes is in fact a rather special result which is a general characteristic only of factor proportions models

using what you know patented knowledge in incumbent firms and employee entrepreneurship prior studies have shown that the acquisition of relevant knowledge by employees in existing firms is associated with the creation of new firms through employee entrepreneurship some researchers propose that the transition to entrepreneurship may be explained by established firms undervaluing knowledge created by employees whereas other scholars maintain that firm strategies may lead to the underutilization of knowledge we ask the question of which of these drivers is more pronounced as an explanation of employee entrepreneurship and what technological factors matter in this relationship analyzing a unique data set we find that the likelihood of employee entrepreneurship increases with the inventor s assessment of the value of a patent for an invention developed while at the incumbent firm but dramatically decreases when the invention protected by the patent is commercialized by the firm licensed to third parties interdependent with other firms inventions protected by patents or technologically broad we also find that conditional on high valuation by the inventor a matching high valuation by the firm further increases the likelihood of transitioning to entrepreneurship in combination we show that a situation when both the inventor and the firm consider the invention valuable but the firm ends up not commercializing the invention is more predictive of employee entrepreneurship than simple differences in assessing the value of the invention the study refines our understanding of the drivers of entrepreneurship by underscoring the strategic explanation of employee entrepreneurship

which school attributes matter the influence of school district performance and demographic composition on property values abstract increasing levels of segregation in american schools raises the question do home buyers pay for test scores or demographic composition this paper uses connecticut panel data spanning eleven years from 1994 to 2004 to ascertain the relationship between property values and school district attributes such as student test scores and the racial and ethnic composition of the student body town and census tract fixed effects are included to control for neighborhood unobservables the effect of changes in school district attributes is also examined over a decade long time frame in order to focus on the effect of long run changes which are more likely to be capitalized into prices the study finds strong evidence that increases in percent hispanic have a negative effect on housing prices in connecticut but mixed evidence concerning the impact of test scores on property values student test scores also appear to have increased in importance for explaining housing prices in recent years while the importance of percent hispanic has declined finally the study finds that estimates of property tax capitalization increase substantially when the analysis focuses on long run changes

self selection and the earnings of immigrants this paper analyzes the way in which the earnings of the immigrant population may be expected to differ from the earnings of the native population because of the endogeneity of the decision to migrate the empirical study shows that differences in the u s earnings of immigrants with the same measured skills but from different home countries are attributable to variations in political and economic conditions in the countries of origin at the time of migration excerpt

general equilibrium benefits for environmental improvements projected ozone reductions under epa s prospective analysis for the los angeles air basin abstract this research demonstrates how locational equilibrium models can be used for benefit measurement with the detail required to match epa s benefit analysis for the first prospective analysis using the projected changes in ozone concentrations for 2000 and 2010 together with the sieg et al int econ rev forthcoming estimates for household preferences for housing education and air quality this paper measures general equilibrium willingness to pay for the policy scenarios developed for the prospective study as they relate to households in the los angeles area benefits are evaluated taking account at the household level of initial air quality conditions relocation based on changes in ozone and price changes the framework generalizes the partial equilibrium general equilibrium comparisons available with conventional computable general equilibrium and property capitalization models estimated general equilibrium gains from the policy range from 33 to 2400 annually at a household level in 1990 dollars

does the market value value added evidence from housing prices after a public release of school and teacher value added value added data are an increasingly common evaluation tool for schools and teachers many school districts have adopted these methods and released the results publicly in this paper we study the release of value added data in los angeles by the los angeles times newspaper to identify how measured value added is capitalized into housing prices this analysis is the first in the us school valuation literature to examine property value responses to a value added information shock which is of interest as this measure is less correlated with demographics than typical school quality measures unique to this setting as well is the release of both school and teacher level value added data which allows us to examine how property values respond to both types of information using a difference indifferences methodology surrounding the release we find that neither school nor teacher value added scores are capitalized into home prices our results suggest that despite the contentiousness following these data releases homeowners do not consider value added models as currently constructed to be a relevant school quality measure on the margin

estimating the effect of air quality spatial versus traditional hedonic price models author affiliation helen r neill department of environmental studies greenspun college of urban affairs university of nevada las vegas 4505 maryland parkway box 454030 las vegas nv 89154 4030 usa helen neill unlv edu corresponding authordavid m hassenzahl department of environmental studies greenspun college of urban affairs university of nevada las vegas 4505 maryland parkway box 454030 las vegas nv 89154 4030 usa david hassenzahl unlv edudjeto d assane department of economics college of business university of nevada las vegas 4505 maryland parkway box 456006 las vegas nv 89154 6006 usa djeto assane unlv edu acknowledgment the authors are grateful to the editor and two anonymous referees for valuable comments the authors wish to thank ms debra march director of the lied real estate institute at the university of nevada las vegas for supporting this research project with real estate data and mr russ merle senior planner from clark county for providing air quality data the views expressed in this paper do not necessarily reflect those of the lied real estate institute and clark county government the authors are responsible for any possible errors 1 introductiontraditionally ordinary least squares ols methods have been used for hedonic modeling ols has the advantage that it can be applied to large data sets it is limited however by its inability to account for spatial autocorrelation for example geostatistical approaches using maximum likelihood estimation mle can account for spatial autocorrelation but in turn are limited by current computing techniques to relatively small data sets i e sets of 1000 or fewer depending on the complexity of the model and number of variables consequently for large data sets modelers must either use ols and be hampered by inadequately specified estimates of relatively low significance or apply mle techniques to a sample of the data set these shortcomings suggest two major research questions the first question which is central to this paper relates to the robustness of competing methods of estimation here we contribute a method for estimating and predicting hedonic price models while controlling for spatial dependence of proximal homes the other question of general interest deals with the usefulness or validity of hedonic modeling for environmental characteristics that is the importance of air quality in explaining sales price of homes in order to evaluate these two questions we propose and test an approach that uses a block bootstrap method to account for spatial dependence in the data our two step procedure consists of first creating blocks of temporal and spatial information within a larger data set of home sales prices and then implementing the bootstrap by resampling from each block next we apply ols and geostatistical mle estimation techniques to generate and store coefficient estimates for each resample the stored sets of resamples then represent monte carlo simulations of the full data set for each of the estimation techniques these can be compared to evaluate the robustness of the methods based on their respective predictive powers our findings may be summarized as follows we find that the geostatistical mle method which accounts for spatial effects outperforms the traditional ols method in several ways theoretically the geostatistical mle method better represents the expected spatial autocorrelation between error terms empirically this method provides better results with respect to expected signs statistical significance and predictive power the block bootstrapping technique allows hedonic modelers to effectively address spatial autocorrelation for large data sets overall we find that under these simulated conditions measured air quality matters for our data set regardless of the method used the remainder of this paper contains five sections

overoptimism and the performance of entrepreneurial firms recent theoretical and empirical research on cognitive bias in decision making suggests that overoptimism critically influences entrepreneurs decisions to establish and sustain new ventures we investigate whether such cognitive bias influences entrepreneurial venture performance using data on commercialization efforts for university inventions in contrast to prior studies our results suggest that entrepreneurial overoptimism does not appear to be the determining factor in the decision to found a firm we do find that entrepreneurs continue unsuccessful development efforts for longer periods of time than do established firms which is consistent with entrepreneurial overoptimism in the development of technologies with uncertain market prospects this latter finding is also consistent with rationality based models of decision making behavior however we find that the economic returns associated with many of the technologies in our sample are realized after the start up has been acquired by an established firm suggesting that start ups may serve as a transitional organizational form in the market for technology commercialization

investment liberalization and international trade abstract this paper estimates the cross price elasticity of exports with respect to investment costs for bilateral relations between 36 countries we show that the effect of reducing foreign direct investment costs on exports depends on country characteristics and trade costs as predicted by the markusen 1997 markusen 2002 model when countries differ in relative factor endowments and trade costs are low investment liberalization stimulates exports whereas when countries are similar in terms of relative factor endowments and size and trade costs are moderate to high investment liberalization reduces exports

macro determinants of fdi inflows to japan an analysis of source country characteristics this paper examines the source country determinants of fdi into japan the paper highlights certain methodological and theoretical weaknesses in the previous literature and offers some explanations for hitherto ambiguous results specifically the paper highlights the importance of panel data analysis and the identification of fixed effects in the analysis rather than simply pooling the data indeed we argue that many of the results reported elsewhere are a feature of this mis specification to this end pooled fixed effects and random effects estimates are compared the results suggest that fdi into japan is inversely related to trade flows such that trade and fdi are substitutes moreover the results also suggest that fdi increases with home country political and economic stability the paper also shows that previously reported results regarding the importance of exchange rates relative borrowing costs and labour costs in explaining fdi flows are sensitive to the econometric specification and estimation approach the paper also discusses the importance of these results within a policy context in recent years japan has sought to attract fdi though many firms still complain of barriers to inward investment penetration in japan the results show that cultural and geographic distance are only of marginal importance in explaining fdi and that the results are consistent with the market seeking explanation of fdi as such the attitude to risk in the source country is strongly related to the size of fdi flows to japan 2007 the authors journal compilation 2007 blackwell publishing ltd

mergers and acquisitions trade a global value chain analysis the present paper deals with how the insertion in international trade and global value chains gvcs of countries affects their capacity of attracting foreign mergers and acquisitions m as to this end we combine data for bilateral m as and trade in value added for the period 2001 15 and estimate an augmented gravity equation results indicate that trade openness per se does not favour m as nevertheless bilateral free trade agreements heterogeneity of destinations sources for exports imports of intermediate and final goods and position and participation in global value chains are relevant for explaining bilateral m as moreover their role is significantly different depending on the level of development of the home and host countries

financial market development in host and source countries and their effects on bilateral foreign direct investment we study an underexplored research question namely whether financial market development in both host and source countries has an effect on bilateral stocks of foreign direct investment fdi and particularly whether the effect of financial market development in one member of the country pair conditions the effect of financial market development in the other member we estimate gravity type models in a global sample of 43 source and 137 host countries over the period 2001 12 we address reverse causality concerns by restricting the sample to observations where reverse causality if existent should be less relevant our major and robust findings are that bilateral fdi increases with better developed financial markets in both the host and the source country and that for developing host countries financial market development in source and host countries functions as substitutes for each other

estimating housing demand with an application to explaining racial segregation in cities we present a three stage nonparametric estimation procedure to recover willingness to pay for housing attributes in the first stage we estimate a nonparametric hedonic home price function in the second stage we recover each consumer s taste parameters for product characteristics using first order conditions for utility maximization finally in the third stage we estimate the distribution of household tastes as a function of household demographics as an application of our methods we compare alternative explanations for why blacks choose to live in center cities while whites suburbanize

the impact of iso 9000 diffusion on trade and fdi a new institutional analysis the effects of iso 9000 diffusion on trade and foreign direct investment fdi have gone understudied we employ panel data reported by oecd nations over the 1995 2002 period to estimate the impact of iso adoptions on country pair economic relations we find iso diffusion to have no effect in developed nations but to positively pull fdi i e enhancing inward fdi and positively push trade i e enhancing exports in developing nations

the transition to home ownership and the black white wealth gap this paper analyzes differences in the likelihood that black and white families become homeowners by following a sample of black and white renters over time we are able to separately study racial differences in the likelihood of applying for a mortgage and in the likelihood that a mortgage application is accepted although its effect on the race gap in housing transitions is small we find strong evidence that black applicants are almost twice as likely as comparable white households to be rejected even when credit history proxies and measures of household wealth are accounted for we show that the housing transition gap exists primarily because blacks are less likely to apply for mortgages in the first place the analysis suggests that differences in income family structure and in the ability and willingness of parents to provide down payment assistance are the primary reasons for this applications gap we speculate that the portion of the gap that remains unexplained after controlling for income d

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

overconfidence and excess entry an experimental approach psychological studies show that most people are overconfident about their own relative abilities and unreasonably optimistic about their futures e g shelly e taylor and j d brown 1988 neil d weinstein 1980 when assessing their position in a distribution of peers on almost any positive trait like driving ability ola svenson 1981 income prospects or longevity a vast majority of people say they are above the average although of course only half can be if the trait is symmetrically distributed this paper explores whether optimistic biases could plausibly and predictably influence economic behavior in one particular setting entry into competitive games or markets many empirical studies show that most new businesses fail within a few years for example using plant level data from the u s census of manufacturers spanning 1963 1982 timothy dunne et al 1988 estimated that 61 5 percent of all entrants exited within five years and 79 6 percent exited within 10 years most of these exits are failures see also dunne et al 1989a 1989b d shapiro and r s khemani 1987

exports and foreign distributional activities evidence on japanese firms in the united states the relationship between japanese exports to the united states and distributional activities of japanese affiliates in the u s wholesale trade sector is examined by using a sample of forty four three digit japanese exporting industries matched to u s industries the statistical analysis provides evidence supporting the hypothesis that japanese direct investment in distribution has strongly promoted japanese exports to the u s markets copyright 1991 by mit press

change in domestic network centrality uncertainty and the foreign divestment decisions of firms abstract we investigate the role of domestic interfirm networks for the foreign divestment decisions of firms we argue that firms foreign operations risk being divested when a firm becomes more central in its domestic network positive changes in firm centrality at home facilitate access to information about new business opportunities but they may also lead firms to consider reconfiguring their value chain activities and resources across locations the resulting opportunity costs of maintaining foreign operations could subsequently lead to their divestment moreover we argue that the positive association between an increase in firm centrality in the domestic network and foreign divestment is stronger under higher uncertainty as pursuing new business opportunities at home becomes more appealing we distinguish between firm specific uncertainty and domestic market uncertainty we test and get support for our hypotheses using foreign subsidiary data from u s firms in the ict industry

neighborhood income distributions this paper studies the distribution of income within neighborhoods and contrasts it with the national income distribution it relies on a unique feature of the american housing survey whose 1985 1989 and 1993 waves of interviews provide data for small residential neighborhoods these consist of a dwelling unit and up to ten of its nearest neighbors most previous work on neighborhoods has used information for much larger groupings of the population such as census tracts the paper employs a variety of parametric and nonparametric econometric tools to study income sorting across us residential neighborhoods it documents the patterns of dependence among neighbors income and imperfect sorting with moderate but very significant correlation among incomes of neighbors and of considerable income mixing in u s neighborhoods

international trade and finance complementaries in the united kingdom 1870 1913 and the united states 1920 1930 abstract do international trade and finance flow together in a variety of theoretical models trade and finance can be shown to have the potential to be substitutes or complements so the matter must be resolved empirically we study trade and financial flows from the united kingdom from 1870 to 1913 and the united states in the interwar years these were the two major capital exporters and key financial centers in each era we find that trade and finance were robustly correlated for each case we consider simultaneity issues we also discuss evidence from the british empire which casts doubt on the idea that trade is a punishment device in the event of a default

vertical intra industry trade and fragmentation an empirical examination of the us auto parts industry the global auto industry has undergone a significant structural transformation in the last two decades as a result of the international fragmentation of production this increase in cross border production sharing activities in the auto industry led to intra industry trade iit in auto parts in this study the extent of iit in the us auto parts industry is examined by decomposing trade into inter industry trade vertical iit and horizontal iit then the development of vertical iit is analysed as an indicator of international fragmentation between the us and 29 trading partners several country specific hypotheses suggested by the fragmentation literature are tested for the period 1989 2006 the results indicate that a substantial portion of iit in the us auto parts industry is vertical iit and the econometric results generally support the hypotheses drawn from the theory in particular the findings show that the extent of the us vertical iit is positively correlated with average market size differences in market size differences in factor endowments and outward foreign direct investment while it is negatively correlated with distance and differences in per capita gdp

why put all your eggs in one basket a competition based view of how technological uncertainty affects a firm s technological specialization conventional wisdom suggests that when a firm faces technological uncertainty it responds by becoming less technologically specialized so as to remain adaptable to subsequent resolution of this uncertainty we adopt a competition based view of technological uncertainty to identify an opposite effect in competitive settings the firm may instead become more specialized when faced with greater technological uncertainty so as to focus on advancing its technologies against competition and influence the resolution of uncertainty in its favor over rivals we propose that this effect is accentuated when the firm expects that it cannot easily adapt to rivals technologies subsequently specifically when rivals are a greater deterrent through being litigious or innovative using u s government funding for fuel cell research as a policy shock with stock option implied volatilities to measure expected uncertainty we find empirical support for our propositions among firms active in research and development in the u s communications equipment industry through these findings we demonstrate that a competition based view of uncertainty identifies an alternative path for the firm s resource accumulation under uncertainty and we stress that the resolution of uncertainty can be something the firm attempts to influence rather than adapt to

are international trade and factor mobility substitutes abstract this paper analyzes whether factor flows and commodity trade are substitutes or complements i e whether increasing the level of one impacts adversely or favorably on the volume of the other it derives with the aid of a new general equilibrium framework of the world which allows possible differences in factor endowments tastes and technologies across the two trading countries the necessary and sufficient condition for substitutability and complementarity the results are then further examined in two special cases a survey of different concepts of substitutability and complementarity which have appeared in the literature is also given

does multinational activity displace trade kimberly a clausing using two panel data sets on the operations of u s multinational firms abroad and the operations of foreign multinational firms in the united states this article examines the empirical relationship between international trade and multinational activity the evidence supports the conclusion that multinational activity and trade are complementary activities particularly multinational activity and intrafirm trade this empirical result is consistent with the theoretical reasons one might expect a complementary relationship between the two activities and is also robust to different approaches and specifications jel f23 i introduction in recent years foreign direct investment fdi has become an increasingly important part of world integration flows of fdi have been increasing faster than trade flows which in turn have been growing faster than income 1 in addition multinational firms play a very large role in world trade for the united states 83 of exports in 1994 were either intrafirm shipments between multinational parents and their affiliates 36 or arms length trade between multinationals and unaffiliated buyers 47 2 although it is clear that multinational firms have an important role in world trade it is certainly less clear what the relationship is between production abroad and trade for multinational firms the popular press often assumes that multinational investment by u s firms replaces u s exports and in fact some economists have assumed that the rapid growth of foreign direct investment in recent years implies that multinational activity will eventually displace trade 3 this article examines the empirical relationship between multinational activity and trade and finds that there is evidence that multinational activity complements rather than displaces trade the article utilizes two panel data sets constructed from aggregate survey data published by the bureau of economic analysis bea the data vary by country and over time the first data set is used to study the relationship between u s exports and the activities of u s affiliates abroad this data set is constructed from data describing the operations of u s multinational firms in 29 host countries between 1977 and 1994 together with data on u s exports both intrafirm and arms length the second data set is used to study the relationship between u s imports and the activities of foreign affiliates operating in the united states it uses data describing operations in the united states by foreign affiliates of firms based in 29 home countries between 1977 and 1994 together with data on u s imports both intrafi rm and arms length most previous studies of this question have examined the relationship between multinational activity and trade for a cross section of countries by using data that also vary over time it is possible to explore more thoroughly the relationship between multinational activity and trade and how this relationship evolves it is also possible to control for fixed country effects that may be influencing the observed relationships previous studies have tended to focus on the relationship between outward multinational activity and exports this article looks as well at the relationship between inward multinational activity and imports finally this article considers the question of complementarity between multinational activity and trade in two ways in addition to looking at the relationship between the quantities of multinational activity and trade the article also studies complementarity much as one might think of complementarity in a demand study by considering cross price effects in particular the article includes an analysis of the relationship between price variables that measure the cost of multinational activity abroad and exports since the price of operating abroad is negatively related to exports this is further evidence of a complementary relationship between trade and multinational activity

hedonic models and air pollution twenty five years and counting this paper reports a meta analysis of how effectively hedonic property models have detected the influence of air pollution on housing prices probit estimates are reported describing how data model specification and local property market conditions in cities represented in thirty seven studies influence the ability of hedonic models to uncover negative statistically significant relationships between housing prices and air pollution measures

hedonic prices and implicit markets estimating demand and supply functions for differentiated products in choosing the level of quality to purchase the buyer of a differentiated product also chooses a point on the marginal price schedule for that product hence in general the demand functions for product characteristics cannot be consistently estimated by ordinary least squares market equilibrium results in a matching of characteristics of demanders and suppliers this matching restricts the use of buyer and seller characteristics as instruments when estimating demand and supply functions for product characteristics the paper develops these issues a stochastic structure for hedonic equilibrium models is then proposed identification results are presented and estimation procedures are outlined

a knowledge and physical capital model of international trade flows foreign direct investment and multinational enterprises abstract this paper addresses two important issues at the nexus of the literatures on international trade foreign direct investment fdi foreign affiliate sales fas and multinational enterprises mnes first the introduction of a third internationally mobile factor physical capital to the standard 2 2 2 knowledge capital model of mnes with skilled and unskilled labor allows us to resolve fairly readily the puzzle in the modern mne literature that foreign affiliate sales among two identical economies completely displace their international trade intra industry trade and intra industry fdi and fas can coexist for national and multinational firms with identical productivities in identical countries second the introduction also of a third country to the model suggests a formal n country theoretical rationale for estimating gravity equations of bilateral fdi flows and fas in a manner consistent with estimating gravity equations for bilateral trade flows

estimating equilibrium housing demand for stayers abstract this study models demand by owner occupied housing stayers most consumers do not move routinely in response to small changes in income or housing price so the own rent and move stay decisions are modeled as multiperiod optimization in the presence of transaction costs the empirical section uses the american housing survey to provide a panel of household stayers for a metropolitan area results indicate that income and value rent measures in different years have separable and significant impacts on housing demand estimated conditional income elasticities are between 0 40 and 0 45

how to get what you want when you do not know what you want a model of incentives organizational structure and learning in this paper we present a model of the interplay among learning managerial intervention and the allocation of decision rights in the context of a generalized agency problem within this context actors face not only conflicting interests but also diverging cognitive visions of the right course of action we assume that a principal may obtain the implementation of desired organizational policies by means of appropriate design of the allocation of decisions or by means of costly intervention through authority or incentives and we analyze their consequences for organizational control and learning we show that the structure of allocation of decision rights is very powerful in terms of control but when the principal is uncertain about the course of action organizational structure and managerial intervention complement each other in nontrivial ways and must be carefully tuned we also show that there is a general advantage in maximizing the partitioning decision rights because it allows both higher control and higher levels of learning