strategic pricing with customer rationing the case of primary metals firms in primary metal industries often charge subcompetitive prices and in periods of high demand they may ration their customers a model is developed to ex plain these empirical regularities in the model firms with market power are aware that the price they charge today affects their demand tomorrow in addition the strategic interaction among firms reinforces this intertemporal effect in the equilibrium of the two stage game oligopolists can price below marginal cost and when capacity constraints are introduced the equilibrium can involve rationing model predictions are assessed using market structure and technology data for several primary metal industries

long term contracting and multiple price systems this article examines product markets in which long term contracts and spot transactions coexist such markets are characterized by multiple price systems wherein adjustment to supply and demand shocks occurs through spot prices while contract prices are fixed or adjust slowly the authors derive the existence of contracts as well as the equilibrium fraction of spot trade in the framework of an optimizing model and analyze the effects of shocks on market equilibrium when some buyers and sellers locked in contractually the model is employed to interpret the change in the copper market from a multiple price system to one characterized solely by spot trade copyright 1992 by university of chicago press

the aftermath of financial crises a look on human and social wellbeing summary alongside its detrimental macroeconomics impacts financial crises can have substantial negative consequences on human and social wellbeing employing a cross country dataset on more than 100 banking and or currency crises during 1981 2007 this work examines the effects of financial crises on indicators of human and social wellbeing through employing an event study analysis the findings of this analysis suggest that the aftermaths of financial crises are characterized by increases in the growth rates of suicide rates crime rates and income inequality rates relative to their pre crisis trajectories additionally declines in the growth rates of health and educational expenditures government welfare expenditures and food quality and quantity intakes are common during periods immediately following financial crises such deteriorations are observed across different countries with income levels and also for crises that are and are not accompanied by recessions on average though human and social indicators are hit harder during financial crisis events accompanied by recessions this is especially true for crises in low and middle income economies in comparison to those in high income countries as a result not only are financial crises directly responsible for more rapid increases in income inequality within countries they may also be responsible for increasing inequalities of income security health nutrition and educational outcomes between richer and poorer countries needless to say deteriorations in many of these fronts are often associated with persistent or permanent losses in human and social wellbeing and cannot be assumed to be simply and immediately reversed with an economic recovery therefore the paper calls on the need for more concerted effort on the part of the policymakers to actively protect human and social outcomes during financial crises rather than trying to address such losses in the aftermath of crises because some of these losses are simply not recoverable

inequality and violent crime abstract we investigate the robustness and causality of the link between income inequality and violent crime across countries first we study the correlation between the gini index and homicide and robbery rates within and between countries second we examine the partial correlation by considering other crime determinants third we control for the endogeneity of inequality by isolating its exogenous impact on these crime rates fourth we control for measurement error in crime rates by modeling it as both unobserved country effects and random noise finally we examine the robustness of this partial correlation to alternative measures of inequality the panel data consist of nonoverlapping 5 year averages for 39 countries during 1965 95 for homicides and 37 countries during 1970 94 for robberies crime rates and inequality are positively correlated within countries and particularly between countries and this correlation reflects causation from inequality to crime rates even after controlling for ot

internal cocaine trafficking and armed violence in colombia this paper exploits time variations in international cocaine prices and potential trafficking routes within colombia to estimate the effect of the illegal cocaine trade on changes in municipality homicide rates i construct the potential internal cocaine trafficking network and exploit the fact that different regions in colombia have comparative advantages in serving different international markets my results suggest that when cocaine prices increase in either the united states or europe homicide rates increase in municipalities strategically placed to serve each international market jel d74 k42 f19

bank mergers and crime the real and social effects of credit market competition using a unique sample of commercial loans and mergers between large banks we provide micro level within county evidence linking credit conditions to economic development and find a spillover effect on crime neighborhoods that experience more bank mergers are subject to higher interest rates diminished local construction lower prices an influx of poorer households and higher property crime in subsequent years the elasticity of property crime with respect to merger induced banking concentration is 0 18 we show that these results are not likely due to reverse causation and confirm the central findings using state branching deregulation to instrument for bank competition we examine the real and social impact of local credit competition by documenting a link between the competitiveness of the local banking market credit conditions urban development and crime several recent studies peek and rosengren 2000 cetorelli and gambera 2001 klein peek and rosengren 2002 and burgess and pande 2003 tie credit market imperfections to diminished real economic activity and growth other studies connect the economic environment to property crime freeman 1999 levitt 2001 raphael and winter ebmer 2001 and nilsson 2004 it is reasonable to hypothesize therefore that reductions in bank competition may lead to economic decline and subsequently increases in property crime we empirically investigate the effects of bank consolidation and increased market power on credit availability and real activity using a unique sample of commercial loans and mergers between large banks in the 1990s we provide micro level evidence that garmaise is from the ucla anderson school and moskowitz is from the graduate school of business university of chicago and nber we have benefited from the suggestions and comments of tony bernardo marianne bertrand phillip bond doug diamond mark duggan eugene fama

burglary and income inequality abstract in a model where risk neutral agents have differing legal incomes which may be supplemented by burglary we study the effects of income distribution on the level of burglary assuming that a detected burglar is incarcerated for a fixed term and assuming that burglars choose target houses using the signal of house quality we show how increases in income inequality may increase the level of crime in particular increases in relative differential inequality unambiguously increase burglary crime corollaries are that a more regressive income tax increases the level of crime and that richer neighborhoods may have lower crime rates

the social costs of gun ownership abstract this paper provides new estimates of the effect of household gun prevalence on homicide rates and infers the marginal external cost of handgun ownership the estimates utilize a superior proxy for gun prevalence the percentage of suicides committed with a gun which we validate using county and state level panels for 20 years we estimate the elasticity of homicide with respect to gun prevalence as between 0 1 and 0 3 all of the effect of gun prevalence is on gun homicide rates under certain reasonable assumptions the average annual marginal social cost of household gun ownership is in the range 100 to 1800

market structure marketing method and price instability data for metals sold on commodity exchanges and at prices set by producers are used to test the relationship between the organization of markets and the behavior of prices on the production side the question is whether prices are more stable in concentrated industries and on the sales side the question is whether markets where buyers are consumers have more stable prices than those with consumers and speculators the recent increase in metal price instability is explained by changes in the market structure and organization variables foremost is increased reliance on commodity exchanges declines in concentration are of less importance

inequality and crime this paper considers the relationship between inequality and crime using data from urban counties the behavior of property and violent crime are quite different inequality has no effect on property crime but a strong and robust impact on violent crime with an elasticity above 0 5 by contrast poverty and police activity have significant effects on property crime but little on violent crime property crime is well explained by the economic theory of crime while violent crime is better explained by strain and social disorganization theories

internal net worth and the investment process an application to u s agriculture recent models of firm investment decisions stressing informational imperfections in capital markets provide a foundation for interpreting evidence that movements in internal finance can predict investment spending even after one controls for measures of firms investment opportunities while such evidence is suggestive it is often open to other interpretations we examine these models using data on equipment investment in the u s agricultural sector this sector is particularly interesting because it has experienced large fluctuations in net worth and the profitability of investment and reasonable measures of net worth can be constructed our findings provide support for a class of internal funds models of investment under asymmetric information

effects of forward sales on spot markets pre commitment sales and prices for fresh strawberries increasingly agricultural markets are vertically coordinated often a thinning spot market coexists with coordinated transactions raising the question of how private coordination affects the market as a whole one of the greatest challenges when analyzing such market level effects is obtaining information on private transactions we utilize publicly available data to evaluate how informal contracts in the fresh strawberry market affect spot market prices using a generalized autoregressive conditional heteroskedastic in mean garch m model we find that these informal contracts increased spot prices as argued by some industry members while the effect on spot price volatility varied by production region

juvenile crime and punishment evidence from japan over the last decade juvenile crime has become a serious social problem in japan the juvenile law was revised in 2001 to impose harsher punishment on juvenile offenders this revision makes it possible to impose criminal punishment on 14 and 15 year old criminal offenders while those offenders aged 16 19 have always faced criminal punishment both before and after the revision using this revision as a natural experiment this study conducts a difference in differences estimation to examine the effect of punishment on juvenile crime the analysis provides evidence that punishment can deter juvenile crime in addition this research examines the criminal behaviour of 13 year olds who face no change in punishment but who soon will in the near future the results suggest that the revision also had a negative impact on the criminal behaviour of these younger offenders

the effect of prison population size on crime rates evidence from prison overcrowding litigation simultaneity between prisoner populations and crime rates makes it difficult to isolate the causal effect of changes in prison populations on crime to break that simultaneity this paper uses prison overcrowding litigation in a state as an instrument for changes in the prison population the resulting elasticities are two to three times greater than those of previous studies a one prisoner reduction is associated with an increase of fifteen index i crimes per year while calculations of the costs of crime are inherently uncertain it appears that the social benefits associated with crime reduction equal or exceed the social costs of incarceration for the marginal prisoner

supply shocks and price adjustment in the world oil market understanding the impacts of transitory oil supply shocks on world oil prices is crucial to the evaluation of the economic impacts of shocks and the design of policy responses to address those impacts this paper integrates short run and long run approaches to oil price determination with particular emphasis on the two price structure of the world oil market with coexisting short term spot prices and long term contract prices even transitory shocks are shown to exhibit persistence effects on long term prices some implications for econometric models of the relationship between spot and contract prices are discussed

income inequality and crime in the united states abstract this paper investigates the relationship between income inequality and crime results show that there is a strong and robust effect of relative income inequality on burglary effect on robbery is also strong and robust in most cases

endogeneity in count data models an application to demand for health care the generalized method of moments gmm estimation technique is discussed for count data models with endogenous regressors count data models can be specified with additive or multiplicative errors and it is shown that in general a set of instruments is not orthogonal to both error types simultaneous equations with a dependent count variable often do not have a reduced form which is a simple function of the instruments however a simultaneous model with a count and a binary variable can only be logically consistent when the system is triangular utilizing data from the british health and lifestyle survey 1991 1992 the gmm estimator is used in the estimation of a model explaining the number of visits to doctors with a self reported binary health index as a possible endogenous regressor if this regressor is truly endogenous one expects the pseudo likelihood estimate of its coefficient to be biased upwards indeed for the additive model the estimated coefficient of the binary health index decreases in value when the possible endogeneity of this regressor is taken into account further indication of endogeneity is given by the fact that the overidentifying restrictions are rejected in the multiplicative model but not in the additive model finally a model that includes predicted latent health instead of the binary health index is estimated in stages

estimating the economic model of crime employment versus punishment effects ann dryden witte 1980 has recently argued in this journal that new support is found for the deterrent hypothesis or the economic model of crime when individual data are employed to estimate the determinants of rearrest rates witte estimates a conventional economic model of crime using a rich and carefully constructed microdata set of released prisoners in north carolina her principal findings are that 1 increases in the certainty and severity of punishment tend to reduce participation in crime measured by number of arrests or convictions per month free and 2 higher legal wages have an extremely weak deterrent effect on crime in this comment i describe two separate data sets within which i find just the opposite results using a sample of offenders released from federal prisons in 1972 i find that increases in the severity of punishment are weakly related to participation in crime while increases in the certainty of punishment are positively related to participation in crime in addition using a sample of male repeat property offenders released from maryland prisons i find that higher wages have a strong and consistent deterrent effect on crime the conclusion is reached at least from these data sets that improving legitimate employment opportunities may be as effective if not more effective in reducing crime as is an increase in punishment

crime inequality and unemployment in england and wales a model of crime is developed based on principles from the existing literature with some original insight the implications of the model are that income inequality and unemployment are important explanatory variables for crimes motivated by economic gain but do not offer much explanatory power for other types of crime panel data of uk regions over the years from 2002 to 2007 are then used to test these predictions the empirical results strongly support the hypothesis that crime is an economic phenomenon

personal indebtedness spatial effects and crime there is a long and detailed history of attempts to understand what causes crime one of the most prominent strands of this literature has sought to better understand the relationship between economic conditions and crime an economic argument is that in an attempt to maintain consumption in the face of unemployment people may resort to sources of illicit income in a similar manner we might expect ex ante that increases in the level of personal indebtedness would be likely to provide similar incentives to engage in criminality in this paper we seek to understand the spatial pattern of property and theft crimes using a range of socioeconomic variables including data on the level of personal indebtedness

neighbourhood income inequality and property crime this paper examines the relationship between income inequality and property crime using census block group data from three us cities nashville tn portland or and tucson az this paper is one o

criminal deterrence revisiting the issue with a birth cohort we estimate the general deterrent effect of criminal justice resources on criminal behavior using panel data for a sample representative of young men in u s urban areas our data which combine individual level information on arrests and personal characteristics with aggregate information on criminal justice resources allow us to obtain deterrence measures that reflect theoretical concepts and are of potential policy relevance we find robust evidence of a general deterrent effect flowing from criminal justice particularly police resources the nature of our data also allows us to conduct extensive exogeneity tests and to explore a number of possible third causes for the deterrent effect we find strong evidence that our deterrence variables are exogenous and no evidence that our deterrence result stems from commonly hypothesized third causes copyright 1994 by mit press

persistent commodity shocks and transitory crime effects abstract this paper studies the dynamic response of crime to a positive income shock we estimate the short and medium run effects that an increase in copper price had on the local economy and on criminal activity in chile which is the world s leading copper producer after a decade of high prices mining municipalities did not exhibit lower crime rates compared to non mining municipalities to explain this counterintuitive result we investigated heterogeneous dynamic effects and observed that property crimes decreased only at the beginning of the boom as the dynamics of unskilled employment are consistent with the crime cycle we argue that crime evolves due to temporary labor market adjustments

an empirical characterization of the dynamic effects of police spending on violent and property crime the study estimates the dynamic effects of shocks to police expenditures on measures of violent and property crime rates using annual u s state level data for the period 1960 2015 we employ a structural panel var model and achieve identification by imposing the restriction that police spending responds to structural shocks to crime with at least a lag of 1 year results indicate that a shock to police spending leads to a persistent and significant decreases in violent and property crime rates and b significant and persistent negative impacts on crime rates in periods of high crime but little impacts in periods of low crime variance decompositions show that shocks to police spending account for moderate to large proportions of the variability of u s state level crime rates our findings are robust across separate measures of violent and property crime rates as well as to the inclusion of additional variables to the baseline panel var model jel k42

the rigidity of prices this paper uses evidence on individual transaction prices to analyze price behavior the evidence shows that for many transactions pricesremain rigid for periods exceeding one year the rigidity of price ispositively correlated with industry concentration for several productsthe correlation of price changes across buyers is low the paper alsoinvestigates the relationship between price rigidity price change andthe length of time a buyer and seller have been doing business together the author interprets the evidence as emphasizing the importance of nonprice rationing and the inadequacy of models in whichprice movements alone clear markets copyright 1986 by american economic association

how much does sorting increase inequality some commentators argue that increased sorting into internally homogeneous neighborhoods schools and marriages is radically polarizing society calibration of a formal model however suggests that the steady state standard deviation of education would increase only 1 7 percent if the correlation between neighbors education doubled and would fall only 1 6 percent if educational sorting by neighborhood disappeared the steady state standard deviation of education would grow 1 percent if the correlation between spouses education increased from 0 6 to 0 8 in fact marital and neighborhood sorting have been stable or even decreasing historically sorting has somewhat more significant effects on intergenerational mobility than on inequality

the risks and rewards of criminal activity a comprehensive test of criminal deterrence whereas previous analyses of criminal deterrence have focused on the effect of criminal enforcement on crime rates this study analyzes the existence of compensating differentials for criminal pursuits by analyzing the risk rewards trade off this approach represents a more comprehensive test of the criminal deterrence hypothesis the sample consisted of black inner city youths who reported their crime participation crime income and self assessed risks from crime the risk premiums for the three principal adverse outcomes arrest conviction and prison constituted between one half and two thirds of all crime income on the average providing strong support for the criminal deterrence hypothesis

crime punishment and the market for offenses crime is a subject of intense emotions conflicting ideologies however economists have generally explained it as a reflection of individual choice and equilibrating market forces two major themes of the literature are outlined the evolution of a market model to explain the diversity of crime across time and space and the debate about the usefulness of positive versus negative incentives systematic analyses generally indicate that crime is affected on the margin by both positive and negative incentives there are serious limitations to the effectiveness of incapacitation and rehabilitation and optimal enforcement strategies involve trade offs between narrow efficiency and equity considerations

crime and local inequality in south africa the authors examine the effects of local inequality on property and violent crime in south africa their findings are consistent with economic theories relating inequality to property crime and also with sociological theories that imply that inequality leads to crime in general burglary rates are 20 30 percent higher in police station jurisdictions that are the wealthiest among their neighbors suggesting that criminals travel to neighborhoods where the expected returns from burglary are highest the authors do not find evidence that inequality between racial groups fosters interpersonal conflict at the local level

heterogeneity stratification and growth macroeconomic implications of community structure and school finance this paper examines how socioeconomic stratification and alternative systems of education finance affect inequality and growth agents interact through local public goods or externalities school funding neighborhood effects and economywide linkages complementary skills knowledge spillovers sorting families into homogeneous communities often minimizes the costs of existing heterogeneity but mixing reduces heterogeneity faster integration therefore tends to slow down growth in the short run yet raise it in the long run a move to state funding of education presents society with a similar intertemporal trade off local and global complementarities play major roles in determining the efficient social and educational structures copyright 1996 by american economic association

why do increased arrest rates appear to reduce crime deterrence incapacitation or measurement error this paper attempts to discriminate between deterrence incapacitation and measurement error as explanations for the negative empirical relationship between arrest rates and crime measurement error cannot explain the observed patterns in the data incapacitation suggests that an increase in the arrest rate for one crime will reduces all crime rates deterrence predicts that an increase in the arrest rate for one crime will lead to a rise in other crimes as criminals substitute away from the first crime empirically deterrence appears to be the more important factor particularly for property crimes jel k42

market price uncertainty risk aversion and procurement combining contracts and open market sourcing alternatives abstract we evaluate the implications of concurrent utilization of contracts and open market arrangements by a risk averse buyer in continuous procuring of a standardized product of known demand over a specified time period the buyer being risk averse is concerned about the magnitude and uncertainty of expenses the contract price is deterministic and the market price is stochastic cases when the two price processes are exogenous and when the contract price is endogenously linked to volume of procurement and market price are examined models are developed to determine the optimal pattern of procurement from the two arrangements for specified price risk aversion and contract duration parameters the study finds that optimal procurement from market increases with contract price premium but decreases with degree of risk aversion and market price uncertainty usefulness of alternate forms of contracts when contract and market alternatives are used concurrently is discussed application of the models to hypothetical datasets compares the relative usefulness of alternate forms of integrating contract and market alternatives and of complete reliance on contract or market alternatives