long term competition in a dynamic game the cold fish war this article presents a model of credible voluntary collective agreements in a dynamic game these agreements are implicit in collections of history dependent threat strategies i consider the strategies in a game of resource exploitation credibility is represented by perfect equilibrium voluntarism requires at least that all behavior be supported by the threat of collapse of the agreement which would return the players to the memoryless equilibrium collective rationality requires that the agreement be robust to the possibility of mutually beneficial renegotiation i analyze the set of agreements meeting each of these restrictions

the private and social value of information exploration for exhaustible resources abstract in this paper i develop a model where exploration yields information about the size and location of the stock of an exhaustible resource this information is valuable in two ways first before production takes place reserves must be located through exploration the process of exploration changes unproven reserves which cannot be produced into proven reserves which can one value of exploration then is that it allows total production over time to expand the expansion effect second by exploring in an early time period a producer gains information about the true stock size prior to making a decision about how fast to exploit reserves with better information the extraction rate chosen by the producer will yield higher expected returns from the stock the timing effect i show that the expansion effect is undervalued by a firm relative to a social planner an increase in proven reserves increases production and lowers prices improving consumer welfare the timing effect however can be over or undervalued by a firm relative to a social planner if the exploring firm makes up a relatively small portion of industry and if consumers are not highly risk averse then the firm will overvalue the timing effect as a result firms may not explore some tracts where it is efficient to do so if however a firm finds it valuable to explore a tract it may explore earlier in time than is optimal

differential games with nonconvexities and positive spillovers abstract this paper deals with differential games characterized by nonconvexities and increasing returns the objective function of the players is convex in the control variables and nonconvex in the state variables we employ the open loop nash equilibrium solution concept this framework enables us to handle games characterized by positive spillovers and strategic complementarities e g capital accumulation differential games with learning by doing where the knowledge available to a firm is given by the knowledge accumulated by the economy as a whole

equilibrium valuation of natural resources the purpose of this paper is to provide a theoretical investigation of equilibrium spot and futures price behavior in a nonrenewable commodity market the underlying commodity is nonrenewable in the sense that the reserve level of the commodity is expected to decline over time in the absence of successful discoveries of additional reserves i wish to understand how the nonrenewable nature of the commodity influences the intertemporal extraction of the commodity equilibrium spot price behavior and the prices of derivative assets traded on the nonrenewable commodity there is considerable disagreement among economists whether resources are exhaustible in the sense of resource constraints becoming binding on our society in the foreseeable future some economists have argued that natural resources are being depleted at

bargaining strategic reserves and international trade in exhaustible resources this paper proposes a framework for the analysis of optimal strategic reserve policy when ability to withstand embargoes influences terms of trade in an exhaustible resource like oil the mode embodies two stylized facts competitive forces are not always strong enough to eliminate other influences on the negotiated price of oil and long term contracts for oil delivery cannot be enforced across national boundaries some modeling issues that arise in this context are discussed and a model of optimal strategic reserve policies is proposed and solved in a leading special case

the economics of worldwide stagflation the last fifteen years have witnessed dramatic changes in economics not only in the manner in which the economics profession views economics but also in the manner in which the general public views economics and economists by the late 1960 s there had emerged more or less a consensus macroeconomic framework that is an agreed upon structure to be used to study economic problems at the aggregate level robert solow stated as quoted in leijonhufvud 1968

the political economy of government domestic expenditure in the affluent democracies 1960 80 despite the large number of studies of the determination of government expenditure in the affluent democracies most students of the subject admit that we know relatively little about the complex dynamics of spending change using multiple regression analyses of changes in nonmilitary outlays over the years 1960 to 1973 and 1973 to 1980 this study attempts to remedy some of the problems in the literature by providing new tests of several old hypotheses by introducing and testing several relatively new hypotheses and by evaluating such propositions in the context of an integrated theoretical framework and of analyses that span two distinct political economic eras results suggest that the dynamics of domestic expenditure change are partially conditioned by macroeconomic and political environments of particular eras overall the self interests and ideological preferences of policymakers the institutional and extrainstitutional political action of policy relevant groups and needs for state assistance emerge as principal sources of changes in domestic expenditure

dynamic cournot duopoly with intertemporal capacity constraints this paper studies a dynamic cournot duopoly in which suppliers have a limited amount of products available for two consecutive periods we derive optimal sales strategies and analyze welfare effects with and without commitment under commitment strategies do not depend on the rival s realized sales in this case there is a unique nash equilibrium for any allocation of initial supplies and prices increase over time absent commitment sellers can adjust their supply decision after the first period in this case a subgame perfect nash equilibrium does not always exist and prices may decline over time a more asymmetric allocation of stocks generally leads to higher first period prices whereas the impact on second period prices is ambiguous the larger firm typically prefers not to commit whereas the smaller firm is better off under commitment commitment generates a higher total surplus and almost always a higher consumer surplus our findings thus suggest that market transparency or flexible supply contracts can adversely affect welfare in situations where production precedes sales and firms face an intertemporal capacity constraint

durable goods oligopoly abstract this paper models a durable goods oligopoly as a differential game two cases are treated sales where firms cannot lease but must sell the good in question and leasing where firms do not sell but only rent in the sales case firms face increasing marginal cost of production and the good in question depreciates for this case a rational expectations feedback nash equilibrium is constructed for which monopoly or oligopoly output is less than the efficient level this gap between oligopoly and competitive output diminishes as the number of firms increases when firms can only lease the good the good is assumed not to depreciate and the monopoly level of steady state output is compared with the level of steady state output for a feedback equilibrium duopoly for this case the duopoly equilibrium has steady state output that is less than the corresponding efficient level but greater than the monopoly level the leasing model is shown to be isomorphic to the adjustment cost duopoly model of driskill and mccafferty journal of economic theory 49 1989 324 338

electoral competition and the growth of public spending in 13 industrial democracies 1950 to 1983 this article examines a theoretically important issue that has received surprisingly little attention whether the process of democratic competition for public office has fueled the growth of domestic spending in the capitalist democracies since world war ii probably because it is difficult to measure electoral competition in multiparty systems existing comparative studies of public spending either ignore this question or use dubious measures of electoral competition this study presents and tests some conceptually more appealing measures of competition the results show a strong robust relationship between improved indicators of electoral competition and the growth of domestic spending from 1950 to 1973 and 1973 to 1983 the study concludes by analyzing the implications of the findings for economic performance in the capitalist democracies and for the democratic management of fiscal policy

monopoly production of durable exhaustible resources we examine monopoly production of a durable exhaustible resource previous authors have implicitly assumed that the monopolist is able to make binding commitments about future decisions we consider the more plausible case in which the monopolist lacks this ability and must choose from dynamically consistent plans two models are considered a discrete time model in which there is a strictly finite initial stock of the resource and a continuous time model in which costs are an increasing function of cumulative production we find that as a general result monopoly leads to overconservation the monopolist who cannot precommit produces the efficient quantity ultimately but does so too slowly by contrast the monopolist who can precommit produces less than the efficient stock even in the limit we also find that increased importance of exhaustibility hastens the extraction of the resource copyright 1990 by the london school of economics and political science

preemption in r d races abstract fudenberg gilbert stiglitz and tirole 1983 consider a patent race in which each firm s instantaneous probability of discovering a patentable invention is an increasing function of its cumulative expenditure on rd in particular we show that for intermediate values of it is possible for the follower to spoil the race by forcing the leader to drop out

on the political economy of welfare expansion a comparative analysis of 18 advanced capitalist democracies 1960 1971 this article elaborates the thesis that economic growth and various types of collective action by class linked actors determine the expansion and decline of welfare spending in rich capitalist democracies our multivariate model of this thesis specified to 1960 1971 growth rates in direct cash transfer payments as proportions of gross domestic product is supported strongly by regression analyses these indicate that economic growth notably facilitates transfer payment growth they also suggest that rightist party participation in government notably dampens welfare expansion while leftist centrist and christian democratic party participation in government are conducive to welfare expansion and they suggest that the political influences of both unions and large industrial corporations are conducive to growth in transfers payments as well in addition state authorities appear to augment welfare spending in response to working class protests strike activity and capital investment disinvestment activ

cartel stability in an exhaustible resource model a simple oligopolistic common pool exhaustible resource game is considered by analysing punishment strategies including optimal punishments it is possible to determine which cartel agreements are implementable in a non cooperative play of the game joint profit maximizing allocations are sustainable for sufficiently low discounting but in general it is shown that no folk theorem exists for this model in particular for sufficiently high elasticities of demand it is shown that optimal punishments are not sufficiently severe to enforce most stationary symmetric extraction paths thus confirming the hypothesis that sufficient market power is needed for a cartel to be stable a simple common property exhaustible resource model in a discrete time infinite horizon framework will be considered by looking at punishments levelled against firms that deviate from an implicitly agreed extraction path it is possible to examine the extent to which different allocations can be supported as non cooperative equilibria we shall pay particular attention to the question of whether punishments can be severe enough to sustain implicit agreements that maximize joint profits and to the idea pindyck 1979 that cartel stability depends crucially upon market power this non cooperative approach to the question of cartel stability has been used by porter 1983 in a repeated oligopoly model with imperfect information see also green and porter 1984 while we assume perfect observability here the model is compli cated by the existence of a state variable in the form of the resource stock moreover we shall apply the idea of optimal punishments in this dynamic model abreu et al 1986 1990 have looked at general properties of the equilibrium set in the green porter model what we find is that by considering a more general strategy space than that conventionally studied cooperative extraction rates are sustainable in equilibrium for low enough discount rates in contrast to the over extraction results often obtained moreover in this model the predictions concerning the range of possible sustainable equilibria as the discount rate approaches zero are sharp while the cooperative solution belongs to the set of equilibria for low discount rates constant symmetric extraction paths below the maximum possible rate fail to be sustainable in the limit if the elasticity of demand is sufficiently high thus for low discount rates only extraction rates close to the cooperative rate are sustainable together with disagreement equilibria which involve very high extraction rates these results are in sharp contrast to those obtained from repeated games where in the limit the range of equilibria is very large the difference is explained by the existence of a state variable in the form of a declining stock of the resource these results are also in contrast to what can happen in our model when the demand elasticity is lower all constant symmetric extraction paths may be sustainable for low enough

perfect equilibrium timing of a backstop technology limit pricing induced by trigger zones this paper considers strategic use of r d in the context of an exhaustible resource market where the consuming countries control r d and a cartel controls the resource it is shown that r d investments to develop a backstop technology can be used as a credible threat to induce a low price profile for the resource the price path associated with the unique perfect equilibrium exhibits limit pricing the backstop is eventually introduced but in a period before this event the cartel keeps the price sufficiently low to make delayed investment the preferred alternative for the consuming nations

a theory of oil igopoly cournot equilibrium in exhaustible resource markets with fixed supplies the emergence of an effective and powerful cartel in the international petroleum market has stimulated considerable effort among economists to develop models of pricing and supply behavior for this industry 2 this modeling task poses two basic difficulties first as in the standard oligopoly problem one must characterize the behavior of several sellers in a market aware of each other and of their effect on market price second there is here the added difficulty of treating the explicitly intertemporal nature of suppliers decision wherein a limited stock must be optimally allocated over time this paper studies the implications of the simplest non trivial postulates about these two aspects of the problem it is assumed that suppliers are non cooperative cournot nash players each of whom is imagined to select an optimal supply strategy taking as given the strategies of the others moreover it is hypothesized that the feasible strategies are limited to open loop paths chosen at the initial date to maximize the present value of profits in light of the paths of supply which the others have chosen 3 these basic postulates together with a few technical assumptions concerning the structure of resource demand permit one to demonstrate the existence of at least one non cooperative equilibrium concerning thisequilibrium we show that 1 the average and marginal return on resource stocks is inversely related to the size of a player s initial endowment 2 aggregate production decreases over time until all stocks are exhausted while firms with smaller stocks exhaust their supplies no later than firms with larger stocks do 3 the present value of price net of extraction cost declines over time 4 industry production maximizes a weighted average of intertemporal consumer s surplus and producers profits

bayesian inference for comparative research rv egression analysis in comparative research suffers from two distinct problems of statistical inference first because the data constitute all the available observations from a population conventional inference based on the long run behavior of a repeatable data mechanism is not appropriate second the small and collinear data sets of comparative research yield imprecise estimates of the effects of explanatory variables we describe a bayesian approach to statistical inference that provides a unified solution to these two problems this approach is illustrated in a comparative analysis of unionization a widely used tool in quantitative comparative politics is the linear regression model estimating relationships between institutional and economic variables observed for a set of countries constituting some population of interest a brief survey of recent comparative research finds no shortage of work of this type for instance remmer 1991 identifies economic crisis as a source of electoral volatility in latin american countries in the 1980s robertson 1990 presents evidence that institutions moderating the transaction costs of negotiations between capital and labor reduce industrial conflict and golden 1993 finds that union wage moderation in industrialized democracies results from coordinated collective bargaining although the methodological advantages are well documented jackman 1985 we identify two distinct problems of statistical inference endemic to this type of quantitative comparative research first because the data constitute all the available observations from a population conventional inference based on the long run behavior of some repeatable data mechanism is not appropriate second because data sets tend to be small and collinear the effects of explanatory variables are estimated imprecisely in most applications the first problem is generally ignored and the second is solved by imposing restrictions on the regression model to obtain sensible results the bayesian model of statistical inference provides a unified solution to these two distinct problems of quantitative comparative research two features of bayesian inference are important in this context first probability is conceived subjectively as characterizing a researcher s uncertainty about the parameters of a statistical model this subjective probability concept seems particularly useful in comparative settings where the data are typically convenience samples not generated by a known probability mechanism such as random sampling second bayesian inference allows the inclusion of other information in addition to the quantitative sample information again this seems useful in the comparative context where rich historical material is commonly available sparking ideas for researchers but formally discarded in the final analysis in the bayesian approach this historical material can be formally incorporated into the analysis we begin by detailing why the nonstochastic and weak data typical of comparative research are problematic for conventional linear regression analysis we next introduce some ideas about bayesian inference and describe bayesian regression analysis these ideas are applied to a comparative analysis of unionization the subject of a recent exchange in the american political science review between michael wallerstein and john stephens stephens and wallerstein 1991 wallerstein 1989 the bayesian regressions we present are supplemented with a sensitivity analysis that investigates how our conclusions depend upon the sample data and our prior beliefs although we survey some ideas in bayesian statistics a full introduction to the bayesian approach to statistical inference is beyond our scope here good book length treatments are pollard 1986 lee 1989 and at a slightly higher level press 1989 our intention here is to spotlight problematic but ignored issues of statistical inference in a common area of application the bayesian alternative that we present represents just one way forward to address these inferential problems

permanent versus interim regulations a game theoretic analysis abstract when a regulator anticipates learning about the benefits or costs of regulations over time questions can be raised about the appropriate regulatory policy this paper compares permanent and interim regulations in a setting with initially uncertain pollution damages a fixed capital input and costly enforcement the analysis shows that neither policy is first best conditions under which one policy dominates the other are identified with the help of a simulation the results indicate that permanent regulations may be preferable to interim regulations even when there is substantial uncertainty about damages

equilibria in a stochastic resource management game under imperfect information abstract the paper considers equilibrium solutions in a stochastic resource management game the countries choose frequently between cooperative and noncooperative retaliation modes of play the choices between cooperative and noncooperative subgames are based on imperfect estimates of the fishing efforts fleet sizes of the co harvesting country during the previous period if either of the countries concludes that the fishing activity of the co harvesting country has been too intensive during the previous period i e the estimated fishing effort exceeds a trigger value then either a noncooperative retaliation period follows or cooperation is continued after a noncooperative period the countries begin to cooperate once again it is shown that equilibria in which cooperative and noncooperative periods alternate can occur in dynamic games different types of equilibria for the game exist the countries may be able to sustain efficient cooperation all the time they may oscillate between cooperation and noncooperation or they may fail to cooperate at all conditions under which an equilibrium coincides with a pareto optimal solution are studied

inefficiency of credible strategies in oligopolistic resource markets with uncertainty abstract the implications of different information patterns for firms in oligopolistic resource markets are considered the traditional open loop nash equilibrium with static information sets is one of many possible nash equilibria and is not suitable for stochastic environments when shocks to resource growth are serially uncorrelated there are no gains from conditioning the harvest on past stock levels and the feedback or credible nash equilibrium is the appropriate nash equilibrium concept this credible equilibrium assumes that firms have knowledge of current stocks of reserves which typically leads to more rapid extraction of the resource and possibly extinction since the open loop nash equilibrium is efficient when demand is iso elastic and extraction costs are zero it is clear that an increase in information can be detrimental to firms in the industry

on the oligopolistic extraction of non renewable common pool resources in recent literature the extraction of common pool resources ha s been discussed under the aspect of whether or not they can be used efficiently when a finite number of agents has access to the resource the objective of this paper is the derivation of a necessary equilibrium condition in a simple model this condition has severe consequences for existence propositions in papers of m c kemp and n v long 1980 j mcmillan and h w sinn 1984 and j f reinganum and n l stokey 1985 copyright 1986 by the review of economic studies limited

on the formation of agricultural prices abstract the purpose of this paper is to analyse the formation of agricultural prices in particular we show that i the rate of price increase goes down as we move from the busy to the lean and from the lean to the leaner seasons ii the small sellers sell off their entire stocks earlier than large sellers we also look at the effects of different types of government intervention on general welfare as well as on the welfare of specific groups in particular we provide theoretical justification for government policies like land reforms or public procurement

attached farm labor limited horizons and servility abstract two facets of attached farm labor arrangements the servility often required of attached laborers and employers interest in maintaining such workers limited horizons are described and incorporated into an otherwise standard model of attached and temporary agricultural employment substantially modifying the model s predictions the dependence of workers preferences on reference group behavior which underlies employers interest in limiting horizons may enable employers to drive even freely mobile workers wellbeing below competitive levels may imply that abolishing servility arrangements would benefit all workers gives rise to multiple equilibria in community layout and culture and sheds light on some characteristics of agrarian revolts

estimating potential social losses from market failure oil exploration in alberta this article presents estimates of the potential social losses caused by market failure in oil exploration in the rainbow zama region of alberta we construct models that predict exploratory drilling for noncooperative nash equilibrium with and without taxes and for the social optimum in the absence of appropriate property rights or taxes estimated losses are of the order of 80 of potential rents with taxes estimated losses are of the order of 30 we show that actual drilling resembles that predicted by the noncooperative model with taxes rather than by the optimal model this indicates that the land tenure system in alberta did not effectively ameliorate the market failure not eliminated by taxation

consistent tariffs with dynamic supply response abstract this paper models a large importer of a competitively produced good for which there are nonlinear adjustment costs in production if producers have rational expectations and the importer is unable to make a credible commitment regarding future tariffs market power may be disadvantageous this is more likely to occur when the difference between short and long run elasticities of supply are large this result depends on the particular subgame perfect equilibrium that is chosen if producers were capable of strategic behavior other equilibria which rely on trigger strategies would be reasonable and market power could no longer be disadvantageous

politics and the structural dependence of the state in democratic capitalist nations i explore empirically a central claim of the structural dependence thesis namely that capitalists ability to disinvest fundamentally conditions policy choices in democratic capitalist systems utilizing time series data for 16 affluent democracies from 1965 to 1984 i find that indeed low rates of business investment are associated with reductions in corporate tax burdens and that these reductions are more pronounced in periods of economic crisis moreover low rates of capital formation engender cuts in personal income taxes during periods of economic stress however i also find that the magnitude of responsiveness of taxation to low rates of investment is relatively small and that analyses of the political context of investment and taxation indicate that governments have choices the responsiveness of corporate tax burdens to capital formation may under some governments be part of a policy mix designed to maintain adequate investment and to address the demands of core constituencies

capacity investment preemption and commitment in an infinite horizon model the commitment value of capacity is analyzed in an infinite horizon duopoly model the paper focuses on the role of alternative behavioral assumptions about the ability of firms to commit to investment paths each firm s investment strategy in a feedback nash equilibrium is shown to be a decreasing function of its rival s current capacity this creates an incentive for a firm to expand its capacity to preempt subsequent rival investment in a precommitment equilibrium there are no incentives to invest preemptively as a consequence steady state capacity levels are greater in a feedback nash equilibrium than in a precommitment equilibrium copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

fixed rules and decision rules time consistency and subgame perfection the paper investigates the relationship between time consistency and subgame perfection we show that despite some suggestions in the literature the two are not equivalent subgame perfection is a stronger refinement the paper also discusses the classes of games in which time consistency and subgame perfection are equivalent

the economics of exploration for non renewable resources abstract the literature on exploration for non renewable resources is surveyed following a brief synopsis in section 2 section 3 focuses on issues related to the world market for resources section 4 considers more microeconomic supply related issues linked to the exploration of the small region or play section 5 turns to the small but growing literature on exploration as a learning process related to r d the latter sections pay particular attention to empirical and policy aspects

revisiting the role of labor worker solidarity employer opposition and the development of old age pensions in the netherlands and the united kingdom the purpose of this article is to emphasize the importance of the organizational blueprint of labor unions for welfare state outcomes as a result of the tendency of scholars to view labor as a homogenous and disadvantaged class the existing literature has paid little attention to this many scholars have simply taken labor union support for welfare state development for granted and consequently have focused only on labor union strength this article argues rather that labor union support for welfare state development cannot be taken for granted it shows that labor unions support or oppose welfare state development depending on their organizational blueprint this new approach highlights the importance of the labor union movement s organizational structure as opposed to its organizational strength for welfare state outcomes the article also explores how the organizational structure of the labor union movement shapes the stance of employer interest groups toward welfare state development the empirical findings are based on a comparison of british and dutch postwar old age pension development

on the markovian efficiency of bertrand and cournot equilibria we characterize and compare closed loop feedback price and quantity strategies within a full fledged dynamic model of oligopolistic competition in which production requires exploitation of a renewable productive asset unlike previous papers on the strategic exploitation of productive assets we allow for imperfect product substitutability which enables us to deal with price competition we show that the traditional result that the bertrand equilibrium is more efficient than the cournot equilibrium does not necessarily hold in a markovian environment either in the short run or at the stationary equilibrium or using the discounted sum of welfare as a criterion for relative efficiency

modeling u s budgetary and fiscal policy outcomes a disaggregated systemwide perspective this paper develops and estimates a model of u s federal budgetary outcomes that allows for considerable disaggregation across spending categories while providing through cross equation coefficient restrictions substantially more statistical power than traditional approaches we identify significant top down fiscal policy effects on budgetary allocations primarily within the defense budget budgetary responses to macroeconomic conditions are generally countercyclical although middle class entitlements appear to react procyclically to inflation political control of congress influences budgetary outcomes with democrats giving higher priority to domestic spending programs the relative rate of public sector inflation affects spending growth consistent with baumol s disease public opinion affects defense and low income entitlement spending defense spending has also been influenced by perceived soviet threat as well as the level of armed conflict there appear to be small election year effects although not of the sort predicted by political business cycle models with a few exceptions administration specific impacts are relatively small and not systematically related to the party of the president

oligopoly extraction of a common property natural resource the importance of the period of commitment in dynamic games the theory of noncooperative dynamic games has provided an extremely powerful framework for studying many of the classic questions in industrial organization for example questions about resource extraction advertising research and development investment in new capacity and barriers to entry where interactions over time among few firms are involved however an important methodological issue arises when economic competition over time is modeled as a dynamic game the issue is the appropriate formulation of the players strategy spaces

a proposal to unify some concepts in the theory of fairness so far the theory of distributive justice has tried to single out a unique criterion of justice in our opinion we live in a world in which different people hold conflicting ideas about justice we propose a procedure for representing these individual opinions by means of what we call aspiration functions and we present in this paper three different ways of aggregating such opposing opinions into a socially acceptable judgement furthermore we show that many well known concepts are special cases of our approach we study under a restriction on the form of the aspiration functions the conditions that are necessary and sufficient for a social choice correspondence to be generated from any of our concepts

the illusion of choice defense and welfare in advanced industrial democracies 1948 1978 research on the tendency of governments to trade off welfare spending for defense has generated diverse and often contradictory findings this study attempts to clarify the issue of trade offs by examining expenditure patterns since 1948 for the four major na to allies united states united kingdom federal republic of germany and france when viewed from the perspective of long term trends in shares of outlays trade offs are evident when short term changes in expenditure which are more germane to the potential for one spending category to benefit at the expense of the other are studied no pattern of trade off can be detected a three equation model is estimated to control for the variety of possible determining factors of public resource allocation in none of the four nations does a pattern of trade off emerge except in periods of wartime or postwar reconstruction these findings are consistent with the ability of governments to finance new spending through either increased taxes or larger budget deficits the growing disinclination to use these methods however suggests that the potential for trade offs has perhaps reappeared in the 1980s

exploitation alternatives and socialism how can one understand the formation of inequality strata and classes and perhaps exploitation in socialist society among marxists there is no widely accepted materialist theory of the development of classes and inequality under socialism perhaps more noticeably there is no widely accepted theory of the political behaviour of socialist states indeed the response of many or most marxists to wars between socialist states for example is that at least one of the countries involved is not socialist this argument is tautological and not scientific since two socialist countries could never fight each other therefore the major premise that they are both socialist must be false the example of wars between socialist countries is given to point out the nature of a crisis in marxian theory that theory formulated in the late nineteenth century to explain the development of nineteenth century capitalism does not seem useful when applied to late twentieth century socialism and capitalism perhaps marxists cannot for instance agree on the nature of soviet society is it socialist capitalist state capitalist or transitional what definitions might one give to decide taking a cue from the marxian approach to capitalism one might seek to define a notion of exploitation relevant to socialist society from such a beginning could follow a theory of class and finally a political theory of socialist society as corollary to the theory of class this paper is an attempt to approach this set of problems in the way indicated by proposing a general theory of exploitation of which socialist exploitation will be a special case the task of providing a tlheory of exploitation relevant to socialist economies has much in common with the problem marx faced in providing a theory of exploitation for capitalist economies the economic problem for marx was to explain how the gross inequities of capitalism could be reproduced in an economy characterised by voluntary exchange in feudal and slave economies there was no mystery to the locus of surplus appropriation since the institution of labour exchange was coercive one could clearly speak of serf and slave labour as being forcibly expropriated due to those social relations under capitalism where the institution for labour exchange is noncoercive how could one speak of exploitation or expropriation of any commodity including labour power marx s effort was to re solve this paradox by providing a theory of value which claimed that despite the non coerciveness of the institution of labour exchange that exchange was exploitative thus he claimed that exploitation was a phenomenon which was robust when one

equilibrium credit rationing of small farm agriculture it is often argued that externally imposed contractual restrictions lead to inequitable credit rationing this paper argues that unrestricted laissez faire markets may also inequitably ration credit a formal model which grants borrowers autonomy in credit application and use demonstrates that adverse incentive and selection effects may cause banks to endogenously impose interest rate restrictions and ration small farms out of the credit market consequently liberalization of financial markets may be insufficient to guarantee small farms access to credit

money and majorities in the federal republic of germany evidence for a veto players model of government spending i formulate a veto players model of policy making by coalition government in the federal republic of germany the model gives testable predictions about how patterns of federal spending respond to changes in government some of the predictions are consistent with conventional wisdom namely that the spd fdp government decreased spending on right wing items when it came to power in 1969 and the return of cdu fdp coalition in 1982 produced a decline in leftwing spending other predictions are less intuitive for example there is no predicted increase in left wing spending associated with the spdfdp coalition and no increase in right wing spending with the cdu fdp government these predictions and those of competing models are tested using disaggregated budget data from fiscal years 1961 1989 controlling for category specific effects and economic conditions the data support the veto players model and this support is robust to a wide variety of plausible assumptions about the parties spending preferences

brand loyalty and market equilibrium two concepts of brand loyalty are defined inertial brand loyalty resulting from time lags in awareness and cost based brand loyalty resulting from intertemporal utility effects their market level implications are formally derived in a continuous time model it is found that inertial brand loyalty leads to equilibria with price dispersion while cost based brand loyalty also may allow single price equilibria in all cases as brand loyalty vanishes so does the difference between the average trading price and the price which obtains with no brand loyalty consistent with empirical results the theory predicts that the relationship between market share and performance is positive in cross sectional studies but flat in time series studies the theory is also consistent with the view that market share is an asset in itself after developing the theory several strategic implications are drawn in the end some questions for further theoretical and empirical research are raised

short versus long coalitions electoral accountability and the size of the public sector this article examines the policy consequences of the number of parties in government we argue that parties externalize costs not borne by their support groups larger parties thus internalize more costs than small parties because they represent more groups this argument implies that the public sector should be larger the more parties there are in the government coalition we test this prediction using yearly time series cross sectional data from 1970 to 1998 in 17 european countries we find that increasing the number of parties in government increases the fraction of gdp accounted for by government spending by close to half a percentage point or more than one billion current dollars in the typical year we find little support for the alternative claim that the number of legislative parties affects the size of the public sector except via the number of parties in government