estimating theoretically consistent demand systems using cointegration techniques with application to greek food data abstract the use of time series techniques cointegration and error correction models has been offered as a potentially promising way in estimating demand systems that resolve the perennial issue of violating the theoretical postulates of homogeneity and symmetry the empirical results of this paper based on linearized aids and greek food data indicate that sample size aggregation schemes and model specification seem to be important factors in the estimation of a theoretically consistent demand system they also show that homogeneity is sensitive to sample size while symmetry is sensitive to the aggregation scheme adopted

global demographic trends and social security reform how sustainable are the current social security systems in the developed economies given the projected demographic trends the most recent literature has answered this question through dynamic general equilibrium models in a closed economy framework this paper provides a new quantitative benchmark of analysis for this question represented by a two region model south and north of the world economy where capital flows across regions the timing and the extent of the demographic transition and the associated economic forces shaping capital accumulation and equilibrium factor prices are very different in the two regions thus the projected paths of interest rate and wage rate in the north diverge substantially between closed and open economy we perform a wide range of policy experiments under both scenarios our main conclusion is that if one is interested in quantifying the path of the fiscal variables e g the value of the payroll tax needed to keep the social security system viable or to finance a transition towards a fully funded system then these two benchmarks yield similar results however if the focus is on quantifying the path of factor prices aggregate variables and ultimately welfare then the two approaches can diverge significantly

corporate contracting for health care this paper examines the process used by fortune 500 companies to contract with health care carriers for complex and hard to observe services we confirm in part the conventional view that large companies partner with health care insurers however we show that the picture is more complex and that most of these companies do not engage in several aspects of partnering the complete nature of our data allows us to describe the distribution of company practices from tough bargaining without continuing relationships to partnering we also show that contract length can be a poor proxy for length of relationship

the nature of the firm origins evolution and development this volume derives from a conference held in 1987 to commemorate the fiftieth anniversary of the publication of coase s classic article the first chapter affords an overview of the volume it is followed by a republication of the 1937 article and by the three lectures coase presented at the conference these lectures provide a lively and informative history of the origins and development of his thought subsequent chapters explore a wide range of theoretical and empirical issues that have arisen in the transaction cost economic tradition they illustrate the power of the transaction cost approach to enhance understanding not only of business firms but of problems of economic organization generally

aging and pensions in general equilibrium labor market imperfections matter we re examine the effects of population aging and pension reforms in an olg model with labor market frictions the most important feature brought about by labor market frictions is the connection between the interest rate and the unemployment rate exogenous shocks such as aging leading to lower interest rates also imply lower equilibrium unemployment rates because lower capital costs stimulate labor demand and induce firms to advertise more vacancies these effects may be reinforced by increases in the participation rate of older workers induced by the higher wage rates and the larger probability of finding a job these results imply that neglecting labor market frictions and employment rate dynamics may seriously bias the evaluation of pension reforms when they have an impact on the equilibrium interest rate

trend reverting fluctuations in the life cycle model abstract aggregate time series provide evidence of short term dynamic adjustment that appears to be governed by complex or negative real eigenvalues this finding is at odds with the predictions of reasonably parameterized convex one sector growth models with complete markets we study life cycle economies in which aggregate saving depends non trivially on the distribution of wealth among cohorts if consumption goods are weak gross substitutes near the steady state price vector we prove that the unique equilibrium of a life cycle exchange economy converges to the unique non monetary steady state via damped oscillations we also discuss examples and extensions

non linearities and equivalence scales this paper focuses on the estimation and testing of equivalence scales in the context of a demand system with nonline ar logarithmic expenditure effects in its budget share equations the authors show that such nonlinearity enables one to identify the scal es without demographic separability restrictions on preferences and to avoid false rejection of the hypothesis that the scales are independ ent of the base utility level the empirical analysis is based on micro data drawn from the u k family expenditure survey copyright 1993 by royal economic society

equivalence scales in a rank 3 demand system abstract in the context of a rank 3 demand system equivalence scales measuring the cost of demographic characteristics independently of the base utility level can be identified from cross section data without demographic separability restrictions although this can also be achieved with a rank 2 demand system that contains a nonlinear log expenditure term in its budget shares tests performed in a nested framework suggest that the rank 3 demand system approach is empirically superior the informative structure of the rank 3 demand system is used to estimate a detailed pattern of demographic costs including the cost of single parenthood and economies of scale within the family

decomposition analysis of consumers demand changes an application to greek consumption data a decomposition analysis for consumer demand functions is developed changes in marshallian demand or expenditure shares functions over time are decomposed into a total substitution effect an income effect and a habit effect this framework is applied to post war greek consumption patterns through a habit persistence version of the quadratic almost ideal demand system quaids it is found that for all commodity categories i e food beverages and tobacco footwear and clothing settling and housing and others the income effect was the main driving force in explaining changes in both quantity demanded and expenditure shares followed by habit and total substitution effects

duality theory for variable costs in joint production duality methods for incomplete systems of consumer demand equations are adapted to the dual structure of variable cost functions in joint production this allows identification of necessary and sufficient restrictions on technology and cost so that con ditional factor demands can be written as functions of input prices fixed inputs and cost these are observable when variable inputs are chosen and committed to production hence the identified restrictions allow ex ante conditional demands to be studied using observable data this class of production technologies is consistent with all von neu mann morgenstern utility functions when ex post production and or output prices are un certain

the perception and measurement of transaction costs the chapter discusses various explanations of how transaction cost minimising corporate configurations come about it contrasts darwinian with rational explanations finding both unsatisfactory what matters rather than computation of fully recognised transaction costs are managerial perceptions of transaction costs these perceptions are not expressed in numbers but in language this is related to arguments derived from bounded rationality and from transaction cost economics the chapter argues that issues of managerial perception must become central to analysis existing academic traditions which accord primacy to perception and to language are drawn upon and argued to be of great relevance to future work

an empirical comparison of flexible demand system functional forms this paper compares the performance of eight frequently used flexible forms that are either 1 locally flexible 2 effectively globally regular or 3 asymptotically globally flexible results show that the functions with global properties generally perform better particularly those models having asymptotic properties results using us consumption data indicate substitutability among the components of consumption at most data points there is also some interesting substitution volatility around the time of recessions in the usa copyright 2001 john wiley sons ltd

estimates of the black economy based on consumer demand approaches we propose a consumer demand system approach to estimating the size of the black economy where alternative hypotheses affecting the empirical results can be tested in a nested framework this approach allows for the estimation of the under reporting of household income from various sources dispensing with the need to use arbitrary criteria to classify households by their main source of income it also avoids potential bias in black economy estimates arising from mistaking preference heterogeneity substitution as income effects we illustrate these arguments by estimating the extent to which self employment income in the uk is underreported using parametric and nonparametric techniques the black economy broadly defined as the economic activities that are hidden from public authorities to avoid taxation has recently received increased attention in the literature due to arguments that the rising tax burden and state regulation is driving economic activity underground tanzi and schuknecht 1997 enste and schneider 1998 the usefulness of attempts to estimate the size of the black economy however is a controversial issue the sceptics emphasise the difficulties associated with the precise definition of black economy activities and point to the widely different estimates of the size of these activities resulting from alternative methods dixon 1999 tanzi 1999 thomas 1999 authors approaching the subject in an optimistic frame of mind emphasise positive aspects of estimating the size of the black economy such as the correct measurement of gdp and other macroeconomic variables e g employment and the design of policy and econometric models bhattacharyya 1999 giles 1999 the controversy on estimation issues however does not subtract from the widespread concern about the undesired consequences of the black economy undeclared economic activities reduce the tax base thereby undermining the financing of public goods and social protection a country trying to curtail the loss of tax revenue by raising tax rates can create a vicious cycle as this reinforces the incentive not to declare economic activities to the public authorities high tax rates have a distorting effect resulting in inefficient allocation of resources due to unequal opportunities and willingness to evade in different sectors of the economy and can undermine the ability of the country to compete internationally distortions in the labour market can also arise because individuals working in the black economy may have difficulty in moving from one job to another furthermore in countries where health pension and other social security payments are not universal individuals working in the black economy and their families are outside the

empirical modelling of the aggregation error in the representative consumer model this paper examines different approaches to modelling the aggregation error associated with the representative consumer model each approach is based on an analytical framework intended for modelling aggregate time series data on quantities and prices with potential additional measures of income distribution simple functions that track aggregation error over time are found to perform better than more complex and theoretically sophisticated models an explanation is given based on typical time series characteristics of economic data

on the consequences of demographic change for rates of returns to capital and the distribution of wealth and welfare in the industrialized world the population is aging over time reducing the fraction of the population in working age consequently labor is expected to be scarce relative to capital with an ensuing decline in the real return on capital this paper uses demographic projections together with a large scale multi country overlapping generations model with uninsurable idiosyncratic uncertainty to quantify the distributional and welfare consequences of these changes in factor prices induced by the demographic transition in our model capital can freely flow between different regions in the oecd the u s the eu and the rest of the oecd thus international capital flows may in principle mitigate the decline in rates of returns one would expect in the u s if it were a closed economy we find exactly the opposite in the u s as an open economy rates of return are predicted to decline by 86 basis points between 2005 and 2080 if the u s were a closed economy this decline would amount to only 78 basis points this result is due to the fact that other regions in the oecd will age even more rapidly therefore the u s is importing the more severe aging problem from these regions especially europe a similar conclusion is reached if we let capital flow freely between the oecd and the rest of the world row while row currently has a younger population structure it is predicted to age even more severely in the next decades giving rise to an even more pronounced decline in world rates of return to capital in order to evaluate the welfare consequences of the demographic transition we ask the following hypothetical question suppose a household economically born in 2005 would live through the economic transition with changing factor prices induced by the demographic change but keeping her own survival probabilities constant at their 2005 values how would its welfare have changed relative to a situation without a demographic transition we find that households experience significant welfare losses due to the demographic transition in the order of 2 5 of consumption depending on their initial productivity level and the design of the pension system these losses are mainly due to the fact that lower future returns to capital make it harder for households to save for retirement on the other hand if the oecd suddenly opens up to row in 2005 and row has higher returns to capital before the world capital market integration then these losses are reduced to 1 5 2 5

estimating a firm s age productivity profile using the present value of workers earnings in hiring new workers risk neutral employers equate the present expected value of each worker s compensation to the present expected value of his her productivity data detailing how present expected compensation varies with the age of hire embed therefore information about how productivity varies with age this paper infers age productivity profiles using data on the present expected value of earnings of new hires of a fortune 1000 firm for each of the five occupation sex groups considered productivity falls with age with productivity exceeding earnings for young workers and vice versa for older workers

demographics and demand evaluation of alternative functional forms abstract we evaluate the role of functional form of demographics in demand analysis by proposing the gql unstructured demographically transformed model which nests the barten gorman demographically modified model and popular rank 3 and rank 2 demand systems we use uk individual data and find that the equivalence of the unstructured and barten gorman forms and identification of meaningful equivalence scales depend on the degree of flexibility of the demand system in demographic price and income effects

estimating welfare aspects of changes in energy prices from preference heterogeneity abstract the european union s energy and climate policy package is expected to cause an increase in end user prices of electricity and fuels this paper assesses the distributional effects of these price increases in cyprus by specifying and estimating a consumer demand system with price heterogeneity between households this novel method allows obtaining robust parameter estimates even when household expenditure surveys are limited as is the case in many european countries the empirical analysis is conducted both conditional on energy related household characteristics and unconditionally we then use the estimated demand system to conduct welfare analysis we find that the rise in energy prices results in welfare losses of eur 101 per household in 2009 prices in year 2020 or a nationwide welfare loss of more than eur 2009 33 million price increases will be regressive and will affect small and urban households more strongly than the rest of the population furthermore we find that the largest proportion of welfare loss is due to loss of household s income purchasing power caused by higher energy prices while the changes in relative prices induce deadweight loss which is a small part of welfare loss because of the limited substitutability of energy with other goods

nesting quadratic logarithmic demand systems abstract we propose a new generalised rank 3 demand system which nests all known and new rank 3 and rank 2 demand systems derived from the quadratic logarithmic ql cost function we investigate its statistical adequacy against commonly encountered alternatives using uk household data

comparisons of poverty across periods significance of distributional effects of prices abstract this paper identifies flexible scales from two cross sections of fes data capturing the distributional effects of inflation poverty rates based on the flexible and simple per capita modified oecd deflators reveal different trends in poverty among households and children

on estimating the cost of characteristics indices from consumer demand analysis we examine the information content of relative equivalence scales using a multiperiod framework and argue that in the absence of independence of base ib these scales can be uniquely identified from demand analysis only when the transformations of preferences through time are the same for all household types a property termed as intertemporally invariant base iib utility restrictions imposed by iib on conditional demands are tested empirically and found rejected within the context of a rank 3 demand system applied to individual household data drawn from the u k family expenditure survey 1970 86 welfare implications of false iib assumptions are also empirically investigated jel classification d1 a propos de l estimation du cout des indices caracteristiques a partir de l analyse de la demande des consommateur ce memoire examine le contenu informationnel des echelles d equivalence relative en utilisant un cadre d analyse sur plusieurs periodes et suggere que en l absence d une independance de la base ib ces echelles peuvent etre identifiees d une maniere univoque seulement si les transformations de preferences dans le temps sont les memes pour tous les types de menages on nomme cette propriete utilite de base invariante dans le temps iib les restrictions verifiables imposees par iib sur les demandes conditionnelles sont verifiees empiriquement et sont rejetees dans le contexte d un systeme de demande de rang 3 applique aux donnees des menages individuels dans une etude des depenses des menages de la grande bretagne 1970 86 les implications de faux postulats iib sont analysees empiriquement

inside the perpetual motion machine cross country comparable evidence on job and worker flows at the industry and firm level many studies suggest that idiosyncratic firm level characteristics shape both job and worker flows in a similar way in all countries others argue that cross country differences in terms of gross job flows are minor however these statements are usually based on the comparison of national estimates typically collected on the basis of different definitions and collection protocols in contrast in this article we use cross country comparable data on both job and worker flows to examine key determinants of these flows and of their cross country differences we find that idiosyncratic firm characteristics industry age and size play an important role for both gross job and worker flows in all countries nevertheless in contrast with part of the literature we find that even controlling for these idiosyncratic factors cross country differences concerning both gross job and worker flows appear large and of a similar magnitude both job and worker flows in countries such as the usa and the uk exceed those in certain continental european countries by a factor of two moreover the variation of worker flows across different dimensions is well explained by the variation of job flows consistently churning flows that is flows originating by firms churning workers and employees quitting and being replaced display much less variation across countries copyright 2010 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

household equivalence scales and welfare comparisons abstract the ratio of cost functions of different households facing the same prices and attaining the same utility level is a true cost of demographic characteristics index this index is independent of a base level of income or utility ib if and only if it equals a ratio of household equivalence scales that are themselves ib applied cost index and equivalence scales specifications are usually ib this paper describes the general restrictions on cost functions and social welfare functions required for ib scales and for their use in welfare analysis

does social security privatization produce efficiency gains while privatizing social security can improve labor supply incentives it can also reduce risk sharing we analyze a 50 privatization using an overlapping generations model where heterogeneous agents with elastic labor supply face idiosyncratic earnings shocks and longevity uncertainty when wage shocks are insurable privatization produces about 18 100 of extra resources for each future household after all transitional losses have been compensated for with lump sum taxes when wages are not insurable privatization reduces efficiency by about 2 400 per future household we check the robustness of these results to different model specifications as well as policy reforms and arrive at several surprising conclusions first privatization performs better in a closed economy where interest rates decline with capital accumulation than in an open economy second privatization also performs better when an actuarially fair private annuity market does not exist third government matching of private contributions on a progressive basis is not very effective at restoring efficiency and can actually cause harm

distance to retirement and older workers employment the case for delaying the retirement age this paper presents empirical evidence and a theoretical foundation in favor of the view that the retirement age decision affects older workers employment prior to retirement to the extent that there are search frictions on the labor market the return on jobs is determined by their expected duration the time to retirement is then key to understanding older workers employment countries with a retirement age of 60 are indeed characterized by lower employment rates for workers aged 55 59 based on the french labor force survey we show that the likelihood of employment is significantly affected by the distance to retirement in addition to age and other relevant variables we then extend mccall s job search model by explicitly integrating life cycle features with the retirement decision using simulations we show that the distance effect in interaction with the generosity of unemployment benefits and the depressed demand for older workers explains the low rate of employment just before the eligibility age for the social security pension finally we show that implementing actuarially fair schemes not only extends the retirement age but also encourages a more intensive job search by older unemployed workers jel j22 j26 h55

retirement pensions and ageing we study the effects of demographic shocks and changes in the pension system on the macroeconomic performance of an advanced small open economy facing a given world interest rate we construct an overlapping generations model which includes a realistic description of the mortality process individual agents choose their optimal retirement age taking into account the time and age profiles of wages taxes and the public pension system the early retirement provision in most pension systems acts as a trap inducing most workers to retire well before the normal retirement age simulations show that pension reform must be drastic for it to have any effects on the retirement behaviour of workers

flexible and semiflexible consumer demands with quadratic engel curves in this paper we introduce three flexible consumer demand systems in which expenditures on goods are quadratic functions of income we view these alternatives as to the demand systems used heretofore in the empirical modeling of rank three demands namely those in which expenditure shares are quadratic functions of the logarithm of income curvature conditions required by theory can be imposed locally during the estimation for each and a semiflexible version can be estimated for illustrative purposes we estimate various forms of two of the systems using canadian data on seven categories of goods for the period 1947 to 1995

r d outsourcing and contractual governance an empirical study of commercial r d projects abstract three complementary models derived from transaction cost economics and property rights theory are constructed to explore the boundary between internal and external r d projects and the governance mechanisms of external r d projects contracted out by private business firms whereas the boundary between external and internal projects is explained with sunk cost potentials the uses of governance mechanisms for external projects in terms of control and property rights are explained with reference to both potential sunk costs technical novelty in the r d work and expected resale value of the final r d outputs the models are empirically tested on 80 projects from the norwegian information technology industry half of which are contracted out to non profit research institutes and half of which are made in house by private manufacturing firms the results support both the boundary hypotheses and three of four control incentive hypotheses the theoretical implications involved in choosing between internal and external r d projects and in designing control and property rights for external projects are discussed

the rank and model specification of demand systems an empirical analysis using united states microdata a rank three demand system is estimated with united states consumer expenditure survey microdata a unique price data set is also used which permits the analysis of effects of systematic errors in price variables it is found that errors in price variables bias test results for the rank three hypothesis in particular towards rejection other test results are affected to a lesser extent estimating smaller systems of demand equations even when conditioning on excluded goods yields significantly different results another important conclusion is that model specification is statistically significantly different for households of varying family sizes and housing tenure statuses jel classifications c31 d12 le rang et la specification du modele des systemes de demande une analyse empirique utilisant des microdonnees americaines on calibre un systeme de demande de rang trois a l aide de microdonnees americaines tirees de la united states consumer expenditures survey un ensemble unique de prix est utilise afin de permettre l analyse des effets d erreurs systematiques dans les variables de prix il appert que les erreurs dans les variables de prix distorsionnent les resultats du test de l hypothese de rang trois en faveur d un rejet d autres resultats de tests sont affectes a un moindre degre si l on calibre de plus petits systemes d equations de demande meme en posant des conditions sur des biens exclus des resultats qui different de maniere significative s ensuivent une autre conclusion importante est que la specification du modele est differente de maniere statistiquement significative pour les menages selon la taille de la famille et le statut domiciliaire

wage declines among older men we examine the evidence on whether real wages decline with age among older men while the general human capital model of wage growth over the life cycle predicts that wages will fall as workers approach the end of their career alternative models of wage growth do not predict these wage declines we find that in longitudinal estimates of age wage profiles wage declines only set in for workers in their 60s furthermore these longitudinal declines are at least partly due to interactions with the social security system the earnings cap or other effects of social security appear to lead some workers to choose jobs and job characteristics associated with lower wages copyright 1996 by mit press

retrieving and transferring embodied data implications for the management of interdependence within organizations this research helps to link theories of sticky information with organizational design and governance it suggests that information embodied in process material can allow downstream tasks to uncover information about upstream tasks it shows that downstream operators can use this information to negotiate interdependence problems with upstream operators data presented in this article begin to uncover when such information retrieval and exchange occurs and how managers can encourage it finally the article discusses implications for theories of operational design and governance

a trigonometric flexible consumer demand system this paper proposes the first ever empirical specification of a trigonometric demand system the new model is potentially useful because of some attractive features it is flexible amenable to exact aggregation over consumers possessed of trigonometric engel curves which can oscillate and able to have an unusually large regular region with comparisons between the new model and two other popular models an illustration is given for japanese demand for non durables and services the new model shows relatively gentle engel curves with an inflection point on each of them which seem reasonable given that aggregate expenditure is used in parameter estimation jel classification c51 d12 un systeme trigonometrique flexible de demande des consommateurs ce memoire propose une premiere specification empirique d un systeme de demande trigonometrique le nouveau modele est potentiellement utile a cause de certaines caracteristiques interessantes il est flexible se prete a l agregation exacte des consommateurs donne lieu a des courbes d engels trigonometriques qui peuvent osciller et couvrir une region reguliere singulierement vaste a partir de comparaisons entre le nouveau modele et deux autres modeles populaires on illustre ces avantages dans le cas de la demande japonaise pour les biens non durables et les services le nouveau modele revele des courbes d engels relativement douces avec un point d inflexion en chacune d elle ce qui semble raisonnable compte tenu du fait que la depense agregee est utilisee dans la calibration des parametres

cost of characteristics indices and household equivalence scales abstract the ratio of cost functions of demographically different households is a true cost of demographic characteristics index this index is independent of a base level of income or utility ib if and only if it equals a ratio of household equivalence scales that are themselves ib this paper analyzes the restrictions on cost functions and commodity specific equivalence scales required for the existence of ib scales and indices since scales can be price dependent the restrictions on behavior are far less severe than for ordinary engel style household scales connections between ib scales and other techniques for incorporating demographic effects into demand systems are described

age dependent employment protection this paper examines the age related design of firing taxes by extending the theory of job creation and job destruction to account for a finite working life time we first argue that the potential employment gains related to employment protection are high for older workers as they are magnified by the proximity to retirement but higher firing taxes for these workers increase job destruction rates for the younger generations furthermore from a normative standpoint when firms cannot ex ante age direct their search the impact of each generation of unemployed workers on the average return on vacancies makes the internalization of the search costs for the other generations imperfect through the ex post nash bargaining process we show that the first best age profile of firing taxes is typically hump shaped partially in contradiction with existing policies in some european countries taking into account the fact that the human capital of older workers is more specific than general tends to exacerbate these results

anticipated growth and business cycles in matching models in a business cycle model that incorporates a standard matching framework employment increases in response to news shocks even though the wealth effect associated with the increase in expected productivity reduces labor force participation the reason is that the matching friction induces entrepreneurs to increase investment in new projects and vacancies early if there is underinvestment in new projects in the competitive equilibrium then the efficiency gains associated with an increase in employment make it possible that consumption employment output as well as the investment in new and existing projects jointly increase long before the actual increase in productivity materializes if there is no underinvestment then investment in existing projects decreases but total investment consumption employment and output still jointly increase

vintage human capital demographic trends and endogenous growth we study how economic growth is affected by demographics in an overlapping generations model with a realistic survival law individuals optimally chose the dates at which they leave school to enter the labor market and at which they retire endogenous growth arises thanks to the accumulation of generation specific human capital favorable shifts in the survival probabilities always induce longer schooling and later retirement but have an ambiguous effect on growth the relationship between the growth of population and per capita growth is hump shaped increases in longevity can be responsible for a switch from a no growth regime to a sustained growth regime and for a positive relationship between fertility and growth to vanish

interaction value analysis when structured communication benefits organizations we present a mathematical model that predicts and explains the circumstances under which a management defined communication structure can add value to an organization this model provides a game theoretical basis for contingent organizational design by relating empirical observations of real organizations to the solution of a rational choice model based on game theory we constructed a multiple player noncooperative game in which players have full knowledge of and universal communication access to each other these players allocate the scarce resource of their attention among potential interaction partners it struck us that this game sometimes did and sometimes did not have a core i e a confluence of individual optima nash equilibrium that was also optimal for the whole group some circumstances allow the best structure to emerge from many individual decisions whereas other circumstances require the imposition of structured communication channels by a central decision maker strong management control of communication structure adds no value in business environments where the game has a core i e where a centrally imposed optimum would dictate the same communications patterns as those defined by the nash equilibrium that emerges spontaneously when each participant optimizes locally trade in an ideal market is the iconic example of such environments in our model other combinations of conditions fail to yield a core even though a single stable nash equilibrium always exists the difference between aggregate effectiveness at the nash equilibrium and the maximal feasible aggregate effectiveness that could be centrally dictated is the value that management can provide through enforcing the globally optimum communication regime the predictions of this simple model about the conditions that favor more or less structured communications agree surprisingly well with accepted organizational contingency theory our simple model thus provides a sound theoretical foundation for many aspects of contingent organizational design

quadratic engel curves and consumer demand this paper presents a model of consumer demand that is consistent with the observed expenditure patterns of individual consumers in a long time series of expenditure surveys and is also able to provide a detailed welfare analysis of shifts in relative prices a nonparametric analysis of consumer expenditure patterns suggests that engel curves require quadratic terms in the logarithm of expenditure while popular models of demand such as the translog or the almost ideal demand systems do allow flexible price responses within a theoretically coherent structure they have expenditure share engel curves that are linear in the logarithm of total expenditure we derive the complete class of integrable quadratic logarithmic expenditure share systems a specification from this class is estimated on a large pooled data set of u k households models that fail to account for engel curvature are found ro generate important distortions in the patterns of welfare losses associated with a tax increase