preserving religious identity through education economic analysis and evidence from the us abstract this paper models the decision of religious parents to send their children to private religious schools as reflecting their desire to shield their children from external influences and thus preserve their religious identity it follows that when the share of the minority in the local population grows and outside influences become less threatening the demand for separate religious schooling among the members of the religious group decreases this pattern implies concavity in the relationship between enrollment in private and religious schooling and the share of the religious group in the population we present empirical evidence from united states county data on catholic and private school enrollment that strongly supports our theory the paper contributes to a better understanding of the demand for religious education

competitive storage rational expectations and short run food price determination this paper demonstrates that lags between retail and wholesale food prices can be explained by inventory behavior of retailers theoretical considerations indicate that the markup model should be modified to include a jorgenson type user cost variable which depends on expected future wholesale price the rational expectations hypothesis is used to derive price expectations the retail price specification therefore depends on the stochastic process generating expected wholesale price the econometric methodology employing both causality testing and nonlinear estimation is illustrated by estimating monthly price relationships for beef the results are consistent with the theory and indicate rejection of the markup model

asymmetric price adjustments a supply side approach using a model of dynamic price competition we provide an explanation from the supply side for the well established observation that output prices react faster in response to input cost increases than to decreases when costs decline the opportunity of profitable storing in anticipation of higher future costs allows competitive firms to coordinate on prices above current marginal costs the initial price response is only partial and profitable storing relaxes competition conversely when costs rise storing is not beneficial in anticipation of lower future costs and firms immediately adjust their prices to current marginal costs which entails the standard bertrand outcome our results shed new light on the empirical evidence about asymmetric pricing and can stimulate further empirical investigation on this puzzle

school finance reform and private school enrollment evidence from california abstract abstract this paper uses the school finance reforms in california in the 1970s to examine whether the constraints such reforms impose on school districts lead to switching to private schools misspecifications of demand in previous work have led to understatement of reform effects an empirical model of schooling share equations is derived from a discrete choice framework large biases are shown to result from failure to account for heterogeneity of demanders and school district specific fixed effects simulations indicate that the changes in public provision potentially resulting from reform explain a sizeable portion of the growth in the private school share

recent advances in the valuation of ecosystem services and biodiversity recent interest in the economics of biodiversity and wider ecosystem services has been given empirical expression through a focus upon economic valuation this emphasis has been prompted by a growing recognition that the benefits and opportunity costs associated with such services are frequently given cursory consideration in policy analyses or even completely ignored the valuation of biodiversity and ecosystem services is therefore increasingly seen as a crucial element of robust decision making and this has been reflected in a growing body of related research we provide a critical review of some of this research considering the valuation methods applied to date and focussing upon their limitations in respect to certain categories of ecosystem services particularly cultural services and the applicability of the extant literature to new settings substantial questions also remain at the interface of natural science and economics and we consider the potential contribution of the conceptualization of ecosystems as assets as a response to this challenge as part of this review we also highlight the role which large scale ecosystem assessments have played as an impetus to extending the valuation evidence base and the way in which frameworks and assessments of how ecosystems contribute to human wellbeing might be translated into policy thinking and decision analyses

vouchers and voting an initial estimate based on the median voter model one of the major concerns associated with school voucher proposals is that they will only benefit those who leave public schools in favor of private schools the children left behind in public schools are expected to necessarily be made worse off by such policies this paper provides evidence suggesting that children left behind in public schools will also benefit the available evidence suggests that after a voucher plan voter support for public schools will rise enough to increase the human capital of public school students despite the presence of negative peer group effects

exchange rate and wage price dynamics a theoretical analysis and an econometric investigation abstract this paper is an attempt to analyze inflation dynamics in a small open economy as the result of the interaction between wage and price determination behaviors and the interest rate exchange rate feedback in the context of dornbusch s model an extended version of this model is specified and analyzed formally then the model is estimated for five oecd countries using a full information maximum likelihood technique finally simulations of the effect of monetary shocks are presented for four countries

why voters may prefer congested public clubs governmental facilities for such services as education health and transportation are often small of poor quality and overcrowded even when the costs are spread among all taxpayers we also find that governments may subsidize private facilities providing the same services or may charge admission fees at public facilities we explain these phenomena with a model which considers two types of people rich and poor a majority consisting of poor people may purposely build small and low quality facilities to discourage use by the rich thereby lowering taxes for the same reason the poor may benefit from an admission fee at public clubs or even from a subsidy to private clubs they do not use

inventory behaviour and market power an empirical investigation abstract this paper examines the empirical relation between the market power of a firm and the level and variability of its inventories we suggest that firms with greater market power hold more inventories and that their inventories are more volatile these hypotheses were tested on a large sample of industrial firms using two different measures of market power and applying a number of estimation techniques the results strongly support our hypotheses

production lags and price behaviour this paper explores the implications of the production lag for the firm s decisions the authors establish a significant relationship between price behavior and the length of the production lag they show that specific results in the literature are crucially dependent upon the assumption about the production lag by allowing the production time to exceed the decision period the basic framework of the earlier price inventory models is significantly extended the model thus incorporates finished goods inventories as well as goods in process inventories copyright 1992 by the london school of economics and political science

inventory and price behaviour the point of this paper is that inventory adjustment attenuates downward pressure on price when realized demand is low because firms accumulate inventory hold overs speculating that demand will be stronger in the succeeding period when realized demand is high the firm draws down its inventories until a stock out occurs and price rises to clear the market

understanding the inventory cycle abstract careful examination of aggregate data from the u s and other oecd countries reveals that production and inventory behavior exhibit paradoxical features 1 inventory investment is strongly countercyclical at very high frequencies e g 2 3 quarters per cycle it is procyclical only at relatively low cyclical frequencies such as the business cycle frequencies e g 8 40 quarters per cycle 2 production is less volatile than sales around the high frequencies it is more volatile than sales only around business cycle or lower frequencies 3 unlike capital investment or gdp the bulk of the variance of inventory investment is concentrated around high frequencies rather than around business cycle frequencies these features of production and inventory behavior at the low and high frequencies provide a litmus test for inventory theories this paper shows that the stockout avoidance theory kahn j 1987 inventories and the volatility of production american economic review 77 667 679 has much better potential than other competing theories for explaining the seemingly paradoxical features of inventory fluctuations observed at different cyclical frequencies my analysis suggests that demand shocks are the main source of the business cycle

a model of inventory and layoff behaviour under uncertainty this paper develops a model of firm behavior under uncertainty designed to study the interac tion of inventories and layoffs the model is a blend of a buffer sto ck model of inventory behavior and an implicit contract model of layo ffs the model creates a distinction between inventory biased and lay off biased firms each of which exhibits inherently different pattern s of response of inventories and temporary layoffs to demand shocks in addition the model implies that the inventory layoff interaction tends to strengthen weaken the response of price and the work force to changes in anticipated demand real interest rates copyright 1988 by royal economic society

internalization of environmental externalities development of a method for elaborating the statement of economic and environmental results abstract internalization of environmental externalities by the economic results of organizations becomes relevant as managers perceive the impacts and risks that degradation of nature exerts on their business advances in the evaluation of environmental performance have been made in recent years however methods for internalization of externalities by income statements are still scarce this study presents a method for the elaborating of the statement of economic and environmental results meseer the proposed method is applied to a real petrochemical company the application of the proposed method allows us to identify that for the period evaluated environmental externalities represented a cost equivalent to 12 5 of the consolidated net income of the whole company the method developed focuses on productive systems providing managers with a holistic view of their business and broadening the understanding of sustainability in industrial operations

on price taking equilibria in club economies with nonanonymous crowding abstract competitive equilibrium in a coalition production economy or a club economy typically does not exist when there is free entry for two reasons first there may be an integer problem as is familiar from club theory with anonymous crowding second optimal groups may have different compositions from the population and then even if there is no integer problem it may be impossible to partition the population into optimal groups i define a notion of approximate equilibrium and show that such an equilibrium always exists in a sufficiently large economy i focus on the optimal size of the economy rather than of clubs

transfers in cash and in kind theory meets the data we review theoretical explanations for in kind transfers in light of the limited empirical evidence after reviewing the traditional paternalistic arguments we consider explanations based on imperfect information and self targeting we then discuss the large literature on in kind programs as a way of improving the efficiency of the tax system and a range of other possible explanations including the samaritan s dilemma pecuniary effects credit constraints asymmetric information amongst agents and political economy considerations our reading of the evidence suggests that paternalism and interdependent preferences are leading overall explanations for the existence of in kind transfer programs but that some of the other arguments may apply to specific cases political economy considerations must also be part of the story

optimal auctioning and ordering in an infinite horizon inventory pricing system we consider a joint inventory pricing problem in which buyers act strategically and bid for units of a firm s product over an infinite horizon the number of bidders in each period as well as the individual bidders valuations are random but stationary over time there is a holding cost for inventory and a unit cost for ordering more stock from an outside supplier backordering is not allowed the firm must decide how to conduct its auctions and how to replenish its stock over time to maximize its profits we show that the optimal auction and replenishment policy for this problem is quite simple consisting of running a standard first price or second price auction with a fixed reserve price in each period and following an order up to basestock policy for replenishing inventory at the end of each period moreover the optimal basestock level can be easily computed we then compare this optimal basestock reserve price auction policy to a traditional basestock list price policy we prove that in the limiting case of one buyer per period and in the limiting case of a large number of buyers per period and linear holding cost list pricing is optimal list pricing also becomes optimal as the holding cost tends to zero numerical comparisons confirm these theoretical results and show that auctions provide significant benefits when 1 the number of buyers is moderate 2 holding costs are high or 3 there is high variability in the number of buyers per period

support for public provision of a private good with top up and opt out a controlled laboratory experiment abstract this paper presents the results of a revealed choice experiment testing the theoretical predictions of political economy models regarding public support for a publicly provided private good financed with proportional income taxes when individuals can purchase the good privately and either continue to consume public provision top up or forego public provision opt out but in each case continue to pay income taxes our laboratory results confirm behavior is consistent with the predicted majority preferred tax rate under mixed financing with top up but we identify preferences for significantly higher rates of public provision than predicted under mixed financing with opt out using non parametric regression analysis we explore the relationship between individuals top up and opt out decisions and both their income levels and the implemented tax rates

price smoothing and inventory this paper explains the phenomenon of price rigidity or price smoothing as the outcome of the optimal inventory policy of a multi period profit maximizing firm under demand and output uncertainties price smoothing may be manifested in two forms first price changes may be moderated with respect to those implied by the demand function and second the firm may choose to restrict price fluctuations by establishing upper and or lower bounds on prices we show that the extent of the asymmetry in price smoothing depends on the relationship between the inventory holding cost and the backlog penalty cost our model accommodates a wide range

price smoothing and inventory behavior abstract consider a monopolist who cannot hold inventories he would increase price in response to a demand increase if desired sales did not increase too much and lower it otherwise if the former case holds for all realizations of a random demand curve the possibility of holding inventories will lead to reduced price variability if the latter case holds systematically inventory holding will lead to more price variability if the effect depends on the level of demand we can say nothing about the consequences of inventory holding for price variability this contrasts with the results of a number of recent papers

the interrelationship between price and output decisions and investment decisions microfoundations and aggregate implications abstract this paper develops a model of firm behavior in which both price and output decisions and investment decisions are made the model permits an analysis of the dynamics of inventory and capital accumulation on price and output behavior there are two main results 1 short run price and output levels will differ from long run levels as desired stocks of inventory and capital diverge from actual levels 2 the size of the elasticities of price and output to changes in demand and cost variables depends on the speed with which gaps between desired and actual stocks are closed through investment

the impact of demand and price expectations on the behavior of prices the effects of demand and price expectations on price behavior are analyzed using data from the manufacturing sector and a model formulated to pinpoint the demand oriented factors affecting prices and to incorporate price expectations as a direct influence on price behavior the expected normal demand is seen to have a strong and systemic influence on price behavior the expected normal level of new orders is found to be an adequate measure with sector data in general although some industries require more specification the effects of inventories and unfilled orders on prices are sporadic and across sectors and industries demand oriented forces are concluded to perform as well statistically as cost push determinants expectations concerning the current normal industry price level have a significant and consistent impact on price behavior this supports the idea that firms setting prices take into account their estimates of competitor s prices future price expectations appear to have little effect on current price information 15 references

the information content of quantity signals and downward inflexible prices it is shown that nonmarket clearing prices can persist in noncooperative nash competition among firms when the dis semination of information depends critically on the flexibility of pr ices the key to this explanation is that the value of the informatio n revealed by quantity signals when prices are fixed can be greater t han the short run profit obtained by an instantaneous price adjustmen t copyright 1987 by the editors of the scandinavian journal of economics

interest rate demand and input price uncertainty and the value of firms abstract in an infinite horizon inventory model an increase in interest rate uncertainty increases the value of a firm which has positive value an increase in input price uncertainty increases the value of the firm if decisions are made before the realization of demand uncertainty increased uncertainty about an additive demand shock reduces the value of a price setting firm with a concave value function and leaves unchanged or increases the value of a quantity setting firm if decisions are made after the realization of demand uncertainty an increase in the uncertainty of an additive demand shock increases the value of the firm

efficiency and equity in the provision of public education the paper focuses on the benefits derived from public elementary and secondary education monetary values of households perceived benefits from operating expenditures are estimated information concerning the preference mappings of citizens is obtained using a random utility model to analyze micro voting data the estimated model in turn provides information concerning the efficiency and distributional consequences of public education expenditures the conclusion is that operating expenditures exceed the estimated efficient level furthermore it may be difficult to justify the inefficiently large expenditures on equity grounds since the estimated distribution of households perceived benefits net of local taxes is pro rich g overnment provision of goods and i j services has the potential of greatly affecting the welfare of citizens this paper focuses on the benefits derived from one such service public elementary and secondary education monetary values of households perceived benefits from public education expenditures are estimated information concerning the preference mappings of citizens is obtained using a multinomial probit random utility model to analyze micro voting data the estimated model in turn provides information concerning the efficiency and distributional consequences of public education expenditures the conclusion is that operating expenditures exceed the estimated efficient level furthermore it may be difficult to justify the inefficiently large expenditures on equity grounds since the estimated distribution of households perceived benefits net of local taxes is pro rich in contrast to this study a number of studies employ ad hoc rules to measure citizens benefits from public elementary and secondary education initially total benefits are assumed to equal the cost of educational services this input cost measure of benefits is then allocated to households using some unproven rule of thumb when an ad hoc rule is used to allocate a questionable measure of total benefits the results are even more suspect conceptually it is quite odd to determine assume total benefits and then allocate the total to individuals or households the correct method is first to obtain estimates of individuals or households benefits these estimates can then be used to determine the magnitude of total benefits and analyze how the benefits are distributed across the population aaron and mcguire 1970 criticize ad hoc benefit measures and propose the income value measure for x units of the politically allocated good x this measure is iv mrsj x where mrsj is the marginal rate of substitution of x for a composite commodity evaluated at x and one s aftertax income this measure is comparable to measures of the income values of goods purchased in private markets while aaron and mcguire argue for preferencebased benefit measures the lack of information concerning preference mappings necessitates that they assume the shape of the utility function even though the results by maital 1973 based on a similar method are slightly less restrictive a number of restrictive assumptions are common to both studies not only are households assumed to have identical separable utility functions but the existing levels of politically allocated goods are assumed to be efficient implying the total income value equals the input cost also the allocation of benefits from mixed goods e g public education between public and private components is based on ad hoc rules the major contribution of the current study is that the benefit estimates are based on information concerning the preference mappings of individuals as revealed through referenda voting 2 the estireceived for publication march 9 1983 revision accepted for publication june 4 1984 state university of new york albany this paper was improved as a result of the advice and encouragement of kenneth wertz john akin david guilkey and james wilde as well as the helpful comments of two referees financial support for this research was in part provided by a dissertation research fellowship from the brookings institution 1 an example is the 1967 tax foundation study 2nmicro voting data are also used by rubinfeld 1977 to obtain information about citizens preferences for public school expenditures he uniquely estimates the parameters of a demand function up to an unknown multiplicative constant a micro demand function for education is uniquely estimated by bergstrom rubinfeld and shapiro 1982 using a different type of survey data while the method used here is to directly estimate preference mappings the information concerning such mappings embedded in such a demand function provides an

assistance to poor households when income is not observed targeted in kind and in cash transfers abstract policymakers frequently design self targeting programs or target poor areas to assist poor families when income is not observed self targeting schemes take advantage of differences in participation costs in assistance programs across households geographic targeting assumes that transfers are solely determined by the region of residence to receive the benefits households not initially present in the targeted areas must relocate away from their original place of residence and live with the poor which entails a cost that can also be interpreted as a participation cost in the assistance program the paper shows that a combination of in kind and in cash transfers tied to the consumption of a publicly provided private good targeted to the poor becomes very useful when non poor households have different participation costs by distinguishing users and non users of public facilities additional in cash transfers can be directed to the poor more effectively the paper demonstrates that the publicly provided good ends up being undersupplied and the distortion becomes less important as participation costs rise more importantly it shows that this kind of redistributive program dominates a pure in cash scheme

the religious factor in private education abstract we quantify the religious factor in private education in the united states by calibrating a political economy model of school choice among public private nonsectarian and subsidized religious schools in which parents differ in their incomes and in their preferences for religious education this shows strong latent demand for religious schooling conditioned on current subsidized tuition levels in parochial schools which is suppressed by the need to pay twice for private education applying the results of the calibration to gauge the effect of means tested school voucher programs on religious and nonsectarian private enrollment we find that when the amount of the voucher is relatively small including subsidized religious schools in such programs is necessary for providing low income families effective access to private education

the welfare cost of free public schools the welfare cost of free public schools is the difference between the cost of those schools and the maximum parents would be willing to pay to send their children to those schools estimates based on data from california school districts in 1970 indicate that this welfare cost is substantial mostly because private schools are cheaper per unit of quality than public schools

a fractiles perspective to the joint price quantity newsvendor model pricing and quantity decisions are critical to many firms across different industries we study the joint price quantity newsvendor model where only a single quantity and price decision is made such as a fashion or holiday product that cannot be replenished and where the price is advertised nationally and cannot be changed demand is uncertain and sensitive to price we develop a method for easily finding the optimal price and quantity that applies to more general cases than the usual one in which uncertainty is either additive multiplicative or a combination of the two we represent a quantity by its fractile of the probability distribution of demand for a given price we use a standard approach to approximating a given distribution with a finite number of representative fractiles and assume that these fractile functions are piecewise linear functions of the price we identify effects that are not usually seen in a joint price quantity newsvendor model for example although the optimal quantity is a decreasing function of the unit cost the optimal price can be nonmonotone in the unit cost and we shed insight into why we illustrate that using a simplified structure of demand uncertainty can result in substantially lower profits

exact consumer s surplus and deadweight loss consumer s surplus is a widely used tool in applied welfare economics both economic theorists and cost benefit analysis often use consumer s surplus despite its somewhat dubious reputation the basic idea is to evaluate the value to a consumer or his willingness to pay for a change in price of a good from say pricep to pricep because price changes affect consumer welfare an evaluation of this effect is often a key input to public policy decisions yet consumer s surplus is probably the most controversial of widely used economic concepts both paul samuelson and ian little conclude that the economics profession would be better off without it it is my feeling of the situation that substantial agreement exists on the correct quantities to be measured the amount the consumer would pay or would need to be paid to be just as well off after the price change as he was before the price change the quantities correspond to john hicks compensating variation measures an alternative measure which takes ex post price change utility as the basis of comparison is hicks equivalent variation the controversy arises in the measurement of these quantities the usual measurement procedure is to use the area to the left of the marshallian market demand curve between two price levels jules dupuit originated this measure of welfare change and alfred marshall and hicks derived appropriate conditions for its use the primary condition for the area to the left of the demand curve to correspond to the compensating variation is to have constant marginal utility of income marshall gave this condition and if it holds the same quantity will be derived as the area to the left of the compensated hicksian demand curve this area to the left of the compensated demand curve is exactly what the compensating variation and equivalent variation measure thus the constant marginal utility of income is a sufficient condition for marshallian consumer s surplus to be equal to hicks consumer s surplus in this case arnold harberger s plea to use the welfare triangle as one half times the product of the price change times the quantity change to measure deadweight loss corresponds to the correct theoretical amount of welfare change in a recent paper robert willig derives bounds for the percentage difference between the correct measure of either the compensating or equivalent variation and the marshallian measure derived form the market demand curve his bounds which depend on the income elasticity of demand for the single good in the region of price change being considered as well as the proportion of the consumer s income spent on the good demonstrate that the marshallian consumer s surplus is often a good approximation to hicks consumer s surplus the fact that the proportion of the consumer s income spent matters as well as the income elasticity was first pointed out by harold hotelling willig contends that the approximation error will be less than the errors involved in estimating the demand curve thus he hopes to remove the need for apology that applied economists often need to give to theorists who remark on the inappropriateness of using marshallian consumer s surplus to measure welfare change however in this paper i show that for the case primarily considered by willig of a single price change which is also the situation in which consumer s surplus is often used in applied work no approximation is necessary professor of economics massachusetts institute of technology and research associate national bureau of economic research i would like to thank peter diamond erwin diewert daniel mcfadden robert merton robert solow hal varian joel yellin and the referees for help and comments research support from the national science foundation is acknowledged the reason that we still have two rather than one of samuelson s six measures of consumer s surplus arises from an index number problem of the correct basis for the welfare comparison i will give both measures but plan to concentrate on the compensating variation

the output inflation relationship abstract this paper shows how the optimal pricing and production policy of a multiperiod profit maximizing firm under demand and output disturbances leads in the aggregate to a positive relationship between production and price deviations from the expected level as depicted by the lucas type supply function the pricing and production decisions are made simultaneously by market agents who base their decisions on the same rational expectations before the disturbances are realized here although the planned production is not affected by the price deviations there is still a contemporaneous positive relationship between them where both production and prices reflect the firm s adjustment to unexpected levels of inventory we show that this positive relationship prevails even when the production decisions are made ex ante based only on expectations before the realization of the random shocks a closed form linear approximation for the supply function is derived which captures the effect of both systematic and unsystematic economic disturbances finally we present an empirical test which supports our assertion that our inventory adjustment mechanism contributes to the creation of the positive relationship between production and price deviations

the resurgence of inventory research what have we learned abstract recent empirical and theoretical research on business inventories is surveyed and critically evaluated while most inventory research has had macroeconomic motivations we focus on its microtheoretic basis and on potential conflicts between theory and evidence the paper asks two principal questions first how can inventories which are allegedly used by firms to stabilize production nonetheless be a destabilizing factor at the macroeconomic level second why if firms are following the production smoothing model is production more variable than sales in many industries we suggest that the so called s s model may help answer both questions

economic and ecological concepts for valuing ecosystem services abstract the purpose of this special issue is to elucidate concepts of value and methods of valuation that will assist in guiding human decisions vis a vis ecosystems the concept of ecosystem service value can be a useful guide when distinguishing and measuring where trade offs between society and the rest of nature are possible and where they can be made to enhance human welfare in a sustainable manner while win win opportunities for human activities within the environment may exist they also appear to be increasingly scarce in a full global ecological economic system this makes valuation all the more essential for guiding future human activity this paper provides some history background and context for many of the issues addressed by the remaining papers in this special issue its purpose is to place both economic and ecological meanings of value and their respective valuation methods in a comparative context highlighting strengths weakness and addressing questions that arise from their integration

the benefits of in kind government programs abstract in this paper i present a methodology to calculate the benefits of in kind programs such as public housing which restrict consumption of some goods to the levels offered by the government most previous studies begin with an a priori specification of the direct utility function i begin with the ordinary demand function and then integrate demand to recover the indirect utility function and the expenditure function i argue that this approach gives additional flexibility in choosing a functional form which best describes the data i then use this methodology to estimate the benefits of the u s government s section 8 housing program

self selection and the redistributive impact of in kind transfers an econometric analysis self targeting welfare programs have received increasing attention from economists and policymakers alike this paper provides evidence on the redistributive impact of transferring low quality goods in kind i study a school feeding program in jamaica which distributes a bland snack to all students poorer households and those with a greater number of eligible children are found significantly more likely to self select into the program but against these targeting benefits is a large estimated dead weight loss

an optimal middleman firm price adjustment policy the short run inventory based pricing policy this paper examines the optimum pricing policies of middleman firms who carry an inventory of goods bought for resale each period the firm in the theoretical model is required to post a price before it observes its realized demand in disequilibrium situations the firm s profit maximizing pricing policy is shown to be a short run inventory based pricing policy which requires the firm to post a price below the long run equilibrium price upon observing its actual beginning inventory level above its optimum level and to post a price above the long run equilibrium price upon observing its actual inventory level below its optimum level the final section suggests that the use of such policies by middleman firms will lead to market price adjustments which are both consistent with the law of supply and demand and which are based on explicit maximizing behavor

use and usefulness of sustainability economics abstract sustainable development is at the roots of sustainability economics baumgartner and quaas 2010 define sustainability economics as the combination of economic efficiency and justice in the distribution of nature s services van den bergh in press criticizes their approach as axiomatic and incomplete lacking a discussion of environmental externalities and dogmas like the gdp dogma the focus on non measurable welfare or happiness in both articles impairs the use and usefulness of their sustainability notions for applied economics and policy alternatively environmentally modified national accounts offer a quantifiable sustainability concept of produced and natural capital maintenance for practical reasons sustainability economics should therefore deal with sustainable economic performance and growth coordination with other social goals has to be left to politics

supply and demand functions in inventory models the central issue in supply chain management is to match supply with demand and the heart of a planning model is the modeling of supply and demand functions to allow for analytical tractability the existing literature often assumes almost surely linear supply and demand functions which greatly limits the applicability of the models the goal of this paper is to provide a unified approach to analyze general random supply and demand functions by transforming the problem into one defined on a higher dimension we show that many of the seemingly highly nonlinear supply and demand functions in the almost sure sense are linear in the stochastic sense with this new notion of linearity called stochastic linearity in midpoint our ability to analyze supply chain problems is much enhanced we are able to prove the concavity of the profit function in the transformed supply and demand decisions for a general class of supply and demand functions that include but are not restricted to the ones studied in the

price dynamics under imperfect information abstract the paper considers the pricing decision of a monopolist firm having demand and costs exposed to nominal and real shocks which include both permanent and transitory changes the firm obtains information through both price and quantity signals and the price equation is found by use of a filtering technique it is shown that imperfect information implies nominal price smoothing where the price adjusts only partially relative to the past price by incorporating new information observed through price and quantity signals

combined pricing and inventory control under uncertainty this paper addresses the simultaneous determination of pricing and inventory replenishment strategies in the face of demand uncertainty more specifically we analyze the following single item periodic review model demands in consecutive periods are independent but their distributions depend on the item s price in accordance with general stochastic demand functions the price charged in any given period can be specified dynamically as a function of the state of the system a replenishment order may be placed at the beginning of some or all of the periods stockouts are fully backlogged we address both finite and infinite horizon models with the objective of maximizing total expected discounted profit or its time average value assuming that prices can either be adjusted arbitrarily upward or downward or that they can only be decreased we characterize the structure of an optimal combined pricing and inventory strategy for all of the above types of models we also develop an efficient value iteration method to compute these optimal strategies finally we report on an extensive numerical study that characterizes various qualitative properties of the optimal strategies and corresponding optimal profit values

an explanation for public provision of schooling the importance of indoctrination this article was completed while i was a national fellow at the hoover institution and represents the unpublished theory and cross country empirical sections from my 1984 university of california los angeles dissertation armen alchian harold demsetz gertrud fremling david friedman robert hansen ben klein ed lazear russell roberts finis welch e g west an unusually helpful anonymous referee from this journal and the participants in seminars at auburn university the university of california at los angeles and at davis california state university at hayward and northridge the hoover institution george mason university the university of houston southern methodist university the u s department of education texas a m university and the 1987 public choice meetings in tucson arizona provided valuable discussions i would like to thank maury pearl for very helpful research assistance any remaining errors are of course my responsibility

the political economy of school choice linking theory and evidence abstract we derive an improved methodology for linking theoretical parameters of a political economy model of school choice to empirical values estimated by regressing local private enrollment shares on mean income the median to mean ratio religious and ethnic composition and other variables this leads us to reject the commonly maintained assumption that a coalition of ends against the middle determines local school funding and to conclude instead that the median income voter is decisive it also allows us to estimate the perceived relative efficiency advantage of private schooling which we find to be about 30 at the margin

defining the generational environmental debt abstract assume that we have borrowed the earth from our children and that we one day shall give it back to them and account for what we have done to it then we would have to try to restore the damage we have caused further we would have to offer compensation for the damage we have done that we cannot repair at a lower cost the generational environmental debt ged is a measure of these costs in this paper we define and discuss the concept of ged and calculate ged for emissions of the greenhouse gas co 2 the global ged for co 2 emissions is estimated to 10000 billion us dollars and the swedish ged for co 2 emissions is estimated to 60 billion us dollars

quality and congestion in environmental goods the road to the wangapeka abstract an increasing complaint heard among new zealand residents is that their enjoyment of local environmental resources is being diminished by increased congestion from foreign visitors this paper considers a model of vertical differentiation in which foreign high value and domestic low value consumers incur congestion costs in using a common resource we demonstrate that reducing quality in the face of increased foreign demand is optimal absent discriminatory prices but not otherwise we also consider the provision of multiple environmental goods and demonstrate that providing differential qualities may be optimal even if domestic consumers do not use the high quality resources at all

lifecycle approach to assessing environmental friendly product project with internalizing environmental externality abstract with tightening environmental regulation and increasing awareness of environmental externalities firms are compelled to take initiatives on environmental protection through such measures as investing in environmental technologies and developing environmental friendly products efps producing the efp is more costly due to additional investment cost and faces the cost competitive challenge this paper conducts a research on how to have the firms voluntarily produce the efp to remedy negative externalities from the prospect of the firm our research focuses on investigating the relationship between policy incentives and economic performance of the efp with a lifecycle approach and probing into the impact of the policy incentives on the efp s commercial feasibility and process of internalizing externalities in view of the efp lifecycle a two stage model is developed to capture its market penetration features while replacing conventional products as an example of the efp a case analysis of hybrid vehicles is presented where the amount of the policy incentives for the efp to be cost competitive is quantitatively assessed and the efp s breakeven in terms of net present value is estimated as well the results show that the required policy incentives are interrelated with additional investment incremental operating costs breakeven sales quantity of the efp and the cost factor that incorporates effectiveness and efficiency of using environmental technologies for energy saving pollutant reduction and business risk

target buffer stocks the behaviour of a buffer stock holding firm facing stationary demand shocks is considered from the viewpoint of recent evidence on inventories and price setting attention is focussed on the responses of price and supply to changes in autonomous demand and compared with those of a nondurable producer the results conflict with recent theoretical work in providing support for a keynesian interpretation of inventory series

price smoothing under capacity constraints this paper examines monopolistic pricing decisions under production and storage capacity constraints which firms may well encounter in practice but which have generally been ignored in earlier price inventory analyses if these capacity constraints are present they evidently influence firms pricing decisions these constraints should therefore be formally modelled for a more complete theory of price behavior the paper addresses the issue of whether or not inventories will lead to an asymmetry in price behavior amihud and mendelson 2 and reagan 15 have noted that inventory adjustments moderate downward price adjustments in periods of low demand but do not moderate upward price adjustments in periods of high demand when stockouts occur these analyses are in contrast to blinder 4 wherein a possible symmetric role of inventories and unfilled orders in dampening price adjustments is considered blinder argues that stockouts may not be empirically significant abel 1 observes however that casual empiricism may lead one to think that stockouts are rather

the household s decision to accept or reject a conditional transfer offer households deemed by society to have insufficient resources to purchase an adequate commodity bundle are often offered aid i e additional resources conditional upon the households purchasing a given level of some commodity e g food fuel or housing such conditional transfers attempt to modify the households normal behavior i e if the households would normally purchase the required level of the designated commodity upon receipt of the transfer the constraint would not be necessary how these incentives and constraints interact to affect the households behavior determines in large part the number and type of eligibles aided by the program aggregate program costs given payment levels and the types of commodity bundles purchased by the recipient households clearly understanding the decision to accept or reject a conditional transfer offer has widespread implications for the costs of the transfer program the impact on eligible households and the attainment of society s objectives numerous studies have investigated the size and distribution of recipient benefits in conditional transfer programs 1 3 6 8 9 14 16 21 to this author s knowledge however no analysis has estimated a model of the household s decision to participate in a conditional transfer program using household data and a theoretically appropriate measure for the household s net gain to overcome this gap in our understanding of the household s

price versus production postponement capacity and competition this article presents a comparative analysis of possible postponement strategies in a two stage decision model where firms make three decisions capacity investment production inventory quantity and price typically investments are made while the demand curve is uncertain the strategies differ in the timing of the operational decisions relative to the realization of uncertainty we show how competition uncertainty and the timing of operational decisions influence the strategic investment decision of the firm and its value in contrast to production postponement price postponement makes the investment and production inventory decisions relatively insensitive to uncertainty this suggests that managers can make optimal capacity decisions by deterministic reasoning if they have some price flexibility under price postponement additional postponement of production has relatively small incremental value therefore it may be worthwhile to consider flexible ex post pricing before production postponement reengineering while more postponement increases firm value it is counterintuitive that this also makes the optimal capacity decision more sensitive to uncertainty we highlight the different impact of more timely information which leads to higher investment and inventories and of reduced demand uncertainty which decreases investment and inventories our analysis suggests appropriateness conditions for simple make to stock and make to order strategies we also present technical sufficiency and uniqueness conditions under price postponement these results extend to oligopolistic and perfect competition for which pure equilibria are derived interestingly the relative value of operational postponement techniques seems to increase as the industry becomes more competitive

inventories and sticky prices more on the microfoundations of macroeconomics the role of inventories in making prices sticky is studied by analyzing a dynamic linear quadratic model of a monopoly firm facing stochastic demand but able to store its finished goods in inventory it is shown that in contrast to the usual presumption firms that exhibit the smallest output responses to demand fluctuations may also exhibit the smallest price fluctuations specifically firms which have very flexible inventory storage facilities or are subjected to very transitory demand shocks will rely on inventories as buffers and will change neither production nor price very much on the other hand firms which have very inflexible storage facilities or whose demand shocks are quite permanent will display large swings in both price and output the standard assumption about inventory carrying costs that has been used in the literature that they are linear is shown to imply that production is impervious to fluctuations in demand it is also established that prices may respond more strongly to positive demand shocks than to negative ones if it is impossible to hold negative inventories i e to have unfilled orders the model offers an explanation for stickiness in relative prices however under certain circumstances it may help explain the persistence of inflation this abstract was borrowed from another version of this item

the melting pot and school choice abstract in the united states parents are offered free public education in the mainstream culture but must pay the full cost of tuition if they educate their children privately this creates strong economic incentives for remaining within the public system which promotes the assimilation of minorities a pareto improvement can be achieved by subsidizing private education in exchange for modifying its social content so as to reduce polarization popular opposition to voucher programs that facilitate school choice without regulating cultural content may partly reflect voters concerns that such programs threaten to erode the common ground created by public education

integrating dynamic pricing and replenishment decisions under supply capacity uncertainty this paper examines an integrated decision making process regarding pricing for uncertain demand and sourcing from uncertain supply which are often studied separately in the literature our analysis of the integrated system suggests that the base stock list price policy fails to achieve optimality even under deterministic demand instead the optimal policy is characterized by two critical values a reorder point and a target safety stock under this policy a positive order is issued if and only if the inventory level is below the reorder point when this happens the optimal order and price are coordinated to achieve a constant target safety stock which aims at hedging the demand uncertainty we further investigate the profit improvement obtained from deploying dynamic pricing as opposed to static pricing our results indicate that either supply limit or supply uncertainty may induce a significant benefit from dynamic pricing and the compound effect of supply limit and uncertainty can be much more pronounced than the individual effects whether or not the supply capacity is limited has a major implication on the value of dynamic pricing under unlimited supply dynamic pricing is more valuable when procurement cost is high or when demand is more sensitive to price with limited supply however the capacity restriction tends to be relaxed reducing the value of dynamic pricing

inventories in a dynamic macro model with flexible prices this paper presents a disequilibrium macro model with inventories rational expectations and flexible prices it is found that less than full employment equilibria are possible even highly likely in the intermediate term and that wage reductions will cause employment to drop increasing aggregate demand will raise employment only if it is done gradually on a technical level we have multiple switching lines disconnected regimes and a connected equilibrium set which borders on a switching iline and otherwise lies in a single region