section 337 and the protection of intellectual property in the united states the complainants and the impact under section 337 of the tariff act of 1930 a firm can challenge imports that infringe its u s intellectual property rights such as patents copyrights and trademarks based on publicly available information this paper examines the characteristics of firms that file complaints under section 337 and also evaluates how firms are affected by the outcomes we find a complaining firm compared with peer firms in the same industry is typically larger produces a more diverse range of products has invested more in intangibles and is no less profitable a finding of no violation significantly depresses the filing firm s profits compared to peers section 337 appears to protect innovators but its effectiveness in promoting more innovation cannot be demonstrated so clearly copyright 1996 by mit press

partisanship tax policy and corporate profit shifting in a globalized world economy political science scholarship has found mixed evidence on the impact of partisanship on the taxation of firms in this article i show that although left leaning governments set tax rates at higher

a note on innovation and patent protection intertemporal imitation risk smoothing abstract in the presence of imitation risks a value maximizing firm intertemporally smooths those risks across current and future new technologies thus changes in patent protection levels can affect the timing of innovation by affecting an agent s motive for imitation risk smoothing

time deposits dimensions and fraud we stipulate arguendo that fractional reserve demand deposit banking is per se fraudulent we ask whether or not time deposit banking can also be illicit and answer in the positive if there is a mismatch between the time dimensions of deposits and loans to wit if an intermediary borrows short and lends long

the effect of impact fees on the price of new single family housing this paper provides new evidence on the effects of impact fees on housing prices using an inventory of single family housing sale transactions in the 38 cities and towns within king county washington for the period 1991 2000 although the effect of impact fees on housing prices has been examined previously earlier studies have been limited by methodological deficiencies this paper examines the effect of impact fees on new housing and their differential effect on housing price based on the quality of housing and finds that the effect of impact fees on the price of new housing is quite significant and elastic raising new home prices by about 166 per cent of the amount of the fee the increase is 358 per cent for the higher quality homes and is statistically insignificant for the lower quality homes

political economy of public policies insights from distortions to agricultural and food markets the agricultural and food sector is an ideal case for investigating the political economy of public policies many of the policy developments in this sector since the 1950s have been sudden and transformational while others have been gradual but persistent this paper reviews and synthesizes the literature on trends and fluctuations in market distortions and the political economy explanations that have been advanced based on a rich global data set covering a half century of evidence on commodities countries and policy instruments the paper identifies hypotheses that have been explored in the literature on the extent of market distortions and the conditions under which reform may be feasible

in which context is the option clause desirable the option clause is a contractual device from free banking experiences meant to prevent banknote redemption duels it has been used within the diamond and dybvig j pol econ 91 401 419 1983 framework to suggest that very simple contractual solutions can act as an alternative to deposit insurance this literature has however been ambiguous on whether the option clause can replace deposit insurance outside of those two contexts it will be argued that the theoretical clause does not generally affect the likelihood that a solvent bank goes bankrupt because of a bank run as empirical evidence suggests it is already near null and that the exercise of the clause will have the effect of diminishing the size of creditor claims on bank assets because it exacerbates the agency problem of bank debt it will therefore be argued that the clause is only desirable in a free banking systems that are historically devoid of bank runs in the first place and have other means of managing debt related agency problems and b under the unrealistic assumption that bank runs are self fulfilling prophecies it will be argued that the agency problem of bank debt makes the option clause undesirable outside of free banking systems

fractional reserve banking client collaboration and fraud this paper traces the recent debate over the legitimacy of maturity mismatching and fractional reserve banking it shows that there is common ground between bagus and howden journal of business ethics 90 3 399 406 2009 106 295 300 2012 on the one hand and evans journal of business ethics 2013 on the other regarding contractual arrangements that lead to fractional reserve banking while both agree that fractional reserve banking that arises out of a bailment or storage contract constitutes fraud block and barnett journal of business ethics 88 4 711 716 2009 100 229 238 2011 stress the illegitimacy of fractional reserve banking for creating more money substitutes than there is actual money while it is true that fractional reserve banks are capable of creating money this activity still cannot be regarded as fraudulent using a common law definition of fraud for it can only take place with requisite client collaboration that makes it impossible to identify a victim

black hole tariffs and endogenous policy theory political economy in general equilibrium preface acknowledgments list of results 1 a preview of the results 2 endogenous policy theory a diagrammatic approach part i endogenous policy theory with specific factors the theory of industry tariffs in partial equilibrium 3 the probabilistic voting model of political efficiency and powerless politicians 4 endogenous lobbying theory and the contribution specialization theorem 5 endogenous tariff theory 6 the power function model of endogenous industry lobbying 7 three simple tests of the stolper samuelson theorem 8 the invisible foot and the waste of nations lawyers as negative externalities part ii endogenous policy theory in general equilibrium a long run theory of national tariff levels 9 the 2 x 2 x 2 x 2 model of endogenous redistribution theory 10 a prisoner s dilemma theory of endogenous protection the leontief model 11 the compensation effect and the multiple equilibrium trap 12 increasing returns to politics and factor endowments economic development and brazilian vitality versus the indian disease 13 endogenous protection in the united states 1900 88 14 a cobb douglas model 15 black hole tariffs 16 the endowment effect cross national evidence on endogenous tariffs part ii postscript 17 the senile industry argument for protection 18 optimal obfuscation and the theory of the second worst the politically efficient policy mathematical appendices references author index subject index

economic development institutional change and the political economy of agricultural protection an econometric study of belgium since the 19th century this empirical study uses 100 years of annual data on 11 agricultural commodities from belgium to measure the impact of structural changes coinciding with economic development and changes in political institutions on agricultural protection the analysis shows that changes in agricultural protection are caused by a combination of factors governments have increased protection and support to farmers when world market prices for their commodities fell and vice versa offsetting market effects on producer incomes other economic determinants were the share of the commodities in total consumer expenditures negative effect and in total output of the economy positive effect with belgium a small economy there was no impact of the trade position changes in political institutions have affected agricultural protection democratic reforms which induced a significant shift in the political balance towards agricultural interests such as the introduction of the one man one vote system led to an increase in agricultural protection the integration of belgian agricultural policies in the common agricultural policy in 1968 coincided with an increase in protection ceteris paribus both institutional factors related to changes in access to and information about the decision making at the eu level and structural changes in the agricultural and food economy may explain this effect

fractional reserve banking in grain fractional reserve banks namely enterprises being legally liable to pay some substance on demand while regularly having too little on hand to satisfy all their obligations are commonly associated exclusively with money conceivably fractional reserve banks can deal in substances other than money as it happens chicago s warehousemen of the 1860s practiced fractional reserve banking not in dollars or sterling but in grain l these warehousemen operated in the style of a conventional financial intermediary borrowing short through demand deposits in order to lend long the natural evolution of fractional reserve banking in grain in nineteenth century chicago was interrupted however ever more stringent laws the result of repeated campaigns against fraudulent receipts eventually forced chicago s warehousemen to keep 100 percent reserves consequently the organization of the grain trade past and present not only provides information about the development of fractional reserve banking in general but reveals the effects of a rare experiment in outlawing fractional reserve banking

individual option prices for climate change mitigation abstract willingness to pay for climate change mitigation depends on people s perceptions about just how bad things will get if nothing is done individual subjective distributions for future climate conditions are combined with stated choices over alternative climate policies to estimate individual option prices the appropriate ex ante welfare measure in the face of uncertainty for climate change mitigation we find statistically significant sensitivity of estimated option prices to both expected future conditions and uncertainty about future conditions

the political economy of declining industries senescent industry collapse revisited many observers have noted a strong tendency for protection once it is instituted to persist over time this paper first shows that persistent protection arises whenever lobbying is an alternative to costly adjustment with endogenous protection the level of tariffs is an increasing function of past tariffs the more an industry lobbies the greater the current protection it receives and the less it adjusts and the less the industry adjusts the more effective it is as a lobby in the future when the costs of lobbying and adjustment are fully variable declining industries contract more slowly over time and never fully adjust however the paper shows that adding a fixed cost of lobby formation or maintenance is sufficient to generate an endogenous collapse of protection such as that predicted by cassing and hillman 1986 american economic review 76 516 523 in which an industry abruptly terminates its lobbying and loses its protection finally the paper examines the well documented bias against growing industries in the lobbying process

equilibrium behavior in the conservation easement game conservation easements allow landowners to collect earnings from their land while reducing their tax burdens because the land cannot be sold into development conservation assures open space amenities for nearby residents however the residents bear a tax increase that offsets the owner s tax reduction we develop a gametheoretic model of the private monetary incentives induced by conservation easement programs and use an experiment to verify that conservation decisions are made based on private incentives and without consideration of the public goods conservation provides this implies that unless land trusts are discriminating conservation easements need not lead to optimal conservation and may even reduce social welfare

is water policy limiting residential growth evidence from california rapid population growth and increasing water costs have led western states to condition development on long term water availability using original survey data this paper examines the effects of water screening policies on california s housing supply from 1994 to 2003 panel regressions indicate that these policies significantly slowed housing growth however impact fees based on the costs of residential water connections do not have this effect and may constitute a preferred policy to enhance the social efficiency of screening policies regulators should encourage the adoption of conservation oriented water rates which are associated with significant savings in residential water use

tariff behavior in five european countries further evidence abstract temporary movements in the average tariff rate for a country can lead to intertemporal substitution effects a five country model of tariff movements is estimated in a generalized system the tariff formation process follows a random walk for the united kingdom denmark sweden and france which implies that tariff changes can be viewed as permanent in those countries however in switzerland the cumulative impulse responses to a tariff shock imply not only shock persistence but shock magnification

market evidence on the effective maturity of bank assets and liabilities the recent years increase in interest rate volatility has intensified concern over the exposure of commercial banks to interest rate or funding risk since the effect of interest rate changes on the equity value of a bank depends on the maturity or duration of the bank s assets and liabilities assessing an individual bank s interest rate risk exposure requires information about the maturity composition of its portfolio it is difficult however to assess a bank s risk exposure from balance sheet data because several important asset and liability items have theoretically ambiguous effective maturities in a frictionless market a security s effective maturity will equal its stated maturity or time to repricing with market imperfections e g depositors transaction or information costs however the equilibrium cost of some deposit items may respond sluggishly or incompletely to market rate changes see hester and pierce 1975 or flannery 1982 such liabilities market values discounted at market rates would therefore fluctuate with the level of interest rates these liabilities are sometimes called core deposits which manifest sticky responses to market rate changes we define an asset or liability s effective maturity as the maturity of a fixed rate perfectly elastically supplied security with the same market value elasticity as the bank balance sheet item under consideration naturally a balance sheet item s effective maturity is the relevant determinant of its contribution to the bank s overall interest rate risk sensitivity

rejoinder to bagus and howden on borrowing short and lending long in barnett and block j bus ethics 88 4 711 716 2009a the present authors claim that borrowing short and lending long is fraudulent and thus ought to be prohibited on legal grounds bagus and howden j bus ethics 90 3 399 2009 take issue with our ethical analysis the present paper is our response to these authors it is an attempt to defend barnett and block j bus ethics 88 4 711 716 2009a against the very interesting and important although we believe erroneous criticisms of bagus and howden j bus ethics 90 3 399 2009

evidence and explanation for the tariff lobbying paradox endogenous tariffs fall as protectionist lobbying rises recent empirical evidence suggests that u s protectionist lobbying expenditures rose while u s trade barrier fell we find that the same result holds in our panel data sample from 28 countries be

an empirical estimation of the price effects of development impact fees empirical analysis of the price of vacant lots sold in three toronto suburban municipalities during the 1977 86 period shows that development impact fees directly increased lot prices by approximately 1 2 times the size of the fee the extent of the increase was related to city growth rates in general the faster the rate of growth the lower was the price effect of development impact fees the effects of growth however were not consistent across the three municipalities as one municipality appeared to be lowering its fees in response to reductions in growth rates the policy environment within which fees are implemented and the way fees are adjusted appear to influence their effect on lot prices the estimated model also suggests that increases in expected future construction costs reduce current lot prices general increases in the consumers shelter costs tend to inflate the price of vacant lots the expectation of future increases in the cost of land development whether it is due to increases in ma

reassessing the ethicality of some common financial practices depositors have perceived banks as acting unethically during the most recent recession one area of consternation is the ambiguity of the legal obligations entailed by the deposit contract when it is backed with only fractional reserves in this article we apply an existing analysis of the legitimacy and ethicality of banking practices to a wider range of financial transactions including insurance policies securities lending perpetual bonds and callable loans securities lending in particular creates rights violations analogous to those in fractional reserve banking both callable loans and perpetual bonds have clear legal obligations which are not inherently problematic though we herein clarify what these obligations are finally we apply our ethical framework to demonstrate that insurance products are distinct from banking deposit contracts and that perceived parallels between the two products underestimate these differences

oil and water do not mix or aliud est credere aliud deponere the financial crisis has led to new interest in the ethics of financial markets in this article we further the debate on the nature of banking contracts by showing that the fundamental subjective purposes of loan and deposit contracts are irreconcilable any resultant mixture of the two contracts is a legal aberration we consider a mutual fund as an important and legitimate alternative to the common demand deposit to provide high liquidity and some yield without offering full availability of a nominal sum besides being a close substitute for how many deposit accounts function today the mutual fund has the additional benefit of satisfying all legal and ethical requirements loan and investment contracts such as money market mutual funds allow for the bank to make use of their clients funds while the intents of money owners are clearly classified without running into legal or ethical problems

supplying trade reform political institutions and liberalization in middle income presidential democracies correcting the relative lack of attention to the supply side of trade policy this article addresses how political institutions channel societal demands for protection i hypothesize that strong presidents with significant legislative powers and strong party leaders empowered through electoral rules that rein in the personal vote can help overcome protectionist biases these arguments compare with two institutional alternatives first that protectionism should decrease as electoral district size grows because elections become more proportional and second that the collective action problems in fragmented party systems thwart trade reform i evaluate these hypotheses empirically using pooled time series cross sectional data involving 18 developing countries from 1971 to 1997 i find that delegation to presidents and party leaders is significantly related to trade liberalization and some evidence suggests that the effective number of parties and the size of electoral districts may also influence levels of protectionism

testing the endogeneity of tariff policy in the u s abstract endogenous tariff theory suggests tariffs are created in response to self interested political pressure using a varma model covering the period 1890 1970 in the u s we show that macroeconomic variables which proxy political pressure granger cause the tariff

safeguards and retaliatory threats abstract this is the first empirical article to analyze the response of shareholders to the threat of retaliatory tariffs authorized by the world trade organization wto we use event study methodology to gauge the impact of european union eu retaliatory threats stemming from the 2002 imposition of u s steel safeguards results indicate that the u s stock returns of firms slated for wto authorized tariffs reacted negatively to the announcements signaling an increased likelihood of retaliation shareholders also generally responded positively to the early cancellation of the safeguards which removed the risk of retaliation industry level analysis indicates that producers of apparel tobacco and transportation equipment were particularly affected by the threat of retaliatory tariffs second stage estimates suggest that retaliatory threats have a more negative impact on firms with a higher export share to the eu greater profit growth and low research and development intensity

gender biases in bank lending lessons from microcredit in france the evidence on gender discrimination in lending remains controversial to capture gender biases in banks loan allocations we observe the impact on the applicants of a microfinance institution mfi and exploit the natural experiment of a regulatory change imposing a strict eur 10 000 loan ceiling on microcredit descriptive statistics indicate that the presence of the ceiling is associated both with bank mfi co financing and with harsher treatment of female borrowers to investigate causal links we develop an econometric approach that addresses the concerns of selection biases multicollinearity and endogeneity our empirical findings suggest that the change in the mfi s gender related attitude was triggered by banks through co financing hence we speculate that co financing pushes ceiling constrained mfis to import whatever biases in loan granting that the banks are prone to overall this paper stresses that apparently benign regulations such as loan ceilings can significantly harm the women s empowerment efforts made by mfis

the partisan paradox and the u s tariff 1877 1934 whereas historical accounts of u s tariff policy from 1877 to 1934 emphasize the pivotal role of parties previous quantitative studies have failed to identify significant partisan effects a formal model of policymaking in which strong parties aggregate voters preferences provides empirical equations to test for partisan effects subsequent time series analysis shows that even after controlling for interest group demands partisan control of government did significantly affect the tariff moreover during the period under study the two political parties enacted tariff policies that benefited different sets of producer groups at the expense of others thus political institutions did play a significant role in shaping the interests that influence u s foreign economic policy

corporate lobbying in antidumping cases looking into the continued dumping and subsidy offset act is protection for sale in this research we examine the effect of corporate lobbying on the disbursement of proceeds of the recent antidumping petitions under the continued dumping and subsidy offset act the so called byrd amendment with the use of novel u s customs service data on the disbursements of the antidumping duties to the injured firms we find that the petitioning firms that spend more on lobbying gain larger proceeds we conclude that firms that lobby are the ones that get protection not necessarily the healthy ones

the hubris of hybrids in the pages of this journal a fruitful debate has evolved on the ethical legitimacy of fractional reserve banking in this article we respond to the new arguments raised by evans j bus ethics 2014 as we clarify our bagus et al in j bus ethics 128 197 206 2015a position on the unethical and illegitimate nature of fractional reserve banking fractional reserve banking is not a recent financial innovation unlike e g money market mutual funds but represents a long standing legal aberration the co mingling of two mutually exclusive financial contracts deposit and loan confounds the contracting parties purposes intents rights and obligations as a result it creates unsolvable legal difficulties and ethical dilemmas while these problems are most evident in the case of a bank run they also arise when trying to answer the simple question of who owns a deposit

foreign influence and welfare how do foreign interests inuence the policy determination process what are the welfare implications of such foreign inuence in this paper we develop a model of foreign inuence and apply it to the study of optimal taris we develop a two country voting model of electoral competition where we allow the incumbent party in each country to take costly actions that probabilistically aect the electoral outcome in the other country we show that policies end up maximizing a weighted sum of domestic and foreign welfare and we study the determinants of this weight we show that although foreign inuence is zero in equilibrium its threat may be welfare enhancing from the point of view of aggregate world welfare this is because foreign inuence helps alleviate externalities arising from cross border eects of policies the threat of foreign inuence can however prove harmful in the presence of large imbalances in inuence power across countries we apply our model of foreign inuence to the study of optimal trade policy we derive a modied formula for the optimal import tariand show that a country s import tariis more distorted whenever the inuenced country is small relative to the inuencing country and whenever natural trade barriers between the two countries are small

misconceptions and political outcomes a large literature shows that strategic interactions among actors with conflicting objectives can cause the political process to produce outcomes that lower welfare this paper investigates an alternative explanation of such outcomes if individuals errors in assessing the likely effects of proposed policies are correlated democratic decisionmaking can produce welfare reducing outcomes even in the absence of conflicting objectives under plausible assumptions choosing candidates from among the best informed individuals does not remedy the problems created by such errors but subsidising information and exposing representatives to information after their election do concentration of power has ambiguous effects

firms governments and wto adjudication japan s selection of wto disputes what explains the selection of cases for wto adjudication this article explores the business conditions under which industries lobby their home government to use the wto adjudication process and the political factors that influence government decisions it explains the industry pattern of selection for international trade disputes as a function of the velocity of the business environment while wto adjudication is seen as costly and slow a positive ruling brings broad benefits in terms of deterrence against future discrimination firms in static industries will invest in wto dispute settlement to achieve these benefits but firms in industries shaped by dynamic competition have high opportunity costs that make them less willing to pursue adjudication this argument accounts for why there are fewer wto cases about electronics industry issues than there are likely incidences of protectionist measures since japan is a leading exporter and provides a government report with unique data on potential wto disputes it was chosen to test the argument in greater depth interviews with japanese business officials and statistical analysis of an original data set provide support for the argument the authors conclude that the passive attitude toward wto adjudication by japan s largest export industry electronics and the sensitivity of japan s diplomatic relations with china have constrained the cases that japan files these findings suggest that the effectiveness of the wto for dispute settlement is conditional upon the time horizon of the industry and the political relations among members

the legitimacy of loan maturity mismatching a risky but not fraudulent undertaking barnett and block journal of business ethics 2009 attack the heart of modern banking by claiming that the practice of borrowing short and lending long is illicit while their claim of illegitimacy concerning fractional reserve banking can be defended their justification lacks substance their claim is herein strengthened by a legal analysis of deposits and loans based on huerta de soto money bank credit and economic cycles 2006 a combined legal and economic analysis shows that while lending deposits can be regarded as illicit the maturity mismatching of loans is legitimate contrary to barnett and block s claim no over issuance of property rights is involved with this practice once the distinction between present and future goods is taken into account however while the practice is not illicit per se it is greatly assisted and developed through the presence of a fractional reserve banking system and can sometimes breed detrimental effects

impacts of land development charges this paper analyzes the impacts of development charges on urban land development the way in which the burden of a development charge is shared between land supplier devel oper and land consumer as well as its impact on demand and on developer s profit depends on a complex range of factors including the elastici ties of land supply and demand the relationships between the development charge the developer s fixed costs and the raw land and developed land prices before charges are exacted the policy im plications of these findings are discussed jel r52

the case against fiduciary media ethics is the key salerno http mises org daily 4389 2010a asserts that in the debate between those who favor and oppose fractional reserve banking the important issue is not whether or not this institution is inherently fraudulent but rather does it or does it not cause the business cycle we join this author in thinking both important however we reverse this order

economic interests and regional trading arrangements the case of nafta this article examines lobbying in the united states on the north american free trade agreement nafta i argue that economies of scale and production sharing across borders create incentives for firms to seek regional trade liberalization statistical analysis demonstrates that sectors with these characteristics were more likely to lobby for free trade in north america these sectors were also exposed to free trade more rapidly under the tariff phasing schedule in the nafta treaty however corporate restructuring to rescale production for the regional market and to increase offshore assembly presented adjustment costs for u s workers which created divisions between labor unions and their employers i conclude that regional arrangements are an attractive mechanism to liberalize trade for firms in need of larger than national markets to take advantage of economies of scale or to develop production sharing networks

entrepreneurial error does not equal market failure barnett and block 2015 claim that bagus and howden 2012b support indirectly the concept of market failure in this paper we show that maturity mismatching in an unhampered market may imply entrepreneurial error but cannot be considered a market failure we demonstrate why fractional reserve banking leads to business cycles even if there is no central bank and why maturity mismatching does not per se lead to clusters of errors in a free market finally in contrast to the examples provided by barnett and block we assure that maturity mismatching does not imply the creation of two incompatible contracts due to the fungible nature of money

in defence of demand deposits contractual solutions to the barnett and block and bagus and howden debate this article contributes to a recent debate between barnett and block j bus ethics 88 4 711 716 2009 bagus and howden j bus ethics 90 3 399 406 2009 barnett and block j bus ethics 100 299 238 2011 cachanosky j bus ethics 104 219 221 2011 and bagus and howden j bus ethics 106 295 300 2012a regarding the conceptual distinction between demand deposits and time deposits it is argued that from an economic perspective there is nothing inherently fraudulent or illegitimate about deposit accounts that are available on demand but that this relies on certain contractual provisions particular attention is drawn to option clauses and withdrawal clauses which solve the problems raised by barnett and block and bagus and howden previous authors have also neglected the asset side of banks balance sheets and this is shown to further justify the legitimacy of fractional reserve banking

ethical differences between loan maturity mismatching and fractional reserve banking a natural law approach in a number of recent articles the debate on the ethics of fractional reserve free banking has been extended to loan maturity mismatching specifically the banking practice of borrowing short and lending long barnett and block j bus ethics 88 4 711 716 2009 2010 claim the practice is illicit because like fractional reserve banking it creates duplicate property titles they argue there is a continuum in the time dimension between the two kinds of activities bagus and howden j bus ethics 90 3 399 406 2009 106 3 295 300 2012a eur j law econ 2012b bus ethics 22 3 235 245 2013 maintain that loan maturity mismatching does not create duplicate titles and is not illicit and that from an economic and legal perspective there is no continuum with fractional reserve banking cachanosky j bus ethics 104 219 221 2011 and evans j bus ethics 2013 enter the debate from the free banking standpoint and view both practices as legitimate in this paper i agree with the conclusions of bagus and howden but adopt a different approach to support this position using the title transfer theory of contract i demonstrate from first principles why loan maturity mismatching does not create duplicate property titles and is a legitimate practice employing this same theory i then present a novel argument to show why the contractual arrangements found in fractional reserve banking are logically contradictory and illegitimate

steel safeguards and the welfare of u s steel firms and downstream consumers of steel a shareholder wealth perspective this paper analyses the steel safeguards applied during 2001 3 results reveal that for shareholders of u s steel companies safeguards generated positive abnormal returns of approximately 6 the cancellation of the safeguards resulted in wealth gains of about 5 steel shareholders experienced negative abnormal returns of 5 in response to the wto ruling that the u s had violated wto law our results are consistent with the neoclassical view that producers gain at the expense of consumers also findings indicate that downstream consuming firms that diversify production in nafta countries avert some trade policy risk associated with higher steel costs caused by safeguard protection ce texte analyse l effet de la protection des acieries americaines au cours de la periode 2001 03 les resultats montrent que pour les actionnaires des societes americaines cette protection a engendre des profits anormaux de l ordre de 6 l annulation de cette protection a resulte en des gains de richesse d environ 5 les actionnaires des acieries ont subi des rendements anormaux negatifs de l ordre de 5 a la suite de la decision de l omc a savoir que les etats unis avaient enfreint la loi ces resultats sont consistants avec le point de vue neo classique qui suggere que les producteurs gagnent au detriment des consommateurs de plus les resultats indiquent que les entreprises consommatrices d acier en aval qui ont diversifie leur production dans les pays de l alena se sont premunies contre certains risques associes a la politique commerciale et aux hauts couts de l acier engendres par la protection

the fable of the bees revisited causes and consequences of the u s honey program abstract in his 1973 paper steven cheung discredited the fable of the bees by demonstrating that markets for beekeeping services exist and function well although economists heeded cheung s lessons policy makers did not the honey program has operated for over 50 years supporting the price of honey through a variety of mechanisms its effects were minor before the 1980s but then became important with annual government expenditures near 100 million for several years reforms of the program in the late 1980s reduced its market effects and budget costs returning it to its original role as a minor commodity program although the 1996 farm bill formally eliminated the honey program it was reinstated in the 2002 farm bill we measure the historical welfare effects of the program during its various incarnations examine its frequently stated public interest rationale the encouragement of honeybee pollination and interpret its history in light of economic theories of regulation

the empirical measurement of rent seeking costs this survey focuses on the efforts carried out mainly by public choice scholars to measure the social cost of rent seeking the concept introduced by gordon tullock in 1967 and coined by anne krueger in 1974 is well known and accepted by the profession but its empirical measurement has fallen behind with respect to its theoretical formulation an often criticized lack in the literature although there are good general surveys none has specifically focused on reviewing the empirical efforts made to measure the phenomenon the purpose of this paper is to provide such a survey it could be said that the rent seeking concept has been fully integrated into economic jargon it is commonly used when some agent seeks to obtain an artificial transfer usually from government and covers all the actions efforts or expenses that the agent has to carry out to obtain the prize the key issue however is the possible social waste that arises in these situations the empirical efforts to measure such waste constitute the main purpose of this survey the concept of rent seeking was introduced by tullock 1967 although the term was first coined by krueger 1974 in a paper not related to the former in a recent paper tullock himself wrote of the history of the concept and the intellectual context within which it arose tullock 2003 starting with the pioneering work by harberger 1954 several studies were conducted during the 1950s in which the calculation of the social cost of monopolies and tariffs always gave the result of very modest figures the first response to these results was made by leibenstein 1966 and his x efficiency which refers to a hypothetical loss in efficiency due to the absence of competition shortly after leibenstein s paper appeared tullock argued that the deadweight costs of monopoly and tariffs understate the true social cost because the expenditures made to capture related rents have to be included so rectangles as well as harberger s triangles have to be included in the calculations let us see this argument once more figure 1 depicts the iconic tullock graphic analysis of rent seeking it represents the demand schedule d for a monopolized good where pm is the monopoly

on the necessary and sufficient conditions for legitimate banking contracts what role do demand deposits serve in the financial system the answer to this simple question has great implications in keeping the legal terms of the contract consistent with the demands of the financial system demand deposits are a perfect monetary substitute since money is only held to hedge against perceived uncertainty in both the timing and magnitude of future expenditures demand deposits are demanded for the same reason from this we derive three main conclusions first a financial contract similar to a demand deposit e g very short term bonds money market mutual funds etc cannot substitute for money second full agreement to a financial contract does not create a perfect substitute for money unless it provides money s two key characteristics on demand and par value redemption finally the demand for fractional reserve demand deposits is fostered by an exogenous source deposit insurance and that demand for a good or service is not a sufficient condition to justify its legality or ethicality

the continuing continuum problem of deposits and loans barnett and block j bus ethics 18 2 179 194 2011 argue that one cannot distinguish between deposits and loans due to the continuum problem of maturities and because future goods do not exist both essential characteristics that distinguish deposit from loan contracts in a similar way but leading to opposite conclusions cachanosky forthcoming maintains that both maturity mismatching and fractional reserve banking are ethically justified as these contracts are equivalent we argue herein that the economic and legal differences between genuine deposit and loan contracts are clear this implies different legal obligations for these contracts a necessary step in assessing the ethics of both fractional reserve banking and maturity mismatching while the former is economically legally and perhaps most importantly ethically problematic there are no such troubles with the latter

quantitative assessment of tariff endogeneity abstract the paper provides a quantitative assessment of the tariff endogeneity hypothesis in the macro context for the interwar and postwar u s economy there is an almost unidirectional causality running from unemployment and trade deficit to the average tariff rate during the interwar period while more interactive relationships hold in the postwar period compared with the interwar era there is a decline in the dependence of tariff on unemployment and trade deficit but the individual effect of unemployment on tariff has increased and that of trade deficit has decreased furthermore unanticipated shocks exert smaller and less persistent effects of tariff

infrastructure financing and urban development abstract historically additions to public infrastructure necessitated by urban growth have been financed under a cost sharing approach in the last several decades however financing of growth has increasingly relied on land use exactions where new residents pay for the cost of incremental infrastructure despite the emergence of a formal growth control literature there has been virtually no formal analysis of the connection between infrastructure financing and urban development to provide such an analysis this paper investigates three different schemes for financing incremental infrastructure within an urban growth model the analysis compares an impact fee scheme to two types of cost sharing schemes deriving the effects on urban growth and land values of switching to the impact fee scheme the efficient financing scheme is also identified

perspective explaining influence rents the case for an institutions based view of strategy research in strategy has identified and tried to explain four types of rents monopolistic rents efficiency rents quasi rents and schumpeterian rents building on previous work on political and institutional strategies we add a fifth type of rent influence rents influence rents are the extra profits earned by a firm because the rules of the game laws regulations and informal rules are designed or changed to suit it to aid the analysis of the relationship between institutional context and firm performance and to provide a structure to guide research we develop a framework with five key components a an identification of the five fundamental problems of a market economy b a typology that describes the five different types of institutions that emerge to solve these problems c the market ordering mechanisms used by institutions to solve these problems d the common causes of weak institutional performance and e generic strategies used by firms to exploit these weaknesses of an institutional context to enhance firm performance we highlight potential applications of the framework as well as an illustrative research agenda that can advance the development of theory to explain the emergence and persistence of influence rents

the politics of dispute settlement design explaining legalism in regional trade pacts dispute settlement mechanisms in international trade vary dramatically from one agreement to another some mechanisms are highly legalistic with standing tribunals that resemble national courts in their powers and procedures others are diplomatic requiring only that the disputing countries make a good faith effort to resolve their differences through consultations in this article i seek to account for the tremendous variation in institutional design across a set of more than sixty post 1957 regional trade pacts in contrast to accounts that emphasize the transaction costs of collective action or the functional requirements of deep integration i find that the level of legalism in each agreement is strongly related to the level of economic asymmetry in interaction with the proposed depth of liberalization among member countries

free banking and monetary control despite growing interest in competitive payments systems and the continuing progress of bank deregulation relatively little is known about the macroeconomic implications of completely unregulated or free banking its advocates view free banking where competing banks freely issue monetary liabilities redeemable in base money 1 as a means for depoliticising the money stock by replacing public holdings of government money with private bank money while limiting changes in the monetary base such a programme begs many crucial questions how would the unregulated stock of bank money be determined would free banking enhance or reduce macroeconomic stability compared to regulated banking what implications would free banking have for the proper conduct of monetary policy lawrence h white i 984 ch i employs a model of a free banking system to answer some of these questions however because it concerns free banklng as practised in scotland in the nineteenth century white s model assumes an open economy operating in an international gold standard where the price level is given and there is no such thing as monetary policy in its modern sense were free banking to reemerge today it would probably be based not on a gold standard but on irredeemable paper fiat base money issued by a former or extant central bank under this form of free banking the price level is no longer given and conventional monetary policy questions remain relevant in particular would free banking on a fiat standard simplify or complicate the control of nominal variables including the price level and nominal income would it be easier or more difficult to adhere to a simple monetary rule what would happen if the stock of base money were frozen as a means for ruling out discretion altogether answers to such questions require an analysis of determinants of the money stock in a closed free banking system with a centrally determined stock of base money here i offer some preliminary answers based upon carl christ s i 989 formal interpretation of selgin i988 the features of free banking stressed here because they bear most on questions of monetary control include i the freedom of banks to issue notes as well as deposits where banknotes are a more

increased protection in the 1980s exchange rates and institutions the strong appreciation of the u s dollar between 1980 and 1985 encouraged the substitution of imports for domestically produced goods for a variety of products this in turn increased the demand for trade protection many of these demands were satisfied via apolitical u s antidumping and countervail regulations yieldingad valorem tariffs well above current average statutory duties the supply of trade protection is developed via a principal agent model that describes the potential gains to both the regulatory agency and the legislator empirical results support the model specification finding both exchange rate and political cycles in the use of apolitical trade protection

what is the latin for mayonnaise a response to bagus howden and gabriel if fractional reserve demand deposits are common and illegitimate an obvious flaw in the banking system is exposed however this article maintains that the only reason why demand deposits may be considered illegitimate is because of a way of defining them that renders them almost irrelevant this article provides a response to bagus et al j bus ethics forthcoming 2014 and identifies examples of how they misrepresent evans j bus ethics forthcoming 2013 it also provides further considerations on the tradeoffs relating to the availability of a deposit methodological subjectivism and the potential for hybrid contracts deposit and loan contracts may be hard to mix but the actual results of doing so should not be ignored

rent seeking protectionism and innovation in the american steel industry trade protection in a declining industry can cause damages beyond those revealed in the usual trade diagram analysis using data on the us steel firms we show that trade protection in that industry rewards poor performance reduces incentives to innovate and frustrates the normal schumpeterian process of creative destruction free trade gives consumers the lowest prices nonetheless protectionism in various guises is pervasive this we show is probably due to political rentseeking by groups that expect to lose as trade patterns adjust to innovation and altered economic conditions these groups invest in political lobbying to secure future returns in trade protection we find empirical evidence that trade protection returns private benefits to the shareholders senior workers and ceo s of lobbying firms perhaps more disturbingly trade protection also appears to reward less innovative firms and may thus frustrate the schumpeterian development of an industry we examine us steelmakers among the most active lobbyers in recent decades steel firms that lobby congress for protection tend to be larger older less diversified and less profitable than non lobbyers they pay their workers and ceos more and their ceos have longer tenure and are more likely to have risen through the ranks of their companies this suggests the owners managers and workers of less dynamic steel firms stand to lose from free trade the announcement of protection raises the stock prices of us steelmakers but by much more for lobbyers than non lobbyers when comprehensive and enduring protection was finally announced lobbyers more than non lobbyers cut jobs while maintaining or possibly increasing wages once comprehensive protection is in place protection also leads to large pay increases for lobbyers ceos this seems consistent with rent seeking and inconsistent with protection helping lobbyers mitigate social consequences of downsizing like unemployment our most striking finding is that high past r d spending is negatively correlated with stock price changes when proteption is announced and positively correlated with subsequent exit from the industry this seems inconsistent with protection providing a hiatus for retooling rather it suggests

habitual and occasional lobbyers in the u s steel industry an em algorithm pooling approach bernard yeung using u s steel firm data we find that lobbying for import protection appears to be habit forming to identify heterogeneity in lobbying behavior among firms we use an expectation maximization algorithm to sort our firms into groups with different propensities to lobby and estimate the determinants of lobbying in each group a two pool model emerges occasional lobbyers lobbying depends on their market performance and habitual lobbyers lobbying only depends on past lobbying the latter tends to be larger steel firms whose business is more focused in steel our evidence is consistent with dynamic economies of scale in protection seeking breeding protection dependent firms jel f13 1 introduction rent seeking activities plausibly have dynamic economies to scale past rent seeking experience should reduce the cost of further rent seeking and increase its return thus rent seekers may over time become more prone to further rent seeking and even become dependent on it given the large welfare losses theoretically associated with rent seeking e g bhagwati 1982 1988 and magee et al 1989 a better understanding of actual rent seeking behavior is required in particular empirical verification of the self sustaining nature of rent seeking is of fundamental importance lobbying for protection from import competition is a form of rent seeking this article uses data on lobbying for protection by firms in the steel industry in the 1970s and 1980s to show that a habit forming effect does exist in a preliminary investigation we pool all firm level data and find that past lobbying increases the current tendency to lobby however not all firms have the same propensity to lobby to allow heterogeneity among firms dependence on past lobbying we apply an expectation maximization em algorithm approach dempster et al 1977 to a lagged dummy model heckman 1982a 1982b this lets our firms sort themselves into groups according to the determinants of their lobbying activity our statistical results suggest that an acceptable division of our data is a division into two groups occasional lobbyers whose lobbying depends on the firm s market performance and habitual lobbyers whose lobbying is essentially unrelated to the firm s business situation and depends mainly on past lobbying firms that never lobby for protection end up in the first group greater firm size and greater focus in steel production are associated with increased lobbying in both groups but the influence is stronger for occasional lobbyers past sales growth and spending on modern equipment are associated with curtailed lobbying by occasional rent seekers but are unrelated to lobbying by habitual rent seekers changes in cash flow have no influence in either generally habitual lobbyers are larger firms whose business is more concentrated on steel they are naturally more inclined than occasional lobbyers to initiate lobbying however their lobbying appears to have become a habit divorced from their market pe rformance these results are consistent with the presence of economies of scale in rent seeking and with rent seeking being habit forming e g magee et al 1989 in the next section we describe the intensive lobbying for protection in the u s steel industry in the 1970s and 1980s we justify our contentions that lobbying for protection by steel firms in the sample period may be habit forming and that different groups of firms should have dissimilar propensities to lobby for protection in section iii we explain the em algorithm approach we explain the data in the fourth section and report our results in section v section vi concludes ii habitual and occasional lobbying in the u s steel industry in the united states domestic firms under import competition pressure often complain to the government about unfair foreign practice

foreign subsidization and excess capacity abstract the u s steel industry has long held that foreign subsidization and excess capacity has led to its long run demise yet no one has formally examined this hypothesis in this paper we incorporate foreign subsidization considerations into a model based on staiger and wolak s 1992 cyclical dumping framework and illustrate testable implications of both cyclical excess capacity and structural excess capacity stemming from foreign subsidization we then use detailed product and foreign country level data on steel exports to the u s market to estimate these excess capacity effects while the full sample results provide evidence of both cyclical and structural excess capacity effects for exports to the u s market these effects are confined to such a narrow range of country product combinations that it is unlikely that such effects were a significant factor in the fortunes of u s steel firms over the past decades

free trade fair trade strategic trade and protectionism in the u s congress 1987 88 what conditions led the one hundredth congress of the united states to enact fair trade and strategic trade policies into law during 1987 88 political partisanship is an important force with democrats supporting and republicans opposing all types of trade intervention otherwise the coalitions of support for and opposition to the various trade policies differ particularly in the senate in that body international business is associated with support for fair trade policies and with opposition to classical protectionism while domestic u s business is associated with support for classical protectionism liberalism is strongly associated with support for fair and strategic trade policies but is not associated with classical protectionism in the house of representatives the long standing protectionist coalition remains an influence few forces in support of free trade remain in u s politics changing international market conditions rapidly affect the making of u s trade policy

maturity mismatching and market failure the present article is a continuation of the debate two sets of authors bagus and howden vs barnett and block have been engaging in regarding one type of maturity mismatching borrowing short and lending long bsll all four authors had agreed that this practice can set up the austrian business cycle the present author denies that bsll would be a legitimate commercial interaction in the free society bagus and howden continue to maintain that it would be licit our main criticism of bagus and howden is a reductio ad absurdum that this opens them up to the charge of embracing the doctrine of market failure this is something highly problematic for the two of them since all four contributors to this debate are well known supporters of laissez faire capitalism

endogenous trade policy and the gains from international financial markets abstract this paper examines the interaction between international financial markets and trade policy when trade policy is endogenous there is a secondary gain from opening up financial markets in addition to the direct risk sharing benefits by breaking the direct link between the terms of trade and welfare international portfolio diversification can allow for a lower level of trade protection in a tariff game between governments we apply the model to an estimation of the welfare gains from international financial markets our results show that these indirect trade gains from financial markets are likely to be much larger than the direct risk sharing gains in the tariff game with financial markets however there are multiple equilibria while one equilibrium allows for complete diversification and complete free trade there are other equilibria in which there is limited diversification and a high level of average protection

political systems and distortions an empirical study this paper studies empirically why price distortions are more prevalent in some countries than in others we find no significant difference between democracies and dictatorships but frequent regime changes reduce distortions political systems factional subordinate that encourage redistributive activities rda tend to have more distortions allowing for different effects of rda in democracies and dictatorships there is a positive and significant effect of rda on distortions in dictatorships in democracies distortions destroying lobbying seems more important since no significant relation between rda and distortions can be found

the urban impacts of the endangered species act a general equilibrium analysis we consider the general equilibrium implications of environmental regulations which result in a reduction of otherwise profitable residential development critical habitat designation under the endangered species act is an important example if the regulations affect a significant amount of land they may have important effects on the rest of the regional economy increasing rents and densities on lands not subject to the regulation causing the conversion of lands from alternative uses increasing the net developed area in the region and decreasing consumer welfare we develop a flexible general equilibrium simulation of the economic effects of critical habitat designation explicitly considering the distributional effects upon owners of different types of land and upon housing consumers the results of our simulation show that the most significant economic effects of critical habitat occur outside of the designated area the prices and rents of non critical habitat lands increase significantly incomes are redistributed across landlords and the well being of housing consumers is further affected through these linkages

do announcements of wto dispute resolution cases matter evidence from the rare earth elements market abstract rare earth elements rees have gained increasing attention recently for several key reasons 1 they are vital to many strategic industries 2 they are relatively scarce 3 they frequently exhibit high price fluctuations 4 china holds a quasi monopoly on their mining and 5 china s ree policy which was overly restrictive and led to a formal complaint from the u s japan and the eu at the world trade organization wto in 2012 this paper investigates whether the announcement of a wto dispute resolution case has the power to fundamentally change market dynamics we find empirical support for this notion because ree prices exhibit a structural break around the announcement of the wto dispute and show lower variance ratios for all tested rees afterward this indicates a tendency toward efficiency although ree prices still do not follow a random walk similarly we find that stock price informativeness of companies in the ree industry increases after the announcement reflecting more firm specific than marketwide information and less governmental influence finally we show that model uncertainty for option pricing models decreases which we measure by the lower pricing differences among them

the internationalization of small and medium sized enterprises a policy perspective small and medium sized firms play an impor tant role in the process of creative destruction the focus of the paper is on the international diffusion of small and medium sized firms innovations small and medium sized firms face two challenges in globalization property rights protection and barriers to entry we suggest that these barriers can frequently be circumvented by using existing multinationals as interna tional conduits for small and medium size firms innovations however such intermediated modes of expansion is adversely affected by transaction difficulties and intermediator s rent extraction we raise two categories of questions i is the private sector systematically making the wrong choice between the direct and intermediated mode of international expansion and ii what should be the policy guidelines to improve the overall rate of international diffusion of innova tion by small and medium sized enterprises

import prices and the political economy of tariffs evidence from germany japan and the united states 1954 1994 abstract endogenous protection theory suggests that macroeconomic conditions affect tariffs through policy responses to political pressure however import prices affect average tariffs even in the absence of policy changes i examine the effects of import prices and macroeconomic conditions in postwar germany japan and the united states finding strong evidence for the effect of import prices but little evidence consistent with endogenous protection theory

a positive theory of agricultural protection the present paper analyses the political economy of agricultural protection in a general equilibrium framework rational politicians offer protectionist policies in return for political support from their constituency individuals in the economy have different factor endowments politicians exploit these differences in establishing redistributive policies when maximizing political support changes in economic variables such as the urban rural income gap capital intensity the share of agriculture in total output and total employment and the share of food in consumer expenditures affect the political equilibrium policy the analysis concludes that the observed correlation between economic development and agricultural protection is caused by a multiplicity of factors

inefficient redistribution and inefficient redistributive politics this paper examines the effect of inefficient redistribution in myerson s american political science review 87 856 869 1993 model of redistributive politics regardless of the absolute levels of the efficiency of political parties transfers to different voter segments parties have incentive to stochastically shift resources away from voter segments with large relative efficiency gaps between the two parties transfers towards voter segments with smaller relative efficiency gaps because of this dependence on relative and not absolute levels of efficiency the parties optimal strategies may lead to large discrepancies between the sum of the budgetary transfers and the sum of the effective transfers

a comment on barnett and block on time deposit and bagus and howden on loan maturity mismatching in time deposits dimension and fraud 2009 william barnett and walter block argue that by borrowing short and lending long there is an over issuance of property rights their article however does not fully extend the consequences of their contribution once this is done it becomes clearer that their argument suits a great impediment to banking becoming a possible reason to support rather than to oppose fractional reserve banking bagus and howden j bus ethics 90 3 399 406 2009 comment on barnett and block j bus ethics 88 4 711 716 2009 the authors claim that while maintaining the illegitimacy of fractional reserve deposits borrowing short and lending long it is actually not illegitimate an extension on bagus and howden 2009 will show that their line of argumentation can be applied as a defense of fractional reserve banking as well

silver bullet or trojan horse the effects of inclusionary zoning on local housing markets in the united states many local governments are adopting inclusionary zoning iz as a means of producing affordable housing without direct public subsidies in this paper panel data on iz in the san francisco metropolitan area and suburban boston are used to analyse how much affordable housing the programmes produce and how iz affects the prices and production of market rate housing the amount of affordable housing produced under iz has been modest and depends primarily on how long iz has been in place results from suburban boston suggest that iz has contributed to increased housing prices and lower rates of production during periods of regional house price appreciation in the san francisco area iz also appears to increase housing prices in times of regional price appreciation but to decrease prices during cooler regional markets there is no evidence of a statistically significant effect of iz on new housing development in the bay area

lobbying and adjustment in declining industries abstract this paper explains the persistence of protection in terms of interaction between industry adjustment lobbying and the political response faced with a trade shock owners of industry specific factors can respond in two ways they can undertake costly adjustment or they can lobby politicians for trade protection and thereby mitigate the need for adjustment the choice will depend on the relative returns from adjusting relative to lobbying by introducing an explicit lobbying process it can be shown that the current level of protection is an increasing function of past protection and that declining industries contract more slowly over time the more responsive are politicians to lobbying in addition the model makes clear that the type of senescent industry collapse predicted by cassing and hillman 1986 is only possible under fairly special assumptions about the technology of lobbying

import competition product quality reversal and welfare abstract we investigate product quality in an import competing country using the framework of vertical product differentiation comparison of three polices suggests that the quality based r d subsidy brings quality reversal leading to a win win win equilibrium in consumer surplus domestic profit and social welfare

who lobbies whom special interest politics under alternative electoral systems why do some interest groups lobby politicians and others lobby bureaucrats we theorize lobbying venue choices and intensityasafunctionofcontractenforceabilitywithpolicymakers politicians orbureaucrats wearguethatorganizational structures of interest groups in particular whether they are centralized or decentralized substantially affect their lobbying strategies because they are associated with different ability to monitor and enforce contracts with policy makers and punish them when they fail we further demonstrate that the effect of centralized versus decentralized structure on venue choices is conditional on the types of electoral system majoritarian semiproportional single nontransferable vote sntv or proportional representation systems we test this argument using longitudinal survey data on lobbying which span two decades and cover around 250 interest groups in various sectors and issue areas in japan the results lend strong support to our argument about contract enforceability under alternative electoral systems

antidumping signaling and cheap talk abstract in the united states there is evidence that domestic non filing firms do not always support dumping countervailing duty investigations absent other factors domestic firms have an unambiguous incentive to support petitions filed by other domestic producers we argue that in cases where the non complainant firm is not a significant importer or exporter the most plausible explanation is that non support acts as a costly signal of private information extending the model to allow firms to engage in cheap talk such signaling can take place even in the absence of an investigation this result provides an explanation for the puzzling observation that fewer antidumping investigations are filed than one would expect

scottish banking before 1845 a model for laissez faire during the free banking era in eighteenth and early nineteenth century scotland there were a number of legal restrictions affecting the evolution of the system scottish banking was characterized by restrictions on small denomination and interest bearing notes there were also restrictions inhibiting the development of capital markets and entry into banking furthermore the bank of england operated as a shadow central bank for the scottish system these considerations call into question the use of the scottish banking experience as the appropriate model for laissez faire and as evidence against the legal restrictions theory of money and the new monetary economics copyright 1989 by ohio state university press