on measures of excess burden and their application abstract new measures of the additional excess burden of a tax reform are proposed and are shown to be useful in three key policy applications these new measures induce a unique measure of marginal excess burden meb among its interesting properties meb is uniformly zero for a proportional tax on inelastically supplied labor problems in applying the standard measures of total excess burden are demonstrated it is concluded that the induced measure of the marginal cost of funds mcf should be regarded as the most useful concept in applied tax analysis

an axiomatic approach to compensated demand abstract starting with hypotheses on functions which can be interpreted as income compensation functions a theory of consumer behaviour is developed if people act rationally they will behave according to these hypotheses from these axioms many propositions well known from traditional neoclassical consumer theory can be deduced in particular shephard s lemma can be proved within this theory

no spurious welfare gains from taxation a further argument for the equivalent variation abstract among all measures based on money metric compensation functions solely the excess burden based on the equivalent variation always correctly identifies the excess burden of a specific tax to be positive this provides a new argument for the use of the equivalent variation when measuring the welfare effects of a price change

ex ante consumer welfare evaluation in cost benefit analysis abstract public projects and policies are normally evaluated ex ante i e while consumers may still be uncertain about future prices income levels interest rates and preferences this paper extends the theory of ex ante consumer welfare evaluation by developing a 2 period model with multiple sources of uncertainty it provides insights into the influence of temporal uncertainty on the empirical measurement of ex ante willingness to pay

organizations as human communities and internal markets searching for duality business firms have been explained as internal markets or as communities to be sustainable however they need to reconcile these two constituting elements that have mainly been touted as opposite and part of a dualistic relationship we suggest that organizations may in alternative view market and community as part of a duality interdependent and mutually constituting processes that may not only contradict each other but also enable one another the implications of a duality view for business ethics which articulates market and community elements in a fruitful mutually enabling relationship are considered and duality is presented as a way of transcending what is commonly viewed as opposition moving organizations both in the direction of humane and competitive finalities

breaking the wave the contested legitimation of an alien organizational form organizational forms imbued with values of modernity that is rationality efficiency and equity diffuse rapidly around the world nonetheless when sustained by beliefs norms and regulations contrasting with those prevalent in the receiving country their adoption may be delayed and within country legitimation may not proceed smoothly we study the diffusion of multiplex cinemas a form conceived in the us and attuned to the cinema as commerce logic across europe where the cinema as art logic prevails our findings reveal that the cultural meanings embodied by multiplexes shaped the founding rates of this organizational form in three ways first countries with larger normative and regulative distance from the us retarded the adoption of the first multiplex second camouflaged entries and at increasing density opposition from local interest groups were observed third the embodiment of global cultural scripts of progress and modernity allowed multiplexes to overcome local opposition the normative distance of the country from the us amplified the fluctuating dynamics of within country legitimacy a new specification of density dependent legitimation is presented to model the cultural cognitive legitimacy of rationalized but alien organizational forms

nonlinear income effects in random utility models random utility models rums are used in the literature to model consumer choices from among a discrete set of alternatives and they typically impose a constant marginal utility of income on individual preferences this assumption is driven partially by the difficulty of constructing welfare estimates in models with nonlinear income effects recently mcfadden 1995 developed an algorithm for computing these welfare impacts using a monte carlo markov chain simulator for generalized extreme value variates this paper investigates the empirical consequences of nonlinear rums in the case of sportfishing modal choice while refining and contrasting the available methods for welfare estimation

potential welfare and the sum of individual compensating or equivalent variations abstract we investigate under which conditions the sign of the sum of both the individual compensating and equivalent variations correctly indicates changes in potential welfare our results reproduce exactly those of chipman and moore for the national income test which did not rely on individual measures of welfare directly related to consumers preferences 1 i a necessary and sufficient condition for the new test to be valid is that individual preferences are identical and homothetic and 2 ii if the distribution of income is constant and preferences are homothetic then the new test is valid only if preferences are also identical

from plan to plant effects of certification on operational start up in the emergent independent power sector in this paper we study the transition from planned venture to operational start up in the emergent independent power sector planned ventures face tremendous obstacles in assembling the resources necessary to begin operations we hypothesize and show that formal certification from authorized actors increases the likelihood of making this transition moreover we find that the effects of certification are contingent on the legitimacy of the sector as a whole certifications have a stronger effect on start ups when sector legitimacy is low than when it is high this research helps us understand a rarely studied organizational transition from entrepreneurial intention to actual operations within nascent sectors it directs attention to the legitimating effects of formal certification highlights the importance of a multilevel approach to legitimacy and contributes to the growing rapprochement between entrepreneurial studies and institutional theory

on the valuation of uncertainty in welfare analysis thisarticle developsa general model of private and public choice under temporal uncertainty the model incorporatesthe effectsof ris k preferencesand the pros pect of future learning into both the individual and aggregate valuationsof public projects the analys isprovidesnew ins ightson individual valuation itsimplicationsfor benefit cos t analys isand the characterization of paretoefficiency under uncertainty it also resolves some of the confusion in the option value and quasioption value literature private and public decisions typically involve many sources of uncertainty including uncertainty about prices income technology environmental quality health etc temporal uncertainty is also common where some of the risk 1 getsresolved over time due to learning additionally private and public decisions often exhibit some form of irreversibility implying that current choicescan affect the ability of decision makers to be flexible and to adjust their future choices in response to forthcoming information when uncertainty and irreversibility are both present welfare analys isgainscomplexity and importance although considerable progress has been made since weisbrod s seminal article a better understanding of the roles of uncertainty and irreversibility in welfare analys improve our ability aseconomis ts to communicate the importance of risk in project evaluation to public decision makers

governance form and organizational adaptation lessons from the savings and loan industry in the 1980s this paper explores how governance form affects the organizational capacity for adaptation we make a general case about the importance of governance in adaptation and we identify three mechanisms through which governance form may affect organizations ability to manage the competency and failure traps that often frustrate the process we look for evidence of these mechanisms through a study of the u s savings and loan s l industry in the 1980s this is an apt context because s ls were confronted by severe environmental changes that suggested a need for change of a relatively radical sort during this decade and because the industry contains a mix of governance forms stock form firms and mutual associations we examine whether mutuals and stocks differed in their propensity to move away from their traditional business and mission of residential mortgage lending in response to the challenges of the 1980s we also consider whether stocks and mutuals differed in their performance outcomes during this decade results indicate that mutuals were slightly less prone toward change but were in no sense inertial they also show that mutuals performed better overall and appeared to change more successfully than did stock firms the overall pattern of results suggests that mutual governance was a resource that allowed s ls to better balance exploration and exploitation in the face of a changing and ambiguous environment we consider the broader implications of these findings for research on organizational adaptation governance form and governance more generally

measuring economic welfare is theory a cookbook for empirical analysis welfare economics is first and foremost a policy science in his classic treatise a k sen says welfare economics is concerned with policy recommendations gunnar myrdal in discussing the economist and the politician proposes that the politician may reasonably expect from the economist that he should explain the actual situation and state the effects of different modes of action in relation to the same initial situation empirical welfare economics should provide guidance to policy makers in evaluating actual policies in real markets using available data and reasonable methods real markets are characterized by multimarket spillovers dynamic responses to economic policy uncertainty and incomplete market structures while theoretical models

how optimal distinctiveness affects new ventures failure risk a contingency perspective abstract in this article we apply the concept of optimal distinctiveness to test whether category spanning has a nonlinear effect on new ventures risk to fail we argue that by being optimally distinct i e by attaining a level of category spanning that allows new ventures to benefit from balancing the competing needs of conformity with and differentiation from competitors new ventures can improve their survival chances in addition we argue that the relevance of optimal distinctiveness varies with a venture s age and a category s density we tested our hypotheses using data from 1668 metal bands that were founded in the united kingdom between 1967 and 2005 the results indicate that optimal distinctiveness is relevant to new ventures failure risk moreover we show that venture age attenuates the relevance of optimal distinctiveness whereas category density strengthens that factor s relevance

application of stochastic choice modeling to policy analysis of public goods a case study of air quality improvements this paper demonstrates the applicability of the stochastic choice method in performing policy analysis of changes in public goods using survey data the air quality problem studied involves air pollution control for the tampa bay area of florida and relatively simple choices between changes in a public good and disposable income it illustrates the use of surveys as a public forum in which preferences are revealed 26 references 2 tables

the imprecision of traditional welfare measures in empirical applications fic bureau of economics working papers are preliminary materials circulated to stimulate discussion and critical comment all data contained in them are in the public domain this includes information obtained by the commi on which has become part of public record the analyses and conclusions set forth are those of the authors and do not necessarily rellect the views of other members of the bureau of economics other commission staff or the commission itself upon request single copies of the paper will be provided references in publications to ffc bureau of economics working papers by ffc economists other than acknowledgement by a writer that he has access to such unpublished materials should be cleared with the author to protect the tentative character of these papers

on lionel mckenzie s 1957 intrusion into 20th century demand theory in this essay we read mckenzie s 17 paragraphs of 1957 on demand theory without a utility index as an opening to the narrative of 20th century demand theory and as a lever for the understanding of what has now reached culmination as the neoclassical theory of demand in tracking the influence of these paragraphs on both theoretical and applied work we also use them as a foothold for reflection on the process of theorizing to argue for the view that one cannot neglect the changing problematic that the theory is adduced to address that the historical narrative behind a particular theorem is indispensable in understanding the theorem itself this implicit theorizing of the process of theorizing then forces us to consider stigler s distinction between textual and scientific exegesis and confront it to a second order level of theorizing and thereby bring out the continuity possibly not quite seamless between a theorem and its history

deadweight loss theoretical size relationships and the precision of measurement in this article we examine the size relation of several deadweight loss measures and derive variance calculations for a numerical methods estimator of deadweight loss two examples are given to demonstrate the importance of these results

organizational inertia and momentum a dynamic model of strategic change this study provides an empirical test of hannan and freeman s theory of structural inertia we examined the changes organizations undertook in response to a major environmental change in addition

surplus maximization and optimality i identify assumptions under which policies that maximize expected surplus are pareto optimal even when expected consumer surplus does not even locally represent preferences over price income lotteries besides the oft made partial equilibrium assumptions that only one price varies and that income changes do not aect demand the two other assumptions are that every consumer s indirect utility function is supermodular in price and income and policies order prices by a single crossing property supermodularity holds precisely if relative risk aversion exceeds the income elasticity of demand a mild condition the single crossing property appears strong but holds in many applications that use expected surplus

public and private returns from joint venture research an example from agriculture public research institutions are turning increasingly to the private sector for additional financial support such a trend in the short run lessens the need for public research expenditures but may in the long run prove to be very costly to the economy as a whole this is because private funding increases the chance that the direction of research will shift so that private benefits are enhanced such a shift is especially costly if public research funds are then not forthcoming that would have the potential of producing the maximum level of benefits to the economy as a whole a case study of canadian barley research is used to illustrate this problem

regulating american industries markets politics and the institutional determinants of fire insurance regulation1 this article assesses three approaches to state regulation capture theory interest group analyses and neoinstitutional research state level event history analyses of fire insurance rate regulation from 1906 to 1930 are used contrary to capture theory regulation was not driven simply by firms interests in market control instead consistent with interest group analyses regulation was more likely when anticompany forces farmers and small businesses could challenge big business politically further as neoinstitutional research suggests regulation was more likely when industry governance evoked legitimacy crises when courts and professions endorsed regulation and its underlying models and when states developed system wide administrative capacities institutional conditions also mediated the effects of markets and politics on regulation using these findings we develop a theory of how political and institutional conditions shape industries governance options

economic behavior under temporal uncertainty a considerable amount of research has focused on the effects of uncertainty on economic behavior in the absence of complete risk markets private risk bearing is widely believed to influence economic decisions arrow 1 sandmo 23 chavas 4 dalal 6 and others have investigated the role of uncertainty in resource allocation for example sandmo 23 has proposed a theory of the firm under risk he showed how risk and risk aversion can have a negative effect on production decisions

compensating variation consumer s surplus and welfare the compensating variation was defined by j r hicks 1942 as the amount one would have to deduct from a person s income to make him just as well off after a change in prices and income as he had been in the initial situation if the compensating variation is positive the individual is better off under the new situation since the compensating variation furnishes a uniquely defined numerical cardinal indicator of welfare improvement it provides an implicit ranking of alternative prospective situations not only relative to the initial situation but also relative to each other in practice this appears to be how this and other tools of cost benefit analysis are actually used one is interested in knowing not only whether a particular bridge or a particular excise tax will lead to an improvement in welfare but which out of a set of alternative bridges or alternative tax systems will improve welfare the most 1 in this paper we analyze conditions under which the compensating variation can be validly used in this generalized sense these turn out to be precisely the same as conditions previously derived see our 1976 paper for the valid use of consumer s surplus as a welfare measure in our final section we analyze the problem of deriving the generalized equivalent and compensating variations either exactly or approximately from observable demand functions by means of generalizations of or alternatives to consumer s surplus

environmental jolts institutional change and the creation of entrepreneurial opportunity in the us electric power industry the relationship between institutional change and entrepreneurship is poorly understood we build the theory in this area by tracing institutional change in the us electric power industry over a 40 year period our analysis shows that environmental jolts mobilize actors to reformulate institutions resulting in increased entrepreneurial opportunity when the institutional environment is stable we find that incumbent organizational forms and embedded logics present formidable obstacles to entrepreneurial activity environmental jolts however catalyze search processes and motivate the evaluation of current institutional logics specifically in the case of the electric power industry environments of abundance and regulation resulted in homogeneity of organizational structures and strategies and few entrepreneurial opportunities environments marked by scarcity and crisis however witnessed heavy scrutiny of existing institutional arrangements that eroded their taken for grantedness and symbolic value resulting in opportunities for entrepreneurial action

acquisitions as exaptation the legacy of founding institutions in the u s commercial banking industry this study focuses on how founding institutions impact intraorganizational capabilities and how such imprints may have different external manifestations in subsequent historical eras we introduce the concept of exaptation to organizational theory identifying an important process whereby the historical origin of a capability differs from its current usefulness three founding conditions branching policy modernization and political culture influenced banks development of capabilities for managing dispersed branches and these capabilities subsequently led to variation in banks propensity to engage in acquisitions

welfare comparison under exact aggregation new econometric model of aggregate consumer behavior in the united states and to apply this model to the analysis of impacts of alternative economic policies on the welfare of individual consuming units the model incorporates time series data on quantities consumed prices the level and distribution of income and demographic characteristics of the population it also incorporates cross section data on the allocation of consumer expenditures for households with different demographic characteristics our econometric model is based on the theory of exact aggregation developed by lau 1977a c this theory makes it possible to dispense with the notion of a representative consumer in constructing models of aggregate consumer behavior one of the most remarkable implications of lau s theory of exact aggregation is that systems of demand functions for individuals with common demographic characteristics can be recovered uniquely from the system of aggregate demand functions using the individual demand functions we can analyze the impact of economic policy on consumer welfare

personal versus market logics of control a historically contingent theory of the risk of acquisition this paper develops and tests a theory of the historical contingency of the risk of acquisition using data from the higher education publishing market from 1958 1990 interviews and historical analyses are combined to identify two forms of capitalism personal and market and in particular to publishing to identify the institutional logics identified with each form of capitalism an editorial and a market logic hazard rate models are used to test for differences in the effects of these two logics on the organization and market determinants of acquisition publishers with relational network forms of organization in production and distribution were at a higher risk of acquisition in the market period but not in the editorial period competition in the product market increased the risk of acquisition in the market period but not the editorial period the covariates explaining the risk of acquisition change as a consequence of the evolution of capitalism and as a result of a firm s strategic and structural conformity with the institutional logic of the prevailing form of capitalism

expected consumer s surplus and the welfare effects of price stabilization suppose a consumer faces a price which is uncertain ex ante a question which often arises is whether the consumer would benefit from a stabilization policy under which the price would then be fixed and known with certainty many authors have addressed this question by calculating the expected compensating variation of the price change others have used expected marshallian consumer s surplus often with the explanation that it is a good approximation to expected compensating variation 2 an important unresolved issue however is whether expected compensating variation does in fact provide a valid ranking of stochastic prices against stabilized prices i e a ranking in agreement with that given by expected utility in section 2 we demonstrate that expected compensating variation is not in general a valid utility indicator in essence while utility comparisons under uncertainty require the use of the cardinal properties of von neumannmorgenstern utility functions the expected surplus measures depend only on ordinal preference rankings expected compensating variation then is completely insensitive to and cannot reflect the precise factor of interest in suchstudies the consumer s attitudes toward risk we then derive a set of restrictions on the utility function which are necessary in order for expected compensating variation to be a valid measure we see that price stabilization policies can only be evaluated with compensating variation if consumer preferences are assumed to satisfy quite stringent requirements this is in constrast to the familiar certainty case in which compensating variation always provides correct rankings

structuring a theory of moral sentiments institutional and organizational coevolution in the early thrift industry the authors investigate the coevolution of organizations and institu tions they study how institutional definitions rules and expectations unfold in tandem with the organizational structures and processes that embody those institutions the research site is the early thrift industry changes in thrifts technical environment the rise of a transient and heterogeneous population and institutional environment the rise of progressivism propelled this coevolutionary process the coevolution of thrift organizations and institutions proceeded primarily through selection adaptation was constrained by both institutional factors it was difficult to adopt a novel institutional logic and technical factors early thrifts were generally small so entry and exit were easy

the contingent nature of public policy and the growth of u s commercial banking runner up academy of management s best published paper in organization and management theory in 2009

the cost of maximum revenue trade taxes an important purpose of trade taxes in developing countries is the raising of revenue with which to finance development expenditures indeed for countries in the earliest years of economic development taxes on foreign trade because of their greater ease of collection when compared with indirect and particularly direct domestic taxes are a major source of government revenue according to a study of chelliah et al 1975 the contribution of trade taxes to total tax revenue in 46 ldcs in 1969 71 averaged 32 2 per cent with contributions ranging as high as zaire s 65 5 per cent these taxes can be either explicit import duties or export taxes or implicit equivalents such as auctioned import quotas differential exchange rates or the pricing policies of marketing boards with statutory monopolies of export crops it would plainly be of interest to know the welfare cost to a developing country of using trade restrictions as revenue raising devices in the case of a country with negligible monopoly monopsony power in world markets probably not an inaccurate description of many ldcs an explicit measure of the cost of trade taxes has been developed by johnson 1960 the measure involving both income and own and cross price elasticities of demand and own and cross price elasticities of supply of traded goods because application of the measure to an actual economy would obviously require a major statistical effort johnson 1960 p 335 johnson s subsequent work 1965 limited attention to the cost of trade taxes in hypothetical two good economies in which community preferences and production possibilities were simply assumed to have particular functional forms in the context of the least developed countries however an alternative not obviously more drastic means of lessening the required statistical effort suggests itself rather than arbitrarily attributing specific forms to technology and preferences one might instead attribute a specific objective to government in its design of the trade tax structure namely the maximization of revenue should that be a reasonable approximation to the structure s purpose then a calculation of johnson s measure of the associated welfare cost is shown in this paper to require estimates only of total revenue from taxes on foreign trade world prices and marginal propensities to consume no knowledge of price elasticities of demand or supply is required a considerable informational economy indeed the measure of loss assumes a particularly simple form the product of a half trade tax revenue and the world price weighted sum of income derivatives of demand for traded goods a developing country s trade tax structure may however reflect a compromise between the objectives of raising tax revenue and of increasing self sufficiency objectives that are in conflict whenever the desired degree of self sufficiency exceeds that obtained under maximum revenue trade taxes

on consumer s surplus abstract this note intends to clarify much of the confusion in the literature on consumer s surplus and obtain a simple discussion on this topic in a unified framework the letter then contains a number of new results

consumer s surplus and welfare change in a simple dynamic model la somme escomptee d equivalents instantanes ou les variations compensees n est jamais un indicateur du bien etre economique exact pour un consommateur dont les preferences sont representees par une fonction utilite inter temporelle croissant

judging agricultural policies a survey this survey provides a structured picture of 40 years of literature which uses welfare economic tools to judge agricultural policy challenges and developments of normative agricultural policy analysis are discussed in an easily accessible graphical framework it is shown how the literature has gone from examining a very small discrete set of simple policies to a much broader often continuous set of policies that combine policy instruments simultaneously the importance of the pareto criterion used to explore the limits of how government can affect welfare is revealed moreover given the importance of the objective of income redistribution in agricultural policy agricultural economists have often departed from the purely efficiency oriented tradition in economics it is shown that they have tried to incorporate equity considerations by either adding these criteria as constraints to the social welfare function or directly incorporating these criteria in the functional form of the social welfare function

welfare and distribution effects of water pricing policies in this paper distribution and welfare effects of changes in block price systems are evaluated a method is discussed to determine for a marshallian demand function equivalent variation in case of a block price system the method is applied to compare for the metropolitan region of sao paulo alternative pricing policies on the basis of their demand welfare and distribution effects of changing water prices results show that there is a trade off between average welfare and income distribution a pro poor price system may result in lower average welfare than a flat price system but in higher individual welfare for the poor moreover there is a trade off between revenues for the water company and income distribution even though pro poor price systems may not be as good for average welfare as flat price systems their direct effects on poverty are important introducing pro poor price systems however may have financial consequences for the water companies

from each according to his surplus equi proportionate sharing of commodity tax burdens abstract this paper examines the incidence of commodity taxes finding that when demand and marginal cost schedules are linear the burden of commodity taxation is distributed between buyers and sellers so that each suffers the same percentage reduction in pre tax surplus this equi proportionate reduction in surplus is the outcome of commodity taxes set at any rate and is unaffected by relative demand and supply elasticities hence when demand and marginal cost schedules are linear commodity taxes resemble flat rate taxes imposed on market surplus similar results apply to nonlinear schedules within certain ranges

the origins of private social insurance public policy and fringe benefits in america 1920 1950 how did the american system of private employment related pension and health insurance arise data on corporate fringe benefit programs during the second quarter of the 20th century contradict the received wisdom that benefits rose in response to wartime federal policy changes and industrial factors instead it appears that public policies such as the wagner act and social security led to union and business support for private insurance which in turn spurred to growth of fringe benefits the historical record suggests that neoinstitutional and conflict approaches must be synthesized to explain the expansion of fringe benefits institutional factors influenced organizational outcomes by affecting interest group goals

the structuration of socio technical regimes conceptual foundations from institutional theory abstract in recent years socio technical transitions literature has gained importance in addressing long term transformative change in various industries in order to account for the inertia and path dependency experienced in these sectors the concept of the socio technical regime has been formulated socio technical regimes denote the paradigmatic core of a sector which results from the co evolution of institutions and technologies over time despite its widespread acceptance the regime concept has repeatedly been criticized for lacking a clear operationalization as a consequence empirical applications tend to depict regimes as too monolithic and homogenous not adequately considering persistent institutional tensions and contradictions these are however crucial for assessing transition dynamics in this paper we revisit two concepts from institutional theory that enable an explicit identification of socio technical regimes and more generally a specification of the semi coherence of socio technical systems first we will show that levels of structuration can be conceptualized as degrees of institutionalization thereby treating institutionalization as a variable with different effects on actors the stability of the system and thus the potential for change secondly we draw on the institutional logics approach to characterize the content of various structural elements present in a system and to trace conflicts and contradictions between them we illustrate this approach with an empirical in depth analysis of the transformation of the australian urban water sector since the 1970ies

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

structural estimation of congestion costs abstract we estimate a structural model of congestion costs using a bayesian nash equilibrium approach the individual s preference for traveling depends on the anticipated level of congestion which in turn is determined by travelers decisions of mobility the model is estimated using a french transportation household survey results confirm the presence of incomplete information and show that aversion to congestion is 6 6 lower during peak times than during off peak times a traveler s willingness to pay to save 1 min in traffic is estimated at 0 73 euros during peak times and 0 25 euros during off peak times

potential benefits of agricultural research and extension in peru the benefits of agricultural research and extension are examined in an ex ante consumer producer surplus framework for five commodities in peru the effects of demand shifts over time and government pricing policies on research and extension benefits are considered data for the analysis include the results of research and extension questionnaires administered at seven sites in peru the projected rates of return to research and extension indicate substantial returns to public investments

approximating compensated income from ordinary demand functions abstract this paper proposes a re versible s econd or der t aylor resort approximation to compensated income from ordinary demand functions resort yields the malmquist vartia m v algorithm as a first order case using the slutsky equation resort obtains the substitution matrix and checks it for symmetry and negative semi definiteness to validate compensated income this validation procedure is an improvement over m v

inverse demand systems and welfare measurement in quantity space most studies of welfare or cost benefit analyses are concerned with the welfare effects of price changes 11 19 27 33 50 there are however many situations in which policy options are directly related to quantity changes the welfare effects of price changes are analyzed with the traditional demand system in which commodity quantities are determined as functions of their prices the welfare effects of quantity changes on the other hand are associated with the inverse demand system in which commodity prices are dependent on their quantities in conventional welfare analysis of price change prices are taken to be exogenous or predetermined while quantities are endogenous in contrast in welfare analysis of quantity changes quantities are exogenous while prices are endogenous price based or dual welfare measures are relevant when there are well functioning competitive markets and quantities are fully adjusted to changes in prices on the other hand quantity based or primal welfare measures are useful in situations where there are constraints on commodity quantities or when transaction costs impede consumers from fully adjusting to changes in prices the choice between priceand quantity based welfare measures is empirical and proper measurement of welfare effects requires the knowledge as to which variable price or quantity is the exogenous one for individual consumers it may be reasonable to assume that the supply of commodities is perfectly elastic and therefore prices can be taken as exogenous but this assumption may not be tenable for consumers in the aggregate or if highly aggregated economy wide data are used to estimate demand relations at the aggregate level quantities are more properly viewed as exogenous than are prices although individual consumers make their consumption decisions based on given prices the quantities of commodities are predetermined by production at the market level and prices must adjust so that the available quantities are consumed 28 1 2

on the stability of the constant relative risk aversion crra utility under high degrees of uncertainty growth models under uncertainty and constant relative risk aversion crra utility are fragile in explaining consumers choice as equilibrium consumption is dependent on distributional assumptions we show that under semi nonparametric distributions general equilibrium models are stable as the existence of expected utility is guaranteed

welfare cost and health insurance a disaggregated approach using duality theory and australian data the present study draws on the fundamental duality between consumer expenditure and utility to provide a hicksian measure of the welfare cost or moral hazard arising from health insurance in australia the theoretical approach is empirically applied to a homogeneous set of medical services associated with diagnosis of the upper gastrointestinal tract viz barium meal radiology the empirical results indicate that the welfare loss represents 1 3 of the total expenditures and 1 5 of the health insurance rebates on barium meal radiology for the year 1984 85 sensitivity analysis indicates that the welfare loss in relatively invariant to changes in the coinsurance rate when the latter takes on values of less than 0 5

a difficulty with the travel cost method instead of observable prices of recreational visits travel cost method tcm re searchers are obliged to substitute researcher assigned visitation cost estimates i argue that visitation costs are inherently subjective but are ordinally measurable so long as the cost in creases with distance travelled it follows that traditional tcm yields only ordinally measur able welfare estimates the household produc tion function formulation of tcm resolves this problem only by imposing severe and un testable analytical restrictions tcm cannot serve as a stand alone technique for estimating recreation benefits rather it must be calibrated using information generated with fundamentally different methods jel q26

knowledge and competitive advantage the coevolution of firms technology and national institutions this issue of jibs offers reviews of two books that analyse the dynamic interaction between the business environments and business strategies in very different ways the institutional underpinnings for business strategies are a major research topic for comparative management aiming to explain why in different contexts firms pursue different strategies and with different implications for performance j peter murman in knowledge and competitive advantage takes a historical perspective focusing on the co evolutionary processes between national innovation systems business strategies and performance this books thus adds to the industry level longitudinal research reviewed in jibs no 4 2003 tom murtha et al s managing new industry creation and david mckendrick et al s from silicon valley to singapore

a note on some limitations of crra utility abstract in a standard environment for choice under uncertainty with constant relative risk aversion crra the existence of expected utility is fragile with respect to changes in the distributions of random variables changes in prior information or the assumption of rational expectations

linear demand functions in theory and practice abstract integrability conditions for an incomplete system of linear demand functions are considered the parameter restrictions consistent with integrability are identified and the structure of the conditional preference map is obtained it is found that the conditional preferences for a set of linear demand functions are either quadratic or leontief from a translated origin welfare analysis with linear demand models is also considered

is the market price of risk infinite abstract in a bayesian model a rational expectations euler equation involves a learning wedge that disconnects the consumer s imrs from the rational expectations pricing kernel the wedge is extremely volatile and explains the high volatility of the rational expectations pricing kernel

self selection in the residential electricity time of use pricing experiments in none of the existing studies that attempt to pool the results of the five best residential electricity tou pricing experiments is the problem of selection bias addressed three of the five experiments used samples of volunteers and it is well known that this can bias results if the ultimate inference to be made applies to the population of non volunteers i e the situation of mandatory tou pricing in this paper we adapt some well used methodology for correcting for self selection to the five experiments in question and estimate the extent to which its presence biases estimates of the elasticity of substitution between peak and off peak electricity consumption we find for example that the bias is upwards of 24 per cent in the los angeles experiment resulting in a substantial overstatement of the response of customers to mandatory tou prices while we stop short of integrating our methodology into a full blown pooling framework users of the epri sponsored retou program should nevertheless be cautioned to the potential biases inherent in forecasts of tou response derived from it since no account for the selfselection phenomenon and its consequences was taken in its development

on the existence of expected utility with crra under stur abstract this note shows that in a standard framework for choice under uncertainty expected utility fails to exist with constant relative risk aversion crra when the endowment follows a stochastic unit root stur process

hicksian welfare measures within a regret theory framework for many years the neoclassical economic paradigm for consumer theory has been based on axioms of rational behavior equivalent to utility maximization for decisions under complete certainty and another set of axioms equivalent to expected utility eu maximization for decisions under risk von neumann and morgenstern recently however this theory has come under fire both from within the economics profession and from outside due to a growing body of evidence suggesting that actual choices display consistent and predictable violations of the behavioral implications of these axioms particularly within the context of risk and uncertainty at least since the 1950s with simon s work on bounded rationality alternative models of behavior have been proposed in the past few years this area has received increasing emphasis notable contributions include the work of akerlof and dickens on cognitive dissonance kahneman and tversky on prospect theory heiner on reliability theory bell and loomes and sugden on regret theory and machina on local approximations to eu functions to date work on these alternative theories has focused on empirical testing of their predictions and their abilities to explain the observed violations of expected utility theory no attempt has yet been made to study formally the implications of these alternatives for welfare analysis and the definition and measurement of the costs or benefits resulting from projects or events yet since the estimates of such costs or benefits often play an important role in public decisions it is important to know whether the standard welfare results based on the eu model continue to hold under what appear to be more realistic theories of choice under uncertainty this paper explores this question in the context of one particular theory namely regret theory this does not imply that the various paradigms are necessarily mutually exclusive for example regret may be an important factor in decision making and at the same time individuals may display bias concerning small probability events as discussed by kahneman and tversky however this paper will focus only on regret to simplify the analysis regret theory was chosen from among the different alternative theories because it has intuitive appeal it contains eu theory as a special case and it is capable of explaining some observed forms of behavior that are inconsistent with eu theory but that are observed consistently in various empirical contexts in addition decisions under regret theory can be formulated within a mathematical optimization framework similar to that used for eu

on welfare analysis under temporal uncertainty the implications of uncertainty for costbenefit analysis remain controversial one issue raised in the evaluation of welfare compensation tests has been the appropriate use of observable economic behavior in the measurement of agents willingnessto pay or willingness to receive in the context of surplus measure this question has received considerable attention in the analysis of the welfare impact of price changes under certainty e g willig 1976 chipman and moore 1980 hausman 1981 mckenzie and pearce 1982 moreover the introduction of uncertainty has raised a number of questions about the appropriateness of alternative welfare measures e g schmalensee 1972 1975 graham 1981 for example graham 1981 has argued that there is little basis to recommend either option price or expected surplus for a role of prominence in welfare analysis the issue rather is whether or not there exists a distribution of individual payments or receipts that maximizes aggregate willingness to pay and passes the pareto improvement test i e that leaves no individual worse off and makes at least one individual better off graham 1981 but in the implementation of the pareto improvement test how is the aggregate willingness topay supposed to be measured empirically more specifically what is the influence of uncertainty and its temporal resolution on the validity of agent surplus the welfare triangle given by the area between a compensated choice function and its corresponding price as a welfare measure some progress has been made in this direction by chavas bishop and segerson 1986 in the context of option price however as shown by graham 1981 while option price is the appropriate measure of benefits in situations involving similar individuals and collective risk it may not be the appropriate welfare measure in more general situations therefore there is a need to refine our understanding of how agent surplus can be used as a welfare measure in the general context of a potential pareto improvement test under temporal uncertainty the objective of this paper is to investigate how temporal uncertainty can affect the measurement of willingness to pay in general welfare compensation tests temporal uncertainty corresponds to the situation where new information becomes available over time which resolves at least part of current uncertainty facing economic agents this new information can influence future individual decisions as well as individual willingness to pay particular attention will be given here to the case where income compensation is conditional on the new information that will become available in the future and results in a more efficient allocation of risk among individuals this paper focuses on competitive agents e g households or firms for which welfare changes can be expressed in terms of price changes this includes the analysis of the welfare effects of various government pricing policies this also includes the evaluation of public projects based on the travel cost method which under a weak complementarity condition consists in using price changes of related private goods as an indirect means of measuring the value of a public project maler 1974 the analysis is presented in the context of a general two period model where the agents are uncertain about the state of the world as suggested by graham 1981 it is shown that the option price provides a lower bound on