retail price regulation and innovation reference pricing in the pharmaceutical industry our paper is a first attempt to evaluate the long run impact of reference pricing on pharmaceutical innovation health and expenditures the model is based on a dynamic game involving three types of agents pharmaceutical firms consumers and a regulatory entity pharmaceutical firms choose the level of research investment and its innovative content then negotiate introductory prices for new drugs with the regulator reference pricing affects negatively the intensity of research and it also modifies the types of innovations that are brought to the market deterring small innovations the model is calibrated with a small data on statins in france our results suggest that reference pricing typically generates a decline in health whereas discounted expenditures may decrease or increase depending on the degree of deterrence of cost reducing innovations

history path dependence and development evidence from colonial railroads settlers and cities in kenya little is known about the extent and forces of path dependence in developing countries colonial era railroad construction in kenya provides a natural experiment to study the emergence and persistence of spatial equilibrium data spanning over one century shows that railroads determined the location of european settlers asian traders and the main cities at independence europeans then left asians departed and railroads declined in the immediate post independence period constituting local shocks to physical and human capital yet the colonial cities persisted we test four explanations for path dependence based on institutional persistence technological change sunk investments and spatial coordination failures

upgrading in global value chains lessons from latin american clusters it has been shown that clustering helps local enterprises in industrial districts overcome growth constraints and compete in distant markets in advanced and less developed countries nevertheless recent contributions have stressed that more attention needs to be paid to external linkages and to the role played by global buyers to foster upgrading at cluster levels in this study we contribute to this debate focusing on the analysis of the relationships existing between clustering global value chains upgrading and sectoral patterns of innovation in latin america we find that sectoral specificities matter and influence the mode and the extent of upgrading in clusters integrated in global value chains

the role of seaports in regional employment evidence from south korea abstractthe role of seaports in regional employment evidence from south korea regional studies this study examines the seaport s influence on regional employment in all 16 regions of korea including seven metropolitan areas based on panel data between 2002 and 2013 it expands an economic model of regional unemployment from labour economics and an autoregressive model from econometrics by employing port potentials separately estimated in a tobit model the result indicates that port activities significantly reduce regional unemployment rates relative to the national level the role of population gross domestic product gdp and household income on unemployment rate was highlighted whilst various determinants of port potentials were investigated about whether they stimulate port potentials

urban development in the united states 1690 1990 the united states transformed itself from a rural to an urban society over the last three cen turies after a century of unremarkable growth the pace of urbanization was historically un precedented between the nineteenth and the early twentieth centuries in the twentieth century the urban population continued to increase but in a much more dispersed manner as the sub urban population increased throughout these developments cities also exhibited considerable variation in their population sizes this paper finds that the pace and pattern of u s urban development are explained by changes in regional comparative advantage and in economies in transportation and local public goods which in turn were determined by the changes in the economic structures of cities this paper also finds that cities varied considerably in size because the larger cities reduced market transaction costs associated with coordinating greater geograph ic division of labor

on the organization of cooperative research and development theory and evidence abstract it has become increasingly prevalent that business firms often rival firms join forces in cooperative r and d to develop new technologies that they can use in their downstream business equity research joint ventures and non equity co development are the two major modes of organization and they differ in how ownership rights over newly developed technologies are assigned this paper addresses the question of when cooperative r and d should be carried out in a research joint venture as opposed to a co development program in a setting of contractual incompleteness the nature of the downstream business of participating firms is shown to determine the organization of cooperative r and d empirical evidence that is consistent with the theoretical analysis is also presented

the uk consumption boom of the late 1980s aggregate implications of microeconomic evidence two competing explanations of the uk consumer boom in the late 1980s are the financial liberalisation imperfect housing market hypothesis of muellbauer and murphy and the expectations hypothesis of king we use 15 years of family expenditure surveys and cohort analysis to investigate to what extent these two hypotheses agree with observed changes in consumption patterns we find that the housing markets explanation accounts for much of the increase by older cohorts but cannot be reconciled with the marked rise in expenditure levels of younger households a simple simulation exercise shows instead that the expectations hypothesis can generate increases of expenditure by young consumers of the magnitude observed in our data

how are investments allocated in a publicly owned port system political factors versus economic criteria castillo manzano j i and fageda x how are investments allocated in a publicly owned port system political factors versus economic criteria regional studies this paper estimates the determinants of investments in port infrastructure in the spanish regions made by the central administration it is found that the use of the infrastructure in relation to capacity has some influence on the amount of investment received by a region furthermore specialization in containers is also relevant for receiving more resources however it is found that when greater political decentralization does not go hand in hand with greater financial decentralization the importance of tactical political aspects increases overall efficiency plays a more relevant role in the regional allocation of investments in ports than in other transport infrastructures

pollution permits and environmental innovation abstract this paper starts with a warning about the negative impact of plain pollution allowance markets on environmental pollution innovation stand alone spot markets enable the government to expropriate an innovation by offering a competing technology pollution permits that puts an arbitrary downward pressure on the licensing price advance allowances reduce expropriation but still create suboptimal incentives for innovation they have the further drawback that permits are inefficiently used when the innovation occurs options to pollute at a given striking price fare better than allowances because they create private incentives to phase out pollution in the case of innovation we characterize the social optimum and show that it can be implemented by issuing options to pollute inter alia finally the paper compares ex ante and ex post government procurement surprisingly ex post licensing by the innovator to the government may yield a higher licensing fee than an ex ante contract

estimation with censored regressors basic issues we study issues that arise for estimation of a linear model when a regressor is censored we discuss the efficiency losses from dropping censored observations and illustrate the losses for bound censoring we show that the common practice of introducing a dummy variable to correct for censoring does not correct bias or improve estimation we show how censored observations generally have zero semiparametric information and we discuss implications for estimation we derive the likelihood function for a parametric model of mixed bound independent censoring and apply that model to the estimation of wealth effects on consumption

the role of ports in the making of major cities self agglomeration and hub effect this paper proposes an evolutionary model of spatial economic development in which agglomeration economies and the hub effect of transport nodes interplay in the making of major cities the model explains the irreversibility of spatial economic development such as the continuing prosperity of port cities even after their initial advantage of water access had become irrelevant it is also shown that in order to decentralize industries from the core region to a periphery region a temporary protection of industries in the periphery by worsening the transport connection with the core for a short period of time may be desirable

commodity variety and seaport performance ducruet c koster h r a and van der beek d j commodity variety and seaport performance regional studies seaports are key locations within value chains and production networks port policies of national and local governments seek higher rents through strategies of specialization or diversification elaborating on longstanding research about urban and regional development this paper proposes an empirical investigation of the interplay between traffic variety and port performance the analysis of traffic data per commodity for 330 european ports highlights the influence of multiple factors such as location function and local context together with the specificity of some commodities regarding port evolution the demonstrated importance of territorial factors provides a good complement to the existing literature mostly focused on global networks and economic players ducruet c koster h r a et van der beek d j l eventail des produits et la performance des ports maritimes regional studies le

searching for the parallel growth of cities in china based on the parallel growth implications of the four urban growth theories endogenous growth theory random growth theory hybrid growth theory and locational fundamentals theory this paper use

evidence on the political economy of the urbanization process urbanization and economic development go hand in hand as a country moves from a rural agricultural base to an urban industrial base this paper argues that urbanization per se occurs in response to the basic sector shift out of agriculture and government policies such as price controls and trade protection of industry affect the process only indirectly through their effect on sector composition however urban concentration the extent to which a country s urban resources are concentrated in one or two large cities as opposed to more evenly spread is much more directly affected by policies and politics the paper finds specifically that investments in inter regional infrastructure facilitates urban deconcentration away from primate to hinterland cities as does increasing democratization or increasing fiscal decentralization the findings move beyond establishing basic correlations in the data to trying to quantify causal effects in a panel framework with instrumental variables estimation

female labour supply and on the job search an empirical model estimated using complementary data sets we develop an empirical model of labour supply that is consistent with on the job search and which is identified and estimated by combining two data sets the u k family expenditure survey which contains information on income and expenditure and the u k labour force survey which has data on hours and job search behaviour we provide statistical evidence on the compatibility of the two samples for the purposes of estimating our model we find that search has a direct negative effect on hours of work and we establish a strong positive effect of wages on hours

the determinants of suboptimal technological development in the system company component producers relationship abstract the paper analyses the behaviour of a high tech system company in a model where her strategic variable is the choice of the contractual relationship with component producers the system company develops an optimal contractual design separating component producers qualities and providing optimal incentives to them the particular features of the system company generate however a static and an intertemporal dilemma in her optimising behaviour the static dilemma is between i releasing property rights to component producers to increase their incentives and ii maintaining more control on strategic components to improve her systemic capacity the intertemporal dilemma is about the optimal share of property rights on component products to maintain in a framework in which the strategic non strategic feature of individual components varies over time both static and intertemporal dilemmas have effects on the divergence between the system company optimum and the socially optimum level of technological development

information and control in ventures and alliances this paper develops a theory of control as a signal of congruence of objectives and applies it to nancial contracting between an investor and a privately informed entrepreneur we show that formal investor control is i increasing in the information asymmetries ex ante ii increasing in the uncertainty surrounding the venture ex post iii decreasing in the entrepreneur s resources and iv increasing in the entrepreneur s incentive consict in contrast real investor control that is actual investor interference is decreasing in information asymmetries control rights are further such that control shifts to the investor in bad states of nature

agglomeration economies and clustering evidence from german and european firms this article empirically analyses the impact of agglomeration economies on the clustering of german and european firms using partial proportional odds models firms are grouped according to industry and divided into departments at the industry level i find evidence for inter industry economies derived from the new economic geography neg framework for european firms in general and german knowledge intensive firms in particular at the department level marshallian externalities such as the hiring of skilled labour and technological spillover and therefore intra industry economies are empirically confirmed for european and german departments like human resources and r d but rarely for others

knowledge and urban economic development an evolutionary perspective knowledge is considered as a main source of economic growth for nations and regions it is the basis for technological development and for increasing the productivity of capital and labour this pa

on the complexities of china s wto accession what are the reasons for and significance of not including china in the wto after recalling why the world has a wto and what membership involves this paper then examines why china wishes to join and the stumbling blocks that have caused the delay in china s wto accession a summary of some recent empirical estimates of the likely orders of magnitude of the economic effects of its accession both to china and to the rest of the world highlight the folly of delaying membership the stumbling blocks concern whether china should be granted developing country status in the wto whether china would be a fair competitor given the dominance of state owned enterprises in that economy still what the extent and conditions of market access into china would be and whether china can deliver on its promise of stricter enforcement of intellectual property rights actions needed by china for getting over those stumbling blocks include building a stronger and broader domestic consensus based on the net benefits from wto membership providing greater trade policy transparency and market access and working towards a compromise on the issue of china s developing country status in the wto

feeding and fueling china in the 21st century abstract this paper addresses the questions to what extent will china become a significant net importer of food and fuel in the foreseeable future and what will be the impact of that import demand growth on international markets it first summarizes what standard trade and development economics and the experiences of other asian economies suggest we should expect of china and then examines china s experience to date before turning to some forecasts for the next decade or so our review suggests that before long china will become a significant net importer of both food and fuels especially petroleum contrary to chinese fears however becoming more interdependent with the rest of the world need not be threatening and it may even offer more supply security for china in the long run

lobbying incentives and the pattern of protection in rich and poor countries in seeking to explain why poor countries tend to choose policies that tax agriculture relative to manufacturing while rich countries do the opposite archetypical parameters for a poor agrarian economy and a rich industrial one are inserted in a computable general equilibrium model to simulate the medium term effects on income distribution of policies that distort the relative prices of tradables the model includes a non tradables sector and intermediate inputs realistic features that ensure even greater skewness in the distributional effects of protection than simpler models suggest the magnitude of the results helps explain the tendency for countries to change gradually from taxing to subsidizing agriculture relative to manufacturing as their economies develop the paper draws out the implications of the analysis for agricultural and trade policy reform in the 1990s this abstract was borrowed from another version of this item

is the uk balance of payments sustainable the uk current account deficit john muellbauer and anthony murphy the uk has a large and persistent current account deficit policy makers argue that the deficit is easily financed temporary and therefore not a sign of structural weakness we examine the conditions in which it is appropriate for a country to overspend its current income with the intention of repaying loans out of future income these include an increase in international capital mobility larger net holdings of foreign assets and expectations of faster productivity growth all three apply to the uk so official reasoning is in part correct even so for several decades there has been a trend deterioration of uk trade performance most markedly in manufacturing and we detect no underlying improvement in the 1980s we highlight structural deficiencies in both demand and supply on the demand side we show the importance of rising house prices and easier consumer credit in fuelling the consumer boom to an unwarranted extent this we trace to unjustifiable subsidies to house ownership on the supply side we stress vastly inadequate investment in skill formation education and physical capital these structural deficiencies lead us to a less optimistic view than official policy we draw the policy lessons for the uk and consider whether continental europe will face similar problems as financial markets are liberalized

trade wars and trade talks when governments meet in the international arena their actions reflect the political situations at home previous studies of trade relations have focused on governments that are immune from political pressures and that act as benevolent servants of the public interest here we introduce domestic politics into the analysis of international economic relations we study the interactions between national leaders who are concerned both with providing a high standard of living to the general electorate and collecting campaign contributions from special interest groups our analysis sheds light on the determinants of the structure of protection in non cooperative and cooperative policy equilibria

should central banks respond to movements in asset prices in recent decades asset booms and busts have been important factors in macroeconomic fluctuations in both industrial and developing countries in light of this experience how if at all should central bankers respond to asset price volatility we have addressed this issue in previous work bernanke and gertler 1999 the context of our earlier study was the relatively new but increasingly popular monetary policy framework known as inflation targeting see e g bernanke and frederic mishkin 1997 in an inflation targeting framework publicly announced medium term inflation targets provide a nominal anchor for monetary policy while allowing the central bank some flexibility to help stabilize the real economy in the short run the inflation targeting approach gives a specific answer to the question of how central bankers should respond to asset prices changes in asset prices should affect monetary policy only to the extent that they affect the central bank s forecast of inflation to a first approximation once the predictive content of asset prices for inflation has been accounted for there should be no additional response of monetary policy to assetprice fluctuations in use now for about a decade inflationtargeting has generally performed well in practice however so far this approach has not often been stress tested by large swings in asset prices our earlier research employed simulations of a small calibrated macroeconomic model to examine how an inflation targeting policy defined as one in which the central bank s instrument interest rate responds primarily to changes in expected inflation might fare in the face of a boom and bust cycle in asset prices we found that an aggressive inflationtargeting policy rule in our simulations one in which the coefficient relating the instrument interest rate to expected inflation is 2 0 substantially stabilizes both output and inflation in scenarios in which a bubble in stock prices develops and then collapses as well as in scenarios in which technology shocks drive stock prices intuitively inflation targeting central banks automatically accommodate productivity gains that lift stock prices while offsetting purely speculative increases or decreases in stock values whose primary effects are through aggregate demand conditional on a strong policy response to expected inflation we found little if any additional gains from allowing an independent response of central bank policy to the level of asset prices in our view there are good reasons outside of our formal model to worry about attempts by central banks to influence asset prices including the fact that as history has shown the effects of such attempts on market psychology are dangerously unpredictable hence we concluded that inflationtargeting central banks need not respond to asset prices except insofar as they affect the inflation forecast in the spirit of recent work on robust control the exercises in our earlier paper analyzed the performance of policy rules in worst case discussants robert shiller yale university glenn rudebusch federal reserve bank of san francisco kenneth rogoff harvard university

resource constraints as triggers of radical innovation longitudinal evidence from the manufacturing sector abstract despite the significant role of radical innovation as a driver of firm growth and performance the consequences of resource constraints for radical innovation outcomes remain unknown our paper addresses this gap we combine arguments from entrepreneurship theory and the theory of recombinative innovation to construct an overarching theoretical framework that argues why resource constraints can promote rather than impede radical innovation we then build hypotheses on two specific resource constraints knowledge and financial and test these by a lagged variable random effects tobit model with longitudinal data from an exceptionally large and detailed innovation survey controlling for absorptive capacity firm age and firm growth we find full support for the hypothesis that knowledge constraints spur radical innovation and partial support for the hypothesis that financial constraints spur radical innovation we discuss the theoretical significance of these findings and point to managerial implications and paths for future research

stock market wealth and consumer spending martha starr mccluer this article investigates the effects of stock market wealth on consumer spending traditional macroeconometric models estimate that a dollar s increase in stock wealth boosts consumption by three to seven cents with the substantial 1990s rise in stock prices the nature and magnitude of this wealth effect have been much debated after describing the issues and previous research i present new evidence from a well known consumer survey the results are broadly consistent with life cycle saving and a modest wealth effect most stockholders reported no appreciable effect of stock prices on their saving or spending but many mentioned retirement saving in explaining their behavior jel e21 e30 d12 i introduction the relationship between stock market wealth and consumer spending has been a subject of long standing interest traditional macroeconometric models estimate that a dollar s increase in household wealth boosts consumer spending by three to seven cents per year such an effect is consistent with predictions from a simple life cycle model in which consumers spend more over their lifetimes in response to higher wealth however the stock market is known to play a role as a passive predictor of information thus it is also possible that stock prices simply lead aggregate economic activity without any short run change in spending induced by changes in wealth understanding the response of spending to changes in wealth is important for determining how stock market fluctuations affect the macroeconomy the question also bears directly on theories of saving behavior and on the issue of retirement preparedness by today s workers the experience of the past few years provides an interesting opportunity to revisit this issue stock prices increased substantially in the 1990s with the standard poor s 500 more than doubling from 1994 to 1997 and rising another 44 through 1999 at the same time stock ownership broadened considerably mostly through mutual funds and retirement accounts so that a large number of households likely experienced wealth gains the increase in wealth might be expected to boost consumer spending and lower the saving rate and indeed these trends occurred however it is hard to separate the influence of the wealth effect from other factors that also would have promoted spending such as strong income growth and favorable labor market conditions this article presents some new evidence on the response of spending to changes in wealth the data come from the michigan survey research center src survey of consumers an ongoing nationally representative survey of u s households in interviews conducted between july and september 1997 households owning stock were asked special questions about their spending and saving the questions covered a number of factors that may influence the effect of wealth on spending including the value and form of stockholdings stock price expectations concerns about retirement and perceptions of income uncertainty in brief the results are broadly consistent with life cycle saving and a modest wealth effect the vast majority of stockholders reported no appreciable effect of stock prices on their spending or saving but many mentioned retirement saving in explaining their behavior the next section reviews previous research on the relationship between stock market wealth and consumer spending the third section describes the data from the michigan survey and the fourth presents the results a final section summarizes and concludes ii background and previous research to frame the discussion it is useful to review how an unexpected increase in wealth would affect consumption in a simple lifecycle model this model though restrictive in its assumptions provides valuable intuition about the propensity to consume unexpected stock gains consequences of refinements to the model are discussed below

do school food programs improve child dietary quality this paper estimates the impact of u s school food programs on the distribution of child dietary quality during 2005 10 the distributional approach allows one to better understand how school food impacts children prone to low quality diets separately from those prone to higher quality diets using a fixed effects quantile estimator i find notable heterogeneity in the general population school food has positive impacts below the median of the dietary quality distribution and negative but insignificant impacts at upper quantiles children demonstrating substantial nutritional needs i e food insecure or receiving free reduced price meals exhibit positive impacts at all levels of diet quality with especially high benefits at low quantiles although school food programs may not benefit the above average child they do improve the diets of the most nutritionally disadvantaged

net campaign contributions agricultural interests and votes on liberalizing trade with china we consider the potential influence of contributions from interest groups to political rivals in the voting behavior of us legislators on international trade policy issues our application addresses the determinants of the permanent normal trade relations with china decision and focuses particular attention on the agriculture agribusiness lobby a simultaneous voting net contributions model suggests that these contributions were very effective relative to organized labor and other corporate groups despite their relatively small dollar value possible explanations arising from differences in targeting strategies are explored

the dynamics of resource allocation in research organizations abstract as a first step towards understanding the evolution of small groups in firms this paper develops and tests a simple decision theoretic model of research unit evolution in which as managers resolve their uncertainty over time they shut down under performing units and remove under performing unit heads the selection process generates several testable hypotheses about how unit and head characteristics affect the assignment of heads to units and resource allocation within the firm data on research units in firms is used to test the model and estimate the relative importance of the different effects on resource allocation

resource windfalls political regimes and political stability abstract we study theoretically and empirically whether natural resource windfalls affect political regimes we show that windfalls have no effect on democracies while they have heterogeneous political consequences in autocracies in deeply entrenched autocracies the effect of windfalls is virtually nil while in moderately entrenched autocracies windfalls significantly exacerbate the autocratic nature of the political system to frame the empirical work we present a simple model in which political incumbents choose the degree of political contestability and potential challengers decide whether to try to unseat the incumbents the model uncovers a mechanism for the asymmetric impact of resource windfalls on democracies and autocracies as well as the the differential impact within autocracies

household gasoline demand in the united states supported by the mit center for energy and environmental policy research the u s dept of energy and the national science foundation

wto accession the changing competitiveness of foreign financed firms and regional development in guangdong of southern china this paper investigates the changing competitiveness of foreign financed manufacturing firms and its implications for regional development in guangdong province of southern china in the run up to world trade organization wto accession it is argued that transnational corporations tncs and some competitive large scale locally funded firms in guangdong will triumph after wto accession the crowding out process of small and medium sized enterprises smes in guangdong will be accelerated in the near future as they are competing directly with tncs and as their competitive advantages are diminishing due to bureaucratic red tape and the rigorous enforcement of new government policies due to close business linkages with local privately funded firms the competitiveness and vitality of foreign financed enterprises will have profound long term effects on the economic development of guangdong before and after wto accession cet article cherche a etudier l evolution de la competitivite des entreprises ind

governance and competence how can they be combined transaction cost economics faces serious problems concerning the way it deals or fails to deal with bounded rationality the efficiency of outcomes trust innovation learning and the nature of knowledge the competence view yields an alternative perspective on the purpose and boundaries of the firm however the competence view cannot ignore issues of governance and in spite of serious criticism transaction cost economics yields some useful concepts to deal with them this paper aims to contribute to the development of theory and empirical research that connects governance and competence perspectives copyright 2004 oxford university press

on the management of open innovation abstract in an open innovation relationship the party that owns a key asset enjoys bargaining power that discourages the investments of the other party in the collaboration we show that these incentives can be restored by conferring on the weak party the power to take decisions during the research process e g a pharmaceutical firm with manufacturing and commercialization assets offers the direction of a joint research project to a biotech partner however on many occasions the strong party still captures more value from the collaboration by retaining the power to take decisions during research even if it produces less innovation value and fewer aggregate profits we conclude that the potential of open innovation is underexploited in particular owners may not release enough power to take decisions on the use of their assets

tell us where the new jobs will come from governments and in particular the governments of the oecd member countries are mishandling climate change issues both the basis and the content of official policies are open to serious question too much reliance is placed on the established process of review and inquiry which is conducted through the agency of the intergovernmental panel on climate change this process which is wrongly taken to be objective and authoritative has been made the point of departure for over presumptive conclusions which are biased towards alarm in the mistaken belief that the science is settled rather than pursuing as a matter of urgency ambitious and costly targets for drastic further curbing of co2 emissions governments should take prompt steps to ensure that they and their citizens are more fully and more objectively informed and advised this implies both improving the ipcc process and going beyond it as to the content of policy it is not the case that the choice now lies between two extremes of no action and the immediate adoption of much stronger measures to curb emissions the orientation of policies should be made more evolutionary and less presumptive with actual policy measures focusing more on carbon taxes rather than the present and prospective array of costly and intrusive regulatory initiatives

trade and exchange rate policies in formerly centrally planned economies this paper examines the international economic policies of the eastern european and soviet successes states in the early 1990s which provide one of those wide open windows of opportunity when powerful vested interests are not lobbying for retention of an existing tariff structure moreover the simultaneous abandonment of central planning by over two dozen countries provided a natural experiment in which a range of differing policies might have been pursued policymakers in transition economies have generally ended up pursuing liberal non discriminatory trade and foreign exchange policies there are exceptions and the majority may be wrong but the presumption is that perhaps after a learning or trial and error process decision makers have found the rules of thumb suggested by economists to be their best guide to international economic policy this paper notes that integration of transition economies into the global trading system has been surprisingly successful almost all the countries in transition from central planning have accepted the wto rule based system in principle even if there are variations in trade policies and performance and have generally pursued multilateral non discriminatory trade policies in particular the potential danger of regionalism proving more attractive than multilateralism has not eventuated the revealed behaviour of policymakers suggests that trade liberalisation is a good rule of thumb and regional groupings among transition economies have been insignificant despite a proliferation of new currencies varying exchange rate regimes and differing degrees of currency convertibility the general pattern has been to accept convertibility for current account transdactions and in many cases to extend this to a de jure commitment and to allow substantial capital account convertibility a general policy conclusion in favour of more open and non discriminatory trade and exchange policies have passed the test of acceptability by policymakers in over two dozen countries in this category

measuring the reaction of monetary policy to the stock market movements in the stock market can have a significant impact on the macroeconomy and are therefore likely to be an important factor in the determination of monetary policy however little is known about the magnitude of the federal reserve s reaction to the stock market in part because the simultaneous response of equity prices to interest rates makes it difficult to estimate this paper uses an identification technique based on the heteroskedasticity of stock market returns to measure the reaction of monetary policy to the stock market we find a significant policy response with a 5 percent rise fall in the s p 500 index increasing the likelihood of a 25 basis point tightening easing by about a half

on the virtues of privatization when government is benevolent abstract this paper shows that privatizing a public firm can be welfare improving even if the government is a welfare maximizer we consider a setup where the firm s owner a profit maximizing entrepreneur or a benevolent government employs a manager who can invent and implement an innovative production technology wage arrangements are optimal given the verifiable information all parties behave rationally and the information structure is the same in both governance modes nevertheless privatization turns out to be preferable in a wide variety of situations government ownership yields the first best if producing under the old technology is not viable

strategic behavior and consolidation in the agricultural biotechnology industry we develop a model explaining the consolidation patterns in the agricultural biotechnology industry among different consolidation and cooperation mechanisms we consider collaborative and licensing agreements joint ventures acquisitions and exchanges of ownership and spin offs the key results derive from the benefits of coordinated actions distinction between transferable and nontransferable payoffs the substitutability complementarity and the importance of the managers noncontractible investments and access and expansion of markets results from the model are used to examine the cooperation and consolidation activities for four major players in the agricultural biotechnology industry dupont dow chemical monsanto and novartis copyright 2003 oxford university press

entrepreneurs and new ideas we study how early stage new ideas are turned into successful businesses even promising ideas can be unprofitable if they fail on one dimension such as technical feasibility correspondence to market demand legality or patentability to screen good ideas the entrepreneur needs to hire experts who evaluate the idea along their dimensions of expertise sharing the idea however creates the risk that the expert would steal it yet the idea thief cannot contact any other expert lest he should in turn steal the idea thus stealing leads to incomplete screening and is unattractive if the information of the other expert is critical and highly complementary in such cases the entrepreneur can form a partnership with the experts thus granting them the advantage of accessing each other s information yet very valuable ideas cannot be shared because it is too tempting to steal them

agglomeration economies and productivity in indian industry abstract the primary objective of this paper is to examine the extent to which agglomeration economies contribute to economic productivity we distinguish three sources of agglomeration economies 1 at the firm level from improved access to market centers 2 at the industry level from intra industry localization economies and 3 at the regional level from inter industry urbanization economies there is considerable variation in the sources and magnitudes of agglomeration economies between industrial sectors in particular our results indicate that access to markets through improvements in inter regional infrastructure is an important determinant of firm level productivity whereas benefits of locating in dense urban areas do not appear to offset associated costs

urban diversity and economic growth at the risk of some simplification it is possible to identify four periods of intense study of cities by economists each of these has led to an increased understanding of the economics of urban areas and the unique role played by cities in the modem economy the first of these periods occurred in the decade after world war i only about ten years after the truck revolutionized the transport of goods within urban areas this period included the first systematic empirical analysis of the forces affecting the location of firms and households within cities robert murray haig 1926 and a number of other microeconomists at columbia analyzed the spatial pattems of manufacturing activity in lower manhattan and in the rest of new york city haig jmd his colleagues devoted considerable attention to where things belong in an urban area p 402 providing the first systematic economic analysis of urban spatial structure for example they analyzed the garment industry concluding that it was destined by nature to disperse north of 14th street and predicting that it would follow the estabhshed spatial pattem of the cooperage barrelmaking industry standardization in size and quality of barrels had meant that identical barrels could be made throughout the new york metropolitan area even in new jersey and the introduction of the truck meant that they could be transported cheaply throughout the region and exported the second of these periods though not in chronological order began in the mid 1960s it formalized many of the insights about location incentives within urban areas which had been uncovered a half century before mixed them with the logic of heinrich von thunen s 1826 ancient theories about agricultural crops and land values and applied them to the hotisehold sector the works of william alonso 1964

opening the black box of innovation a common feature of the existing patent race and endogenous growth literatures is their representation of r d activities as being performed by a collection of individuals playing simultaneously the roles of financier creator owner and user of the innovation in practice however r d takes place either within firms where researchers inventors are subject to employment contracts or through contractual agreements between independent research units and users of their innovations in both cases the contractual provisions on how to finance the research activities how to share property rights on innovations and how to structure the monetary compensations to the inventors are complex and suggest that the aggregated view of the r d process may be too limited

formation of hub cities transportation cost advantage and population agglomeration abstract many cities are located on rivers or coasts such cities developed as transportation hubs or markets for interregional trade since these locations provide better access to other regions local products are collected at such hubs and interregional trade then takes place among these transportation hubs as the volume of trade between hubs increases more workers are needed in order to meet labor demand for shipping and handling commodities resulting in population agglomeration at such hubs formalizing the mechanism described above this paper constructs a simple three location general equilibrium model in which transportation hubs and population agglomeration emerge endogenously

stock market wealth and consumption this paper explores the link between changes in the aggregate value of corporate stock and changes in consumer spending it presents data on the distribution of corporate stock ownership based on the 1998 survey of consumer finances it also uses time series evidence on the comovement of stock market wealth and various categories of consumer spending to calibrate the wealth effect it concludes that in the year after a change in stock market values consumer spending is likely to rise by between one and two cents for each dollar increase in the value of corporate stock

shirking sharing risk and shelving the role of university license contracts abstract in this paper we develop a theoretical model of university licensing to explain why university license contracts often include payment types that differ from the fixed fees and royalties typically examined by economists our findings suggest that milestone payments and annual payments are common because moral hazard risk sharing and adverse selection all play a role when embryonic inventions are licensed milestones address inventor moral hazard without the inefficiency inherent in royalties the potential for a licensee to shelve inventions is an adverse selection problem which can be addressed by annual fees if shelving is unintentional but may require an upfront fee if the firm licenses an invention with the intention to shelve it whether the licensing contract prevents shelving depends in part on the university credibly threatening to take the license back from a shelving firm this supports the rationale for bayh dole march in rights but also shows the need for the exercise of these rights can be obviated by contracts

shifting proximities the maritime ports sector in an era of global supply chains hall p v and jacobs w shifting proximities the maritime ports sector in an era of global supply chains regional studies economic geographers argue that spatial and non spatial dimensions of proximity are central to innovation and collective action the various dimensions of proximity in relation to maritime ports are examined global supply chains represent a shift in organizational and cognitive proximities between seaports and among port users in the process extra local relationships have become even more influential in maritime port development as organizational proximity between dominant port users has increased through vertical and horizontal integration territorially based institutional and social proximities especially as regards stable and shared regulatory systems are increasingly important as a counterbalance to ensure openness to innovation and upgrading hall p v et jacobs w des proximites en pleine evolution les ports maritimes en periode de chaines d approvisionnement mondial