externalities property rights and the allocation of resources in major league baseball most economists who have analyzed professional baseball have concluded that two distinctive features of its labor market the reserve clause and player draft influence the distribution of wealth between players and owners but do not affect the allocation of playing talent among teams such conclusions which are strongly at variance with laymen s views of such matters are derived from theoretical considerations rather than empirical examinations our paper examines data from the two decades of major league history and concludes that on the basis of that data the empirical generalizations of previous economists do not appear to be justified

the transaction costs paradigm 1998 presidential address western economic association 1998 presidential address western economic association though the idea can be traced to david hume and adam smith the path breaking first economic analysis of transaction costs did not occur until 1937 when ronald coase published the nature of the firm 1 stigler and boulding perspicaciously reprinted coase s paper in the famous aea readings in price theory 1952 but for a quarter of a century it had no real impact on the profession in the 1940s two significant works were published which touched on transaction costs but these sparks did not ignite a fire 2 the transaction costs paradigm began to blossom in the early 1960s again it was coase who supplied the primum mobile his great paper on social cost was published in early 1961 though aaron director dated that issue of journal of law and economics as 1960 ronald had company this time george stigler s article on information cost came out later the same year and kenneth arrow s work on the appropriability of returns to inventions appeared in 1962 3 the combined wisdom of three brilliant men would perhaps not have been enough except that by the early 1960s science was on their side jargonistic articles on economic development flooded the journals throughout the 1950s but by 1960 economists were beginning to question the explanatory power of this kind of economics after the clarion call of friedman s work on the consumption function a few years earlier in 1957 the great methodological debate began 4 the demand for testable implications was becoming more vociferous by the day and the tendency for economists to be policy oriented was losing hold as the keynesian revolution waned 5 the tide of economic explanation was beginning to swell and the transaction costs paradigm was the beautiful goddess who emerged from the foam i began graduate work at ucla in 1961 and after my ma a year later i turned to audit the price theory lectures of jack hirshleifer and armen alchian the straight as student who knew by heart everything about market imperfections was told that this kind of knowledge did not count by 1963 graduate students at ucla s department of economics were all talking property rights and transaction costs now i knew coase and stigler by heart and could even handle the questions on pricing behavior and mergers at the end of friedman s price theory 1962 moreover i was the luckiest of the lot because in late 1963 armen gave me a copy of a manuscript by harold demsetz 6 one of the great expositors of our time harold wrote about property rights and transaction costs with such clarity and force that i decided then and there to work on these topics for my doctorate since that time my research has all been on the same track in this address i shall confine discussion of the transaction costs paradigm to my own involvement this limitation is imposed by necessity i like to sail the strange seas of thought alone and have seldom read other people s publications with the seriousness they deserve after i left chicago in 1969 from 1976 to 1982 i spent my time on contracts in the petroleum industry and from 1982 to now my research has concentrated on economic reforms in china although these works are all transaction costs oriented the former is not in print because it is proprietary while the latter has mostly been published in chinese after more than half a lifetime on the seashore however i feel it is time to share my small collection of pebbles with colleagues in the wea still you would not be wrong if you feel that i am addressing the subject as if i were a stranger returning from another planet i the nature of transaction costs transaction costs must be defined to be all the costs which do not exist in a robinson crusoe economy this broad definition is necessary because it is often impossible to separate one type of transaction cost from another the toll collector of a bridge serves not only transacting customers but also police against trespassers

international migration non traded goods and economic welfare in the source country abstract this paper examines the economic effects of emigration in a source country producing both traded and non traded commodities it is shown that even if the economy faces fixed terms of trade emigration can still affect the welfare of the non migrants and the direction of the effect in this context will always be negative

interprovincial migration and the stringency of energy policy in china the authors thank eni s p a icf international shell international limited and the french development agency afd founding sponsors of the china energy and climate project we also gratefully acknowledge the support of the energy information administration at the u s department of energy we are also thankful for support provided by the ministry of science and technology of china the national development and reform commission and rio tinto china we further gratefully acknowledge the financial suppo rt for this work provided by the mit joint program on the science and policy of global change through a consortium of industrial sponsors and federal grants this work is also supported by the doe integrated assessment grant de fg02 94er61937

coase s choice of methodology this paper examines the nature of ronald h coase s realism by considering the relationship between theories and facts in his methodology i focus especially on coase s criticisms of friedman s 1953 essay as set out in a lecture published in 1982 it is shown that in developing his argument coase applies his institutional economics to address the question of how economists operating within a regulated market for ideas choose their theories he calls for realism in methodology and carries out an empirical study of economists choices he explores how the profession is regulated and highlights how discourse impacts on the functioning of science a key question addressed within this paper is how can coase maintain a sociological and rhetorical view of science without falling into relativism i identify the different motives for theory choice that coase considers and show that his answer is both institutional and epistemic this helps to clarify the status of the empirical basis in coase s methodology and sheds new light on the nature of his realism i conclude by carrying out a reflexive analysis of coase s text as a text that attempts to justify the methodology on which it is itself based

emigration and welfare in an economy with foreign capital abstract this paper examines the effects of emigration on welfare of the remaining residents r in an economy producing traded t and non traded n goods with the aid of foreign and domestic capital while the existing literature has established that emigration reduces the welfare of those left behind when foreign capital is not present in the economy the analysis below suggests that with foreign capital the effect on welfare may well be reversed the paper also compares the welfare implications of remittance flows back to the source country when they are used to finance consumption and when they are used to finance capital accumulation

bee pollination and productivity growth the case of alfalfa the spread of commercial pollination has received little attention in the literature analyzing the growth in u s agricultural productivity between world war i and 1960 growers of most fruits nuts and seeds came to realize that intensive bee pollination was essential to achieve high yields alfalfa seed growers were among the last groups to adopt commercial pollination this article examines the dramatic impact that concentrating bees in alfalfa seed fields had on yields which resulted in the restructuring of the alfalfa industry the fourth most valuable commodity grown in the united states in the 1950s

international migration income taxes and transfers a welfare analysis abstract an important issue in public policy debates is the effect of international migration on welfare in source and host countries we address this issue by constructing a general equilibrium model of a two class source or host country each country produces many traded and non traded goods uses income taxes and distributes the tax receipts equally to all individuals the analysis examines the effects of permanent migration on class and national welfare we show among other things that marginal immigration hurts people already in the country regardless of whether or not non traded goods exist the presence of international capital mobility however may reverse the above result

decentralized income redistribution and immigration abstract we analyze the welfare and other effects of immigration on a system of jurisdictions with a common labor market mobile capital and redistributive tax transfer policies comparative statics analysis of a model of nash non cooperative equilibria in tax transfer policies shows that the welfare effect of immigration depends on whether immigrants are net fiscal contributors or burdens any one jurisdiction s redistribution and immigration policies generate fiscal externalities for others in the system which a central government can internalize by appropriate taxes and subsidies

why do rich countries prefer free trade over free migration the role of the modern welfare state abstract according to traditional trade theory heckscher ohlin free trade and free migration are equivalent measures of economic integration leading both to an equalization of factor prices this prediction is in sharp opposition to the observed preference of rich countries for free trade over free migration we provide an explanation for this inconsistency the redistribution policies in the countries social welfare in countries with a relatively small number of low skilled native workers is higher with free trade than with free migration due to redistribution of income towards immigrating workers

an econometric model of the u s beekeeping industry this paper presents a dynamic econometric model of the u s beekeeping industry for policy analysis and economic projections data from 1952 to 1984 were used to estimate the model by three stage least squares the model indicates that when the federal price support for honey exceeded the market price the federal program had a significant impact on several sectors of the industry a comparison of beekeeper revenue consumer expenditures and federal government expenditures suggests the honey support program was an ineffective means of supporting honey prices from 1982 through 1984

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

the fable of the bees an economic investigation ever since a c pigou wrote his books on welfare a divergence between private and social costs has provided the main argument for instituting government action to correct allegedly inefficient market activities the analysis in such cases has been designed less to aid our understanding of how the economic system operates than to find flaws in it to justify policy recommendations both to illustrate the argument and to demonstrate the nature of the actual situation the quest has been for real world examples of such defects

pollination markets and the coupled futures of almonds and honey bees simulating impacts of shifts in demands and costs honey bees have garnered much attention in recent years concerns about long term sustainability of pollinator populations have been coupled with concerns about implications for food supplies we use a novel formulation of a multiple input multiple output two season equilibrium simulation model to explore economic linkages across the markets of buyers and sellers of pollination services and honey we specify and calibrate in a tractable way the empirical relationships between pollinators and the crops they pollinate especially almonds our model highlights the sequential nature of the pollination season and implication for revenue from pollination and honey production we demonstrate how shifts in almond supply and demand and the much discussed honey bee hive health problems cause price and quantity adjustments in horizontally and vertically related markets and quantify these effects we show that the economic fortunes of the almond industry including demand growth cost concerns and the potential for new almond varieties that use fewer bees crucially affect the returns to beekeeping and the number of hives these drivers of almond economics also have substantial effects on the cost of pollination for crops that are pollinated later

ponzi schemes and the financial sector dmg and drfe in colombia abstract we use a novel dataset to estimate for the first time in the literature the effects of ponzi schemes on the formal financial sector dmg and drfe two ponzi schemes that were shut down by the colombian government in november 2008 had over half a million customers who invested funds corresponding to 1 2 of colombia s annual gdp we find that pyramid costumers obtained more loans from the financial sector and their credit standings were better than those in the respective control groups while the schemes were operating afterwards their loan stocks started to decrease and their ratings with the banking sector deteriorated prior to november 2008 deposits in the financial sector fell more in the municipalities more affected by the schemes

inducing efficiency externalities missing markets and the coase theorem the capacity of side payments to induce an efficient outcome as predicted by the coase theorem is studied side payments are formally introduced in a bimatrix game involving externalities and the resulting equilibrium is called an induced equilibrium when induced equilibria exist they weakly pareto dominate a nash equilibrium of the original game without side payments when because of externalities one market is missing an induced equilibrium always exists is uniquely valued and is pareto efficient when more than one market is missing induced equilibria may not exist may be pareto inefficient and may be pareto ranked copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

remittances and labor force participation in mexico an analysis using propensity score matching summary about 2 5 million mexicans migrated to the united states during 1997 2002 and 1 6 million of them sent remittances to their families did recipients change their labor force status in response to these remittances this question has been examined before unlike the previous studies we separate persistent from sporadic remittances and we use propensity score matching to measure differences in behavior we find limited evidence of labor force participation effects of persistent remittances which is broadly consistent with remittances being an integral part of household s income generation strategy

on generalizing the economic analysis of international migration a note the author critically examines an article by kar yui wong concerning two important well known propositions on international factor movements namely first finite international factor movements are beneficial to the nationals of the destination country but detrimental to those who are left behind in the source country and second marginal movements do not have such welfare implications the present paper by utilizing the indirect trade utility function derives results in a manner that is both direct and at once intuitively transparent

the private provision of excludable public goods an inefficiency result abstract does voluntary contracting suffice for the efficient provision of excludable public goods even in a complete information environment we find that the answer is negative the reason is that some agents may profit from not participating at the provision stage but instead negotiate access ex post

the economic analysis of international migration a generalization this note examines and extends the following two propositions that finite international factor movements are beneficial to the nationals of the destination country but detrimental to those left behind in the source country and that marginal movements do not have such welfare effects using some newly developed techniques the propositions are found to be valid irrespective of the number of goods and factors if the economy starts from the autarky position when only one factor can flow the gain of the nationals loss of those left behind will be positively dependent upon the amount of inflow outflow however if goods trade and or factor flow are initially present the propositions are in general not true summary in fre excerpt

economic shocks and crime evidence from the crash of ponzi schemes abstract in november 2008 colombian authorities dismantled a network of ponzi schemes making hundreds of thousands of investors lose tens of millions of dollars throughout the country using original data on the geographical incidence of the ponzi schemes this paper estimates the impact of their breakdown on crime we find that the crash of ponzi schemes differentially exacerbated crime in affected districts confirming the intuition of the standard economic model of crime this effect is only present in places with relatively weak judicial and law enforcement institutions and with little access to consumption smoothing mechanisms such as microcredit in addition we show that with the exception of economically motivated felonies such as robbery violent crime is not affected by the negative shock

resisting migration wage rigidity and income distribution like any trade activity migration tends to generate gains to all parties involved the migrants as well as the native born population with a mal functioning labour market however migration will exacerbate the imperfections in the market consequently it may lead to losses to the native born population which are typically quite sizeable another economic problem raised by migration is the additional toll imposed on the welfare state income distribution institutions being unable to exclude migrants from the various entitlement programmes and public services the modern welfare state can find migration rather costly these two economic considerations may help explain the resistance to migration despite the pure gains from trade benefits created by it immigration could be more beneficial to the native born population when labour markets are better functioning and the welfare programmes are less comprehensive this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item