information on strikes and union settlements patterns of coverage in a newspaper of record the authors investigate whether the new york times coverage of strikes and non strike wage settlements in large bargaining units changed during the 1980s a time when a transformation of industrial relations is said to have taken place although the total number of new york times articles on such events declined during the 1980s the authors find that when appropriate control variables are included in the analysis the apparent drop in coverage disappears important variables determining the extent of news coverage were occurrence of a strike strike duration number of workers involved occurrence of federal intervention key industry status that is whether the affected industry was among those industries identified as exceptionally important for wage setting and proximity to new york city they speculate that the reduced number of articles may simply reflect a decreased incidence of strikes

does product market competition increase strike activity evidence from the uk although many studies have examined the effect of labour market characteristics macroeconomic fluctuations and workplace level factors on strike activity much less is known about industry level determinants of industrial conflict and in particular the role of product market competition i examine the effect of competition on strike activity using evidence from a natural experiment of policy reform the introduction of cartel legislation in the uk in the late 1950s my econometric analysis which takes advantage of the fact that different industries were affected to varying degrees by cartel policy establishes that both the number of strikes and the number of working days lost as a result of strikes increased significantly when competition intensified after the abolition of cartels i propose an interpretation of these results with reference to theoretical models of bargaining with asymmetric information

imperfect information and strikes an analysis of canadian experience 1967 82 to test their hypothesis that the propensity to strike is affected less by the actual balance of bargaining power than by the parties uncertainty about their relative power the authors perform a probit analysis of data on 1 871 collective agreements negotiated in the canadian manufacturing sector between 1967 and 1982 they find consistent with their hypothesis that some characteristics of individual bargaining units the relevant industries and the economy as a whole that affect both the quantity and reliability of information needed to assess relative bargaining power do have significant value in predicting strike incidence across industries and over time

career concerns incentives and endogenous learning in labour markets models of career concerns provide a framework for analyzing the actions that may be taken by a manager in an attempt to influence performance signals that the market uses to update its beliefs on her productivity and the incentive problem that arises if such actions do not coincide with those that maximize the financial return to a firm s owner this survey provides a formal introduction to the main types of models of career concerns hidden action and hidden information and discusses some extensions of these models applications of the career concerns framework to explain aspects of managerial behavior and the form of labor market institutions are emphasized copyright 1992 by blackwell publishers ltd

competing models of international lending activity abstract four competing models of the world bank s lending to developing countries are constructed and econometrically estimated by pooled time series and cross section data the analysis suggests that a model combining economic and political determinants performs best besides per capita income inflation balance of payment and budget deficit external debt and past growth political determinants such as the capitalist climate or political instability are also important as well as a recipient country s former status as a colony or dominion this politico economic model is successfully used to forecast the distribution of ibrd loans and ida credits among the developing countries

strikes and holdouts in wage bargaining theory and data we develop a private information model of union contract negotiations in which disputes signal a firm s willingness to pay previous models have assumed that all labor disputes take the form of a strike yet a prominent feature of u s collective bargaining is the holdout negotiations often continue without a strike after the contract has expired production continues with workers paid according to the expired contract we analyze the union s decision to strike or hold out and highlight its importance to strike activity strikes are more likely to occur after a drop in the real wage or a decline in unemployment

employment rents and the incidence of strikes a new measure of labor market tightness on workers behavior the employment rent is modeled as a determinant of workplace conflict an empirical estimate of the employment rent workers expected cost of job loss is calculated it is argued that the cost of job loss affects strike incidence this relationship is tested by estimating an econometric model of strike incidence for the united states from 1955 to 1983 the cost of job loss is shown to explain a large percentage of the variation in strike incidence the cost of job loss is a far superior explanatory variable than the unemployment rate which is commonly used in strike models copyright 1987 by mit press

the shape of public choice to come some predictions and advice in the normal course of events elders are sometimes called upon to reflect on the past while the more youthful set about deciding the future for the most part i shall honor the dictum but offer some unsolicited advice on what needs to be done and be so bold as to predict these suggestions will be acted upon a kind of self fulfilling prophecy of course the advice may be rejected or ignored what then

inflation and social consensus in the seventies it is widely believed that the two oil price shocks of the i 970s played a major role in the increase in inflation in industrial countries while this hypothesis is consistent with the timing of changes in inflation at the global level it seems to break down when applied to individual countries cross sectionally for example over the period i973 9 switzerland had an average inflation rate of 4 7 while in neighbouring italy inflation averaged i5 6 over the same period furthermore inflation in the pre opec period i97i 2 was actually higher in switzerland than in italy it seems that a supply shock explanation of inflation in the seventies also requires an explanation of why different countries responded so differently to a similar set of shocks at the world level the purpose of this paper is to offer such an explanation and to test the hypothesis with a cross sectional equation accounting for differences in average inflation rates over the period i973 9 in eighteen oecd countries this time period includes the year of the first opec shock i 973 and the following six years up to the time of the second opec shock the hypothesis to be tested is set in the framework of a model similar to that of brunner et al i 980 the key features of the brunner model are that the adjustment of real wage expectations is subject to lags and that labour supply is positively related to the difference between the perceived real wage and the expected or target real wage given these two assumptions a negative supply shock gives rise to a period of stagflation whose intensity will be greater the slower is the speed of adjustment of real wage expectations the model of this paper extends the brunner model in three ways first across countries the speed of adjustment of real wage expectations or targets is assumed to depend positively on the degree of social consensus as proxied negatively by an indicator of average long run strike activity second the model allows for the possibility of inflation inertia or systematically incorrect inflation expectations as well as a sluggish adjustment of real wage expectations third the model incorporates the hypothesis that money supply growth will vary across countries according to variations in inflationary pressures as perceived by governments the first section of the paper provides a discussion of the rationale for the key proposition regarding strikes and social consensus as well as a brief discussion of the role of wage bargaining institutions section ii develops a theoretical model which yields a reduced form cross sectional equation relating the average i 973 9

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

is strike behavior cyclical we examine cyclicality of strike frequency and incidence using canadian data on strikes and contracts total strike frequency exhibits significant procyclicality to which within contract strikes contribute appreciably evidence is weaker for procyclical behavior of contract expiry strikes both in total and disaggregated by issue strike incidence is also procyclical particularly in manufacturing though the procyclicality here is confined to strikes over nonwage issues these results mirror those obtained by analyzing the frequency of strikes in the contract data industry specific cyclical variables positively affect strike incidence in manufacturing but region specific variables have no effect

learning and capacity expansion under demand uncertainty a competitive dynamic model of entry into a new industry is set up and both its positive and normative aspects are studied the main assumptions are that entry is sequential that it occurs under imperfect information on the size of the market and that better information becomes available as time goes on the gradual improvement in information is due to the fact that later waves of entrants are able to observe the profitability of earlier entrants the major results reported here under suitable restrictions are that the equilibrium rate of entry is monotonically decreasing over time and that at any given point in time it is smaller than the socially optimal one when a new market opens as a result of a product being newly invented for instance or when an existing market starts to expand uncertainty with respect to its size is likely to prevail as a result of this uncertainty entry of firms into such markets typically will occur in waves some firms will enter initially while others will wait to see the consequences of that initial entry if the experience of early entrants is favourable entry will continue otherwise entry will cease hence with the introduction of a new product two phases are associated the growth phase typified by positive operating profits for existing firms and expansion of productive capacity due to entry of new firms and the mature phase typified by erosion of profits and fixed total productive capacity empiricists estimating the time pattern of investments during the growth phase have found an s shaped diffusion curve see mansfield 1986 and gort and klepper 1982 the purpose of the present paper is to theoretically characterize these time patterns and to investigate their welfare properties any attempt to model the type of entry described above must account for differences in both entry dates and resultant earnings in other words the theory must explain why the realized earnings of different cohorts of firms are not equal often such ex post differences are reconciled by assuming heterogeneity with respect to some latent underlying characteristic managerial ability for instance and attributing differences in earnings to differences in that characteristic in this paper instead earning differentials are attributable to luck only ex ante all firms are technologically identical and equally capable of forecasting market prospects and rationally acting upon those forecasts ex post some firms turn out to have entered at the right time and are for that reason more profitable the model developed in this paper analyzes a parametric example of a sequential entry problem in which the uncertainty over market size is gradually resolved over time in a bayesian setting in an environment of perfect competition and constant returns toscale a free entry equilibrium concept is introduced and the aggregate implications of the time path of investments are derived i then compare this actual time path to the optimum this comparison is interesting because the equilibrium is analysed under the

a policy to prevent rational test market predation this article models the problem of designing predation policy as one of structuring incentives so that firms choose not to practice predation but to engage in nonpredatory competition the government decides how intensively to search for possible predatory incidents how thoroughly to investigate each incident and how much to penalize convicted predators we consider test market bluffing predation in which incumbents with high costs can deter entry into a national market by pretending to have low costs if fines are merely transfers the optimal fine is the largest one that is feasible furthermore the government should avoid injunctions against continued predatory pricing

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

imperfect information and dynamic conjectural variations this article analyzes oligopoly interaction in an environment where firms are imperfectly informed about the evolution of the market demand curve the analysis develops a two period cournot framework under the assumptions that demand shifts are positively serially correlated that firms never directly observe the demand curve and that firms never observe the previous quantity decisions of rivals firms do draw inferences about the position of the demand curve from past observations on prices consequently the current output of a firm will influence the current market price which will then influence rivals inferences about future demand the future output decisions of rivals will respond accordingly the theory predicts negative dynamic conjectural variations essentially a firm perceives that an increase in its output will lower the current market clearing price which will cause rival firms to think that the demand curve has shifted down and hence induce them to lower their outputs in the future

the economic and organizational basis of early united states strikes 1900 1948 this paper examines the question of whether economic factors played an important role in determining strike activity in the united states in the first half of the twentieth century a review of recent research shows one author david snyder concluding that economic factors mattered little during that period and that union organization and political variables explained much more and another p k edwards concluding the opposite a retest of these authors analyses employing ordinary least squares regression and a variety of measures suggests that snyder s position is more sound this author argues however that edwards was correct in claiming that economic factors are major determinants of the extent of unionism as well as of strike activity and thus one needs to apply a two stage least squares test of the snyder hypothesis when that is done the results show that economic variables are highly significant determinants of strike activity throughout the pre 1949 period but for the subperiod 1921 29

irrational workers the moral economy of labor protest in egypt after comparing the predictions of marxist moral economy and rational choice theories concerning collective actions by workers in egypt in the period since the 1952 free officers coup this article concludes that a moral economy perspective is best able to explain the nature and frequency of these protests the supporting evidence is the correlation between labor protest and violations of workers feelings of entitlement as manifest in declining real wages or disruptions to established patterns of wage differentials the targeting of state institutions combined with the fact that workers have eschewed actual production stoppages in favor of symbolic protests indicates a view of reciprocal rights and obligations between themselves and the state the latter reinforces the moral economy by combining significant concessions with its repressive response to labor protests marxism proves unable to explain the largely defensive and reactive nature of labor protest while rational choice theory is reduced to efforts to quantify workers reactions to this repression

military expenditures and bureaucratic competition for rents this paper has provided empirical evidence on the relationship between transfers to the military and the degree of political competition in a country it has been argued that in both democratic and autocratic rent seeking societies the military may have a significant advantage in capturing government transfers in democratic societies the role of the military as guardian of national security puts it in a unique position to seek transfers as a result military elites in these countries have been quite successful in influencing the political system to increase rents to them and members of their group in dictatorships violence is an important rent seeking behavior since the military has a comparative advantage in violence it has emerged as the dominant rent seeking interest group in these countries as a result military groups dominate resource allocations in most politically unstable countries

effect of strike activity on firm value the article examines the stock market s reaction to labor management problems and employee strikes a discussion is presented about various categories of strike costs and cumulative abnormal return

government introduced price distortions and growth evidence from twenty nine developing countries from the time adam smith s wealth of nations was published in 1776 until today the role of the state in the economic affairs of nations has been probably one of the most debated subject matters not only among economists but also among other social scientists a free competitive market and pricing system has since been recognized as a crucial factor in the allocation of resources indeed in the economic development of nations at the national as well as international levels there is a growing interest in the role of governmental policies in particular those policies that directly or indirectly influence the working of the market mechanism and the incentive system in the context of nations economic growth an example of the growing interest is the rather unequivocal focus placed in recent years by the world bank and the international monetary fund imf on the need for liberal competitive and outward looking policies in promoting economic growth in developing countries an area of particular concern has been that of the government introduced price distortions in several developing nations historically speaking such policies have grown over time as a part of the so called grand socialistic and planned economic policies and programs undertaken by several developing nations since they attained political independence these nations embarked upon such policies in pursuance of the promises that were made by their political leaders during their freedom movements against the colonial powers the imposition of controls by governments over domestic prices interest rates wages foreign trade and exchange rates for example has caused severe distortions in the economies of these nations and such distortions are not without bearing on economic growth according to the world bank 1983 2 coun

strategic information manipulation in duopolies abstract this paper studies a duopoly market in which firms can draw inferences concerning uncertain market demand from observations of their outputs and market price firms may adjust their outputs away from myopically optimal levels to affect the informativeness of the market price because firms quantities are observed firms can manipulate the extent to which belief revision occurs rather than the direction in which beliefs are revised as in signal jamming models we develop conditions and present examples under which the value of information is positive and negative and under which firms will increase or decrease quantity to manipulate information journal of economic literature classification numbers d80 l13

rent seeking and institutional stability in developing countries although developing countries are most often associated with institutional instability most are fairly stable and may be considered extremely stable if one takes into account the fact that policies adopted by many of these nations are highly inefficient in a large number of cases post independence economic policies adopted by developing countries have resulted in very slow stagnant or even negative economic growth in more advanced and democratic countries such policies would prevent the reelection of leaders although a small fraction of the population enjoys an extremely high standard of living the majority of the population in developing countries have not experienced any significant gains in their standard of living since independence yet while there have been several coups and attempted coups many governments have remained relatively stable with some leaders remaining in power for over a quarter of a century in other cases leaders have served until their death and successors have continued uninterrupted with remarkable stability even when such leaders adopt what may be considered extremely inefficient policies why then have many institutions remained so stable the present paper argues that the stability observed in many developing countries is a result of a rent seeking equilibrium between well organized interest groups in the population that compete for wealth transfers generated by the relatively weaker and more poorly organized groups in this equilibrium the military is one of the most important interest groups that benefit from the transfers because rent seeking in these countries often involves violence the

logit estimates of strike incidence from canadian contract data logit estimates of strike incidence are made based on a unique and comprehensive data set of 2 437 collective agreements the appropriate level of aggregation since that is where bargaining occurs the results are interpreted through a theoretical framework emphasizing that strikes are more likely when the joint costs of using the strike mechanism are low relative to the cost of alternative mechanisms for achieving the same purposes such functions of strikes are to generate information elicit truth telling establish reputations provide catharsis and solve intraorganizational conflict

predictors of individual propensity to strike this article examines willingness to strike among 141 nonprofessional public school employees shortly before expiration of their contracts a questionnaire asked respondents how many days they would participate in any strike called by their union regardless of the issue or issues a strike for a low 10 wage increase and a strike for a high 24 wage increase the results suggest that the individual worker characteristics predictive of willingness to strike vary substantially among different strike goals for example it appears that militancy is related to striking for a high wage increase faithful union participation to striking in support of the union and neither to striking for a low wage increase suggesting that contrary to a common assumption not all strikes are sustained by militant workers

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

a theory of exit in duopoly we develop a duopoly model in which exit occurs because of the existence of fixed costs or opportunity costs each firm enters the market knowing its own cost but not that of its opponent as times goes on each firm becomes increasingly pessimistic about the cost of its remaining rival the time of exit is the only strategic variable so that our model is a war of attrition in contrast to the classic war of attrition however we assume that with positive probability each firm s costs may be low enough that staying in forever is a dominant strategy thus our model unlike the classic one has a unique equilibrium

political regimes and economic growth arguments that relate regimes to growth focus on property rights pressures for immediate consumption and the autonomy of dictators while everyone seems to agree that secure property rights foster growth it is controversial whether democracies or dictatorships better secure these rights the main mechanism by which democracy is thought to hinder growth is pressure for immediate consumption which reduces investment only states that are institutionally insulated from such pressures can resist them and democratic states are not the main argument against dictatorships is that authoritarian rulers have no interest in maximizing total output these views are summarized in turn

experimentation and learning in a differentiated products duopoly abstract this paper explores price setting behavior in the context of a duopoly in which firms are uncertain about the degree of product differentiation firms learn from the difference in their realized demands in light of the price differential the informativeness of this market experiment is shown to be increasing in size of the price differential in markets with highly substitutable products price dispersion is enhanced as firms adjust their prices so as to generate more information in markets with highly differentiated products firms compress their prices as they prefer to reveal less about the extent of product differentiation journal of economic literature classification numbers d43 d83 l13

endogeneous protection factor returns and resource allocation we consider a heckscher ohlin samuelson trade model with two lobbies representing the interests of factor owners and two political parties the lobbies contribute resources to politics equating their returns to political and economic activity at the margin while the parties maximize their probability of election trading off general voter dissatisfaction with protection against the electioneering resources that favorable policies attract from the lobbies the equilibrium level of protection of a factor and its expected rate of return increase with its relative endowment if this relative endowment is high low then the factor will be better worse off than under free trade but at intermediate factor endowment ratios both factors will be worse off under parameter changes making lobbies more sensitive to the commodity price the lobbies contribute more resources to politics and can both be worse off even though the parties are proposing lower trade distortions

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

the institutional framework and economic development the compound growth rates of per capita output and farrell type efficiency measures for 115 market economies over the period 1960 80 were compared with measures of political civil and economic liberty it was found that the institutional framework has significant and large effects on the efficiency and growth rate of economies politically open societies which subscribe to the rule of law to private property and to the market allocation of resources grow at three times the rate and are two and one half times as efficient as societies in which these freedoms are abridged

strikes are more common in countries with majoritarian electoral systems strikes are more common in those oecd countries where the legislature is elected in single member districts smd than in those where it is elected by proportional representation pr furthermore more working days are lost due to industrial conflict in countries with smd i suggest a politico economic explanation for these rarely noticed empirical regularities further empirical testing including controls drawn from previous strike research reveals that they hold up in a variety of econometric specifications

union competition and strikes the need for analysis at the sector level international comparative research has found that strike incidence is higher where two or more unions bargain with an employer multi unionism as is common in most european countries than where only one union does all else equal two proposed explanations for this relationship both invoking inter union rivalry as the main dynamic are that under multi unionism unions a make propagandistic use of strikes to attract members or b compete with each other by bidding up bargaining demands to date the evidence bearing on these hypotheses has been equivocal because the author argues researchers have focused on activity at the national level rather than at the lower levels that are more commonly the nexus for strike formation the author performs empirical tests using industry sector level data for seven european countries for the years 1990 2006 and finds evidence clearly favoring the competitive bargaining hypothesis over the propaganda hypothesis

sacrifice tests for predation in a dynamic pricing model ordover and willig 1981 and cabral and riordan 1997 meet ericson and pakes 1995 abstract to detect the presence of predatory pricing antitrust authorities and courts routinely ask whether a firm sacrifices current profit in exchange for the expectation of higher future profit following the exit of its rival because predatory pricing is an inherently dynamic phenomenon we show in this paper how to construct sacrifice tests for predatory pricing in a modern industry dynamics framework along the lines of ericson and pakes 1995 in particular we adapt the definitions of predation due to ordover and willig 1981 and cabral and riordan 1997 to this setting and construct the corresponding sacrifice tests

taking stock collective bargaining at the turn of the century examining data from two national surveys of matched pairs of union and management lead negotiators the authors evaluate the current state of practice in labor relations and test several propositions related to the transformation of american industrial relations they find that 30 40 of the parties reported that they had introduced negotiated workplace level innovations or engaged in strategic level interactions both important aspects of transformation also nearly half of the parties reported experience with use of interest based bargaining practices at the same time relatively few parties reported relationships that were improving and views on the extent of change differed between labor and management thus there is an identifiable path supporting the transformation process but only a minority of bargaining relationships are moving down that path

the politico economic behavior of authoritarian governments the study of the interaction between the economic and political behavior of governments in democratic western capitalist countries has yielded many insights in the three decades since anthony downs an economic theory of democracy was published in 1957 similarly the study of the overt political component of the economic decision making process in authoritarian eastern centrally planned economies has attained a great degree of refinement in the post stalin era for most countries in the world however neither model democratic curn capitalist nor authoritarian curn centrally planned applies very well rather there is a third type more or less authoritarian curn more or less capitalist which reasonably describes a large number of developing countries it is likely that the behavior of these countries governments will not be well explained by models which fit the other two types the purpose of this paper is to propose a framework in which the economic decisions of authoritarian governments can be analyzed without assuming that the government is the only economic agent thus in basically capitalist countries where elections are not the means by which power is validated and transferred 1 the political economic behavior of government an individual s first formal exposure to economics is usually a principles text in early chapters of most of them the economic system is described as being determined by the interaction among three groups of economic agents households firms and governments the latter which only began to be considered an economic agent of important status with the advent of keynesian analysis is in such texts initially accorded a place of equality with the other two but soon is presumed to behave entirely differently while households and firms exhibit maximizing behavior in their own self interest the government s economic actions are motivated by a desire to stabilize and

dumping and signaling abstract a model of predatory dumping based upon incomplete and asymmetric information is developed the foreign firm may induce exit by the home firm through acting like a low cost competitor irrespective of its actual costs the home firm must infer the foreign firm s cost through its export price by tying the export price to the price that the foreign firm charges in the foreign market a home county antidumping law raises the cost of signaling low production costs to the home producer the law has signal enhancing or inhibiting effects which may adversely affect the home firm with ambiguous welfare consequences

democracy dictatorship and decision costs this paper tries to help bridge the inductive and the deductive traditions in the study of democracy i identify two empirical patterns which i call the paradox of conflict and the paradox of decision importance more conflict ridden societies are both less likely to be democracies and when democratic more likely to be consensual rather than majoritarian similarly important revolutionary regime transforming decisions are less likely to be democratic but when democratic they are more likely to be consensual i use a decision cost minimizing model of democracy to explain those patterns the model is developed out of the metaphor of institutions as decision producing firms attempting to maximize quality and minimize cost of those decisions its main intellectual source is the transaction cost minimizing view of organizations but the formalism owes most to buchanan and tullock s calculus of consent

political instability in africa a rent seeking approach the foregoing analysis developed the paradigm of self interest motivated revolutionary activities in effect the construct presented differs from the by product theory developed by tullock only in its specific modeling of government created rents as the engine which drives the violent political behavior the empirical test of the positive relationship between rent creation by the government and the amount of destabilizing political activity yields strong support for the structuring of politically destabilizing activities as rent seeking in nature it is the authors hope that further empirical investigation and a more general and rigorous modeling of revolution as a rent seeking activity will become an important part of the literature in public choice

on the inefficient extraction of rents by dictators most countries in the world are governed by autocracy that is some form of one man rule be it monarchy or dictatorship dictatorship is a prevalent form of autocracy with a majority of the world s population living under this type of rule yet when analyzed from an economic point of view dictatorships do not appear to be efficient they are not efficient in social terms and more strangely they do not appear to be efficient from the dictator s viewpoint take one example in bulandia a fictitious country a general from the army overthrows the government and establishes himself as the supreme leader he promptly places those who helped him in the revolution in key government positions as well as granting them favors in the business world such positions and favors are considered rewards for supporting the revolution they can be considered a cost of the revolution suppose the general appoints his brother an air force colonel as head of the newly established national mining industry his brother having no background in business or engineering is to say the least not the most qualified man for the job but it is assumed that he must be granted the position in order to maintain a stable coalition he must be paid off if this is the only problem the payoff why does the dictator use such an inefficient method of pay off why doesn t he for example have the industry managed by a foreign mining company which can actually generate profits and then use these profits to

cost of living adjustment clauses in union contracts a summary of results our paper provides an explanation why cost of living adjustment cola provisions and their characteristics vary widely across u s industries we develop models of optimal risk sharing between a firm and union to investigate the determinants of a number of contract characteristics these include the presence and degree of wage indexing the magnitude of deferred noncontingent wage increases contract duration and the trade off between temporary layoffs and wage indexing preliminary empirical tests of some of the implications of the model are described one key finding is that the level of unemployment insurance benefits appears to influence the level of layoffs and the extent of cola coverage simultaneously

the political economy of distribution in developing countries a rent seeking approach economic development in many third world countries after independence has been biased in the sense that some mainly urban social groups have gained much more than the majority of the population who lives in rural areas or urban shantytowns that bias is to a large extent caused by government policy and accordingly by an uneven distribution of political influence this paper contains an analytical model reflecting the bias in the distribution of the benefits and costs of public sector activities where those activities are determined by the distribution of political influence the main elements of the distribution of political influence are determined in a rent seeking game between society different social groups

predation reputation and entry deterrence abstract economists often argue that predatory practices are irrational since there exist cheaper or more certain means to gain or maintain a monopoly our gametheoretic equilibrium analysis suggests that if a firm is threatened by several potential entrants then predation may be rational against early entrants even if it is costly when viewed in isolation because it yields a reputation which deters other entrants asymmetric information plays a crucial role in our analysis since it provides the rationale for entrants to base their expectations of the firm s future behavior on its past actions the analysis also suggests methods to treat general reputational phenomena

the economics of special interest politics the case of the tariff this paper investigates the interaction of politicians and special interest lobbies the goal is to model the equilibrium levels of redistributive policies such as taxes subsidies tariffs and regulatory decisions the model is applied throughout to the setting of tariffs by contributing to political campaigns special interest lobbies generate economic returns higher tariffs generate revenue for import competing industries through higher product prices higher milk support prices raise dairy farm income and so forth the lobby invests to maximize these net economic returns in evaluating their chances of election politicians weigh the favorable effects of special interest money against the unfavorable association with the lobby and the social cost of the redistributive policy section i explores the lobby s problem it describes a formalization of mancur olson s discussion of the voluntary provision of public goods and optimal contributions by lobbies to political campaigns section ii describes determination of the equilibrium tariff positions of each politician in a political campaign

the equivalence of lending equilibria and signalling based insurance under asymmetric information i present a model in which a continuum of individuals have stochastic idiosyncratic income shocks complete insurance is physically feasible but unattainable due to an information asymmetry income shocks are observable only by the individuals receiving them any insurance institution must therefore rely on self reporting of income innovations two ways of achieving incentive compatible self reporting are presented the first is a debt market with an explicit lending restriction the second is an insurance contract that linearly filters a signal transmitted by individuals the two are then demonstrated to be identical equilibrium consumption fluctuates in a random walk which is inefficient given the physical potential for complete insurance but is efficient given the information constraints the results are complementary to those of green 1987 but permit more general stochastic processes of income to be analyzed serial correlation of income reduces the efficiency of the insurance

bargaining theory inflation and cyclical strike activity in manufacturing this paper presents a theoretical and empirical analysis of cyclical movements in strike activity the first part of the paper develops a bargaining model that demonstrates the crucial role of limi

the political economy of development a cross national causality test of development democracy growth hypothesis the empirical investigation of the development democracy growth hypothesis estimates positive correlations and causal associations between development and democracy and democracy and growth among the preconditions for the emergence of democracy market and culture show strong and highly significant positive effects which are largely transmitted directly development affects democracy directly and indirectly via education and investment the positive causal association between democracy and growth is transmitted both directly and indirectly via labor and welfare accordingly the hypothesized compatibility between economic development and political democracy is confirmed while rejecting the trade off between political democracy and economic growth

transaction cost economics and cross national patterns of industrial conflict a comparative institutional analysis at the core of a capitalist system is an implied coalition between labor and capital built upon a system of exchange and compromise without capital the material condition upon which labor s interests are realized would be impossible likewise without labor s consent to exchange wages for future investment capital could not procure the profits and savings necessary for its reproduction and transformation organizing stable and cost efficient class coalitions has long been recognized as not merely an economic priority but a political challenge yet some democracies have met this challenge more successfully than others for the student of comparative political economy an enduring question remains why the present study is an attempt to provide an answer that complements and integrates the more common macroand microanalytic studies of industrial conflict it is argued here that a useful approach is to explicate some of the major microeconomic dynamics that condition exchanges between labor and capital and to demonstrate how institutional devices designed to accommodate political representation and conflict resolution facilitate or impede the process of class compromise by employing the logic of transaction cost economics the analysis highlights the comparative institutional elements fundamental to economizing on the costs of exchange shaping consensus within a political economy s industrial relations system the resulting transaction cost efficiency model of industrial conflict specifies the ex ante cost factors price margin of transaction and the institutional control of bounded rationality and the ex post cost factors legislative polarized pluralism executive hegemony and the frequency of general elections central to the process of building and sustaining class coalitions the model is tested on data drawn from 19 democracies covering the years 1965 83 use of simulation models reveals the relative trade offs associated with different patterns of ex ante and ex post cost structures

the specification of econometric strike models a varma approach in the case of macro econometric strike models classical regression techniques do not deal with important specification issues 1 the question of causality between strikes and other variables 2 the choice of appropriate lag structures and 3 omitted variable bias moreover since rational bargainers would tend to avoid previous bargaining mistakes the determinants of strike activity in a given period may not apply in subsequent periods this study attempts to model post war us strike behaviour beacuse of the spurious regression problems vector autoregressive moving average varma techniques are preferred to standard regression methods for the early post war period strikes are successfully modelled in terms of unemployment and wage and price inflation there is no feedback from strikes to the other variables contrary to the predominant view that us strikes are more frequent when real wage increases are small increasing rates of wage change both real and nominal lead to more strikes for t

is there a relationship between economic conditions and political structure the results of this investigation into the relationship between political environment and economic well being are both disappointing and encouraging phone is the only measure of economic well being which is unambiguously and positively associated with democracies why this is true remains a mystery the two reasons discussed earlier are both plausible as in a third namely increasing availability of telephones reduces the costs of organizing special interest groups to the extent that active participation of special interests is a necessary condition for the emergence or continuation of democratic government telephones per capita will be related positively to the incidence of democracy

a signal jamming theory of predation we propose a new theory ofpredation based on signal jamming in our model the predator s characteristics are common knowledge while the entrant is uncertain of his own future profitability the entrant uses his current profit to decide whether to remain in the market and the predator preys to jam or interfere with this inference problem thus our model differs from those based on reputation effects in which the predator preys to signal information about himself

learning reputation and entry deterrence a chain store game with correlated entrants abstract this paper presents a chain store game in which the entrants types are correlated it argues that the uninformed incumbent will experiment to strategically learn or to remain uninformed about the entrants types and play tougher or softer initially when another potential entrant exists

effects of union organization on strike incidence in eu companies the author reinvestigates the relationship between the organizational power of trade unions and strikes based on data from the european company survey 2009 ecs 2009 and the institutional characteristics of trade unions wage setting state intervention and social pacts ictwss database which include more than 5 000 firms across all 27 european union eu member states he shows that the incidence of strikes is higher in companies for which workplace union membership is high the number of workplace unions is high and unions dominate establishment level works councils these factors interact to affect strike incidence in addition the company level effects of union organization on strike incidence vary across countries these country differences can partially be explained by differences in national trade union systems such as decentralization and membership density

incomes policies inflation and strikes in nigeria 1950 1985 an empirical investigation the effects of incomes policies and inflation on the incidence of strikes in nigeria for the 1950 1985 period are examined studies have analysed extensively the determinants of strike activity in developed countries however relatively little empirical analysis of strike determinants in less developed countries exists an attempt is made to fill this gap by including key economic organizational and institutional variables into a model that is capable of predicting the variations in strikes in nigeria a developing country with a growing unionized sector the estimated results of the model show that strikes in nigeria are positively influenced by the level of inflation the level of union membership incomes policies and time trend

democracy and development a theoretical framework a simple framework is set up to discuss the relationship between democracy material welfare and development democracy is regarded both as a good in its own right and as an input in the production of material welfare the optimum level of democracy is then related to the level of development at the optimum point the marginal cost of democracy in terms of foregone output is positive and growth is a decreasing function of the level of democracy deviations from the optimum path are described as either repressive or populist democratization is not unambiguously an optimal response to exogenous shocks

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

the impact of capital structure on advertising competition an empirical study this article examines the interaction between capital structure and advertising competition using a sample of firms that raise significant amounts of capital we find that firms whose financial leverage has decreased as a result of their new funding increase their advertising significantly more than firms whose leverage has increased we also find that these firms industry rivals respond less aggressively with their own advertising when they have more debt in their capital structure overall our results support the view that financial leverage has a dampening effect on the intensity with which a firm chooses to compete in the product market

longitudinal analysis of strike activity this article presents an empirical study of strike activity in a panel of contract negotiations for some 250 firm and union pairs evidence is presented on two sources of variation in dispute rates changes in the characteristics of the collective bargaining agreement that affect subsequent strike outcomes and the effects of lagged strikes on the incidence and duration of subsequent disputes strike probabilities are significantly affected by the duration and expiration month of the previous agreement dispute rates are also increased by the occurrence of a short strike during the previous negotiations and reduced by the occurrence of a long strike

the effect of labour relations legislation on strike incidence the impact on strike incidence of nine labour relations policy variables representing legislation in eleven canadian jurisdictions is estimated using logit analysis of 3 347 individual collective agreements mandatory strike votes compulsory dues check off and compulsory conciliation boards are associated with significantly lower strike probabilities prohibition of replacement workers and employer initiated strike votes are associated with significantly higher strike probabilities no significant association was found between strike incidence and the length of cooling off period following conciliation and negotiated or automatic reopeners policy impacts are interpreted in a framework emphasizing the influence of asymmetric inforrnation and joint costs on strikes

creating and capturing value in repeated exchange relationships the second paradox of embeddedness prior empirical studies suggest repeated exchange develops increasing value in buyer supplier relationships a first order implication of this finding is that buyers will concentrate exchange among a relatively small number of suppliers to generate maximum value in relationships however buyers are equally concerned with value capture by distributing rather than concentrating exchange buyers may position themselves to capture more of the value created leaving buyers potentially conflicted concerning the choice we label this dynamic the second paradox of embeddedness distinguishing it from uzzi s uzzi b 1997 social structure and competition in inter firmnetworks the paradox of embeddedness admin sci quart 42 1 35 67 paradox driven by technological uncertainty by examining the procurement activities of a large diversified manufacturing company we then test for supplier and buyer behavior consistent with the conditions that give rise to the second paradox and behaviors that result from it

switching costs in the wholesale distribution of cigarettes recent theories of price wars triggered by entry assign a critical role to switching costs in explaining price and output changes earlier elzinga and mills 1998 showed that actual switching patterns following an episode of new entry in an industry are driven by the fact that buyers have different switching costs the current paper draws on transaction specific price and shipments data surrounding the 1984 1985 price war in generic cigarettes to explore the size and determinants of switching costs among wholesale cigarette distributors results show that switching costs vary across firms and are nontrivial in magnitude several implications of the findings are discussed

bargaining as search behavior under mutual uncertainty this paper presents a model of bargaining and strikes that differs from much of the existing literature it is based on the proposal by hicks 4 that a strike is a mistake the bargaining process is therefore conceived in this paper as a bilateral search problem in which both labor envisaged here as the union or union leadership and management seek the best possible position that is acceptable to the opposition a strike results when neither party makes an acceptable proposal before the end of the existing contract most previous models can be classified as either bargaining models that employ nash s assumption of pareto efficient outcomes or strike models that follow the ashenfelter johnson framework 8 1 in the latter framework the firm is viewed as an omniscient profitmaximizer that faces a constraint imposed by the concession schedule of the union this schedule as farber notes may not reflect economically rational choices of wage increases and strikes by workers 2 262 thus while the ashenfelter johnson model may serve as a reduced form representation of bargaining outcomes it fails to provide a price theoretic model of the structure of the bargaining process hayes attempts to reconcile the ashenfelterjohnson model with price theoretic behavior by viewing strikes as an optimal contracting process when labor lacks information possessed by the firm 3 hayes however retains the notion of profit maximization subject to a concession curve by assuming that the union presents ex ante a menu of wage strike combinations to the firm the basic structure of the bargaining process that both parties make and respond to offers is therefore ignored as in kaufman 5 this model stresses the bilateral nature of bargaining unlike kaufman emphasis is placed on the structure and object of the search process it is assumed that both parties formulate reservation positions wages above or below which continued conflict is preferred bargaining represents the attempt by each side to find or influence the reservation position of the opposition in the next section the formulation and revision of reservation positions is explored these positions need not move in a specific direction for either party unless assumptions are made regarding the values of specific variables the smoothly declining concession schedule

collective bargaining in small firms preliminary evidence of fundamental change this analysis of 481 negotiations in michigan over the period 1987 91 suggests that fundamental changes may have occurred recently in collective bargaining in small firms only 33 of the negotiations conformed to the traditional model of arm s length collective bargaining the balance involved either highly contentious or highly cooperative relations further in only one sixth 17 of the cases was the contract settled within one week before or after the contract expiration delays were more common and longer in negotiations in which settlements were implemented unilaterally by management over labor s objections than in cases involving strikes concessions figured prominently in the majority of the negotiations in the sample with a shift from wage to benefit concessions occurring during the period examined

the determinants of strikes in the united states 1900 1977 this study aims to assess the recent debate that has emerged in the literature over the economic and organizational political models of strikes and to propose and test a synthesis of those models as an explanation for the pattern of strike activity in the united states since 1900 the paper begins with a review of strike activity in the post 1900 period and then develops a conceptual framework incorporating six factors the size of union membership economic conditions political events institutional arrangements psychological variables and the extent of rival unionism to explain this historical pattern the second part of the paper contains a regression analysis of strike activity over the 1900 1977 period the regression results show that both the economic factors of unemployment and inflation and various noneconomic factors such as changes in union membership the outbreak of world war ii and enactment of new deal legislation are significant in explaining variations in strike activity during t

the determinants of strike incidence and severity a micro level study this paper investigates the determinants of strike incidence and severity during labor contract negotiations the author develops a model that considers the forces influencing both unions willingness to strike and employers willingness to take a strike and estimates it using data describing 1 050 negotiations in u s manufacturing during the 1971 80 period the results indicate that strike incidence is influenced by the gender composition of the labor force demand fluctuations in the product market location in a right to work state the number of workers in the bargaining unit union density in the industry and the extent to which wages kept pace with inflation over the prior contract period on the other hand neither the local unemployment rate when negotiations began nor the inflation rate over the term of the expiring contract influenced strike incidence or severity in this sample