bluuebunny/crossref_metadata_2025 huggingface dataset:
SOME EVIDENCE ON LUMP SUM VERSUS CONVEX COSTS OF CHANGING PRICES
Authors: CARLSON JOHN A.
Published: January 2010

Two models in which price stickiness results from price adjustment costs are tested. One, an (s,S) pricing model, assumes lump‐sum adjustment costs and predicts firms will make relatively large, infrequent price changes. The other assumes convex adjustment costs and predicts frequent, partial price adjustments. Survey data of firms' price behavior reveal patterns consistent with the (s,S) model. However, many of the patterns are also consistent with partial‐adjustment rules, although the high percentage of firms which fix prices for a quarter or more casts doubt on the plausibility of the partial‐adjustment hypothesis.
BUYERS' STRATEGIES, ENTRY BARRIERS, and COMPETITION
Authors: SCHEFFMAN DAVID T. , SPILLER PABLO T.
Published: January 2010

In markets where sellers have customer‐specific investments, and buyers can make credible, but costly, commitments to switch suppliers, buyers' strategies attenuate the market power of sellers. Furthermore, since current prices and a buyer's decision to switch suppliers are related, limit pricing becomes an equilibrium. Limit prices increase with the time it takes a buyer to switch suppliers, and with buyers' switching costs, but fall with the level of sunk investments. Thus, sunk investments may restrain the sellers' ability to exert market power. The paper questions, then, the standard inverse relationship between market performance and sunk investments.
THE AMBIGUOUS CONSEQUENCES OF ANTI‐DUMPING LAWS
Authors: WEBB MICHAEL
Published: January 2010

The anti‐dumping law is most often applied in oligopolistic industries, while most analyses focus on the monopoly model. I analyze a duopoly model where a foreign firm engages in price‐based dumping. Under Cournot behavior, the anti‐dumping law has ambiguous price and welfare effects. When the home firm is a Stackleberg leader, two disquieting effects emerge. First, the home firm can use the anti‐dumping law to curtail competition even when the foreign firm does not initially engage in dumping. Second, the anti‐dumping law can increase profits of both firms at the expense of domestic consumers.
AN INCOME‐SATIATION MODEL OF EFFICIENCY WAGES
Authors: RASMUSEN ERIC
Published: January 2010

Efficiency wages are wages that exceed a worker's reservation wage. A standard explanation for such wages is “bonding”: high wages increase the cost of being discharged for misbehavior and so help ensure worker honesty. A neglected alternative is “satiation”: by decreasing the worker's marginal utility of income, the high wage decreases the benefit from misbehavior. Satiation, unlike bonding, applies even in a one‐period model, but it relies on the misbehavior having a monetary benefit and on at least part of the punishment being nonmonetary.
MONEY, CREDIT, and WAGES IN HYPERINFLATION: POST‐WORLD WAR I GERMANY
Authors: BURDEKIN RICHARD C. K. , BURKETT PAUL
Published: January 2010

An important feature of the German hyperinflation is the way in which accelerating monetization of both government and private debt by the Reichsbank fueled the inflation process. The stimulus to private credit demand arising from more rapid adjustment of money wages over this period is often ignored, however. The present empirical results strongly support the importance of wage pressures in augmenting fiscal influences on nominal money growth during 1920–1923. Our findings also suggest that wage claims provided the main conduit through which higher inflationary expectations were accommodated by faster rates of monetary expansion.
THE IMPORTANCE OF FINANCIAL CONSIDERATIONS IN DIVORCE DECISIONS
Authors: PETERS H. ELIZABETH
Published: January 2010

This paper studies the linkage between the expected financial consequences of divorce and the decision to become divorced. A standard choice‐theoretic model predicts that the probability of divorce will be negatively related to the financial opportunity cost of divorce. This opportunity cost is measured as the difference in the present values of the future income streams that a married woman might expect if she were to stay married rather than become divorced. Our empirical results indicate that the expected short‐term financial consequences are a better predictor of subsequent divorce than are the longer‐term consequences.
BIDDING TILL BANKRUPT DESTRUCTIVE COMPETITION IN PROFESSIONAL TEAM SPORTS
Authors: WHITNEY JAMES D.
Published: January 2010

The analysis and evidence here suggest that the market for star athletes in professional sports could be subject to “destructive competition”—a competitive process which drives some participants from a market even though it is inefficient for them to leave. When pursuing a league championship, the talent which turns an average team into a contender contributes disproportionately to the team's success. Teams which fail to earn enough on the last stars they sign to offset losses on their inframarginal talent will abandon a competitive market for star athletes. Other situations that involve input rivalry between producers might yield similar results.
REWARDS, EXPERIENCE AND DECISION COSTS IN FIRST PRICE AUCTIONS
Authors: SMITH VERNON L. , WALKER JAMES M.
Published: January 2010

Consistent with a model of asymmetric risk aversion, subjects in first price auctions consistently bid above the risk neutral Nash prediction. It has been argued that this is due to low opportunity cost of deviating from the risk neutral bid. We increase opportunity cost (and payoff levels) by factors of 0, 1, 5, 10, and 20, from the normal levels generating payoffs up to $250 for risk neutral subjects and observe an insignificant increase in the slope of individual bid functions. The RMSE of bids declines significantly. This is consistent with a reward/decision cost model of bidding behavior.
MONETARY REWARDS AND DECISION COST IN EXPERIMENTAL ECONOMICS
Authors: SMITH VERNON L. , WALKER JAMES M.
Published: January 2010

A survey of thirty‐one experimental studies which report data on the comparative effects of monetary rewards and opportunity cost shows: (1) several studies in which increased rewards shift the central tendency of the data toward the predictions of rational models; (2) in virtually all cases rewards reduce the variance of the data around the predicted outcome. This is consistent with a model in which rewards are balanced against decision cost in agent behavior and explicates the argument that when rational models fail it can be attributed to low opportunity cost of deviations from the rational prediction.
DISCOUNT WINDOW BORROWING AND FEDERAL RESERVE OPERATING REGIMES
Authors: PEARCE DOUGLAS K.
Published: January 2010

I find empirical evidence that bank borrowing behavior at the discount window changed when the Federal Reserve changed its short‐run operating procedures and reserve accounting rules. Under narrow Federal funds rate targeting (1975‐79), the spread between the funds rate and the discount rate was relatively predictable and borrowing was very sensitive to the spread. Under nonborrowed reserves targeting (1979‐82), the spread became more volatile and less predictable, and borrowing became significantly less sensitive to the spread. With the switch to contemporaneous reserve accounting under borrowed reserves targeting in 1984, borrowing became even less sensitive to the spread.
FISCAL POLICY AND TRADE ADJUSTMENT: ARE THE DEFICITS REALLY TWINS?
Authors: ROSENSWEIG JEFFREY A. , TALLMAN ELLIS W.
Published: January 2010

Since the mid 1980s, an extensive emprical literature has examined the relationship between U.S. Fiscal deficits, exchange rates, and trade balances. We investigate two questions that continue to spark debate: do increased government deficits casue doller appreciation, and do fiscal deficits lead to higher trade deficits (the popular ‘twin deficit’ notion)? We examine these issues fusing a five‐variable VAR system, generating posterior probability bounds to assess significance. Our result provide some evidence that growing goverment deficits apperciate the dollar, and support the “twin deficit” notion that government deficits contrinute to trade deficits.
ALTRUISM, DEFICIT POLICIES, AND THE WEALTH OF FUTURE GENERATIONS
Authors: LORD WILLIAM , RANGAZAS PETER
Published: January 2010

Available evidence suggests that the generations of most families are linked by altruistic human capital investment, rather than by altruistic financial transfers. What is the consequence of this distinction for the Ricardian Equivalence Theorem? We use a realistically calibrated overlapping generations model to show that, despite the presence of altruistic human capital transfers, deficit policies are likely to reduce the aftertax wealth of future generations. Furthermore, the majority of households in the current‐period population would vote in favor of a deficit‐financed tax cut.
POST‐REFORM INDUSTRIAL PRODUCTIVITY PERFORMANCE OF CHINA: NEW EVIDENCE FROM THE 1985 INDUSTRIAL CENSUS DATA
Authors: Mcguckin Robert H. , Nguyen Sang V.
Published: January 2010

Beginning in the late 1970s, a series of reforms to improve industrial productivity were implemented in China. We estimate changes in productivity growth and identify its sources in the post‐reform period 1980‐85. Our work is based on the newest and most comprehensive data set available on Chinese industrial activities. Productivity growth estimates are shown to be strongly affected by output specification. Overall, we find sharp increases in productivity growth in the 1984‐85 period as compared to the 1980‐84 period. Collective and private enterprises show higher output and productivity gains than do state‐owned enterprises.
PROMOTIONS AS WORK INCENTIVES
Authors: Berkowitz M. K. , Kotowitz Y.
Published: January 2010

Why do professional partnerships like law firms, accounting practices, and management consulting groups to name a few, rely almost exclusively on promotions for incentives and do not typically use incentive pay to motivate their associates? We compare three schemes (relative‐input‐based piece rates, tournaments with monetary prizes, and tournaments with promotions as prizes) within an environment characterized by group production and double moral hazard induced by possible wealth constraints on the supervisors. We find that the difficulty in implementing promotion tournaments is possibly an important reason for the existence of firms.
CORPORATE CONTROL AND PERFORMANCE IN THE 1930s
Authors: Santerre Rexford E. , Neun Stephen P.
Published: January 2010

This paper tests the Berle and Means thesis that the dissemination of corporate ownership has allowed corporate managers to pursue goals other than profit maximization. Using piece‐wise linear regression analysis with a sample of large U.S. corporations in the 1930s, a nonlinear relation is estimated between the degree of dominant stockholder control and corporate performance. The empirical results lend some support for the Berle and Means view of the “modern” corporation. In particular, a small degree of stockholder control is found to be associated with a low level of corporate performance, ceteris paribus.
THE RISING COST OF TIME OF FEMALES, THE GROWTH OF NATIONAL BRANDS AND THE SUPPLY OF RETAIL SERVICES
Authors: Pashigian B. Peter , Bowen Brian
Published: January 2010

A rise in the relative cost of time of women has increased the demand for brand names and reduced the demand for information traditionally supplied by retailers. A theory of the optimal allocation of shopping responsibilities in a two‐earner household shows that a rise in the woman's wage increases the demand for brand names by more than an increase in the man's wage. An increase in the relative earnings of women is related to a rise in male shopping, the growth of trademark filings, an increase in manufacturer advertising, and a reduction in retail personal services in several industries.
THE EFFECT OF THE MEDICAID HOME CARE BENEFIT ONLONG‐TERM CARE CHOICES OF THE ELDERLY
Authors: Ettner Susan L.
Published: January 2010

This paper analyses the impact of Medicaid home care benefits on the probability of nursing home entry and the use of formal and informal home care by disabled elderly remaining in the community. Using data from the National Long‐Term Care Survey, I find evidence that Medicaid home care subsidies reduced the probability of nursing home entry among at‐risk elderly using formal home care. Among non‐in‐stitutionalized persons, the subsidy increased the use of formal home care but led to substitution of informal with formal care for services that were non‐medical in nature.
FIRM SPECIFIC HUMAN CAPITAL AS AN EMPLOYER DISCIPLINE DEVICE
Authors: Laing Derek
Published: January 2010

The inability of employers to monitor perfectly the level of effort of their employees is a potentially serious impediment to labor market efficacy. Indeed, a number of recent studies have concluded that this may lead to involuntary unemployment (Shapiro and Stiglitz [1984], Sparks [1986]); an inefficient sectoral allocation of workers (Oi [1990], Strand [1986]); and discrimination against productively identical workers (Bulow and Summers [1986]). This paper shows that the lock‐in effect of firm‐specific human capital can help alleviate problems of worker moral hazard and thereby promote labor market performance.
FOCUSING THE SEARCH FOR GIFFEN BEHAVIOR
Authors: Johnston Richard S. , Larson Douglas M.
Published: January 2010

A recent paper by Otis Gilley and Gordon Karels showed that Giffen behavior can result from a rationing constraint which provides a second, lower bound to consumption. This model provides a far wider set of possibilities for uncovering Giffen behavior empirically than simply among the poor with limited consumption choices among a few staple items. Giffen behavior of this type can equally well result from the interaction of two binding upper constraints to the consumer's choice set. This is demonstrated with a consumer who experiences local satiation, the antithesis of the usual setting where Giffen goods are thought possible.
PRICE FLEXIBILITY AND AGGREGATE STABILITY: NEW EVIDENCE AND IMPLICATIONS
Authors: Kandil Magda
Published: January 2010

The relation between price flexibility and aggregate real stability has been subject to recent debate. Increased price flexibility decreases the response of real output to aggregate demand shifts and, in turn, is stabilizing. The increased flexibility may exacerbate, however, the size of demand shifts induced by a given underlying shock. If the latter channel dominates, increased flexibility may prove destabilizing. This paper examines the real effects of specific shocks underlying aggregate demand across a group of eighteen major industrial countries. The stabilizing effect of price flexibility appears to dominate.
DO DRINKERS KNOW WHEN TO SAY WHEN? AN EMPIRICAL ANALYSIS OF DRUNK DRIVING
Authors: Muliahy John , Sindelar Jody L.
Published: January 2010

This paper presents empirical evidence that an individual's decision to drive while drunk is negatively affected by the expected full price of driving drunk. The analysis uses a unique data set containing information on self‐reported drunk driving matched to state‐level drunk driving policies as well as to state excise taxes on beer. These are hypothesized and found to affect drunk driving. Further, we find interesting racial differences but surprisingly small differences by gender in the effect of socioeconomic and policy variables on drunk driving propensities.
THE LAW OF ONE PRICE REVISITED: NEW EVIDENCE ON THE BEHAVIOR OF INTERNATIONAL PRICES
Authors: Ceglowski Janet
Published: January 2010

This paper is an empirical investigation of the long‐run behavior of international prices at the microeconomic level. It analyzes the time‐series behavior of a unique set of carefully matched, disaggregated export prices for manufactured goods from the U.S., Gemany, and Japan over the period 1974–90. The results provide little evidence of a long‐run linear relationship between global prices of similar export goods from different sources, casting doubts on the empirical relevance of the law of one price.
TEACHING TOOLS: ECONOMICS OF CHILDHOOD IMMUNIZATION
Authors: Hemenway David
Published: January 2010

Recent outbreaks of measles and other childhood diseases have put immunization policy on the national agenda. This teaching note on childhood immunization, intended for principles courses, discusses the rationale for government involvement, the situation in the U.S., and the policies of Northern Ireland and Austria. It emphasizes (a) the use of financial incentives to motivate behavior, (b) the distinction between shifting and moving along the demand curve, and (c) the notion of negative prices (i.e., paying the customer to “buy” the item). Students especially like the idea of the demand curve extending below the x‐axis.
A LONG‐RUN VIEW OF GERMAN DOMINANCE AND THE DEGREE OF POLICY CONVERGENCE IN THE EMS
Authors: Hafer R. W. , Kutan A. M.
Published: January 2010

A preliminary for European monetary union is convergence of the European Monetary System's members' policies. Using a cointegration framework with short‐term interest rates and monetary bases as monetary policy measures, we find policy convergence has not occurred. Nor, contrary to popular belief, does the Bundesbank dominate other members' policies. Although the Bundesbank is influential, substantial policy interaction occurs among almost all the EMS countries examined. Finally, the “credibility” argument, that pegged exchange rate systems constrain and discipline monetary policymakers behavior, is undermined by our findings.
THE RELATION BETWEEN NARRATIVE AND MONEY MARKET INDICATORS OF MONETARY POLICY
Authors: BOSCHEN JOHN F. , MILLS LEONARD O.
Published: January 2010

This paper studies the relation between narrative‐based indicators of monetary policy and widely used money market indicators of monetary policy. Three principal findings emerge. First, changes in monetary policy, as measured by the narrative‐based policy indices, are associated with persistent changes in the levels of M2 and the monetary base. In contrast, changes in the narrative policy indicators lead to transitory changes in short‐term interest rates, nonborrowed reserves, and the spread between the six‐month commercial paper rate and the three‐month treasury bill rate. Third, these findings are generally robust across different narrative‐based policy indices.
ENTREPRENEURIAL ENTERPRISES, ENDOGENOUS OWNERSHIP, AND THE LIMITS TO FIRM SIZE
Authors: WIGGINS STEVEN N.
Published: January 2010

This paper develops a simple model of entrepreneurial enterprises. The analysis differs from traditional work on entrepreneurship by analyzing why entrepreneurial activities are typically conducted in small firms owned by the entrepreneur. I argue that ownership incentives are an advantage of small firms. When the probability of success of an economic activity becomes small, if becomes costly for large firms to commit to strong incentives, and small worker‐owned firms emerge. The paper discusses application of the theory to innovation, wild‐cat oil exploration, restaurants and retail trade, professional practices, salesmen, and franchising.
ARE PART‐TIME WOMEN PAID LESS? A MODEL WITH FIRM‐SPECIFIC EFFECTS
Authors: MONTGOMERY MARK , COSGROVE JAMES
Published: January 2010

This paper uses data from a survey of child‐care establishments to compare part‐and full‐time wages within two narrow occupations, one high skill and one low skill. Unlike previous studies, it controls for firm‐specific effects. We find that when firm‐specific effects are accounted for, only the low‐skill workers in our sample receive lower wages for working part‐time. On the other hand, when compensation is defined to include prorated fringe benefits, establishments appear to compensate both high‐ and low‐skill part‐timers at a lower hourly rate.
THE DEMAND FOR CIGARETTE SMUGGLING
Authors: SABA RICHARD R. , BEARD T. RANDOLPH , EKELUND ROBERT B. , RESSLER RAND W.
Published: January 2010

When taxes raise the full price of a good above that in nearby jurisdictions consumers have an incentive to cross into the lower‐price jurisdiction to make purchases. Using a simple microeconomic model of the consumer's border‐crossing decision, we derive an econometric model to test the significance of border crossing and estimate the magnitude of the resulting sales. Examining cigarette sales in the continental U.S. over the period 1960 to 1986, we find strong evidence that border crossing is a significant factor in explaining sales differentials between states. Implications for demand estimation and excise tax policy are discussed.
CATHOLIC SCHOOLS, DROPOUT RATES AND EDUCATIONAL ATTAINMENT
Authors: SANDER WILLIAM , KRAUTMANN ANTHONY C.
Published: January 2010

This paper examines the effect of Catholic schooling on high‐school dropout rates and educational attainment. Particular attention is given to the effect of selection into the Catholic school sector. After adjusting for self‐selection, we find that sophomores in the Catholic schools are still substantially more likely to graduate with their class. It is also shown that seniors in the Catholic schools are not more likely to acquire more schooling than other seniors if selection is taken into account.
FEAR AND LATHING IN THE MICHIGAN FURNITURE INDUSTRY: EMPLOYEE‐BASED DISCRIMINATION A CENTURY AGO
Authors: BUFFUM DAVID , WHAPLES ROBERT
Published: January 2010

We analyze employee‐based discrimination using historical data on workers attributes from Michigan's furniture industry. The data provide compelling evidence of employee‐based discrimination in the form of a compensating wage differential. A one percentage point decrease in the share of the work force from the worker's own ethnic group increased the wage about 0.1 percent. This response was larger in small firms, in small towns, and among certain ethnic groups. Protestants were generally paid more to work with Catholics. The additional labor costs generated by employee‐based discrimination were probably offset by several benefits which rendered complete segregation unnecessary.
RISK, RATIONALITY, AND RELIGIOUS PORTFOLIOS
Authors: IANNACCONE LAURENCE R.
Published: January 2010

This paper derives a theory of religious behavior and organization from the assumption that people seek to limit the risk associated with their religious activities. Alternative risk reduction strategies lead to different styles of religion: one centering on collective production, exclusivity, and high levels of commitment; another centering on private production, diversified consumption, and fee‐for‐service transactions. Western religions, particularly their more sectarian forms, exemplify the collective style, whereas Asian and New Age religions approximate the private.
THE EXPECTATIONAL STABILITY OF UNDEREMPLOYMENT EQUILIBRIA
Authors: MOORE BARTHOLOMEW J.
Published: January 2010

External economies of scale can generate multiple equilibria in perfect‐foresight models. With multiple equilibria comes the problem of indeterminacy: At which equilibrium will the economy arrive? Another implication of these models is that “animal spirits” may drive the economy between equilibria, say from a low‐employment to a high‐employment equilibrium and back. I show a learning algorithm can be used to eliminate the indeterminacy of these models. Socially inferior low‐employment steady states are ruled out. Stable low‐employment steady states may exist, but are not unambiguously inferior because of the presence of both positive and negative externalities.
THE FAILURE OF GOVERNMENT‐SPONSORED CARTELS AND DEVELOPMENT OF FEDERAL FARM POLICY
Authors: HOFFMAN ELIZABETH , LIBECAP GARY D.
Published: January 2010

While economists recognize that private cartels are difficult to sustain, they are too sanguine about the prospects for government‐assisted cartels. Although the state's coercive power would seem to make it an effective enforcer of cartel agreements, the political costs of enforcement can be high of segments of the industry resist. The government's solution lies in alternative strategies for raising prices. Examining government efforts to organize an orange cartel in the 1930s, we find that farmers' opposition to output cuts and quota assignments because of their distributional effects forced a policy she to purchases of “excess stocks.”
CRIMINAL DETERRENCE IN THE REDUCED FORM: A NEW PERSPECTIVE ON EHRLICH'S SEMINAL STUDY
Authors: ANDREONI JAMES
Published: January 2010

Ehrlich [1973] is perhaps the best known and most influential study of criminal deterrence. Ehrlich's structural estimation of a three‐equation simultaneous system found large and significant direct deterrent effects of penalties on crime rates. However, recent theoretical results show that higher penalties may indirectly increase crime rates by reducing the probability of conviction. Hence, a reduced‐form model is needed to learn the total effect of penalties on crime rates. Using such a model, we find that the marginal deterrent effects reported by Ehrlich vanish. This result generates much different policy implications than those widely adopted following Ehrlich's publication.
THE “RUSH TO TRANSPLANT” AND ORGAN SHORTAGES
Authors: BARNETT A. H. , KASERMAN DAVID L.
Published: January 2010

Normally, economists expect entry to improve industry performance. The effects of entry, however, can become perverse. Here, we examine the causes and effects of observed entry into the transplantation industry. Entry appears to be caused by economic rents created by the shortage of organs resulting from the current policy proscribing payment to organ donors. Under this policy, entry has little effect on the number of transplants performed. Consequently, entry spreads available organs among an increasing number of transplant centers, resulting in both increased costs and lower success rates. Thus, current policy simultaneously encourages entry and perverts its normally salutary effects.
EMPIRICAL STUDIES OF DEPRECIATION
Authors: Jorgenson Dale W.
Published: January 2010

This paper surveys empirical research on depreciation based on an econometric model of asset prices introduced by Hall in 1971 and shows how Hall's model provides a vehicle for unifying research on constant quality price indices and depreciation. An additional objective of the paper is to illustrate the use of this research in constructing an integrated system of income, product, and wealth accounts. A system of vintage accounts, like that originated by Christensen and Jorgenson in 1973, is the key to successful integration.
INDETERMINACY AND VOLATILITY OF EXCHANGE RATES UNDER IMPERFECT CURRENCY SUBSTITUTION
Authors: Mahdavi Mahnaz , Kazemi Hossein B.
Published: January 2010

We know that when currencies are perfect substitutes, exchange rates could become indeterminate. We show that even when currencies are less than perfect substitutes exchange rates could display volatility unrelated to economic fundamentals. With increases in currency substitution: (1) the exchange rate becomes more sensitive to changes in economic fundamentals, increasing its volatility; (2) the exchange rate could become indeterminate, and it is more likely to become so if governments pursue similar monetary policies; (3) currencies with high nominal interest rates would decline significantly and the exchange rate becomes more sensitive to changes in the supply of those currencies.
DISCRIMINATION, BAYESIAN UPDATING OF EMPLOYER BELIEFS, AND HUMAN CAPITAL ACCUMULATION
Authors: Farmer Amy , Terrell Dek
Published: January 2010

This article proposes a dynamic labor market discrimination model based on Bayesian updating of beliefs by the employer. The employer forms initial beliefs of worker ability conditional on group and updates his beliefs each period based on observed output. Inaccurate initial priors lead to diminished human capital investment among members of the undervalued group and may generate inequities lasting many periods or even permanently. Statistical discrimination models in which differing variances drive the inequity are special cases of the model.
TRADE PROTECTION AND THE ROLE OF CAMPAIGN CONTRIBUTIONS IN U.S. FOOD AND TOBACCO INDUSTRIES
Authors: Lopez Rigoberto A. , Pagoulatos Emilio
Published: January 2010

This article examines the determinants of both trade protection and campaign contributions for a sample of U.S. food and tobacco industries. Empirical findings indicate that while market structure variables are significant, campaign contributions are the key factor in explaining the inter‐industry levels of trade barriers in those industries studied. Thus, regardless of industry characteristics, campaign contributions have a strong persuasive role, rather than the facilitative role that most previous studies suggest.
ECONOMIC LOSSES DUE TO FORECASTING ERROR AND THE U.S. POPULIST MOVEMENT
Authors: Halcoussis Dennis
Published: January 2010

A farmer's crop mix is affected by the expected relative prices of the crops. A price forecasting error results in economic loss from planning a suboptimal mix. A new method of estimating economic loss due to forecasting error indicates that economic loss increased during the height of the Populist movement and then decreased. Using data for Kansas counties from 1882 to 1907, I estimate agricultural crop mix functions using a SUR (Seemingly Unrelated Regression) procedure and calculate the economic loss due to forecasting error. Although new market opportunities must have made farmers better oth these nnnnrtunities increased the cost of price uncertainly.
EFFICIENCY IN EMPLOYMENT BASED HEALTH INSURANCE: THE POTENTIAL FOR SUPRA‐MARGINAL COST PRICING
Authors: Bradford W. David
Published: January 2010

Currently, the majority if privately insured individuals in the U.S. are insured through their employers. This has significant implications for competition and the ability qf a “competitive” insurance industry to assure marginal‐cost pricing. The central barrier to competition arises when employers restrict their employees' ability to select among insurance carriers. Several models 4 insurer proft maximization are explored which demonstrate that supra‐marginal cost pricing is likely to persist euen when the insurance market appears “cornpetitiue.”
TRENDS IN RANKINGS OF ECONOMICS DEPARTMENTS IN THE U.S.: AN UPDATE
Authors: Scott Loren C. , Mitias Peter M.
Published: January 2010

Economics departments in the U.S. are ranked based on (1) the number of pages published in thirty‐six economics journals, (2) publications in five of the top journals, (3) output per faculty member, and (4) an index of the concentration of research in a department. Evidence shows that the top twenty departments have generally retained their positions since the 1970s, but rather large changes have occurred in departments ranked from 240 to 100. An “Economists Hall of Fame” is developed listing the top fifty individual producers of research in the thirty‐six journal set and the top five journals.
INFORMATION, CHANCE, AND EVOLUTION: ALCHIAN AND THE ECONOMICS OF SELF‐ORGANIZATION
Authors: Vany Arthur De
Published: January 2010

The strong invisible hand theorem says there is emergent order in human affairs. Smith and Hayek described it; Alchian gave the evolutionary proof. He showed that profit maximization is an emergent property of evolution when survival depends on positive profits. I extend Alchian's argument to consider how evolution discovers and adopts successful organizational forms. Evolving organizations “lock in” on inefficient equilibria. Noise and imitation—the evolutionary operators Alchian stressed—promote learning and adaptation to move the evolutionary dynamic off inefficient paths. Evolution is orders of magnitude faster than optimization; the relative time scales make the processes observationally distinguishable.
WHY HOLD‐UPS OCCUR: THE SELF‐ENFORCING RANGE OF CONTRACTUAL RELATIONSHIPS
Authors: Klein Benjamin
Published: January 2010

Court enforcement and private enforcement are not alternative contract enforcement mechanisms, but are used jointly by transactors to define the self‐enforcing range of a contractual relationship. Within this framework contract terms economize on the limited amounts of private enforcement capital possessed by transactors, either by directly controlling transactor behavior or by shifting private enforcement capital between transactors to coincide with likely future market conditions. Hold‐ups occur when market conditions change sufficiently to place the relationship outside the self‐enforcing range. This probabilistic view of hold‐ups is contrasted with opportunism more generally and with moral hazard behavior.
EVOLUTION AND SPONTANEOUS UNIFORMITY: EVIDENCE FROM THE EVOLUTION OF THE LIMITED LIABILITY COMPANY
Authors: Kobayashi Bruce H. , Ribstein Larry E.
Published: January 2010

We examine whether the unguided state‐by‐state evolution of limited liability company statutes has led to efficient interstate uniformity. Our evidence suggests significant uniformity has been produced in cases where the net benefits of uniformity are positive, and that such uniformity has not been produced by herd behavior. Our results are consistent with Alchian's intuition about the role of market processes, and suggests that the survival of efficient rules, fostered by the rational behavior of decentralized economic actors, are produced by forces beyond the control or foresight of individual lawmakers or legislatures.
APPROPRIABLE RENTS FROM YELLOWSTONE PARK: A CASE OF INCOMPLETE CONTRACTING
Authors: Anderson Terry L. , Hill Peter J.
Published: January 2010

The history of Yellowstone Park is best understood in the context of the theory of the firm as developed by Armen Alchian. In the late nineteenth century, the Northern Pacific Railroad recognized the potential amenity rents from Yellowstone and captured them by vertically integrating its monopoly on transportation to the region with the supply of tourist facilities in the park. This gave the railroad de facto ownership of the park that lasted until automobiles were allowed to enter in 1915. Thereafter the tragedy of the commons ensued and rents were dissipated instead of maximized.
DOES THE PER SE RULE DETER VERTICAL PRICE‐FIXING?
Authors: Butz David A.
Published: January 2010

Manufacturers can easily circumvent legal restrictions on resale price maintenance. They can coordinate and finance their retailers' meet‐the‐competition price guarantees and guarantee the margins of retailers damaged by price‐cutting rivals. Or they can offer various other rewards to outlets that do not discount. Hence, no retailer wants to discount first, and in equilibrium all charge the “suggested” resale price. Antitrust enforcers who want to prevent manufacturers from controlling resale prices would need to scrutinize the whole range of transfers between manufacturers and retailers. Unfortunately, doing so could stifle essential services and penalize innocent firms.
WAGE SECRECY AS A SOCIAL CONVENTION
Authors: DANZIGER LEIF , KATZ ELIAKIM
Published: January 2010

Despite the general belie that a free flow of information enhances efficiency, social convention appears to call for secrecy regarding individuals' wages. This paper provides an explanation for this convention. We suggest that the role of wage secrecy is to reduce effective labor mobility, and thereby enhance the feasibility of risk‐shifting contracts. Wage secrecy may yield a mix of mobility and risk shifting that is superior both to a spot market for labor and to a social convention that binds workers to their employers.
MUNICIPAL GOVERNMENT APPROACHES TO SERVICE DELIVERY: AN ANALYSIS FROM A TRANSACTIONS COST PERSPECTIVE
Authors: NELSON MICHAEL A.
Published: January 2010

Municipal governments are less likely to contract out for service delivery if citizen preferences for the service are heterogeneous. This conclusion is based on an analysis that extends to the public sector the empirical industrial organization literature on transaction costs and the “make or buy” decision faced by private firms. Service delivery practices for sixty‐three municipal services are examined. The findings are consistent with the proposition that the cost for writing and monitoring contracts may be an important consideration in municipal service delivery approach and that bureaucratic supply may not be as inefficient as some previous studies indicate.
WORKER EFFORT DECISIONS AND EFFICIENT GENDER—SPECIFIC WAGE—TENURE PROFILES
Authors: HERSCH JONI , REAGAN PATRICIA B.
Published: January 2010

Despite theoretical arguments that predict the opposite, empirical estimates of workers' returns to tenure tend to be greater for female than for male workers. This paper develops an agency model of wage contracts to explain this empirical finding. If male and female workers differ only in the expected length of their working lives, efficient wage‐tenure profiles are steeper for women than men as a direct result of their shorter working life. This result implies that returns to tenure for women and men will become comparable as women's and men's labor force attachments converge.
GOVERNING A GROUNDWATER COMMONS: A STRATEGIC AND LABORATORY ANALYSIS OF WESTERN WATER LAW
Authors: GARDNER ROY , MOORE MICHAEL R. , WALKER JAMES M.
Published: January 2010

We examine strategic behavior in groundwater depletion within the setting of state governance of groundwater resources in the American West. Solving a dynamic common‐pool resource model for its optimal solution and its subgame perfect equilibrium provides benchmarks for behavior observed in laboratory experiments. Three forms of legal rules—common‐pool depletion with a “rule‐of‐capture” to establish ownership (absolute ownership doctrine), entry restrictions (prior appropriation doctrine), and stock quotas (correlative rights doctrine—are examined in terms of their impact on individual strategic behavior in laboratory experiments.
HYSTERESIS IN UNEMPLOYMENT EVIDENCE FROM 48 U.S. STATES
Authors: SONG FRANK M. , YANGRU WU
Published: January 2010

Studies using standard unit‐root tests generally cannot reject the hypothesis of a unit root in unemployment rates. These findings have been interpreted as supporting the hysteresis hypothesis. We demonstrate that the failure to reject the null may be due to the low power of the tests. We analyze unemployment rates of 48 U.S. contiguous states using a more powerful panel‐based test which exploits cross‐section restrictions on the constituent series. The critical values are simulated tailored to our sample size. We reject the null decisively, casting some doubt on the hysteresis hypothesis for the United States.
PUBLIC MUNIFICENCE FOR PRIVATE BENEFIT: LITURGIES IN CLASSICAL ATHENS
Authors: CARMICHAEL CALUM M.
Published: January 2010

Liturgies or public services became less efficient as a source of state revenue in Classical Athens over the democratic period. This is illustrated in a model in which each citizen, knowing his own wealth and the probability distribution of the visible wealth of others, can engage in costly wealth concealment to improve his chances of avoiding a liturgy. Relative to a wealth tax, liturgies are efficient as long as their performers can acquire sufficient private benefits through public munificence. The observed decline in these benefits over the democratic period reduced or eliminated this relative efficiency.
THE IMPACT OF UNIONIZATION ON MOTOR CARRIER COSTS
Authors: KERKVLIET JOE , MCMULLEN B. STARR
Published: January 2010

Union trucking firms have significantly different cost structures than non‐union firms. Further, average costs for union firms are higher than for non‐union firms even after controlling for higher unionized labor costs. The translog cost function approach used here incorporates a unique dummy variable technique to test not only for overall differences in union/non‐union costs, but also to identify which individual cost function parameters differ between the two types of firms. Results suggest that unionized trucking firms are at a competitive disadvantage in the less regulated, post‐1980 trucking industry.
THE SUPPLY OF CHILDREN'S TIME TO DISABLED ELDERLY PARENTS
Authors: SLOAN FRANK A. , PICONE GABRIEL , HOERGER THOMAS J.
Published: January 2010

This study develops and tests a model of supply of children's time to disabled elderly parents, using data from the National Long‐Term Care Survey. The model, which assumes strategic behavior among relatives, offers predictions about effects of changes in the price of paid personal care, parent's wealth, kid's wage rates, public in‐kind subsidies of personal care, and parent's relative bargaining power on care provided by children. Although several statistically significant relationships are obtained, the evidence does not generally indicate that children's provision of care to parents is guided by a strategic bequest motive.
RATIONAL BUBBLES IN THE STOCK MARKET: ACCOUNTING FOR THE U.S. STOCK‐PRICE VOLATILITY
Authors: YANGRU WU
Published: January 2010

Can rational stochastic asset bubbles help explain the excess volatility of stock prices? The bubble considered here is treated as an unobserved state vector in the state‐space model and is easily estimated using the Kalman filter. I find that the bubble components estimated account for a substantial portion of US. stock prices, and the model does a credible job in fitting the data, especially during several bull and bear markets in this century. Much of the deviation of stock prices from the present‐value model are captured by the bubble.
STIGMA EFFECTS OF NONEMPLOYMENT
Authors: OMORI YOSHIAKI
Published: January 2010

Do longer past spells of nonemployment cause longer future spells? If so, what is the likely cause, stigma or human capital decay? I examine a sample of 10,245 spells of nonemployment experienced by 2,184 young men. After controlling for unobserved heterogeneity, I find an increase in the duration of previous nonemployment lengthens the expected duration of future nonemployment. But the lower was the local unemployment rate when past nonemployment occurred, the larger is this effect. The finding supports the stigma hypothesis that workers who experience nonemployment when proportionately fewer are nonemployed are more severely stigmatized.
CYCLICAL COMOVEMENTS IN INDUSTRIAL LABOR AND PRODUCT MARKETS: THEORY AND EVIDENCE
Authors: KANDIL MAGDA , WOODS JEFFREY G.
Published: January 2010

We establish the theoretical connection between industrial labor and product markets within the contractual wage‐rigidity new Keynesian explanation of business cycles. We estimate time‐series and cross‐sectional regressions for 28 private two‐digit (S.I.C.) industries and find: (i) greater uncertainty is associated with upward flexibility of the nominal wage and moderates the countercyclical response of the real wage to aggregate demand shocks; (ii) an upwardly rigid nominal wage response to energy price shocks reduces the real contractionary effects of these shocks; (Hi) downwardly inflexible nominal wages are associated with downwardly rigid prices in response to productivity shocks.
TAXES, TORTS, AND THE TOXICS RELEASE INVENTORY: CONGRESSIONAL VOTING ON INSTRUMENTS TO CONTROL POLLUTION
Authors: HAMILTON JAMES T.
Published: January 2010

Theories of rational political ignorance and congressional voting imply that Congress members may take different interests into account when they vote on technical amendments than when they vote on a bill's final passage. This article uses votes on Superfund reauthorization to examine what factors influence politicians' support for different instruments to control pollution and how the interests Congress members take into account vary with the anticipated degree of electoral scrutiny. Controlling for a legislator's general support for environmental programs, a representative's votes on specific policy instruments in Superfund legislation depended on the district‐level costs and benefits of the instruments.
RISK PREFERENCE ESTIMATION IN THE NONLINEAR MEAN STANDARD DEVIATION APPROACH
Authors: SAHA ATANU
Published: January 2010

Risk preferences and technology are jointly estimated in the nonlinear mean‐standard deviation framework for a competitive firm model under price risk. A utility function is proposed that nests various risk preference structures and risk neutrality as empirically refutable special cases. The empirical application using firm‐level data finds evidence of decreasing absolute risk aversion, differences in the nature of relative risk aversion by firm size, and little support for the widely used linear mean‐variance framework. The estimation results also show that ignoring risk and risk preferences can substantially overestimate output supply and input demand elasticities.
MODELING GROWTH (AND LIBERALIZATION) USING SMOOTH TRANSITIONS ANALYSIS
Authors: GREENAWAY DAVID , LEYBOURNE STEPHEN , SAPSFORD DAVID
Published: January 2010

Economic liberalization has been a pervasive phenomenon over the last twenty years. Programs have been initiated on the assumption that liberalization promotes economic growth, but the empirical evidence for this is limited. This paper takes a novel approach to modeling growth and structural change as smooth transitions. This allows us to model deterministic change without imposing discrete changes. We use smooth transition analysis to reappraise the time‐series properties of long‐run growth rates in a number of developing countries which have undertaken liberalization. Our results challenge conventional wisdom on both methodological and empirical grounds.
WAGES AND EMPLOYMENT IN PUBLIC‐SECTOR UNIONS
Authors: BABCOCK LINDA C. , ENGBERG JOHN , GLAZER AMIHAI
Published: January 2010

We model the politics of wage and employment determination for unionized public‐sector workers who can strike. If the employment level affects the identity of the decisive voter in budget referenda and other elections, then unions may be able to increase wages by increasing employment. We identify conditions under which public sector unionization will lead to increased wages and employment; we also show that a majority of voters may favor unionization. (JEL 545, J51, H4)
BATTER UP! MORAL HAZARD AND THE EFFECTS OF THE DESIGNATED HITTER RULE ON HIT BATSMEN
Authors: GOFF BRIAN L. , II WILLIAM F. SHUGHART , TOLLISON ROBERT D.
Published: January 2010

American League batters have been hit by pitches 10% to 15% more frequently than National League batters since the designated hitter rule was introduced in 1973. This evidence is consistent with the idea that the American League s adoption of the designated hitter rule created a classic moral hazard problem. Because they are not required to appear at the plate, American League pitchers can throw at opposing hitters with greater impunity (i.e., at lower cost) than National League pitchers who must take their turns at bat and, hence, bear more of the costs of their own actions. (JEL D81, J28)
TEACHING TOOLS: A POLLUTION RIGHTS TRADING GAME
Authors: NUGENT RACHEL A.
Published: January 2010

This article describes a classroom game in which students simulate the US. EPAS market for emission allowances to understand the efficiency benefits of market‐based incentives for pollution control. It can be used in either a principles or environmental economics course. Acting as managers of coal‐fired power plants facing different clean‐up costs, students compare the cost of pollution reduction to the cost of acquiring permits to emit pollution. The game can be conducted in one 50‐minute class period with discussion of the results carried over to the next class. (JEL A2)
AN EVOLUTIONARY EXPLANATION FOR ROTTEN KIDS
Authors: LINSTER BRUCE G.
Published: January 2010

We explore how natural selection acts upon genes for cooperation, altruism and selfishness in an prisoner's dilemma played by family members. A key parameter determining behavior is that parents and children have different expectations of future offspring. Examining asexual and sexually reproducing populations we show that which strategy of cooperation and defection proves be stable depends on the relative reproduction potential of the players and what proportion of the population is young. “Rotten kids” with altruistic parents can be a stable outcome where reproductive success is the goal, and natural selection may lead individuals to care about their unborn progeny. (JEL D10, H31)