bluuebunny/crossref_metadata_2025 huggingface dataset:
HOTELLING'S “MAIN STREET” WITH MORE THAN TWO COMPETITORS*
Authors: Economides Nicholas
Published: July 2006

ABSTRACT. I analyze oligopolistic competition among three or more firms located on Hotelling's (1929) Main Street and show that in contrast with Hotelling's duopoly, the symmetric locational structure supports a noncooperative equilibrium in prices. However, in a two‐stage game of location choice in the first stage, and price choice in the second stage, there exists no subgame‐perfect equilibrium where the whole market is served. This is because, starting from any locational pattern, firms have incentives to move toward the central firm. This strong version of the Principle of Minimum Differentiation destroys the possibility of a locational equilibrium. The results are a direct consequence of the existence of boundaries in the space of location. The sharp difference between these results and those of the standard circular model (whose product space lacks boundaries) shows that the general use of the circular model as an approximation to the line interval model may be unwarranted.
PRODUCT DIFFERENTIATION, PRICING POLICY AND EQUILIBRIUM*
Authors: De Fraja Giovanni , Norman George
Published: July 2006

ABSTRACT. This paper studies the price‐location equilibrium of duopolists supplying differentiated goods and competing in a spatial market with elastic demand. We show that a price‐location equilibrium exists under all three pricing policies traditionally considered by the literature: f.o.b. mill, uniform delivered, and spatially discriminatory pricing. We also show that firms always cluster at the market center. The second part of the paper studies the endogenous choice of pricing policy. A surprising feature of the resulting equilibrium is asymmetry. The greater the extent to which the goods are substitutes, the more likely is it that one firm will choose f.o.b. pricing and the other price discrimination. Finally, the welfare consequences of the analysis show some interesting trade‐offs.
THE SCOPE FOR PURE PROFITS IN A STANDARD LOCATION MODEL*
Authors: Damania Dick
Published: July 2006

ABSTRACT. This paper examines the possibility of sustaining a collusive equilibrium in a standard location model. Drawing on recent developments in game theory, it is suggested that collusion is only feasible if market areas lie within a certain range. When market areas are large the threat of entry is likely to undermine any collusive agreement. In contrast when market areas are small, defection from the cartel is shown to be profitable. Thus collusion is shown to be feasible only when market areas and demand lie within certain bounds. More generally, this result appears to be consistent with the somewhat ambiguous empirical evidence which suggests that competitive pricing behavior is likely to prevail in periods of excessively high demand and during recessions.
THE DETERMINANTS OF STATE MANUFACTURING GROWTH RATES: A TWO‐DIGIT‐LEVEL ANALYSIS*
Authors: Duffy Neal E.
Published: July 2006

ABSTRACT. This paper analyzes 1954–1987 state manufacturing employment growth in 19 two‐digit industries. Markets were found to be the strongest influence in 18 industries. Labor was the second strongest, followed by a threshold variable. Weaker influences were resources, taxes, and amenities. Regional values for the market, labor, and threshold variables corresponded well with regional employment change in the Manufacturing Belt and all other regions of the U.S.
COMPUTATION OF MAXIMUM LIKELIHOOD ESTIMATES OF GRAVITY MODEL PARAMETERS*
Authors: Yun Seongsoon , Sen Ashish
Published: July 2006

ABSTRACT. This paper presents the derivations of several new algorithms for the computation of maximum likelihood estimates of the parameters of a very general form of the gravity model. The algorithms are then compared with previously available algorithms including GLIM and that given in Sen (1986). One of the new algorithms emerges as far superior in just about every way to its competitors. In particular, it is usually much more than an order of magnitude faster than the GLIM procedure and that given in Sen (1986). It is also not substantially affected by pitfalls such as multicollinearity and (unlike the GLIM procedure) is capable of comfortably handling large O‐D matrices.
REGIONAL INDUSTRIAL STRUCTURE AND ECONOMIC GROWTH AND INSTABILITY*
Authors: Lande Paul S.
Published: July 2006

ABSTRACT. National and regional employment patterns are subject to growth‐instability tradeoffs. This paper applies the portfolio selection model to detailed employment data for the U.S. economy and selected states. Empirical results indicate that growth‐instability trade‐offs exist in a form not previously understood. The paper also identifies growth and stabilization potential by identifying stabilizing sectors.
ARTIFICIAL NEURAL NETWORKS: A NEW APPROACH TO MODELING INTERREGIONAL TELECOMMUNICATION FLOWS*
Authors: Fischer Manfred M. , Gopal Sucharita
Published: July 2006

ABSTRACT. During the last thirty years there has been much research effort in regional science devoted to modeling interactions over geographic space. Theoretical approaches for studying these phenomena have been modified considerably. This paper suggests a new modeling approach, based upon a general nested sigmoid neural network model. Its feasibility is illustrated in the context of modeling interregional telecommunication traffic in Austria, and its performance is evaluated in comparison with the classical regression approach of the gravity type. The application of this neural network approach may be viewed as a three‐stage process. The first stage refers to the identification of an appropriate network from the family of two‐layered feedforward networks with 3 input nodes, one layer of (sigmoidal) intermediate nodes and one (sigmoidal) output node (logistic activation function). There is no general procedure to address this problem. We solved this issue experimentally. The input‐output dimensions have been chosen in order to make the comparison with the gravity model as close as possible. The second stage involves the estimation of the network parameters of the selected neural network model. This is performed via the adaptive setting of the network parameters (training, estimation) by means of the application of a least mean squared error goal and the error back propagating technique, a recursive learning procedure using a gradient search to minimize the error goal. Particular emphasis is laid on the sensitivity of the network performance to the choice of the initial network parameters, as well as on the problem of overfitting. The final stage of applying the neural network approach refers to the testing of the interregional teletraffic flows predicted. Prediction quality is analyzed by means of two performance measures, average relative variance and the coefficient of determination, as well as by the use of residual analysis. The analysis shows that the neural network model approach outperforms the classical regression approach to modeling telecommunication traffic in Austria.
THE DEBT/TAX CHOICE IN THE FINANCING OF STATE AND LOCAL CAPITAL EXPENDITURES*
Authors: Temple Judy
Published: July 2006

ABSTRACT. State and local governments commonly finance investment in public capital by issuing bonds and by using current revenues. This paper presents a model of state and local governments' reliance on borrowing in which the optimal share of debt in the financing of capital investment depends on the relative costs of tax and debt finance. Equations are derived and estimated for spending on public capital and the share of debt in the financing of that spending. The results reveal that the level of private incomes plays an important role in both the capital investment and financial decisions of the jurisdiction. Even after controlling for Sunbelt‐Snowbelt differences in incomes, grants, outstanding debt and certain demographic factors, the results indicate that state and local governments located in the Snowbelt rely more heavily on bond issues to finance capital investment. Finally, the estimated invariance of the level of state and local capital investment to the share of debt in the financing of the investment suggests that investment decisions are not greatly affected by factors influencing the willingness to issue bonds.
EFFECT OF ENVIRONMENTAL REGULATIONS ON STATE‐ LEVEL MANUFACTURING CAPITAL FORMATION*
Authors: Garofalo Gasper A. , Malhotras Devinder M.
Published: July 2006

ABSTRACT We quantify the effect of environmental regulations on regional capital formation in the manufacturing sector. Our model integrates environmental regulations into a choice‐theoretic model derived from Tobin's q theory of investment. It is postulated that more stringent environmental regulations raise the firm's cost of production both directly and indirectly, thus reducing the firm's q value and lowering the rate of capital formation. The empirical results indicate that the effect of environmental regulations on net capital formation is modest. We do find that environmental regulations affect regions differently. More stringent environmental regulations will improve the relative position of manufacturers in the North‐east, South Atlantic and West. Over one‐fourth of the dollar losses in manufacturing capacity would occur in five states: Texas, California, Pennsylvania, Ohio and Michigan.
ON THE INTERPRETATION OF FIXED INPUT COEFFICIENTS UNDER AGGREGATION*
Authors: de Mesnard Louis , Dietzenbacher Erik
Published: July 2006

ABSTRACT A fixed input coefficient is traditionally interpreted as the additional input from one sector that is required for an additional unit of output in another sector. It is shown that this ratio of increments is, in general, not fixed under aggregation. A tight upper and lower bound for its variation are derived. A necessary and sufficient condition for the ratio to be fixed is obtained. As a consequence, adopting the common assumption of fixed input coefficients implies that additional assumptions at any subaggregate level are required. Similar results are given for the Leontief inverse, whose typical element is usually interpreted as the additional output in one sector that is required for an additional unit of final demand in another sector.
SPATIAL AUTOCORRELATION IN BRITISH UNEMPLOYMENT
Authors: Molho Ian
Published: July 2006

ABSTRACT.The recent literature on local unemployment in Britain and the U.S. is reviewed, and a model estimated for Britain which is consistent with the findings of that literature. Spatial econometric techniques are applied to test and elaborate on that model. The results indmte the presence of significant spillovers in adjustments to local demand shocks. These spillovers occur over a wide spatial field and are strongest after a lag, suggesting that they reflect migration behavior. In addition, highly localized spatial interactions are found, consistent with commuting adjustments in response to shocks. Incorporating these effects eliminates spatial autocorrelation from the residuals. A simulation exercise is undertaken to demonstrate the effects of supply‐ and demand‐side shocks on the model solution.
OBNOXIOUS FACILITY LOCATION IN THE INTERIOR OF A PLANAR NETWORK*
Authors: Drezner Zvi , Wesolowsky George O.
Published: July 2006

ABSTRACT. The problem of locating a point that is as far as possible from arcs and nodes of a network is investigated. Each arc or node may have a different multiplicative factor (weight) for its distance. A graphical solution approach, as well as a computational algorithm, is presented.
INDUSTRIAL CENTERS AND REGIONAL GROWTH IN THE PRESENCE OF LOCAL INPUTS*
Authors: Englmann Frank C. , Walz Uwe
Published: July 2006

ABSTRACT. A large proportion of regional production takes place in nontraded goods and services. In addition, significant productivity increases can be observed in some segments of this sector. Starting from these two empirical observations we construct a model of growth in a two‐region setting with factor mobility. The growth process is based on endogenous technological change in the nontraded input sector, whose output serves as an input in the production of one of the two final goods, the so‐called industrial good. We consider two extreme cases, one with locally limited, the other with interregional knowledge spillovers. Conditions are established under which interior solutions with production of local inputs and steady‐state growth in both regions result, and others under which we find a core‐periphery pattern with growth concentrated in one region only. The stability of the equilibria is discussed by considering the transition processes. Finally, it is shown that catching‐up as well as leapfrogging may occur, if new technologies become available.
UNDERSTANDING SPATIAL INERTIA: CENTER OF GRAVITY, POPULATION DENSITIES, THE WEBER PROBLEM, AND GRAVITY POTENTIAL*
Authors: Tellier Luc‐Normand , Vertefeuille Claude
Published: July 2006

ABSTRACT. In this paper we attempt to clarify the theoretical links between the concepts of “center of gravity” and “point of maximum population density” which describe the present, and the concepts of “minimum of the comprehensive Weber problem” and “maximum comprehensive gravity potential” which guide the future. Critical values of the characteristic parameters of the relevant functions are estimated. Implications for the understanding of spatial inertia are discussed.
LOGNORMAL EXTRAPOLATION AND INCOME ESTIMATION FOR POOR BLACK FAMILIES*
Authors: Cloutier Norman R.
Published: July 2006

ABSTRACT. In studies of urban and state income distribution, the estimation of percentile incomes within intervals reported by the Bureau of the Census has often been done under the assumption that incomes are uniformly distributed. This paper shows that income may be significantly underestimated if the assumption is applied to lower‐level percentiles in the black family income distribution. Consequently, conclusions about the level and determinants of the relative income of poor black families may be misleading.
A ROBUST APPROACH TO PREDICTING FLUCTUATIONS IN STATE‐LEVEL EMPLOYMENT GROWTH*
Authors: Li David T. , Dorfman Jeffrey H.
Published: July 2006

ABSTRACT. Economic forecasting models are famous for performing well over short time periods and then suffering rapidly deteriorating performance when economic conditions change. This behavior makes composite forecasting models valuable in situations where large forecast errors cause considerable losses. A composite forecasting model for state‐level employment is proposed here. This method is designed to protect state budget processes by producing robust forecasts of changes in employment and the related revenue collections. An application to Georgia nonagricultural employment is presented which demonstrates the benefits of this technique. The example shows that the method can forecast such series accurately without the forecaster having to choose in advance a single model specification to all economic conditions.
ALLOCATIVE EFFICIENCY OF RURAL NEVADA WATER SYSTEMS: A HEDONIC SHADOW COST FUNCTION APPROACH*
Authors: Bhattacharyya Arunava , Harris Thomas R. , Narayanan Rangesan , Raifiee Kambiz
Published: July 2006

ABSTRACT.The efficiency of the water utility firms in rural Nevada and their input optimization are examined in this study. The empirical methodology incorporates a hedonic specification of the nonminimum globally concave cost function in estimating the effect of the regulatory environment and the quality of water services on the optimum utilization of inputs. Allocative distortions are introduced through shadow prices and are specified as functions of regressors which make distortion factors firmand input‐specific. The results show that 76 percent of the water utilities of rural Nevada in the sample overutilize energy relative to labor. The impact of allocative distortions on each firm's cost is also computed.
EFFICIENT ALGORITHMS FOR CONSTRUCTING PROPER HIGHER ORDER SPATIAL LAG OPERATORS*
Authors: Anselin Luc , Smirnov Oleg
Published: July 2006

ABSTRACT. This paper extends the work of Blommestein and Koper (1992)–BK–on the construction of higher‐order spatial lag operators without redundant and circular paths. For the case most relevant in spatial econometrics and spatial statistics, i.e., when contiguity between two observations (locations) is defined in a simple binary fashion, some deficiencies of the BK algorithms are outlined, corrected and an improvement suggested. In addition, three new algorithms are introduced and compared in terms of performance for a number of empirical contiguity structures. Particular attention is paid to a graph theoretic perspective on spatial lag operators and to the most efficient data structures for the storage and manipulation of spatial lags. The new forward iterative algorithm which uses a list form rather than a matrix to store the spatial lag information is shown to be several orders of magnitude faster than the BK solution. This allows the computation of proper higher‐order spatial lags “on the fly” for even moderately large data sets such as 3,111 contiguous U. S. counties, which is not practical with the other algorithms.
WELFARE GAINS FROM REMOVING LAND‐USE DISTORTIONS: AN ANALYSIS OF URBAN CHANGE IN POST‐APARTHEID SOUTH AFRICA*
Authors: Brueckner Jan K.
Published: July 2006

ABSTRACT. This paper analyzes the effect of eliminating apartheid land‐use restrictions in South Africa using a simplified version of the standard urban model. When freedom of residential location is granted, black township residents compete for land near the center of the core cities, pushing white residents to less accessible locations. Black consumption rises and white consumption falls in response, but the increase in total land rent is sufficient to compensate for white losses. The resulting aggregate welfare gain is a natural consequence of eliminating the distortion imposed by the apartheid system. These conclusions are robust to a number of modifications of the basic model.
MILL AND UNIFORM PRICING A COMPARISON*
Authors: Cheung Francis K. , Wang Xinghe
Published: July 2006

ABSTRACT. In this paper we examine profit, price, output and welfare under mill and uniform pricing in a monopolistic spatial market with nonlinear demand, a general consumer distribution function, and a general transportation cost function. We show that if demand is convex (concave) then the optimal uniform price minus the average unit transportation cost is lower (higher) than the optimal mill price, output under uniform pricing is lower (higher) than output under mill pricing, and welfare under uniform pricing is lower (higher) than welfare under mill pricing, provided other respective conditions are satisfied.
THE LAW OF ONE PRICE IN A NETWORK: ARBITRAGE AND PRICE DYNAMICS IN NATURAL GAS CITY GATE MARKETS*
Authors: De Vany Arthur , Walls W. David
Published: July 2006

ABSTRACT.In this paper we develop a model of the law of one price in a network where many markets are linked with a structure of paths. We show that arbitrage‐free prices depend on the structure of the network and so do price dynamics. Our estimates indicate that local bypass and open access pipeline transportation were instrumental in opening arbitrage paths to natural gas city markets and causing their prices to converge. Spot markets in the city gates, pipeline hubs, and production fields, that are scattered over distant points in the vast pipeline network in the United States, now form a single market.
STRUCTURAL CHANGES IN LABOR DEMAND AND UNEMPLOYMENT IN LOCAL LABOR MARKETS*
Authors: Hyclak Thomas
Published: July 2006

ABSTRACT. It seems quite clear that the US. economy in the late 1970s and early 1980s was exposed to an accelerated rate of structural change resulting from energy price shocks, increased international competition and technological change. It is of considerable interest, then, that previous attempts to examine structural unemployment in this period find that structural shift in employment generally were not Significant determinants of the unemployment rate. This paper revisits this issue using a measure of structural job shifts drawn from the literature on establishment job creation and destruction. The results show that changes in the structure of labor demand across industry by establishment‐size sectors had a statically significant and empirically important positive effect on the unemployment rate in a sample of 200 metropolitan labor markets during the 1976 to 1984 period.
THE LONG‐RUN ECONOMIC IMPACTS OF FEDERAL, STATE, AND LOCAL FISCAL POLICIES IN METROPOLITAN AREAS*
Authors: Crihfield John B. , Panggabean Martin P. H.
Published: July 2006

ABSTRACT. This paper uses new estimates of metropolitan factor demand and output supply functions to study how federal, state, and local fiscal policies affect metropolitan economies. We illustrate our work with findings for ten metropolitan areas in five states for changes in state corporate income taxes, local property taxes, the federal corporate income tax, an investment tax credit, interest rates, public capital stocks, output prices, and tax and regulatory policies affecting gross wages. It is clear from these simulations that a policy that is nominally the same everywhere will have repercussions that vary widely across regions and cities.
THE EFFECT OF RETAIL FIRM OWNERSHIP ON PRICE EQUILIBRIUM*
Authors: Kawamukai Hajime
Published: July 2006

ABSTRACT. This paper examines the effect of retail firm ownership on price equilibrium using a simple linear‐city model. It is shown that price divergence emerges due to the differences in retail firm ownership, because retail firms under different ownership internalize shopping externalities differently. It is also shown that if a commercial center has two specialized retail firms, these stores charge the same markup for different goods at the equilibrium.
THE DUALITY OF THE PRICE AND TECHNOLOGY SETS
Authors: Magill Michael J. P.
Published: July 2006

This paper is concerned with the generalisation of Samuleson's factor‐price frontier in the framework of efficient allocation of resources. Efficient prices dual to efficient allocations are defined in terms of the concept of normal profit and characterised by a theorem dual to Koopmans'theorem on efficient allocations. A Duality theorem (familar in convexity theory) shows that a knowledge of these prices leads to an alternative derivation of the technology set.
A BAYESIAN APPROACH USED TO INCREASE THE POWER IN A TEST OF HYPOTHESIS IN LINEAR REGRESSION
Authors: Cohen Ayala
Published: July 2006

In regression problems, we often test a null hypothesis which, according to prior knowledge, is likely to be wrong. In order to decrease the error of the second kind, we then raise the power function and thus, also increase the significance level. In this paper, we will represent our prior knowledge by certain prior probility functions and will apply Bayesian methods to test the null hypothesis. We will show that the results obtained by the Bayesian method are equivalent to the sampling methods with a raised power function.
FUNDAMENTAL MARXIAN THEOREM IN CASE OF MULTIPLE ACTIVITIES
Authors: Murata Yasuo
Published: July 2006

It is proved in this paper that in a non‐joint production system of Leontief type which allows the simultaneous operation of multiple activities for each commodity production there exist unique labour values of commodities defined as the best minimal labour contents and the so‐called fundamental Marxian theorem can be verified and extended. An appendix studies a generalization of Hawkins‐Simon conditions in our framework.
A NOTE ON HICKSIAN STABILITY1
Authors: Woods J. E.
Published: July 2006

Metzler has proved that a necessary condition for A to be D‐stable is that A is an N‐P‐matrix, where A is the Jacobian matrix of the excess demand functions. We prove that A is an (N–P)O ‐matrix if and only if, for every positive diagonal matrix D, each real characteristic root of DA is non‐negative. Our result enables us to see directly why the Hicksian perfect stability conditions are not equivalent to the true dynamic stability conditions.
MARKET PROCESSES IN A RICARDIAN FRAMEWORK: THE CASE OF V.K. DMITRIEV
Authors: Skourtos M.
Published: July 2006

Abstract. The paper examines the significance of V.K. Dmitriev's theory of coin petition for the understanding of the classical prices of production.

We emphasize, that without such a comprehensive treatment of the notion of competition many aspects of the logic of the reproduction of the surplus producing capitalist economy remain vague and this may lead to a mere assimilation of the classical theories to « non‐substitution » like explanations.

V.K. Dimitriev's theory of competition is built around the central concept of overcapacity, which functions as a potential competitive threat and demonstrates how a modified version of the classical notion of « center of gravitation » can be perceived, so as to incorporate this very distinguished element of modern industry.

Dimitriev's ideas on the inherent possibility of crises are further discussed and we conclude with an assesment of his « Ricardianism ».
ON THE UNIQUENESS OF LIMIT CYCLES IN BUSINESS CYCLE THEORY
Authors: Lorenz Hans‐Walter
Published: July 2006

Abstract. The paper investigates sufficient conditions for the uniqueness of limit cycles in standard business cycle theory. The application of the Levinson/Smith theorem to the generalized Liénard equation reveals that these sufficient yet not necessary conditions usually imply that the uniqueness of limit cycles in, e.g., the Kaldor‐model or the Phillips‐multiplier‐acceteralor model cannot be established without additional restrictive assumptions.
COST‐PRICES WITH VARIABLE RETURNS(*)
Authors: Corchon Luis C.
Published: July 2006

In this paper a model of oligopolistic competition is presented. Firms use a mark‐up in order to price but the model does not rely necessarily on the assumption of constant returns to scale. An existence theorem is proved for such an economy.
THE VON NEUMANN VERSION OF DE VITI DE MARCO'S MODEL THE CASE OF PUBLIC INTERMEDIATE COMMODITIES
Authors: Vagliasindi Pietro A.
Published: July 2006

As a substantial share of the national product is absorbed by the public sector, it may be interesting to examine the consequences of public sector activities introducing externalities into a von Neumann model. Previous approaches have shown some limitations and shortcomings which may be solved by introducing each externality as a different von Neumann commodity, distinguished on the basis of its user. These public intermediate commodities (pic) are related only to the production side of the economy. We will suppose their total available amount to influence directly the use and the intensity of one or more productive processes.

Pic are also one of the premises and foundations of the public sector normative and positive theory of De Viti De Marco. In our model we will try to follow his line of reasoning as faithfully as possible, even if we shall confine ourselves to the original von Neumann (or KMT) model. It may be surprising to see how easily pic will fit into the von Neumann model, but this should not be unexpected after the article by Morishima and Thompson.

We will show how the rate of growth of the von Neumann economy (where the prices of pic are determined by the equilibrium solution and paid through taxation) is greater than the one which will be determined by the private market equilibrium where pic are free.
ESTIMATION OF ENGEL ELASTICITIES FROM THE BOX‐COX ENGEL FUNCTION
Authors: Haque Mohammed Ohidul
Published: July 2006

A general type of Engel function which can be called the Box‐Cox Engel function is developed. This function is used to estimate the relationship between the dependent and explanatory variables for which many commonly used Engel functions become special cases. The Maximum Likelihood (ML) method is used to estimate its parameters using grouped Household Expenditure Survey (HES) data. These estimated parameters are then used to estimate Engel elasticities for total food and various non‐food items. The Box‐Cox Engel function is also used to discriminate among the commonly used Engel functions, by performing a parametric test on the power parameters. A joint test on the different power transformation has been done by the likelihood ratio test and it turns out that none of the commonly used Engel functions are appropriate for the Australian HES 1975‐76 data, although the double log Engel function is not significantly different from the Box‐Cox Engel function for five out of ten consumption items.
RISK AND ILLEGAL TRADE
Authors: Schöler Klaus
Published: July 2006

In many countries illegal imports have reached a considerable share of all national imports. Therefore, we have to investigate the economic effects resulting from smuggling. This paper explains this phenomenon by means of the managers' different individual attitudes towards risk and their different estimation of the exposure costs of illegal trade. It could be shown that this basis of smuggling is also an important aspect for a national economy, since the relative prices are affected by the risk and cost estimations of the trade firms.
WAGE DIFFERENTIALS AND EMPLOYMENT IN A TWO‐SECTOR MODEL WITH A DUAL LABOUR MARKET
Authors: van de Klundert Th.
Published: July 2006

The concept of a dual labour market is analysed in a two‐sector general equilibrium model. The primary sector pays efficiency wages, while there is no connection between efficiency and the relative wage level in the secondary sector. The two sectors produce different goods. Capital is assumed sector‐specific. The results under different conditions in the labour market (market clearing, minimum wages and levelling of the wage distribution) are derived analytically.

Comparative statics are discussed by applying a linearized version of the model. The outcomes may be used to explain observed differences in wage and employment distributions in the US and Europe.
DYNAMIC MONOPOLIST'S BEHAVIOUR AND CONSUMER LEARNING*
Authors: Scarpa C.
Published: July 2006

This paper studies the features and the welfare properties of the equilibrium in a monopoly model with asymmetric information: consumers can only learn the quality of the good through experience. Because of word‐of‐mouth communication, cumulated sales help the process of product diffusion. It is proved that usually the profit‐maximizing price policy entails a low introductory price, that is gradually increased over time. Output decreases over time, so that, in order to accelerate the process of information diffusion, the monopolist is induced to produce more than he would with perfect information. For the same reason, the quality level could also be above its full information level. Thus, consumers might even benefit from their own lack of information, becauses this induces the monopolist to offer a larger output, possibly of a better quality.
SEARCH UNEMPLOYMENT AND THE EFFECT OF AGGREGATE DEMAND POLICY: A DUAL LABOR MARKETS ANALYSIS
Authors: Tanaka Yasuhide
Published: July 2006

This paper examines the role of aggregate demand policy affecting unemployment under a model of dual labor markets. Recently, some papers have considered the sources of unemployment in OECD countries and have stressed the role of aggregate demand policy in reducing it. However, there exists the argument that aggregate demand policy may have an adverse effect on unemployment. Therefore, in this paper, we will consider in what situations aggregate demand policy has such an effect on unemployment, and propose an analysis of its microfoundation.
A NONLINEAR MODEL OF THE BUSINESS CYCLE WITH MONEY AND FINANCE (*)
Authors: Gallegati M. , Gardini L.
Published: July 2006

In this paper we analyze the working of a capitalist system with sophisticated financial institutions, where the Modigliani‐Miller theorem does not apply, so that the financial part of the economy affects the working of the real side. This model, in which the real and the financial sectors are connected throught a simple portfolio approach, and where the ratio between cash flow and debt commitment affects the pace of investment, explains the emergence of instability and, more generally, the cyclical behavior of the economy as an internally generated phenomenon of a capitalist system. As far as the dynamic behavior of the model is concerned, we can envisage the following process: when investment activity is low, the system evolves toward a stationary state; as soon as the accumulation rate starts growing, the model shows the existence of limited cycles and, when the elasticity of investment to internal finance increases further, a chaotic dynamic appears. Finally, we expect a situation of financial crisis to emerge when the elasticity of investment to internal financing constraint goes beyond a certain level, i.e. when the realized flow of profits is not sufficiently high to validate the debt commitments. The working of the model is referred to an economics with no technical change, while its dynamic properties will be investigated by the use of numerical simulation.
MODELING THE SOFT BUDGET CONSTAINT: INFLATION EXPLAINED BY A DISEQUILIBRIUM IN THE CIRCUIT OF CAPITAL
Authors: Loranger Jean‐Guy
Published: July 2006

The article presents a two equation model showing how a disequilibrium between financial capital and real capital is a measure of the degree of a soft budget constraint situation, how such a disequilibrium can originate from price changes, interest rates or other international causes influencing the exchange rate. This is modeled by a circuit equation which is linked to a price equation via the mark up coefficient where it will be assumed that state (or private) enterprises can always cover their current costs and investment costs either by manipulating the selling price or by borrowing at cheap conditions or by getting subsidies or tax exemptions.
INVESTMENT AND GROWTH IN THE JOHANSEN PUTTY‐CLAY MODEL. A TECHNICAL NOTE(*)
Authors: Skonhoft Anders
Published: July 2006

The »paradoxical« result in Leif Johansens putty‐clay model, that savings and investment do not seem to matter for growth, is examined. Using a growth‐accounting framework it is shown that investment efforts generally influence output growth, but this influence is not revealed in a proper way when the investment ratio is fixed. Interpreted in a one‐country case, the existence of a positive relationship between the propensity to invest and the growth rate of output is demonstrated.
THE KALDOR‐PASINETTI PROCESS RECONSIDERED(*)
Authors: Teixeira Joanilio R.
Published: July 2006

In this pape we extend Pasinetti's model in two ways: (i) taking into account both direct and indirect taxation we allow the government to own explicitly part of the capital stock and to get profits; (ii) opening the economy to international trade and allowing a non‐zero current/capital account balance.

We show that such extensions do not violate the essential features of the Cambridge result, provided that the external rate of savings is not affected by some kind of interest rate.
NEGATIVE SURPLUS VALUE AND INFERIOR PROCESSES*
Authors: Hosoda Eiji
Published: July 2006

One of the most interesting results in value theory is that positive profits are consistent with negative surplus value. This result is obtained, using a two‐commodity linear model with joint production. Since existence of an inferior process is always implied in a two‐commodity model, the result has been supposed to be applicable to a limited type of technology. The purpose of this paper is to show that positive profits with negative surplus value do not necessarily imply the existence of such a process in higher dimensions. Although a different type of inferiority is implied, such a definition of inferiority is quite different from what is normally understood.
INTER‐CLASS TRANSFERS IN A GOODWIN‐TYPE GROWTH MODEL
Authors: Mainwaring Lynn
Published: July 2006

In a discrete‐time version of Goodwin's growth‐cycle model, the effects of capitalist philanthropy on workers are analysed in comparative static and dynamic terms. In either case, aggregate incomes of both classes may suffer. Likewise, concessions obtained through trade‐union activity, and resistance to labour‐saving innovations have harmful long‐term effects on the working class.
NON PURE PRIVATE GOODS IN THE ECONOMICS OF PRODUCTION PROCESSES
Authors: Parrinello Sergio
Published: July 2006

In this article the concept of nonrival input is re‐examined as a possible source of increasing returns, by taking a production process as the elementary unit of analysis. Nonrivalry of inputs is redefined in order to furnish an analytical tool to be used for extending the theory of value and distribution beyond the case of pure private goods and constant returns. Furthermore, the reformulation of the same concept is implemented for a critical appraisal of the notion of industrial design which has been adopted by Romer in his modelling approach to the theory of endogenous growth.
A REVISED GEOMETRY OF MEAN‐VARIANCE EFFICIENT PORTFOLIOS
Authors: Ehrbar Hans G.
Published: July 2006

A revised definition of efficiency compares portfolios with different net worths. One axiom rules out instantaneous riskless gains, the other asserts that it costs money to buy good portfolios. Unlimited short sales are allowed. Portfolios which cannot be improved at any price are called absolutely efficient. The geometry of the mean‐standard deviation frontiers is governed by three “efficient set constants”. A few results regarding efficient portfolios must be modified, and a new version of the security line equation is proposed. Explicit formulas are given: no need to use different formulas for singular or non‐singular covariance matrix.
CREDIT MARKET IMPERFECTIONS AND THE INCIDENCE OF WORKER‐OWNED FIRMS
Authors: Bowles Samuel , Gintis Herbert
Published: July 2006

Under plausible conditions, in a market economy with both democratic and capitalist firms, credit market imperfections imply that the fraction of workers in democratic firms is an increasing function of the share of worker wealth. Our analysis addresses two agency problems that all firms must solve: eliciting effort from a team of workers and choosing the appropriate level of risk, in a situation where neither effort nor risk is contractually specified. The democratic firm enjoys a relative advantage in dealing with the agency problems surrounding labor, while the capitalist firm has a relative advantage in dealing with agency problems involving risk‐bearing.
ORGANISATIONAL CAPABILITIES AND INTERFIRM RELATIONS
Authors: Loasby Brian J.
Published: July 2006

The co‐ordination problem is a consequence of the division of labour and the division of knowledge; what is to be co‐ordinated is the generation and testing of novel conjectures. The firm provides one means of doing this, and of developing a set of capabilities which can be deployed to cope with structural uncertainty. Any firm's capabilities are inevitably limited, and must be supplemented; this requires the development of market relationships, and, where success depends on closely‐complementary activities founded on a different knowledge base, the organisation of interfirm co‐operation. The additional value thus created may justify additional transaction costs.
DIRECTED GRAPH THEORY AND THE ECONOMIC ANALYSIS OF INNOVATION
Authors: Santarelli Enrico
Published: July 2006

This article applies digraph theory to the theory of technological regimes. The first part of the paper identifies a number of links between the evolutionary approach and a particular version of the neoclassical approach to the economic analysis of technological change. Both these approaches are shown to take the body of presently‐available technological knowledge as a quantifiable magnitude allowing firms varying in strategy, structure and core capabilities to explore a range of feasible alternatives within the frontiers imposed by such knowledge. The second part of the paper therefore considers technological knowledge to be a cognitive empirical structure which can be better defined and calculated by using the theorems of digraph theory.
ENVIRONMENTAL TAXES, RELATIVE PRICES AND CHOICE OF TECHNIQUE IN A LINEAR MODEL OF PRODUCTION
Authors: Gehrke Christian , Lager Christian
Published: July 2006

A classical model of production is used to study the effects of environmental taxes on relative prices and on the choice of technique. It is shown that a taxation of energy inputs can induce cost‐minimizing producers to switch to a technique that requires more total energy. An explanation for such a ‘perverse’ substitution is provided by showing that with a positive rate of profits the relative prices of (relatively) energy‐intensive products can be higher with a higher tax rate.
THE EVOLUTIONARY DYNAMICS OF FINANCIAL PRACTICES
Authors: Sethi Rajiv
Published: July 2006

This paper presents a model in which financial practices are chosen by decentralized units on the basis of expectations regarding financial market conditions, while the probability distribution governing market conditions itself depends on the choices made. If all agents are unboundedly rational, there is a unique equilibrium in which expectations are self‐fulfilling. The assumption of universal unbounded rationality is relaxed by introducing an optimization cost, which leads to the possibility that optimizers may not have a sufficiently great evolutionary advantage to eliminate nonoptimizers entirely. In this case behavioral heterogeneity can persist even in the long run. For certain classes of probability distributions governing financial conditions, the evolutionary dynamics of population composition can help explain a number of stylized facts regarding the dynamics of financial practices which have hitherto been explained on the basis of learning dynamics or systematic cognitive biases.
THE ROLE OF SUBSTITUTION IN WICKSELL'S DURABLE CAPITAL MODEL
Authors: Hong Keehyun
Published: July 2006

In this paper the author shows that the absence of a good which is used directly or indirectly for the production of other goods is a crucial feature of Wicksell's two‐sector model, without which a positive relation between the value of machine stock and the consumption good output cannot be guaranteed. In fact he proves that, if that model is generalised by assuming that the capital good is used as an input also in its own production, the sign of the “marginal product of social capital” is indeterminate, even when both sectors have “well‐behaved” production functions of a Cobb‐Douglas type.
MACROECONOMIC POLICY ANALYSIS
Authors: Sayer Stuart
Published: July 2006

Much of the mainstream literature on macroeconomic policy proceeds by making assertions about the relative efficiency of governments and markets. All too often coordination is assumed to be performed by some mythical deus ex machina, such as the Walrasian auctioneer or a benevolent and more or less omniscient government. The limitations of this approach and the sterile debate to which it gives rise are illustrated and examined in sections 2 and 3. To overcome this problem the relative efficiency of alternative government and non‐government allocation and coordination mechanisms need to be analysed explicitly. Section 4 provides a simple illustrative sketch of this approach.
A POST KEYNESIAN PERSPECTIVE ON COMMERCIAL BANK BEHAVIOR AND REGULATION
Authors: Hill R. L. St.
Published: July 2006

The purpose of this paper is to present a post Keynesian perspective on commercial bank behaviour and regulation. It is assumed that: i) the quantity of loans is endogenous; ii) banks are dual purpose institutions whose functions are to create credit and supply means of payment and liquidity; iii) uncertainty pervades decision making; and iv) banks are price setters in retail markets, but price takers in wholesale markets. The effects of a number of instruments of regulation are analysed including lender of last resort, liquid reserve requirements, deposit insurance, capital adequacy and open market operations.
SEARCHING FOR ENDOGENOUS BUSINESS CYCLES IN THE U.S. POSTWAR ECONOMY
Authors: Kiefer David
Published: July 2006

This paper explores the possibility that booms and busts are endogenous with an econometric examination of the U.S. economy. Although existing empirical results suggest the contrary, a theoretical literature discounts the stability verdict on the grounds that it is based on linear econometric evidence which is unreliable when the underlying phenomenon is non‐linear. We study a simple Keynesian cycle model which is theoretically general enough to include convergence to equilibrium or endogenous cycles as special cases. We find one particular nonlinear econometric specification which exhibits a limit cycle when estimated on postwar data, while the estimate of its global linear approximation converges to a fixed equilibrium. Our results are an empirical investigation of the boundary between stability and instability.
CAPACITY UTILIZATION, INVESTMENT AND NORMAL PRICES: SOME ISSUES IN THE SRAFFA‐KEYNES SYNTHESIS
Authors: White Graham
Published: July 2006

Drawing on recent debate over the theoretical significance of (Sraffian) normal prices this paper begins by outlining an interpretation of the relation between normal prices and administered pricing. This interpretation takes the anticipated average or normal rate of capacity utilization in each sector as data in the calculation of prices and profit rates. However, anticipated average utilization in each sector, in a cyclically disturbed system, will depend on relative prices and thus on distribution. This interdependence between prices, profit rates and utilization has an important bearing on certain issues arising out of attempts at a Sraffa‐Keynes synthesis. The paper attempts to shed light on those issues by exploring further the links between pricing, utilization and investment, using a simplified three‐sector model.
Immunologic mechanisms in allergic cutaneous vasculitis: cellular interactions, effects of cytokines, therapeutic insights*
Authors: Tosca A.D. , Stratigos J.D.
Published: July 2006

After establishment of the importance of circulating and tissue bound immune complexes in the immunopathogenesis of allergic cutaneous vasculitis, endothelial cell cultures and the development of experimental models permitted us to further visualise aspects of cell‐cell interactions, inflammatory mediators and recently studied adhesion molecules, knowledge that might lead to deeper comprehension of the immunology of vasculitis and at the same time open new horizons for therapeutic intervention. In this review, recent data concerning immunologic mechanisms in allergic cutaneous vasculitis are presented. Emphasis is given to anti‐idiotypic antibodies, monocyte‐endothelial cell, neutrophil‐endothelial cell and lymphocyte‐endothelial cell interactions. The implication of cytokines in immune complex mediated inflammation is postulated. Therapeutic attempts with anti‐idiotypic antibodies, cytokine inhibitors or antagonists and monoclonal antibodies against cell surface leukocyte or endothelial molecules might be rewarding in the future.