This paper presents a model of a market characterized by uncertainty and transaction costs. The uncertainty and transaction costs create incentives for firms to use both long- and short-term fixed-price contracts. The model sheds light on several puzzling empirical observations. I explain why long-term-contract prices can move by different magnitudes and even in different directions than short-term prices, why econometric price equations are likely to find costs, but not demand forces, mattering, and why "rigid" prices and delivery lags are not necessarily disequilibrium phenomena but, rather, can be perfectly understandable and predictable equilibrium phenomena.

This paper presents a model of a market characterized by uncertainty and transaction costs. The uncertainty and transaction costs create incentives for firms to use both long- and short-term fixed-price contracts. The model sheds light on several puzzling empirical observations. I explain why long-term-contract prices can move by different magnitudes and even in different directions than short-term prices, why econometric price equations are likely to find costs, but not demand forces, mattering, and why "rigid" prices and delivery lags are not necessarily disequilibrium phenomena but, rather, can be perfectly understandable and predictable equilibrium phenomena.

The ability of individuals to move freely from one jurisdiction to another is generally seen as a constraint on the amount of redistribution that each jurisdiction within a system of governments can undertake. In this paper, we look at this proposition by developing a positive analysis of income redistribution by local governments in a federal system. We ask how much redistribution occurs when only local governments can have tax/transfer instruments, individuals can move freely among jurisdictions, and voters in each jurisdiction are fully aware of the migration effects of redistributive policies. Local redistribution is shown to induce sorting of the population, with the poorest households located in the communities that provide the most redistribution. While the threat of out-migration affects the potential for redistribution, our results suggest that significant local redistribution is nonetheless feasible. Numerical computations indicate that the proportion of residents who are renters is a major factor affecting the local choice of level of redistribution.

The paper investigates whether compensation among local jurisdiction is, by itself, sufficient to ensure efficient provision of local public goods. Jurisdictions have fixed boundaries, and each has an entrenched government with the power to tax and supply the public good. Residents can move costlessly among jurisdictions. It is shown that competition among numerous jurisdictions is not sificient to guarantee public sector efficiency. Though residents can "vote with their feet," land is immobile. Hence, governments can unsurp some land rents for their own ends. Increasing the number of jurisdictions limits but cannot completely eliminate the ability to exercise discretionary governmental power.

Government may provide a good that can, if legally permitted, be supplemented by private purchases. Policy is determined by majority rule. Under standard assumptions on preferences, a majority voting equilibrium exists. A regime of positive government provision with no restriction on private supplements is shown to be majority preferred to a regime of either only market provision or only government provision. Combined public and private expenditure on the good is higher under this dual-provision regime than under either of the alternatives. Under some preference configurations, the median-income voter is pivotal; under others, a voter with income below the median is pivotal.

This paper presents the results of an evaluation of the role of real cash balances as a factor input for 11 two-digit SIC code industries over the period 1952-73. Using a four-factor translog cost function for each industry along with duality theory, it was possible to estimate the partial elasticities of substitution and the elasticities of demand for all factors. The substitution elasticities between real cash balances and production labor as well as with capital were found to be significantly different from zero. The interest elasticity of demand for each varies with industry and ranges from -.22 to -.41. The overall findings suggest that the neoclassical model offers considerable promise for modeling the firm's demand for money.