Knowledge that Transforms

Asch, Peter, and Joseph J. Seneca, Is Collusion Profitable? this REVIEW 58 (Feb. 1976), 1-12. Block, M. K., F. C. Nold and J. G. Sidak, The Deterrent Effect of Antitrust Enforcement: A Theoretical and Empirical Analysis, Technical Report ISDDE-1-78, Hoover Institution, Dec. 1978. Clabault, James M., and John F. Burton, Jr., Sherman Act Indictments, 1955-1965 (New York: Federal Legal Publications, 1966). Feinberg, Robert M., Structure and Employment Instability, this REVIEW 61 (Nov. 1979), 497-505. , The Lerner Index, Concentration, and the Measurement of Market Power, Southern Economic Journal 46 (Apr. 1980), 1180-1186. Guth, Louis A., Robert A. Schwartz, and David K. Whitcomb, The Use of Buyer Concentration Ratios in Tests of Oligopoly Models, this REVIEW 58 (Nov. 1976), 488-492. Hay, George A., and Daniel Kelley, An Empirical Survey of Price-Fixing Conspiracies, Journal of Law and Economics 17 (Apr. 1974), 13-38. Lustgarten, Steven H., The Impact of Buyer Concentration in Manufacturing Industries, this REVIEW 57 (May 1975), 125-132. , The Use of Buyer Concentration Ratios in Tests of Oligopoly Models: Reply, this REVIEW 58 (Nov. 1976), 492-494. Omstein, Stanley I., Industrial Concentration and Advertising Intensity (Washington, D.C.: American Enterprise Institute, 1977). Palmer, John, The Profit-Performance Effects of the Separation of Ownership from Control in Large U.S. Industrial Corporations, Bell Journal of Economics 4 (Spring 1973), 299-302. Trade Regulation Reporter, Vol. 4, New U.S. Antitrust Cases (Chicago: Commerce Clearing House, 1979).

Jon P. Nelson, George R. Neumann, Ronald M. Crandall, A Comparison of Alternative Econometric Models of Iron and Steel Investment Behavior, The Review of Economics and Statistics, Vol. 62, No. 1 (Feb., 1980), pp. 122-127

T HE presence of adjustment costs for a firm altering its labour force or capital stock creates considerable problems for econometric work involving firm behaviour, either on the employment or the investment side. The usual way of handling these costs is to derive a so-called desired level for the choice variables based on an optimization assuming there are no adjustment costs and then to add an ad hoc lagged adjustment process, the nature of which however is not derived explicitly from the actual costs of adjustment. There are two problems with this. First, as noted by Nerlove (1972), the resulting paths would not in general be optimal for a profitmaximizing firm so there is an inconsistency between equilibrium behaviour and adjustment behaviour. Second, by allowing the adjustment process to be data determined without imposing the restrictions implied by optimization over adjustment costs, one makes it harder to discriminate between models on the basis of the data. This makes it difficult to test the appropriateness of assumptions about the underlying economic model (for example, the form of the production function used). The problem with including the adjustment costs in the optimization is of course that it leads to formulations that are intractable for empirical work. This paper is an attempt to avoid that problem by looking more carefully at labour costs and to see what can be said about the underlying production model without using ad hoc dynamic assumptions. In particular it recognizes the fact that, even for small firms, the wage rate for operatives is a step function in hours worked; up to a certain number of normal hours an operative is paid at one hourly wage rate but above that number of hours is paid at a higher, overtime rate. Of course, a firm would only use labour at the overtime rate if it cost less overall than hiring more labour at the normal rate. But since firms do regularly employ overtime labour, this suggests that they must face either a rising supply curve for labour or else a fixed cost in hiring additional employees; Since the latter enables one to retain price-taking behaviour in the labour market and can also provide an explanation for short-time working, that is what will be investigated here. What is relevant to the production decisions of a firm is of course the marginal cost of an additional hour of labour, provided, that is, that the average cost is not so high that it is unprofitable to produce at all. For a firm that has employees on short-time working, the marginal cost is the normal hourly wage rate. For a firm with employees on overtime, the marginal cost is the hourly overtime rate. These observations are formalized in the next section of the paper. In succeeding sections they are applied to models based on the Constant Elasticity of Substitution (CES) production function and to the vintage model of Malcomson and Prior (1979).

The results presented below demonstrate that the structural modeling approach to interest rate determination not only stands apart from the sectoral disaggregation question conceptually but also performs fairly well without sectoral disaggregation empirically. This paper presents estimation and dynamic simulation results for an aggregated equivalent to the disaggregated model of the determination of bond yields developed in Friedman (1977; 1979). Instead of six bond demand and two bond supply equations, here there are but one demand and one supply equation. The empirical results show that, while disaggregation is of value in structural interest rate modeling (that is, the disaggregated model outperforms the aggregated one), even the aggregated structural model performs very well in comparison with familiar unrestricted reduced-form term structure equations.

straints that are imposed, the price vectors chosen to generate the data, and the functional form used for the cost function approximation. It is also fair to say that if input-output coefficients are the ones of interest, since these are obtained for each of the points used in the generation, it may be better to seek some approximating functions for these directly rather than seek an approximating function for the cost function and then derive the input-output coefficients. All these comments do not imply that the pseudo data approach should be given up. It is, however, important to sort out the aims of the analysis. There are some problems (like studying the effects of changes in environmental regulations) where one cannot get any answers from time series and one has to use the process analysis models that have detailed specification of technology and the constraints. But for this the appropriate thing is to do a simulation analysis of the process model itself and not seek a single equation approximation of the complex technology. What distin,guishes Griffin's approach from the garden variety simulation analyses of process models is this distillation in a single equation.

conditioned and the nine slope coefficients (B-values) estimated by the stepwise procedure are, in fact, correlated. In summary, we conclude that, due to intercorrelation among the nine input categories, the true role of economic motivation in the decision to relocateparticularly for nonwhites-is still an open issue. Our tests indicate that the explanatory power of the Liu Overall Index in this regard is, at best, misleading.

Develops a dynamic model of fertility behavior and estimates it empirically from 3 large interview studies. The decisions of couples regarding desired family size and desired spacings between children are considered at the same time. The specification of desired family size is based on the economic theory of the family that incorporates concepts of human capital allocation of time and nonmarket household behavior. Childspacing is estimated in the context of stock-adjustment model in which the variables that affect child spacing are included explicitly. The empirical results are consistent with a stock-adjustment framework because the estimated coefficients of the number of previous children (or number of living children) have negative signs that are statistically significant. The variables used for the estimate are fecundity variables contraception ever used date of birth and work status. The estimated coefficients generally have the expected signs and are statistically significant. The childspacing results expressed in terms of the proportion of respondents who had one child during the year and wanted one more child are reasonable. Virtually all the estimated results are in the 0-1 range. Estimates from all 3 surveys showed that the greater the number of additional children desired the more quickly the respondent acquires the next child. The effects of husbands and wives income showed similar patterns fertility usually being lowest in the intermediate income classes. Increased income may generate price effects that offset income effects in some ranges of income not only in terms of opportunity costs but in terms of the costs of raising children in a lifestyle similar to that of their parents. Educational variables were found to be inconsistent among the 3 surveys and not always significant. Taste variables (race religion and parity) had the expected effects. (Authors modified)