Knowledge that Transforms

A mathematical model of applied research is formulated. It views applied research as a search in a given distribution; basic research shifts the distribution searched. The productivity of applied research effort is a function of the gap between technology in practice and basic knowledge. With constant basic and applied research a (stochastic) steady state emerges in which technological change is determined by the rate of progress of basic knowledge, and the technological gap by the level of applied research.

This paper develops a model for estimating the costs associated with the institutional and legal restrictions related to the states' abortion statutes. A travel-cost demand model is estimated with data for legal abortions obtained in New York State. The purpose is to determine the value--for women seeking abortions--of the 1973 Supreme Court ruling which liberalized abortion codes. The estimated benefits foregone in the absence of liberalization, over a 10-year period with a 10 percent discount rate, range from 12 million to 30 million in present value. It is important to note that this study makes no attempt to measure the losses to certain groups in society as a result of the liberalization.

A major conceptual error in the standard BLS and Lebergott unemployment estimates for 1930-43 is reported. Emergency workers (employees of government contracyclical programs such as WPA) were counted as unemployed on a normal-jobs-to-be-created instead of job-seekers unemployment definition. For 1933-41, the corrected unemployment levels are reduced by 2-3.5 million people and the rates by 4-7 percentage points. The corrected data show strong movement toward the natural unemployment rate after 1933 and are very well explained by an anticipations-search model using annual full-time earnings.

This study introduces an econometric model to explain the determinants of expenditures in capital maintenance and repair and, indirectly, to question the assumption implicit in most investment studies that such expenditures do not "matter" in the process of capital accumulation. The model is estimated by a consistent-systems technique, with data pertaining to the rolling stock of class-I line-haul railways in the United States from 1944-70. The empirical results indicate that maintenance expenditures are determined by gross additions to and retirements from the rolling stock as well as by the cost of funds and the rate of utilization. Moreover, in light of the uncovered rade-offs between maintenance expenditures and gross investment, the paper concludes that in estimating investment models, a proxy for maintenance expenditures should be included among the independent variables.

The behavior of a monopoly is analyzed in the following setting. Search creates a stochastic stream of customers. Searchers observe the queue and leave if it is too long. Production is random. In the optimal solution, waiting time, effective demand, and the utilization of capacity are jointly determined. Product quality in the form of waiting time is endogenous to the model, and it is found that price or capacity changes affect both the quantity and the quality of output. If an equilibrium exists, there is excess capacity. Price equals marginal cost, but monopoly produces too little capacity and output unless profits are zero.