Commonly defined, a market is efficient if prices always fully reflect available information. That market might be viewed as consisting of two major segments: an information market and pricing mechanism. The efficiency has been amply documented elsewhere. The information market, however, should be afforded increased attention. In particular, the efficiency of the information market may vary across securities and with respect to particular securities, across time. Stated another way, the degree of imperfection in the information market may vary across securities and across time, resulting in a relative efficiency phenomenon. The presence of such a phenomenon would offer research opportunities yielding a greater understanding of the functioning of the information market and the pricing of securities.

The purposes of this article are two. Some extensions to Mayers’ [1] classical work on portfolio building in the presence of nonmarketable assets are presented. In addition the implications of certain simple forms of taxation and redistribution are investigated.

Journal Article Transitivity Get access Peter C. Fishburn Peter C. Fishburn Pennsylvania State University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 46, Issue 1, January 1979, Pages 163–173, https://doi.org/10.2307/2297179 Published: 01 January 1979 Article history Received: 01 February 1977 Accepted: 01 April 1978 Published: 01 January 1979

I. Introduction, 395.—II. The model, 397.—III. Competitive entry and long-run equilibrium, 402.—IV. Welfare analysis of industry equilibria, 405.—V. Conclusion, 408.

Christos C. Paraskevopoulos, Alternative Estimates of the Elasticity of Substitution: An Inter-Metropolitan CES Production Function Analysis of U.S. Manufacturing Industries, 1958-1972, The Review of Economics and Statistics, Vol. 61, No. 3 (Aug., 1979), pp. 439-442

N his well-known review of the human capital approach to the study of income distribution Jacob Mincer makes the point that . . a better understanding of the relation between and earnings requires an understanding of the factors determining investment (1970, p. 18). The importance of this point has been lost somewhat in the past few years with the plethora of empirical examinations of the relationship between years of schooling (as the measure of human capital investment) and earnings. Nevertheless, it is clear that if schooling is itself the result of optimizing rather than random behavior, the typical earnings regression will overstate the contribution of schooling to earnings. A simple model that explains interpersonal differences in investments in formal schooling has been developed by Becker (1967, 1975) with more formal extensions of this model having been presented by Ben-Porath (1967) and Wallace and Ihnen (1975). Basically, Becker's model views the individual as maximizing the present value of his net earnings over the life cycle by investing in formal schooling up to the point at which the marginal rate of return from the equals the marginal financing costs. This may, in turn, be expressed in a conventional demand-supply framework. The demand for schooling is the product of two factors: the expectation of returns from a particular. level of schooling achievement and the probability that the particular individual will in fact succeed in attaining this level.' The first factor is largely determined by the exogenous forces of the labor market where individual differences arise because of imperfect knowledge. The second is largely a function of individual'capacities (ability), the schooling environment, and the extent to which the individual believes the schooling environment and curriculum will actually lead to an increase in his stock of human capital. The supply side of the model reflects the opportunity for which is determined, in large part, by the availability of financing funds. For youths enrolled in high school the major economic decision they face is whether to continue with the formal educational process. The primary alternatives to schooling are full-time participation in the labor force, service in the Armed Forces, marriage and work within the household. The data indicate that these alternatives are chosen, in varying degrees to the extent that only 75% of a schooling cohort that entered the fifth grade in 1964 graduated from high school in 1972 (U.S. Department of HEW, 1974, p. 14). A sizable proportion of young adults, therefore, terminate their educational before the completion of high school. This decision to drop out of high school has seemed to arouse considerable public and private concern. While there is now some evidence and concern regarding an overinvestment in college training (Freeman, 1975), the fact that young people drop out of high school usually raises the spectre of increased crime, drug usage, unemployment and a general alienation of youth from the adult community. The public result of this. concern has been a variety of dropout prevention programs which have been supported under Title VIII of the Elementary and Secondary Education Act together with a provision' of the Vocational Education Act. which directs Federal monies to areas of high need, including local areas with a high concentration of school dropouts. A variety of instructional methods have been supported in the dropReceived for publication May 9, 1977. Revision accepted for publication February 15, 1978. * University of South Carolina. The research reported herewas supported by the Office of the Assistant Secretary for Planning and Evaluation, Department of Health, Education and Welfare. That support, together with the comments of Caroline Clotfelter, Susan Cochrane, Elchanan Cohn, Linda Edwards, Robert Hauser and two anonymous referees, is gratefully acknowledged. The computational assistance of Jane Lee was also of great help. The conclusions expressed here do not necessarily reflect the position of the sponsoring agency. I This useful distinction is taken from Griliches (1973).

IT has long been suspected that price uncertainty may cause allocative inefficiency in farm operation.' This may be especially true for small farms since they cannot afford expert economic advice (Schultz, 1964, p. 118). It is also a common understanding that output uncertainty may reduce allocative efficiency.2 Therefore, if prices and output are known with less uncertainty, farmers should allocate their resources more efficiently. This study is intended to investigate empirically such a relation.3 The data are for the small-scale family farms of Taiwan in the mid-sixties drawn from three mixed farming regions of the island.4 Most of the family farms of Taiwan grow rice alongwith other crops. The extent to which a farm is engaged in rice farming may be measured by a ratio of rice income to total crop income, to be referred to as the rice income ratio. Due to government price stabilization policies on rice, rice prices have been the most stable among almost all crops.5 The unit yield of the rice crop had also increased rather steadily before 1967 while that of other crops showed much larger year to year variations.6 Rice farming in Taiwan thus involves less price and output uncertainty than other crops. It seems reasonable to assume that a farm with a larger rice income ratio is involved in a lesser extent of price and output uncertainty and the variable rice income ratio can be used as a proxy of the degree of price and output certainty facing each farm. When this variable is related to allocative efficiency, it is therefore expected to have a favorable effect on the latter due to less price and output uncertainty.

Since the formulation of the portfolio selection problem by Markowitz [12] as a parametric quadratic programming problem, considerable effort has been devoted to obtaining operational portfolio management models. Research has involved: (1) characterizing the return generating process in terms of index models; (2) specifying special-purpose algorithms such as the critical-line method of Markowitz [13] or the solution procedure of Jucker and de Faro [11]; (3) using linear programming formulations to approximate solutions to the nonlinear programming problems such as Sharpe [20, 22] and Stone [25]; and (4) converting portfolio selection models into portfolio management models designed to revise an existing protfolio subject to transaction costs using heuristics such as Smith [24] or revision formulations such as Pogue [16, 17] and Stone and Reback [27].

A definition of market adjustment is proposed in terms of the time it takes market attributes to reflect new information. Properties of the proposed definition are discussed. In order to operationalize the concept, a statistical method is introduced to estimate the adjustment times. Empirical examples are used to illustrate the proposed method. Some possible economic interpretations are given. The properties of the estimator are also investigated by simulation and analytical methods.