The inner mechanism of global competition remains much as Adam Smith defined it two centuries ago: nations interact, while seeking to win by gaining higher wealth. Self-interest in gaining wealth drives the process, although wars and other deviations often occur. In this setting, economic concepts of competition, benefit-cost criteria and risk can help in defining efficient choices among policy tools (including military activities). From research using those concepts (my study with Theodora Shepherd, 1986), 1 will discuss several tentative conclusions about the U.S.-USSR rivalry. 1) The global competitive process (let us call it Process 1) has properties which appear to make it stable. 2) The United States and USSR appear to possess inherent security from conquest by each other. 3) Each country's efficient limit on military spending can be analyzed as an analog of payments for insurance, to raise national security. In that context, inherent security reduces the U.S. and USSR's efficient levels of armaments. 4) Military entropy occurs; global wealth is subject to a general process (Process 2) which subtracts it into military forms and warfare.

The exchange of comments between William Shepherd and Michael Smirlock, Thomas Gilligan, and William Marshall (this Review, December 1986) raised two key points that remain unresolved. The first point is whether Tobin's q ratio, a firm's financial market value divided by replacement cost of its assets, is a better measure of firm performance than accounting rates of return. The second point of contention is whether superior performance, however measured, can be attributed to efficiency rather than market power. This paper offers further clarification on both of these points. In Section I the performance measure choice is shown to be influenced by fundamental differences between finance and economics. In Section II, the structure-performance model employed by Smirlock, Gilligan, and Marshall (hereafter, SGM) and Shepherd is shown to be a special case of a more general model allowing for a dependence of the market-share-performance relationship on the concentration ratio. The same data from the original study by SGM (1984) are used in Section III to provide a comparison of SGM's findings with empirical results from an alternative specification of the structure-performance model. This comparison suggests that attributing superior firm performance exclusively to efficiency is not well founded. Concluding remarks are found in Section IV.

Analyzes the ultra-free entry as normative contribution to industrial organization. Ultra-free entry in context of the evolving field of industrial organization; Assessment of the conceptual validity of William Baumol, Elizabeth Bailey John Panzar and Robert Willig's analysis in representing the nature of competition; Empirical issues in measuring and testing ultra-free entry. (Из Ebsco)