Suppose that engineers can demonstrate that air bags will reduce the risk of death in an automobile by 25 percent for any given frequency and severity of accidents. Would the installation of these devices necessarily reduce the fatality rate by 25 percent? The answer depends upon the response of drivers to the increased protection from dangerous accidents. If they increase their (speed, recklessness, driving while intoxicated, driving in unsafe conditions, etc.), they may realize substantially less than a 25 percent reduction in expected fatalities. Such offsetting behavior is not irrational: it merely represents a substitution of the marginal benefits of driving intensity for the reduced marginal cost of risk. If offsetting behavior actually occurs, it may be realized in increased risks for bicyclists, motorcyclists, and pedestrians. These externalities could be substantial unless there is a reduction in risk taking among these groups. As a result, the net effect of mandating air bags or any other safety device is far from obvious. There may be no net reduction in fatalities or serious injuries. These theoretical considerations are at the core of Sam Peltzman's classic study (1975) of automobile safety regulation. For policymakers, however, the key question is how much offsetting behavior actually occurs. As Peltzman (1977) acknowledges, offsetting behavior could be trivial or substantial. In this paper, we explore this issue, providing new empirical estimates of the effects of crashworthiness standards established for automobiles over the past fifteen years. These standards have required the installation of lapshoulder belts, energy-absorbing steering columns, head restraints, padded dashboards, crush-resistant passenger compartments, safer windshield mounting, more secure locks, and a variety of other features

The economic theory of regulation long ago put public interest theories of politics to rest. These theories have correctly been viewed as normative wishings, rather than explanations of real world phenomena. They have been replaced by models of political behavior that are consistent with the rest of microeconomics (Anthony Downs, 1957; James Buchanan and Gordon Tullock, 1965; George Stigler, 1971; Sam Peltzman, 1976). Recently, however, debate has arisen over whether some version of a public interest theory of regulation will have to be readmitted to our thinking about actions and results in the political arena. What is at issue is the empirical importance of the altruistic, publicly interested goals of rational actors in determining legislative and regulatory outcomes (James Kau and Paul Rubin, 1979; Kalt, 1981; Peltzman, 1982). This study assesses the nature and significance of publicly interested objectives in a particular instance of economic policymaking: U.S. Senate voting on coal strip-mining regulations. The existence of such objectives is, of course, no contradiction of the economic view of human behavior (Kenneth Arrow, 1972; Gary Becker, 1974); and may well be rooted in genetic-biological history (Becker, 1976; Jack Hirshleifer, 1978). Generally, however, individuals' altruistic, publicly interested goals have been given little attention. This reflects the judgment that such goals are so empirically unimportant as to allow the use of Occam's razor in positive models, or well-founded apprehensions that these goals are unusually difficult to identify, measure, and analyze. Notwithstanding the latter problem, we find that approaches which confine themselves to a view of political actors as narrowly egocentric maximizers explain and predict legislative outcomes poorly. The tracking and dissecting of the determinants of voting on coal strip-mining policy suggest that the economic theory of politics has been prematurely closed to a broader conception of political behavior

I tackle a problem which I believe concerns all our disciplines; the problem of the legal processes involved in international trade regulation, and its various costs and benefits. Much of what I say could be applied to international processes, obligations, and institutions such as the GATT or OECD, but for reasons of time and space I will generally confine myself to the domestic U.S. laws and procedures concerning imports.' During the post-World War II period, there have been two parallel but clear trends in the system of United States regulation for imports. The first has been for the overall dramatic reduction in the level of tariffs since 1945, after the negotiation of the GATT, and the seven tariff and trade negotiating rounds under the auspices of GATT. The second trend has been a gradually accelerating recourse to measures for restraining imports other than normal tariffs, including measures entitled antidumping duties and This trend has particularly accelerated since 1962, and it is instructive to examine the major trade acts of 1962, 1974, and 1979 (the latter being the Trade Agreements Act of 1979, which implemented the results of the Tokyo Round Multilateral Trade Negotiations). The clear trend manifested in those statutes is towards a greater legalization or judicialization of the system. The 1974 act greatly reduced administrative discretion in the application of certain regulatory principles, particularly countervailing duties. It did this by imposing time limits, and in some cases embellishing the requirements for public hearings and other procedures to allow citizen access to the process. The 1979 act went even further in this regard, and also took some major steps in expanding the scope for judicial review of administrative actions. Consequently, as of this writing in 1983, the United States has a remarkably elaborate governmental system for the regulation of imports, including approximately a dozen different formal types of procedures or processes, many of which have explicit statutory procedural requirements calling for public hearings, judicial review, citizen complaint, and much reduced discretion for Executive Branch officials handling these matters. (See my 1977 book.) These include proceedings for escape clause, antidumping, countervailing duty, ? 337 unfair trade actions, ? 301 complaints against foreign government actions, etc. It is said that the U.S. legalistic system of regulating trade is costly, is itself a non-tariff barrier to trade, and lends itself to manipulative use by special domestic interests. Some of this may be true, but a systematic appraisal must examine at least three questions. 1) What are the real costs of the system? 2) What are the benefits of the system? 3) What alternatives to the system exist or are feasible, and what are their costs and benefits? I will therefore discuss those three questions, along with some policy and historical matters

There is an interesting unexplored sideline to the empirical literature on compensating wage differentials (CDs) for hazardous work. Every study of differences between union and nonunion compensation for exposure to deadly hazards has found that union members receive much larger CDs than nonunion workers.' Further, in many of these studies negative CDs are found and some are statistically significantly negative. Some have interpreted these results as indicating the possible existence of substantial market failure. Despite this, there has been almost no discussion of the implications of such a conclusion for occupational safety and health policy. In contrast, several authors, ignoring the union-nonunion differences, have suggested that the empirical evidence on risk premiums supports the argument that markets efficiently allocate occupational risk without government intervention. (See, for example, Robert Smith, 1982, pp. 327, 336.) The analysis presented below shows that a market failure argument is not needed to explain the finding that union workers receive larger CDs than nonunion workers. Efficient contracts may provide workers with either larger or smaller CDs than a competitive market would. But, negative CDs cannot be reconciled with efficient markets given any reasonable assumptions about workers' preferences. The analysis also considers several potential statistical explanations for these findings. Results are mixed and the conclusion considers the policy implications.

This paper examines bargaining among firms to mitigate rent dissipation following the major oil discoveries of 1926-35. Because of high bargaining costs, firms chose prorationing instead of consolidation and unitization, and success varied. The analysis also shows that prorationing took the form it did because concession, such as per well quotas, were required to draw in small operations and the quotas led to predictable responses regarding rent dissipation. Prorationing, despite its costs, controlled total field production and costs, conserved natural reservoir energies, and lengthened field life. When private agreements failed, the parties successfully appealed for state enforcement. Since similar heterogeneities influnce regulations elsewhere in the economy, detailed analysis of bargaining among firms is essential for insight into the emergence of various institutional forms. 33 references, 3 tables

In their seminal work describing the decline of American industry, Robert Hayes and William Abernathy (1980) identified competitive failures in world markets (loss of market shares at home and abroad); declining productivity (in both absolute terms and relative to Japan and West Germany from 1960 to 1978); and the loss of leadership in both mature and high technology industries. While other commentators had noted the relative decline in American economic performance and cited a large number of alleged causes for this decline, the Hayes and Abernathy article was notable for citing managerial failure as being at the root of the problem. Although Hayes and Abernathy acknowledged the influence of excessive government regulation and taxation, pressures from labor unions and public interest groups, dependency on OPEC-priced oil, and capital market emphasis on short-run financial returns, they argued that Japanese and West German companies were subject to the same constraints, only more so. How then, they asked, can one explain the poorer performance of American industry by these factors? Instead, they pointed to the new management orthodoxy as deserving a major share of the blame, and provided the results of a comparative study of management attitudes in the United States, Japan, and Western Europe to substantiate their charges

The Equal Credit Opportunity Act of 1975 was amended in 1976 to expand the prohibition on discrimination in the extension of credit to include race, color, religion, national origin, and age. While studies have shown that differences exist between blacks and whites in capital accumulation (Henry Terrell, 1971) and in the use of financial services (Lindley-Selby, 1977), they have not concluded that the differences constituted racial discrimination in the supply of financial services. Evidence presented in support of the original Equal Credit Opportunity Act appears to have been statistically deficient in demonstrating discrimination based on sex. Richard Peterson concluded, ... that commercial banks did not systematically discriminate against potential borrowers based upon their sex before ECOA was passed (1981, p. 560). Testimony alleging racial discrimination in credit extension was given to Congress when it considered the 1976 amendment and to the Federal Reserve when it was in the process of promulgating Regulation B (Board of Governors, 1976, p. 243). Again, no statistical evidence supporting claims of racial discrimination was given. Despite the paucity of statistical evidence supporting the notion that financial institutions racially discriminate in the extension of credit, Congress acted as if such discrimination were pervasive. The mood of Congress is reflected by the statement in the Congressional Record of Representative Frank Annunzio of Illinois