Knowledge that Transforms

Within the context of a world where some goods may be nontraded and some factors may be internationally mobile, this paper analyzes the conditions under which trade in factors can replace trade in goods in the presence of tariffs or taxes. crucial issue regarding the perfect substitutability between trade in goods and trade in factors turns out to be whether the sufficient conditions for international equalization of prices of goods and factors are exactly met, not met, or met in excess. THE TOPIC OF international equalization of factor prices has been widely discussed in the literature, starting with P. A. Samuelson in 1948 [4]. However, the treatment of the problem has consistently been restricted to the case where all goods are being traded and all factors are immobile between countries. A breakthrough came with Ken-Ichi Inada's article The Production Coefficient Matrix and the Stolper Samuelson Condition [2]. There he accepts that some goods may not be traded between countries, and then shows at what level, and how many, nominal factor rewards governments should fix through intervention in order to obtain international equalization of prices of goods and factors (IEPGF). In Section 1 of this paper we extend Inada's results to include the possibility of international factor mobility, thus eliminating the necessity of government fixing of factor rewards in order to get IEPGF. We will thus be looking for sufficient conditions for IEPGF when some goods are nontraded and some factors are internationally mobile. In Section 2 we analyze some of the implications of models where the sufficient conditions for IEPGF which we found in Section 1 are either not met, exactly met, or met in excess. In particular, we will show that the results obtained by Robert Mundell [3] about perfect substitutability between goods movements and factor movements are due to the fact that he is working with an overdetermined model, in the sense that the sufficient conditions for IEPGF are met in excess. We will be only concerned with the case where the total number of goods equals the total number of factors. It is assumed that each country produces the same n goods with the help of the same n factors under linear homogeneous production functions which are identical for all countries. All n factors are used in some positive amount in the production of each good. Of the n goods, k < n are traded;

IN A RECENT ARTICLE in Econometrica [1] Barbara Bergmann argues that improvement over the usual regression procedures can be gained by a combination of a very simple do-it-yourself simulation with regression. She asserts that this approach can provide insights which would not be found using a regression approach, and claims that simulation-regression offers a partial solution for the problems of multicollinearity and choice of functional form while economizing on degrees of freedom. These points are illustrated with an application to a simple model determining the incidence of poverty. In this comment we point out an analytic solution to Bergmann's theoretical model and show her simulation to be inefficient. We explore the general properties of prepared regression, arguing that its usefulness is overstated and that it is not more fruitful for scientific investigation than properly performed regression analysis. Bergmann proposes a model of the effects on the incidence of poverty (p) of the unemployment Tate (u), the weekly gross turnover rate (v), and the weekly wage rate relative to the poverty line. In her model, which assumes homogeneous labor force participants who stochastically become employed or unemployed, the probability that a person will be employed next week depends only on his employment status this week. A participant is poor if he is employed no more than a certain number of weeks in the year (c), which number depends on the poverty threshold and the weekly wage. This model can be criticized on many substantive grounds such as its use of a homogeneous labor force, the assumption that accessions and separations are random, the neglect of the labor force participation decision, and the omission of unearned income. Hall [4] has shown that the probability of separation depends importantly on the length of employment. It may also be important to distinguish between quits and layoffs. Our primary purpose, however, is not to offer substantive criticism of the model. We need only emphasize here that the poor in this model are very different from the poor in the real world.2 Bergmann solves the model by computer simulation, but in fact it has an analytic solution. The model is a two state Markov process in equilibrium, with the states defined as employed this week (state 1) and unemployed this week (state 0). The transition probability matrix is as follows:

[Social choice is studied under continuous expression of preferences by individuals. Comparison is made with simple majority rule. The existence of a social utility function under continuous expression of preferences is studied, and a straightforward topology on expressed preferences is defined.]

Edgeworth's conjecture that as the number of traders in an exchange economy increases the core approaches the set of competitive equilibria has been formalized both as a theorem about a sequence of finite economies, and as a theorem about an economy having an infinite number of agents. This paper, using nonstandard analysis, provides a synthesis of these two approaches. It is shown that the core and the set of competitive equilibria are equivalent within a non-standard exchange economy. This theorem implies a asymptotic theorem concerning the core and competitive equilibria of sequences of finite economies. (Из Ebsco)

[This is the second part of a paper concerning an iterative decentralized1 process designed to allocate resources optimally in decomposable environments that are possibly characterized by indivisibilities and other non convexities. Important steps of the process involve randomization. In Part I we presented the basic models and results, together with examples showing that certain assumptions can be satisfied in both classical and non convex cases. Part II goes further with such examples in showing that our process yields optimal allocations in environments in which the competitive mechanism fails, and also shows how abstract conditions used in Part I can be verified in terms of properties of preferences and production functions that are familiar to economists.]

[The empirical content of the paper is the relationship between personal attributes and job performance, as measured by rate of promotion, in a large corporation. It focuses, however, on a behavioral model and method of estimation which provide a natural way of dealing with this and similar phenomena.]

A two-person bargaining problem is considered. It is shown that under four axioms that describe the behavior of players there is a unique solution to such a problem. The axioms and the solution presented are different from those suggested by Nash. Also, families of solutions which satisfy a more limited set of axioms and which are continuous are discussed. WE CONSIDER a two-person bargaining problem mathematically formulated as follows. To every two-person game we associate a pair (a, S), where a is a point in the plane and S is a subset of the plane. The pair (a, S) has the following intuitive interpretation: a = (a1, a2) where ai is the level of utility that player i receives if the two players do not cooperate with each other. Every point x = (x1, x2) e S represents levels of utility for players 1 and 2 that can be reached by an outcome of the game which is feasible for the two players when they do cooperate. We are interested in finding an outcome in S which will be agreeable to both players. This problem was considered by Nash [3] and his classical result was that under certain axioms there is a unique solution. However, one of his axioms of independence of irrelevant alternatives came under criticism (see [2, p. 128]). In this paper we suggest an alternative axiom which leads to another unique solution. Also, it was called to our attention by the referee that experiments conducted by H. W. Crott [1] led to the solution implied by our axioms rather than to Nash's solution. We also consider the class of continuous solutions which are required to satisfy only the axioms of Nash which are usually accepted. We give examples of families of such solutions.

[Observations are made on the sources of cross-equation constraints and the ways they can be used as identification aids, on possible simplifying transformations of linear homogeneous cross-equation constraints, on a rank condition for identification of a block of equations under such linear constraints, and on a strategy for using these constraints for single-equation identification.]