Knowledge that Transforms

Citations are given to show that since 1888 some people have understood the idea of effective tariffs. For fourteen studies on twenty-six countries done during the last five years, one finds a rank correlation of .95 between the height of a nation's average effective tariff and the height of the nation's average nominal tariff. Looking at the effective tariff and the nominal tariff for various industries within a country, one finds both a significant regression between them and a rank correlation between them of over .70 for twenty-three of the twenty-six countries. I speculate on reasons for these results.

The paper provides estimates of (1) research expenditures on poliomyelitis, (2) several forms of productivity benefits from applying the knowledge generated by the research, and (3) the costs of applying that knowledge. Internal rates of return are computed under a variety of assumptions, with results generally between 4 and 14 percent. The interrelatedness of research with procedures for applying the research findings is investigated; in the case of polio, the rate of return on research is found to be heavily influenced by the costs of application. Finally, a discussion is included of the likely allocative efficiency of private-market behavior when a collective-consumption good, such as research knowledge, requires the use of an individual-consumption good, such as a vaccination, for its application.

In reply to the critiques of Professor Hillinger and Lapham on Amartya Sen's original article.

This paper is concerned with an extension of the theory of peak load or joint product pricing. It is prompted by a recent paper by Turvey (1968) and by Marshall's (1920) early analysis of joint product pricing. Both of these authors hint at solutions to a joint product or peak load problem that have not been discussed in the major contributions on peak load pricing (Steiner 1957; Williamson 1966). Both Williamson and Steiner recognize the existence of a class of peak load situations which Steiner calls the "firm peak" case. These occur where it is not possible in the off peak period to fully utilize capacity even when a price equal to marginal running cost is charged.1 This corresponds to Marshall's "valueless straw case." When the straw is worthless, farmers concentrate on the production of a crop which has a larger proportion of ears to straw. Corresponding to this process is a firm peak situation where a public utility would install different kinds of facilities in order to vary its production methods so as to reduce the costs of servicing the peak loads. Empirical evidence of this can be noted in the electricity supply industry's production techniques, which consist of employing plants that have different cost characteristics according to their role in meeting demand. This was noted by Turvey whose paper throws some light on the problems of an electricity supply industry in meeting demand. Although Turvey does not explicitly state what are optimal peak load prices when an industry uses more than one kind of plant to meet its peak loads, he hints that prices equal to marginal running cost are somehow relevant. Turvey criticizes the assumption of constant marginal running costs and constant incremental capacity costs as "too simple a notion to be meaningful." He then notes that, for an electricity system consisting of plants differing in age, location, and type (and therefore also running costs), the system marginal running cost curve is upward sloping. He goes on to say: "The first consequence of

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