Quantitative restrictions imposed on product categories have been observed to shift the composition of imports with these categories in favor of relatively more expensive items. This paper applies Alchian and Allen's proposition concerning the effects of transportation costs on the composition of demand to explain this phenomenon. It is also shown that the same effects occur under specific tariffs but do not pertain to ad valorem tariffs or value restrictions.

I consider markets with asymmetric information. As suggested by Akerlof, quality deterioration in such markets may take place. I show that this is a general phenomenon. Minimum quality constraints (or "licensing requirements") are examined as a possible solution to the problem. Although not generally a first-best solution, such constraints will increase welfare in a number of cases. The types of markets that are likely to benefit from minimum quality standards are identified. It is then shown that, if quality standards are set by the profession (or industry) itself, it is likely that the standards will be too high.

Quantitative restrictions imposed on product categories have been observed to shift the composition of imports with these categories in favor of relatively more expensive items. This paper applies Alchian and Allen's proposition concerning the effects of transportation costs on the composition of demand to explain this phenomenon. It is also shown that the same effects occur under specific tariffs but do not pertain to ad valorem tariffs or value restrictions.

A general equilibrium model is presented wherein wage labor requires monitoring in order to extract effort. Landlords may also elect to adopt sharetenancy contracts in which workers have an incentive to supply unsupervised effort. Two "distortions" exist: monitoring costs in one sector and a share "tax" in the other. Efficiency statements require second-best comparisons adopting more specific functional forms. This mixed wage-sharetenancy economy is technically efficient and provides greater Benthamite social welfare than a wage-only economy, when private incentives lead to mixing. The incidence of sharetenancy is hypothesized to increase with monitoring costs, density of tenants per landlord, and labor intensity of production.

A general equilibrium model is presented wherein wage labor requires monitoring in order to extract effort. Landlords may also elect to adopt sharetenancy contracts in which workers have an incentive to supply unsupervised effort. Two "distortions" exist: monitoring costs in one sector and a share "tax" in the other. Efficiency statements require second-best comparisons adopting more specific functional forms. This mixed wage-sharetenancy economy is technically efficient and provides greater Benthamite social welfare than a wage-only economy, when private incentives lead to mixing. The incidence of sharetenancy is hypothesized to increase with monitoring costs, density of tenants per landlord, and labor intensity of production.

We construct a theory of competitive equilibrium under uncertainty using an entrepreneurial model with historical roots in the work of Knight in the 1920s. Individuals possess labor which they can supply as workers to a competitive labor market or use as entrepreneurs in running a firm. All entrepreneurs have access to the same risky technology and receive all profits from their firms. In the equilibrium, more risk averse individuals become workers while the less risk averse become entrepreneurs. Less risk averse entrepreneurs run larger firms and economy-wide increases in risk aversion reduce the equilibrium wage. A dynamic process of firm entry and exit is stable. The equilibrium is efficient only if all entrepreneurs are risk neutral. Inefficiencies in the number of firms and in the allocation of labor to firms are traced to inefficiencies in the risk allocation caused by institutional constraints on risk trading. In a second best sense which accounts for these constraints, the equilibrium is efficient.

This paper reexamines traditional macrotheoretical questions in models that fully integrate conditions of production into the structure. The relative price of capital and consumer goods and the real rate of interest are required to equal the technical rates of transformation. Capital stocks are immobile between sectors, and increasing marginal costs of introducing new capital goods into the production process are assumed. Given plausible values of the parameters, standard fiscal policies may not change aggregate demand in the directions predicted by the IS-LM approach. And to judge what outcome is most likely requires considerable information about an economy's structure of production.

[We construct a theory of competitive equilibrium under uncertainty using an entrepreneurial model with historical roots in the work of Knight in the 1920s. Individuals possess labor which they can supply as workers to a competitive labor market or use as entrepreneurs in running a firm. All entrepreneurs have access to the same risky technology and receive all profits from their firms. In the equilibrium, more risk averse individuals become workers while the less risk averse become entrepreneurs. Less risk averse entrepreneurs run larger firms and economy-wide increases in risk aversion reduce the equilibrium wage. A dynamic process of firm entry and exit is stable. The equilibrium is efficient only if all entrepreneurs are risk neutral. Inefficiencies in the number of firms and in the allocation of labor to firms are traced to inefficiencies in the risk allocation caused by institutional constraints on risk trading. In a second best sense which accounts for these constraints, the equilibrium is efficient.]

This paper reexamines traditional macrotheoretical questions in models that fully integrate conditions of production into the structure. The relative price of capital and consumer goods and the real rate of interest are required to equal the technical rates of transformation. Capital stocks are immobile between sectors, and increasing marginal costs of introducing new capital goods into the production process are assumed. Given plausible values of the parameters, standard fiscal policies may not change aggregate demand in the directions predicted by the IS-LM approach. And to judge what outcome is most likely requires considerable information about an economy's structure of production.

I consider markets with asymmetric information. As suggested by Akerlof, quality deterioration in such markets may take place. I show that this is a general phenomenon. Minimum quality constraints (or "licensing requirements") are examined as a possible solution to the problem. Although not generally a first-best solution, such constraints will increase welfare in a number of cases. The types of markets that are likely to benefit from minimum quality standards are identified. It is then shown that, if quality standards are set by the profession (or industry) itself, it is likely that the standards will be too high.