Knowledge that Transforms

The wage discrimination model developed by Becker has been criticized for predicting that competitive forces will lead to the disappearance of racial discrimination in the long run. We have reformulated the model in terms of nepotism toward white workers rather than discrimination against black workers. In this new framework, both nepotistic and taste-neutral firms are expected to survive the competitive struggle in the long run. Therefore, the new framework is consistent with long-run as well as short-run racial wage differentials.

Recently, some charities have been attacked for spending an “excessive†portion of their resources on fundraising. This paper shows how competition for donations can push fundraising shares to high levels even when donors dislike charities that spend a large portion of receipts on fundraising. It also considers a case in which donors take account of the productivity of fundraising in generating gifts from others. In the light of the models developed in the paper, a variety of regulatory strategies are assessed from the dissemination of information to the establishment of a federated fund drive.

Past research has recognized that both demand and capability influence the allocation of R&D resources. Scholars have had an easier time getting a grip on demand than on capability. While it has been recognized that knowledge is an important part of capability, to date, formalization of knowledge and its role in R&D activity has been unsatisfactory. This paper models the role of knowledge in R&D. Various sources of such knowledge are considered. The model throws a different light on analyses that employ a “knowledge capital stock, †and also illuminates the dual private and public nature of technological knowledge.

This paper explains involuntary unemployment in terms of the response of firms to workers' group behavior. Workers' effort depends upon the norms determining a fair day's work. In order to affect those norms, firms may pay more than the market-clearing wage. Industries that pay consistently more than the market-clearing wage are primary, and those that pay only the market-clearing wage are secondary. Thus, this paper also gives a theory for division of labor markets between primary and secondary.