Peter C. Y. Chow, Mitchell Kellman, Anti-LDC Bias in the U.S. Tariff Structure: A Test of Source Versus Product Characteristics, The Review of Economics and Statistics, Vol. 70, No. 4 (Nov., 1988), pp. 648-653

A current trend among oil-producing nations with private oil sectors is to move toward tax systems that are based upon pr ofits rather than production. The authors present a case study of wha t can go wrong with profit-based tax schemes. They study the implemen tation of the net profit share leasing system in the United States in the early 1980s. They conclude that the information requirements of the scheme are heavy, perhaps prohibitive, and that the net profit sh are system can easily backfire if the informational requirements can not be met. The authors also show that the U.S. government misused th e limited amount of information that was available to it. Copyright 1988 by MIT Press.

The relevance of imperfect competition for models of aggregate economic fluctuations has received increased attention from researchers in both macroeconomics and industrial organization.Measuring properly the size of industry markups of price over marginal cost is important both for assessing the role of market structure and for determining the extent to which excess capacity is a significant feature accompanying imperfect competition in American industry.Using a panel data set on four-digit Census manufacturing industries, this paper expand8 recent work by Robert Hall on the importance of market structure for understanding cyclical fluctuations.We outline a methodology for estimating industry markups of price over cost and the influence of market structure on cyclical movements in total factor productivity.While we find evidence to support the proposition that price exceeds marginal cost In U.S. manufacturing, our results offer only limited support for the notion that markups are importantly related to differences in Industry concentration, though the effect of unionization is important.Concentration effects are important only in industries producing durable goods or differentiated con8umer goods.In addition, much of the estimated markup of price over marginal cost is accounted for by fixed costs related to overhead labor, advertising, and central office expenses; we do not find compelling evidence of substantial evidence of excess capacity in most industries.

L. G. Godfrey, Michael McAleer, C. R. McKenzie, Variable Addition and Lagrange Multiplier Tests for Linear and Logarithmic Regression Models, The Review of Economics and Statistics, Vol. 70, No. 3 (Aug., 1988), pp. 492-503

Evidence on cost savings from reorganizing township low-volume, rural-road systems into larger units is presented in the study of technical efficiencies in producing local government services. Data are from a sample of midwestern townships. Heterogeneity of surface types is accounted for by specifying a multiple output translog cost function. Examination of economies of size suggest that cost savings could be realized by reorganizing townships into larger units. The presence of economies of scope suggest that jurisdictions should not specialize in maintenance responsibilities due to the joint use of inputs. Copyright 1988 by MIT Press.