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A model for testing all types of relative price inefficiency expands the Averch-Johnson effect and makes it possible to test for absolute price efficiency, which exists if the value of the marginal product for each factor is equated to factor price and implies both cost minimization and production of the optimal quantity of output. Duality theory is used to derive the empirical model using 1973 data for electric utilities. The results indicate that relative and absolute price efficiency were generally not achieved by electric utilities in that year. 36 references, 1 table.

In this paper the labor force entry and exit by married women are examined using longitudinal data that enable one to observe actual changes in economic behavior and characteristics. The symmetry assumption is investigated by estimating separate equations for the entry and exit choice. Section II briefly analyzes the wifes labor supply decision and discusses the issue of symmetry. The data and analytical procedure are described in section III and the empirical results are presented in section IV. Some implications of our findings are presented in section V. (excerpt)

In this REVIEW some years ago, Edwin Elton and Martin Gruber (1970) used the concepts of market equilibrium and differential tax rates between capital gains and dividend income to structure a theoretical model which they then used empirically to estimate marginal stockholder tax rates. Their specification of an equilibrium condition is appropriate for a security seller who qualifies for preferential tax treatment of capital gains. However, their assumption that such a stockholder is the marginal stockholder in a market equilibrium is questionable. This assumption, along with disregard of transactions and other costs, is essential to their empirical derivation of stockholder tax rates. This note presents an alternative explanation of their empirical results.

Randolph C. Martin, Robert E. Graham, Jr., The Impact of Economic Development Administration Programs: Some Empirical Evidence, The Review of Economics and Statistics, Vol. 62, No. 1 (Feb., 1980), pp. 52-62

THE Federal Home Loan Bank Board (FHLBB), a government regulatory agency for member Savings and Loan Associations (SLA), provides advance loans (advances) to members. Advances are considered a major policy tool for the FHLBB in stabilizing deposit, mortgage, and housing markets. Indeed, the FHLBB has characterized advances as providing 'a central credit resource, capable of expanding and contracting to meet the needs of its member institutions for housing credit.' Debt issues in the government agency capital market are the primary source for FHLBB funds.2 The quantity of advances outstanding has grown from $5.3 billion at year-end 1968 to $32.7 billion at year-end 1978, and with considerable variation in between. A key issue in evaluating the role of advances has been whether or not the FHLBB uses nonprice rationing in allocating advance loans. Without nonprice rationing, the FHLBB sets the interest charge for the advances and member SLAs determine the quantity of loans they wish to borrow. In this case, an appraisal of FHLBB policy is relatively straightforward and can be based on the level of the advances rate. With nonprice rationing, in contrast, an appraisal of FHLBB policy is more complicated because the unobserved availability of advances must also be considered. The relevance of this issue is underscored by a recent report of the existence of nonprice rationing.3 Existing econometric models of the advances market treat the question of nonprice rationing in different ways. Hendershott (1977) has the quantity of advances determined by SLA demand without regard to interest rates, so there is neither price nor nonprice rationing. As a consequence, advances policy is viewed as purely passive. Kearl and Rosen (197-4) have the quantity of advances determined by a FHLBB reaction function, again with no role for interest rates, so they have a pure nonprice rationing system. In the MPS model (see Gramlich and Jaffee (1972)) both the quantity and interest rate for advances are set exogenously by the FHLBB, which then implies a combination of interest rate and nonprice rationing. Finally, Silber (1973), in the most sophisticated of the studies, has two versions, one with interest rate and one with nonprice rationing. The version with interest rate clearing has a FHLBB reaction function determining the interest rate and an SLA demand function determining the quantity. The version with nonprice rationing has the FHLBB determine the quantity of advances and no equation for the interest rate, in much the same spirit as Kearl and Rosen. The treatment of rationing in these models is not satisfactory. First, the models specify a priori the presence or absence of rationing, but without providing a test of the hypothesis that rationing takes place. Second, among the rationing models, the specifications are deficient in assuming either that only rationing occurs (Kearl and Rosen, and Silber) or that price and nonprice rationing always occur together (the MPS model). In this paper we develop a model based on optimizing behavior on the part of the FHLBB. Whether market clearing or nonprice rationing behavior obtains in a given time period depends on both economic conditions and the nature of the FHLBB's objective function. As a polar case, the general model collapses into an ordinary market clearing simultaneous equation model and we are able to offer statistical evidence as to which model is to be preferred. In section II.A we develop a market clearing model and in II. B a rationing model. A geometric interpretation is given in section II.C. Section III provides the empirical specification for impleReceived for publication November 6, 1978. Revision accepted for publication July 12, 1979. * We are indebted to NSF Grant SOC77-07680 and the Federal Home Loan Bank Board for support, to Naoyaki Yoshino for helpful comments, and to David Romer for expert research assistance. An earlier version of this paper was presented at the Econometric Society Meetings, Vienna, September 1977. 1 FHLBB Journal, April 1972, p. 24. 2 See Jaffee (1976) for a recent survey of FHLBB structure and policies. 3 Wall Street Journal, May 4, 1979, p. 18.

That it is easier to measure the costs of price regulation than the benefits is evident in the conflicting results of studies made to determine welfare gains. An econometric study based on a simple theory of demand by customer class concludes that: (1) the effectiveness of regulation across states is irregular, which suggests that state regulatory agencies confront firms with highly variable political climates and may serve customers with an uneven quality of benefits; (2) the pattern of cross-subsidization of prices that penalized residential customers in 1969 was gone or shifted to favor residential customers by 1974; (3) a more-detailed re-evaluation of the presumed benefits and costs of nonuniform pricing may be warranted; and (4) welfare improvements appear to be possible. The dominant question that emerges is how to explain what underlying forces contribute to the substantial state-to-state and between-customer variations in regulatory impact. 13 references, 6 tables.