A probabilistic discovery model modified after Kaufman's earlier model is simplified to reduce computational demands and to reduce the sensitivity of the resulting estimates. The model is applied to the North Sea to estimate remaining oil reserves and forecast future discoveries. The simplification jeopardizes some informational detail, but the errors and approximations inherent in historical data sometimes overvalue the available information. A broader categorization scheme helps to control errors in this case. The model uses a stochastic production function based on a timing relationship between exploratory efforts and reservoir discovery and on a dynamic relationship of productivity and resource depletion. 21 references, 4 tables. (DCK)

This paper extends the fundamental theorem of share (or capital) valuation under conditions of certainty and purely competitive markets, to allow for the distinction between capital gains and income in the taxation of personal income. The objective is to develop the theorem for the tax case in a form general enough to allow for corporations both currently and not currently paying a dividend. However, the general derivation is sufficiently tedious to warrant a presentation which begins with less general cases. Accordingly, we will first develop the share valuation equation for a continuous discount version of the taxless case for corporations either paying or not paying a dividend. Then we turn to the effect of income and capital gains taxes for corporations currently paying a dividend; and finally the more general case. The derivations will be simplified by assuming a constant rate of interest over time, but all the theorems can be extended to deal with foreseen changes in interest over time.

This paper is not directed to the question of whether the Treasury should or should not practice in the public sector what the Clayton Act prohibits in the private sector. The paper is concerned exclusively with the theoretical question of whether the Treasury would necessarily receive higher prices by employing price discrimination than it could get by selling the issues at a single price. From a theory of bidding under uncertainty, which seems to apply naturally to the Treasury auction, it will be shown that buyers may be expected to enter lower bids under price discrimination than they would for a simulated competitive auction. If this analysis is accepted, it suggests that the Treasury may actually get less revenue from a given bill offering under price discrimination than under a competitive auction.

Warren L. Smith, Some Evidence on the International Price Mechanism: Comment, The Review of Economics and Statistics, Vol. 40, No. 1, Part 2. Problems in International Economics (Feb., 1958), pp. 127-129

DESPITE extensive controversy and discussion,1 the subject of monetary interest theory still seems to involve a considerable residue of confusion and uncertainty. While the writer does not pretend to be able to unsnarl all the tangled threads of this complex subject, it is hoped that the analysis presented here will serve three somewhat interrelated purposes: (i) to clarify the relation between the Keynesian liquidity preference theory and the loanable funds theory espoused by Robertson, Haberler, and others; (2) to produce a clearer understanding of the relation between stock and flow analysis in monetary theory; and (3) to develop an important distinction between (a) the determination of the rate of interest in a short period when the level of income is not in equilibrium, and (b) the forces that explain the change that occurs in the rate of interest during a longer period as the level of income moves from one equilibrium position to another.

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.