Knowledge that Transforms

A limitation of Audretsch's 1991 study of new-firm survival was the level of aggregation to industries. This precluded linking establishment-specific characteristics, such as organizational structure and size, to post-entry performance. The purpose of this paper is to relate the post-entry performance of individual establishments not only to their technological and market structure environments, but also to establishment-specific characteristics. We do this by estimating a hazard duration function for more than 12, 000 individual establishments in U.S. manufacturing started in 1976 by tracking their subsequent performance over a ten-year period. We conclude that establishment-specific characteristics, which Audretsch was not able to capture in his earlier study, play an important role in shaping the exposure to risk confronting new establishments.

There has been no systematic study of the characteristics of the universities and academic researchers that seem to have contributed most to industrial innovation. Nor do we know how such academic research has been funded. This paper, based on data obtained from 66 firms in seven major manufacturing industries and from over 200 academic researchers, sheds new light on the sources, characteristics, and financing of academic research underlying industrial innovation. The findings should be of interest to economists concerned with technological change and to policy makers attempting to increase the economic payoff from the nation's academic research.

EDUCATION;TEACHING;MACROECONOMICS

Economics

The authors investigate the structure of preferences and uncertainty that guarantees that prices are fully revealing even though asset markets are incomplete and there are more sources of uncertainty than assets in the economy. A sufficient condition for fully revealing prices is that investors have preferences of the (possibly state-dependent) linear-risk-tolerance class. Finally, the authors discuss how their result allows one to extend certain existing literature on demand aggregation, welfare analysis, and the pricing of contingent claims to the case in which markets are incomplete and investors have asymmetric private information.

The data base compiled during the norming of the Third Edition of the Test of Understanding College Economics (TUCE III) (Saunders, 1994) contains information from 40 instructors of introductory microeconomics courses at 26 different schools who used the posttest score to determine some part of their students' course grade. Of these students, 1,896 answered 30 questions on micro TUCE III both at the beginning (pretest) and the end (posttest) of their one-term course. This paper will use a comparison of the preand posttest responses to each alternative on each question by each student to analyze patterns of persistence and change in choosing correct and incorrect responses.' For each student on each question, there are five possible response patterns: