Knowledge that Transforms

The low estimates of the income elasticity of housing demand obtained when individual households are the unit of observation are theoretically reconciled with the high estimates obtained when metropolitan-wide averages are used. The omission of the housing price term biases the ungrouped (whether stratified by metropolitan areas or not) estimate(s) downward and the grouped estimate upward. The inclusion of a metropolitan-wide average housing price term worsens the downward bias of the unstratified ungrouped estimate. The corresponding price elasticity estimate is biased upward (toward zero). These results are interpreted in terms of the theory of residential location and used to explain the empirical evidence. For the evidence considered, the true income and price elasticities are approximately .75 and -.75, respectively.

This paper develops an econometric model of production technology in terms of the ante-ex description of production possibilities. Ex ante and ex post substitution characteristics are allowed to differ from one another and parametric representations are derived which provide arbitrary second-order approximations to the true underlying characteristics. Nested in the maintained model are the specialized putty-putty, puttyclay, and structures of technology; and hypothesis tests are developed to test for the applicability of these specialized structures. An example is provided in which the hypotheses that fossil fuel electricity generation can be characterized by putty-clay or clay-clay technologies are tested using data drawn from individual United States electricity generating plants.

[The purpose of this paper is to present a model which explains the formation of firms in a market economy. This is done by unifying two recent developments in economic theory: the labor-managed market economy and the coalition production economy. D. Sondermann's model [30] of a coalition production economy with "increasing returns to coalition" is generalized. Specifically, the concept of coalition structures is introduced, so that the model can be naturally interpreted to represent a labor-managed market economy. Two kinds of specific interpretation are considered: one is a type of socialistic economy and the other a capitalistic economy.]

[This paper considers (i) the robustness of the @t and Durbin-Watson bounds tests for first-order autocorrelation when disturbances in the linear regression model are heteroskedastic and (ii) the robustness of the Goldfeld-Quandt and Glejser tests for heteroskedasticity when the disturbances follow a first-order autoregressive scheme.]

IN THIS PAPER we show that application of the traditional theory of the true cost of living index to Lancaster's new approach to consumer theory (cf. [6 and 7]), i.e., to shadow prices of characteristics rather than to ordinary prices of goods, opens a possibility for a convenient treatment of quality changes and of the introduction of new goods. Section 2 is a statement of the relevant properties of Lancaster's model. In Section 3 this model is used to derive a cost of living index, which is not only price compensating but also quality compensating. However, the Laspeyres index which corresponds to this true index and which in principle might be observable, is not always an upper bound on this true index. In this section the relationship to the hedonic price index is also noted. Section 4 contains some concluding remarks.2

[A choice function is defined to exist if there is a "best" (under a binary relation R) element in all non-empty compact subsets of S, the set of all possible alternatives, whereas a demand correspondence exists if there is a "best" element in only the budget sets of S. Some basic restrictions on R are considered. First, if the "at least as good as" sets are closed, then none of the standard restrictions on R are shown to be necessary for the existence of a demand correspondence: the "domination" of finite sets is necessary and sufficient. This is shown to imply that acyclicity of R is necessary and sufficient for the existence of choice functions. Second, if either there is a restriction on convergent P monotone sequences or if R satisfies a regularity condition, then a condition on cyclical sets of alternatives is enough to guarantee the existence of demand correspondences. For the existence of rational choice functions, however, reflexivity, completeness, and transitivity of R, together with the above-mentioned condition on P-monotone sequences, are necessary and sufficient. Finally, if the strictly preferred sets are taken to be convex, then under a restriction weaker than the first, a best element in budget sets exists.]