Knowledge that Transforms

A technique for assessing the degree of monopoly power, developed by Appelbaum (1979, 1982), is extended here to permit measurement of monopsony power as well. Data from the U.S. beef packing industry are examined. The results reveal small, but statistically significant monopoly/monopsony price distortions in slaughter cattle and wholesale beef markets but, in spite of a recent trend toward heightened concentration in the industry, give no indication that performance has become appreciably less competitive of late.

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.

Spatial autocorrelation occurs when population members are related through their geographic location. This paper presents a maximum likelihood procedure for simultaneously estimating the parameters of the correlation function and the regression coefficients. A test for the presence of spatial autocorrelation is also provided. Estimation of an hedonic regression illustrates the technique.

Using panel data for rural South India, a fixed-effects individual wage equation and farm production function are estimated that have calorie intake and nutritional status (weight-for-height) of workers as their arguments. Neither market wages, nor farm output, are observed to be responsive to changes in the daily energy intake of workers. However, both are highly elastic with respect to weight-for-height. These results suggest that, while the human body can adapt to inadequate nutrition in the short run, it cannot adapt as readily to chronic malnutrition that eventually results in loss of weight-for-height.

Standard approaches to designing a futures hedge often suffer from two major problems. First, they focus only on minimizing risk, so no account is taken of the impact on expected return. Second , in estima ting the hedge ratio, no allowance is made for time variation in the distribution of cash and futures price changes. This paper describes a technique for estimating the optimal futures hedge that corrects these problems and illustrates its use in hedging Treasury bonds with T-bond futures.

This paper presents a theoretical and empirical analysis of the effects of child care costs on family labor supply and the demand for market child care. The model is a framework for cross-section estimation of the effects of child care costs on labor supply and child care use. It applies to households having young children requiring continuous care and in which both the mother and 1 other potential child care provider are present. The 3 potential sources of child care are the mother the potential informal provider and the market. Using data from the 1980 baseline household survey of the Employment Opportunity Pilot Projects this empirical analysis uses a subsample of 6170 households in which there is a married woman under age 45 with her spouse present at the time of the survey at least 1 child under age 14 and nonmissing data on key variables. Results show that 1) higher market child care costs discourage women from working even when an informal source of care is available indicating that such informal care is an imperfect substitute for market care; 2) a higher wage rate for the mother encourages her to work thus a higher wage rate increases the probability of using market child care; 3) the number of children requiring care has a negative impact on the probability of the women working with the largest impact caused by younger children; 4) nonwage income has a negative impact on the probability of the woman working; and 5) black women are more likely to work than whites and are statistically more likely than whites to use market child care if they do work. This family labor supply model predicts that the cost of market child care will affect household decisions on labor supply and child care use. Estimates of a qualitative choice model provide strong confirmation that child care costs affect such decisions. The responsiveness of the labor supply of mothers to child care costs demonstrated in this study indicate that such subsidies do have their intended effect of encouraging labor supply. The fact that a large proportion of current child care subsidies benefit primarily middle and upper income families via the income tax credit suggests that the labor supply effets of such subsidies may in practice be stronger for less needy families than for low income families. Employer-subsidized child care may become an increasingly popular tool for attracting mothers into the labor force.

This study examines how errors in measuring marginal attribute pric es vary with the form of the hedonic price function. In simulations, consumers with known utility functions bid for houses with given attributes. Various forms of the hedonic function are estimated using equilibrium housing prices. Errors in estimating marginal attribute prices are calculated by comparing each consumer's equilibrium marginal bid vector with the gradient of the hedonic function. When all attributes are observed, linear and quadratic Box-Cox forms produce lowest mean percentage errors; however, when some attributes are unobserved or are replaced by proxies, linear and linear Box-Cox functions perform best.

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