Knowledge that Transforms

In this paper the author examines the demand for a hypothetical input, electric over-the-road vehicles, in the commercial sector using data from a survey experiment. This experiment is designed to allow the estimation of theoretically plausible, derived demand functions from either the Translog or the CES production functions. A heteroscedasticity-corrected, two-limit Tobit model is developed and estimated. The results provide evidence of considerable adaptability to new technologies and price structures on the part of firms. They evidently would be willing to cope with the limited traveling range of electric vehicles if these vehicles were able to provide a less costly means of doing business. Copyright 1987 by MIT Press.

The simulation model of this study indicates that a decline in above n ormal profits associated with concentration will cause a redistribution of incom e from the highest of six income classes to low and middle income classes. The m agnitude of gains and losses range from 0.2 to 0.9 percent of income for reducti ons in four-firm concentration ratios to 50 percent in all manufacturing industr ies. The methodology uses consumer expenditure data and input-output information to estimate the impact on payments made to capital, and uses income tax data on income sources by income class to estimate the impact on income received from c apital ownership. Estimates of the change in profits resulting from a change in concentration are based on a published concentration-profits regression. Copyright 1987 by MIT Press.

Increasing returns to scale (RTS) is frequently po stulated as affecting productivity in surface coal mining. However, it is not cl ear whether increased capital intensity or increased output is the relevant phen omenon. A ray-homothetic production function that incorporates the capital labor mix and fixed site geology into the scale elasticity is presented and estimated with a micro (mine level)dataset. The results indicate that higher capital int ensity contributes to higher RTS for some types of capital equipment, but not al l. On the average, increasing RTS was found, with few mines approaching optimal scale. Copyright 1987 by MIT Press.

Solomon W. Polachek, Phanindra V. Wunnava, Michael T. Hutchins, Panel Estimates of Union Effects on Wages and Wage Growth, The Review of Economics and Statistics, Vol. 69, No. 3 (Aug., 1987), pp. 527-531

Arnold Zellner and Franz Palm (1974) show that comparing the actual with the implied stochastic process es generating the endogenous variables in a system of dynamic structu ral equations provides important information about the system's corre ct specification. The authors apply their methodology to structural e xchange-rate models. They find that the log of the bilateral exchange rate is generally well approximated by a random-walk model. Thus, th e stochastic processes generating the exogenous variables should also be random-walk models, which in not borne out by our empirical resul ts. They suggest a reconciliation of their results based on a decompo sition technique developed by Stephen Beveridge and Charles R. Nelson (1981). Copyright 1987 by MIT Press.

In conducting an investigation into the specification of partial static equilibrium factor demand models, this paper isolates: (1) the endogeneity of output and quasi-fixed factor levels; (2) the choice of omitted share equation; and (3 ) the presence of serial correlation (when using time series data) as the specification issues that most affect the existing empirical literature. The impact of specification changes are studied via a series of experiments conducted on an illustrative data set and are found to have significant effects on: parameter estimates and model diagnostics; departures between observed and full equilibrium levels of quasi- fixed factors; and price elasticities. As a consequence, caveats must be attached to several previous studies and care must be taken by future researchers in addressing using such models. Copyright 1987 by MIT Press.