We analyze competition among informed traders in the continuous‐time Kyle(1985) model, as Foster and Viswanathan (1996) do in discrete time. We explicitly describe the unique linear equilibrium when signals are imperfectly correlated and confirm the conjecture of Holden and Subrahmanyam (1992) that there is no linear equilibrium when signals are perfectly correlated. One result is that at some date, and at all dates thereafter, the market would have been more informationally efficient had there been a monopolist informed trader instead of competing traders. The relatively large amount of private information remaining near the end of trading causes the market to approach complete illiquidity.

We present a simple model implying that futures risk premia depend on both own‐market and cross‐market hedging pressures. Empirical evidence from 20 futures markets, divided into four groups (financial, agricultural, mineral, and currency) indicates that, after controlling for systematic risk, both the futures own hedging pressure and cross‐hedging pressures from within the group significantly affect futures returns. These effects remain significant after controlling for a measure of price pressure. Finally, we show that hedging pressure also contains explanatory power for returns on the underlying asset, as predicted by the model.

This paper provides an analysis of the citation counts of articles published in the leading finance journals. It identifies the determinants of the most prevalent measure of influence for finance journals, the Social Sciences Citation Index impact factors. It finds that impact factors are affected by citations outside the finance field, are not affected by the distribution of published articles across subfields, and are good predictors of the long‐term citation counts of articles. The citation impact factors are reduced for both the Journal of Financial Economics and The Journal of Finance by their publication of other than regular articles.

We build a model of child labor and study its implications for welfare. We assume that there is a trade‐off between child labor and the accumulation of human capital. Even if parents are altruistic and child labor is socially inefficient, it may arise in equilibrium because parents fail to fully internalize its negative effects. This occurs when bequests are zero or when capital markets are imperfect. We also study the effects of a simple ban on child labor and derive conditions under which it may be Pareto improving in general equilibrium. We show that the implications of child labor for fertility are ambiguous.

Bioprospecting has been touted as a source of finance for biodiversity conservation. Recent work has suggested that the bioprospecting value of the “marginal unit” of genetic resources is likely to be vanishingly small, creating essentially no conservation incentive. This result is shown to flow specifically from a stylized description of the research process as one of brute‐force testing, unaided by an organizing scientific framework. Scientific models channel research effort toward leads for which the expected productivity of discoveries is highest. Leads of unusual promise then command information rents, associated with their role in reducing the costs of search. When genetic materials are abundant, information rents are virtually unaffected by increases in the profitability of product discovery and decline as technology improvements lower search costs. Numerical simulation results suggest that, under plausible conditions, the bioprospecting value of certain genetic resources could be large enough to support market‐based conservation of biodiversity.

Losing Sleep at the Market: The Daylight Saving Anomaly by Mark J. Kamstra, Lisa A. Kramer and Maurice D. Levi. Published in volume 90, issue 4, pages 1005-1011 of American Economic Review, September 2000

How will banks evolve as competition increases from other banks and from the capital market? Will banks become more like capital market underwriters and offer passive transaction loans or return to their roots as relationship lending experts? These are the questions we address. Our key result is that as interbank competition increases, banks make more relationship loans, but each has lower added value for borrowers. Capital market competition reduces relationship lending (and bank lending shrinks), but each relationship loan has greater added value for borrowers. In both cases, welfare increases for some borrowers but not necessarily for all.

Look at the dramatic change in family structure that has occurred recently, illustrated in Figure 1. In the United States, 23 percent of children lived with an unwed mother in 1998, compared with only 8 percent in 1960.1 Of this 15-percentage-point increase, about 6 percentage points are due to a rise in the rate of divorce; the remaining 9 percentage points arise from an increase in out-of-wedlock births. Why care about this change in the structure of families? The lot of children living with a single mother is bleak. About 70 percent of those children in a family with a never-married mother were living near or below the poverty level in 1995. The corresponding figure for children being raised by a divorced mother was 45 percent. Associated with the increase in number of single mothers has been a rise in the percentage of the population on welfare. In 1960 only 1.7 percent of the population was on AFDC (Aid to Families with Dependent Children), while in 1995 about 5.2 percent were. Most mothers who received AFDC were single; 71 percent were in 1993. Also, AFDC mothers tended to have more children (2.6 on average vs. 2.1 for the population as a whole in 1993). It is interesting to note that there is evidence suggesting that more entrances into and exits out of welfare are connected with a shift in family structure rather than with a change in employment status. For instance, of the first-time entrances into welfare during 1983-1991 about 21 percent were associated with an out-of-wedlock birth, 23 percent were connected with a divorce or separation and 21 percent were linked with a reduction in the mother's work hours. Last, real AFDC benefits rose by about 70 percent between 1945 and 1977. They were about 25-percent higher in 1995 than in 1945. Could this have contributed to the rise in single motherhood? The task here is to outline a general-equilibrium model in which, at any point in time, some individuals will marry, others will divorce, and yet others will choose to have out-of-wedlock births. While the model is still prototypical in nature, it will be shown how such a framework can be used to address public-policy questions, in particular, the impact of welfare on family structure and the well-being of the economy.

We provide measures of absolute and relative equity agency costs for corporations under different ownership and management structures. Our base case is Jensen and Meckling's (1976) zero agency‐cost firm, where the manager is the firm's sole shareholder. We utilize a sample of 1,708 small corporations from the FRB/NSSBF database and find that agency costs (i) are significantly higher when an outsider rather than an insider manages the firm; (ii) are inversely related to the manager's ownership share; (iii) increase with the number of nonmanager shareholders, and (iv) to a lesser extent, are lower with greater monitoring by banks.

We study a collective decision-making process in which people interested in an issue may participate, at a cost, in a meeting, and the resulting decision is a compromise among the participants' preferences. We show that the equilibrium number of participants is small and their positions are extreme, and when the compromise is the median, the outcome is likely to be random. The model and its equilibria are consistent with evidence on the procedures and outcomes of U.S. regulatory hearings. (JEL D7, H0, L5)