Knowledge that Transforms

We examine the protective effect of a tariff in a small economy with uncertainty and a stock market in which shares of firms are traded. In a deterministic economy, the allocation of resources is governed by commodity prices; in our economy, it is governed by equity prices and is dependent on commodity prices only to the extent that they influence equity prices. We show that in the absence of international trade in securities a tariff need not protect the import competing sector. In the presence of international trade in securities, a tariff always protects the import competing sector.

Crime of almost every variety has increased enormously over the past 80 years in England, at the same time that the risk of capture and severity of punishment have declined. This paper presents an attempt to understand these profiles and their interrelationship. Comparisons with the United States are also stressed. In performing this analysis, methodologies were developed and implemented to isolate the deterrent component from the incapacitation component of punishment. One-half of the total effect of imprisonment is ascribed to deterrence. In addition, the most recent experience of rising criminal activity is shown to be, in no small way, a manifestation of the movements in deterrent variables.

In order to investigate the preferences of union members and the formation of union bargaining goals, a model of union behavior applicable to the United Mine Workers (UMW) and based on maximization of the expected utility of the median-aged member of the union is developed. The relationships determining the optimal wage-ton tax policy of the UMW are estimated over the 1948-73 period. It is found that (1) union members are quite risk averse with a coefficient of relative risk aversion greater than 2.5; (2) union members discount future benefits at the relatively low rate of 3.5-4.5 percent annually; and (3) union members value a dollar spent on fixed fringe benefits almost 40 percent more than a dollar spent on discretionary income. The latter result suggests that the income tax makes nontaxable fringe benefits a relatively attractive method of compensation. Another result which may be important for national energy policy is that the bargaining goals of the UMW are not very responsive to shifts in the demand for coal.