We estimate economies of scale for U.S. firms producing electric power. Cross-section data for 1955 and 1970 are analyzed using the translog cost function. We find that in 1955 there were significant scale economies available to nearly all firms. By 1970, however, the bulk of U.S. electricity generation was by firms operating in the essentially flat area of the average cost curve. We conclude that a small number of extremely large firms are not required for efficient production and that policies designed to promote competition in electric power generation cannot be faulted in terms of sacrificing economies of scale.

The theory of exhaustible resources is modified to take account of the industrial organization of the world oil market. The cartel is viewed as a unified enterprise which dominates other extractors because of its larger reserves. Equilibrium price and sales paths are derived giving neither the dominant extractor nor the competitive fringe any incentive to change its intertemporal behavior. Under standard but simplified cost assumptions, it is shown that a disproportionate share of the increased profits results from the formation of the cartel goes to non-members and that the cartel's restriction on sales eventually leaves it the sole supplier of oil.

This paper brings together and integrates social interactions and the special relation between quantity and quality. We are able to show that the observed quality income elasticity would be relatively high and the quantity elasticity relatively low and sometimes negative, even if the true "unobserved� income elasticities for quantity and quality were equal and of average value. Moreover, the observed quality elasticity would fall, and the observed quantity elasticity would rise, as parental income rose

Macroeconomics

Because commodities as transacted are complex, tax statutes could not cover all margins subject to optimization. A tax will induce, then, substitution within the commodity away from the taxed attributes and into the others. The results of a test on cigarettes are consistent with our prediction that the effects of unit and ad valorem taxes will differ both from each other and from those predicted by the conventional model. It is shown that, although the market will adjust in numerous changeable characteristics, the adjustment is constrained by the condition that the sum of the dollar value of the inefficiencies and of tax paid is minimized.

The criterion employed to judge successes and failures has been the acceptance or nonacceptance of Smith's theory by his immediate successors. This judgement has been supplemented with a more personal one of scientific fruitfulness. He had one overwhelming and proper success--the theorem on resource allocation under competition--and several minor successes. He also had one modest success that was improper (i.e., unfortunate)--the distinction between productive and unproductive labor. Smith's most important analytical failure was the hierarchy of employments of capital. Three failures that should have been successes receive special attention: his wage theory, his rent theory, and the analysis of the division of labor. The reasons for the differing fates of these theories are examined.

This paper presents a model of price stabilization applicable to less-developed economies. Distinctive features of the model are: (i) its explicit incorporation of a commercial banking system, (ii) its specification that the actual rate of inflation depends on inflationary expectations and on excess demand for output, and (iii) endogeneity of the growth rate of real output. Numerical simulations are also conducted. We demonstrate that stabilization through an initial increase in the average nominal interest rate paid on money holdings has significantly more favorable short-run effects on real output than does stabilization through an initial reduction in the rate of monetary expansion

This paper utilizes an economic model to analyze the determinants of legislative decision making. The model is empirically tested using the statistical technique of n-chotomous multivariate probit analysis. The legislative issue addressed is the 1973 amendment to the Fair Labor Standards Act. The amendment proposed to increase the minimum wage and the number of workers covered. The dependent variable denotes a representative's voting pattern on the minimum wage; the independent variables represent economic characteristics of a legislator's congressional district. The hypothesized linkages between the set of independent variables and legislative voting patterns were generally substantiated in the empirical tests