Franklin M. Fisher, Peter Temin, Regional Specialization and the Supply of Wheat in the United States, 1867-1914: A Reply, The Review of Economics and Statistics, Vol. 56, No. 1 (Feb., 1974), pp. 114-115

Franklin M. Fisher, Peter Temin, Regional Specialization and the Supply of Wheat in the United States, 1867-1914: A Reply, The Review of Economics and Statistics, Vol. 53, No. 1 (Feb., 1971), pp. 102-103

Joseph Schumpeter argued that there are increasing returns in R & D both to size of R & D establishment and to firm size. This has been taken to imply that the combination of small firms into big ones would increase R & D output. Tests have been attempted in the literature looking at the relation between scale and R & D input. The present paper shows that these tests are inappropriate. Moreover, the stated conclusion as to R & D output does not follow from Schumpeter's hypothesis. Indeed, it is very nearly true that none of these propositions can be derived from any other.

This paper presents a case study of a well-informed investor in the South Sea bubble. We argue that Hoare's Bank, a fledgling West End London bank, knew that a bubble was in progress and nonetheless invested in the stock: it was profitable to “ride the bubble.” Using a unique dataset on daily trades, we show that this sophisticated investor was not constrained by such institutional factors as restrictions on short sales or agency problems. Instead, this study demonstrates that predictable investor sentiment can prevent attacks on a bubble; rational investors may attack only when some coordinating event promotes joint action.