An empirical test of the theory of exhaustible resources requires an estimate of the time path of the shadow price of the unextracted resource that generally is not observable because of the prevalence of vertical integration in natural resource industries. In this paper we use duality theory to derive an econometric model that provides a statistical test of the theory of exhaustible resources. A restricted cost function is used to obtain estimates of the shadow prices of unextracted resources. The procedure is illustrated with data for the Canadian metal mining industry. For this industry the empirical implications of the theory of exhaustible resources are strongly rejected.

We develop an overlapping-generations model of endogenous growth in which human capital is the engine of growth and the generations are linked through material and emotional interdependencies within the family. Parents invest in their children to achieve both old-age support (care) and emotional gratification, and material support from children is determined through self-enforcing implicit contracts. We show that optimal intergenerational trade can then lead to maximization of growth opportunities. Our model produces a theory of the "demographic transition" linking longevity, fertility, and economic growth. We also show that while population aging may raise the growth rate, an increase in young-age longevity is likely to produce a greater increase in the growth rate and a reduction in the fertility rate in a growth equilibrium. These predictions and the model's implications concerning the behavior of private savings during the takeoff period appear consistent with empirical evidence.

We develop an overlapping-generations model of endogenous growth in which human capital is the engine of growth and the generations are linked through material and emotional interdependencies within the family. Parents invest in their children to achieve both old-age support (care) and emotional gratification, and material support from children is determined through self-enforcing implicit contracts. We show that optimal intergenerational trade can then lead to maximization of growth opportunities. Our model produces a theory of the "demographic transition" linking longevity, fertility, and economic growth. We also show that while population aging may raise the growth rate, an increase in young-age longevity is likely to produce a greater increase in the growth rate and a reduction in the fertility rate in a growth equilibrium. These predictions and the model's implications concerning the behavior of private savings during the takeoff period appear consistent with empirical evidence.

The authors develop a model in which the mode of acquisition conveys information concerning the value of the bidder. The model incorporates the possibility that offers containing both cash and stock can be made in a setting consistent with the U.S. tax code. The authors demonstrate that bidders with unfavorable private information about their equity value choose offers containing some stock to avoid the capital gains tax on sequences of cash offers. The model yields a number of unique predictions about the construction of acquisition offers. The authors present evidence consistent with the model.

We develop a model in which the mode of acquisition conveys information concerning the value of the bidder. The model incorporates the possibility that offers containing both cash and stock can be made in a setting consistent with the U.S. tax code. We demonstrate that bidders with unfavorable private information about their equity value choose offers containing some stock to avoid the capital gains tax consequences of cash offers. The model yields a number of unique predictions about the construction of acquisition offers. We present evidence consistent with the model.

The article examine some differences in the knowledge structures and judgments of experienced and inexperienced auditors in the United States. It examines the recall of typical and atypical information by experienced and inexperienced auditors within the context of a going-concern situation and then relates this measure of memory to the inferences and predictive judgments made by these auditors. In experiment 1, auditors read a description of a company that the audit partner-in-charge had suggested may have a going-concern problem. The description consisted of items that are considered typical of a company with going-concern problems, atypical Items, and filter items. After an intervening period with a distracter task, all subjects were given a recall test, were asked to infer the likelihood of certain previously unstated items being true, and to estimate the probability that the firm would fail within a year. In experiment 2 and 3, the researchers collected additional data to examine some validity threats related to the first experiment.

[Using laboratory market data, this study demonstrates that consumers respond differently to a market event depending on the information reported about the event. Specifically, they respond more rapidly to an economically predicted price increase when they are informed that sellers' marginal costs have increased, but they resist price increases if they know that the sellers' profits have increased. These information effects are based on the principle of dual entitlements, which posits that purchase decisions are influenced not only by the direct economic utility of the purchase, but also by consumers' perceptions of the equity or fairness of a negotiated price. Survey evidence from prior studies indicates that consumers (buyers) justify price increases driven by increases in sellers' costs, but resist price increases that increase sellers' profits. This study goes beyond surveys to investigate these predictions in a market setting affected by an economic event that simultaneously increases both the marginal costs incurred and the profits earned by sellers. Specifically, we examine the combined effect of a change in the sellers' tax rate and tax base. Nine laboratory markets in three separate financial information structures were conducted to investigate the predicted information effects. Each market had ten traders (five buyers and five sellers), for a total of 90 subjects. In three markets, buyers were apprised of an increase in sellers' marginal tax costs. In three other markets, buyers were informed of an increase in sellers' after-tax profits. Finally, three control markets with no information disclosures served as a baseline. Subjects in each market were student volunteers who received their market profits in real cash, in conformance with the tenets of induced-value theory. The results have implications for the financial disclosures volunteered by firms or mandated by regulatory bodies. While the accounting literature has traditionally stressed information effects on investors (Lev 1989), the body of users affected by financial reporting is much larger and includes the consumers who purchase the goods and services of disclosing firms (Financial Accounting Standards Board 1978, par. 24). This study suggests that financial disclosures can influence consumer behavior in competitive markets for goods and services.]

We consider a home government with political pressure to restrict trade. The foreign country is compensated with a portion of the tariff revenues or quota rents, but cannot directly observe the political pressure abroad. In this setting, the two countries negotiate over the volume of trade and transfer of rents, depending on the level of political pressure. We determine globally optimal, incentive-compatible trade policies, in which the home government has no incentive to overstate (or understate) the pressure for protection.