Lumber industry production behavior is modeled using pooled microdata. Explicit recognition of the crucial role of capacity utilization at the mill level is used to generate information concerning product supply and factor demands. To exploit optimally the panel structure of the data base, fixed effects and error components models are estimated, along with the ordinary least squares model. Results for key elasticities are robust and highly significant. Furthermore, the results are more plausible than those from previous studies that rely on aggregate data and flexible functional forms. Copyright 1990 by MIT Press.

Two implications of received theory are (1) mineral net prices rise at the riskless interest rate, and (2) in-ground value is equal to the current net price. Both propositions are false. A correct theory has been joined to mistaken premises. Mineral resources are inexhaustible. The economic problem is not the intertemporal allocation of a stock but coping with the cost of a flow of reserve accretions. Mineral scarcity and price are the uncertain fluctuating result of a tug-of-war between diminishing returns versus increasing knowledge. Hence minerals are risky assets. Development cost, finding cost, and user cost (the penalty for development/production today instead of tomorrow) are all substitutes. Hence change in any one is a proxy for change in any other. Development cost is observable, and has been stable in many countries for pro- longed periods. User cost was also stable in the USA. There is no sign of any pattern of gradual depletion and rising cost. A simple model of an individual reservoir explains observed relations of value and price. The rate of interest has both a positive and negative effect upon the rate of reservoir depletion. The net effect of a change is therefore weak. Expropriation of low-cost oil fields, had they been operated independently to maximize value, would have led to drastic increases in depletion rates. The fact of decrease proves collusive restriction of output to maintain prices.

Taxation, Tax complexity, Tax-reporting positions

This paper introduces the concept of biconvergence, which is a weak and intuitive topological assumption on the utility function and the production function together. Concerning recursive utility, the author shows that, given biconvergence, the utility function is the unique admissible solution to Koopman's equation. Concerning dynamic programming, he shows that, given biconvergence, the true value function exists, it is the unique admissible solution to Bellman's equation, and it may be calculated numerically as the limit of successive approximations. Finally, he develops an overly strong sufficient condition for biconvergence that substantially weakens the Lipschitz condition used by contraction-mapping techniques. Copyright 1990 by The Review of Economic Studies Limited.

The authors examine the premium consequences of alternative health insurance provisions by estimating pricing regressions for group insurance with data on 9, 019 fee-for-service plans offered by larger firms in the private sector. They find that cost-sharing at the point of purchase, especially for hospital care, significantly lowers fee-for-service premiums. However, some aspects of plan design that are often touted as cost-reducing, such as self-insuring or offering employees the option to join a health maintenance organization, are found to increase premiums. Coverage of alcoholism/chemical dependency treatments, inpatient mental health care, and psychologists' services, which are mandated in many states, are found to be expensive. Copyright 1990 by MIT Press.

Results of tests contrasting tax-loss selling with intertemporal information variation as explanations of the January seasonal in stock returns are reported. Closed-end fund shares display the typical size-related January seasonal while their net asset values do not. Interpreting the net asset value return as a proxy for information about underlying assets, this result indicates information variation is not a necessary condition for the January effect in stocks. The share returns at the turn of the year are negatively related to their mean preceding year returns and positively related to the standard deviations of their preceding year returns. These results are consistent with tax-loss selling.

[Tests of financial asset pricing models may yield misleading inferences when properties of the data are used to construct the test statistics. In particular, such tests are often based on returns to portfolios of common stock, where portfolios are constructed by sorting on some empirically motivated characteristic of the securities such as market value of equity. Analytical calculations, Monte Carlo simulations, and two empirical examples show that the effects of this type of data snooping can be substantial.]

[The downside risk in a leveraged stock position can be eliminated by using stop-loss orders. The upside potential of such a position can be captured using contingent buy orders. The terminal payoff to this stop-loss start-gain strategy is identical to that of a call option, but the strategy costs less initially. This article resolves this paradox by showing that the strategy is not self-financing for continuous stock-price processes of unbounded variation. The resolution of the paradox leads to a new decomposition of an option's price into its intrinsic and time value. When the stock price follows geometric Brownian motion, this decomposition is proven to be mathematically equivalent to the Black-Scholes (1973) formula.]

[If returns on some stocks systematically lead or lag those of others, a portfolio strategy that sells "winners" and buys "losers" can produce positive expected returns, even if no stock's returns are negatively autocorrelated as virtually all models of overreaction imply. Using a particular contrarian strategy we show that, despite negative autocorrelation in individual stock returns, weekly portfolio returns are strongly positively autocorrelated and are the result of important cross-autocorrelations. We find that the returns of large stocks lead those of smaller stocks, and we present evidence against overreaction as the only source of contrarian profits.]

[Results of tests contrasting tax-loss selling with intertemporal information variation as explanations of the January seasonal in stock returns are reported. Closed-end fund shares display the typical size-related January seasonal while their net asset values do not. Interpreting the net asset value return as a proxy for information about underlying assets, this result indicates information variation is not a necessary condition for the January effect in stocks. The share returns at the turn of the year are negatively related to their mean preceding year returns and positively related to the standard deviations of their preceding year returns. These results are consistent with tax-loss selling.]