This paper shows that the existing estimates of prewar gross national product exaggerate the size of cyclical fluctuations. The source of the exaggeration is that the original Kuznets estimates are based on the assumption that GNP moves one-for-one with commodity output valued at producer prices. New estimates of GNP for 1869-1918 are derived using the estimated aggregate relationship between GNP and commodity output for the interwar and postwar eras. The new estimates of GNP indicate that the business cycle is only slightly more severe in the pre-Worid War I era than in the post-World War II era.

The authors model an oligopoly facing uncertain demand where each firm chooses as its strategy a "supply function" relating its quantity to its price. A supply function adapts better to an uncertain environment than either a fixed price or a fixed quantity; it could be committed to through the choice of organizational structure and employee decision rules. The authors give conditions for existence and for uniqueness of a Nash equilibrium in supply functions under uncertainty. They compare the equilibrium with the Cournot and Bertrand equilibria as they vary the demand and cost curves, the number of firms, and the form of uncertainty.

This paper examines the seasonal behavior of proportional dealer spreads for OTC NASDAQ common stocks. Results indicate there is seasonality in dealer spreads. Spreads tend to be larger in the second half of the calendar year, peaking in December. At the turn-ofthe-year, spreads tend to peak in mid- to late December and then recede during January. The last trading day in December produces the largest daily decline in spreads during the turn-of-the-year period.

This article analyzes the volume of trade in a multiperiod noisy rational expectations model. When traders receive private signals at the first trading date and are allowed a second round of trade, two type of equilibria exist. In the first, traders do not learn about the average private signal from the second round of trade, and all trade takes place at the first date. In the second, traders do learn from the second round, and trade thus takes places at both the first and second dates. The article characterizes volume when a public signal is disclosed at the second date.

The paper investigates the problem of tariff reform in a small open multi-household economy that only has tariffs and domestic commodity taxes as policy instruments. The concept of a productivity improvement in tariffs and taxes is introduced and conditions for its existence are established. We prove that a Pareto-improving change in tariffs and domestic taxes exists if a productivity-improving change in tariffs exists and if the Weymark condition on the matrix of household demands holds. Conditions are established for particular tariff reforms, such as proportional reductions and reductions of extreme rates, to yield Pareto improvements in welfare.

R. Preston McAfee, John McMillan, Michael D. Whinston; Multiproduct Monopoly, Commodity Bundling, and Correlation of Values*, The Quarterly Journal of Econ

We examine the rationality of investor exercise behavior by analyzing two years' tendered exercise notices for Treasury bond futures options. We conclude that exercise behavior is generally rational, but document numerous failures to exercise as well as some exercises that should not have occured, both at and prior to expiration. The most frequent type of error is failing to exercise, suggesting that traders do not monitor their positions with sufficient care. Finally, we show that investors use information arriving after trading closes, but before exchange-imposed exercise deadlines, in forming their exercise decisions.

This paper investigates the effect of share repurchase through transferable put rights (TPRs) on shareholder wealth and corporate control. Transferable put rights make the put option, which is implicit in a tender offer, marketable. Shareholders who do not tender their shares increase their proportional ownership of the firm and extract some of the gains of the tender offer from exiting shareholders. Finally, TPRs improve tax efficiency by ensuring that only shareholders who have the highest tax bases will tender.