The paper develops new testable implications for monopolistic competition in the open economy. Within a two-sector model we explore how international trade affects plant size, the degree of product diversity, and excess capacity. The analysis then focuses on how trade affects the degree of domestic and international concentration, intersectoral capital mobility, and output in the competitive sector. Finally, we compare the model to the traditional Hecksher-Ohlin model and find that many of the central propositions still hold.

Capital market research, Research design, Control groups

This paper demonstrates that the treatment of self-services, their inclusion or exclusion, affects neither the decision relevance of the information made available by the reciprocal method of cost allocation nor the internal versus external acquisition decision made through the underlying technology matrix. Three propositions and proofs are provided, showing that there is a one-to-one transformation between the two treatments of self-services in each of the analyses.

The article presents a comment on the effect of chance variation on revenue and cost estimations for breakeven analysis. In traditional breakeven analysis, total revenue and total cost are represented by straight lines with one intersection which indicates the breakeven quantity output. The effect of quadratic revenue and cost curves on breakeven analysis was introduced. Two breakeven points for the quadratic model were derived by solving for the levels of output at which the regressed total revenue equals total cost. Regardless of whether a linear or non-linear breakeven model may be appropriate, however, the revenue and cost functions are often unknown. Givens illustrated the regression analysis, but did not consider the effect of regression forecasting errors. In order to resolve the above issue an attempt was made to demonstrate the determination of what he called "the chance variation" in estimated revenue and cost functions; and to illustrate how these chance variations affect the results of a breakeven analysis. The estimated cost-volume functions were subtracted from the estimated revenue-volume functions to derive an estimated profit-volume function.

This paper considers the short run adjustment of money holdings towards their desired levels. A rationale for short run money holdings is given, which allows for uncertainty in cash flows, and it is shown how the adjustment to desired money balances will occur following a change in some of the economic variables. The model generates a particular form for the short run demand for money function, which is shown to be econometrically superior to the standard ad hoc formulation. The chief theoretical novelty is the derivation of the appropriate transient probability density of money holdings.

Internal control systems, Individual judgement, Group judgment, Decision making