This paper concerns the classification of biases in the set of produced varieties in a monopolistically competitive equilibrium in the natural oligopoly setting. That is, we analyze the relationship between the set of produced goods in equilibrium when fixed costs are small and the set of produced goods by a social planner when fixed costs equal zero. It is shown that if all of the goods are substitutes, there are never too few varieties, and there may be too many. Conversely, if the goods are all complementary, there are never too many, and there may be too few.

Our paper simulates the likely effects of a comparable-worth wage-adjustment policy in the state and local sector on female employment in the sector. The simulation is based on estimates of within-occupation male/female substitution and across-occupation occupational employment substitution that we obtain using data from the 1980 Census of Population.

[This study hypothesizes and finds that both the magnitude and duration of the trading volume reaction to quarterly earnings announcements are increasing functions of unexpected earnings and decreasing functions of a factor affecting the availability of predisclosure information: firm size. In contrast to unexpected earnings, which are not known until earnings are actually announced, firm size can be assessed prior to the announcement. Evidence that market reactions to quarterly earnings announcements differ systematically with a variable such as firm size, whose value is known before the announcement, may be relevant to policymakers in evaluating the potential benefits of differential accounting disclosure requirements (especially those based on firm size). Additional analysis, however, also confirms the incremental value of the actual earnings disclosures: even after controlling for the already known firm size, unexpected earnings are still positively related to the magnitude and duration of the trading volume reaction.]

This study hypothesizes and finds that both the magnitude and duration of the trading volume reaction to quarterly earnings announcements are increasing functions of unexpected earnings and decreasing functions of a factor affecting the availability of predisclosure information: firm size. In contrast to unexpected earnings, which are not known until earnings are actually announced, firm size can be assessed prior to the announcement. Evidence that market reactions to quarterly earnings announcements differ systematically with a variable such as firm size, whose value is known before the announcement, may be relevant to policymakers in evaluating the potential benefits of differential accounting disclosure requirements (especially those based on firm size). Additional analysis, however, also confirms the incremental value of the actual earnings disclosures: even after controlling for the already known firm size, unexpected earnings are still positively related to the magnitude and duration of the trading volume reaction.

Commonly used trade credit terms implicitly define a high interest rate that operates as an efficient screening device where information about buyer default risk is asymmetrically held. By offering trade credit, a seller can identify prospective defaults more quickly than if financial institutions were the sole providers of short-term financing. The information is valuable in cases where the seller has made nonsalvageable investments in buyers since it enables the seller to take actions to protect such investments.

Commonly used trade credit terms implicitly define a high interest rate that operates as an efficient screening device where information about buyer default risk is asymmetrically held. By offering trade credit, a seller can identify prospective defaults more quickly than if financial institutions were the sole providers of short‐term financing. The information is valuable in cases where the seller has made nonsalvageable investments in buyers since it enables the seller to take actions to protect such investments.

A method is presented for generating test statistics that share the same first order asymptotic optimality properties of the classical statistics. Generalizing J. Neyman's work (1959), t he linearized classical statistic tests restrictions in implicit func tion form using a parameter estimator that is consistent and symptoti cally normally distributed under the alternative hypothesis. By judic ious choice of estimator and form of restrictions at which to evalua te the statistic, a class of asymptotically optimal statistics is obt ained, among which are numbered some familiar classical statistics. A n application is presented for testing common factor restrictions in a single equation dynamic regression model with moving average distu rbances.

The study and evaluation of internal control requires an auditor to analyze all key controls and control relationships included in each major transaction cycle. Gaining the requisite level of understanding can become a formidable task where complex systems with intricate control relationships, computer‐based accounting systems, or systems with suspected collusion, are involved. This study describes an audit simulation model which is designed to assist auditors in evaluating and documenting the reliability of complex internal control systems. The proposed simulation extends previous ones in two primary respects. First, dependencies between error and control processes can be modeled, which allows an auditor to investigate the effects of collusion on system reliability and final balance error amounts. Second, the simulation is an interactive computer model which can be tailored to different client applications without the need for programming knowledge. An application of the simulation approach in a typical payroll cycle is described. Résumé. L'étude et l'évaluation du contrôle interne nécessitent de la part du vérificateur d'analyser l'ensemble des contrôles‐clé et les liens entre les contrôles compris dans chaque cycle d'opération important. L'obtention du niveau de compréhension requis peut s'avérer une tâche énorme lorsque le praticien étudie des systèmes à interrelations complexes, des systèmes comptables informatisés ou des systèmes où la collusion est soupçonnée. Cette étude décrit un modèle de simulation en vérification destiné à aider les vérificateurs dans l'évaluation et la documentation de la fiabilité de systèmes de contrôle interne complexes. La simulation proposée constitue un prolongement de simulations précédentes sous deux aspects primordiaux. En premier lieu, les dépendances entre les processus d'erreur et de contrôle peuvent être modelées, ce qui permet au vérificateur d'examiner les effets de la collusion sur la fiabilité des systèmes et les montants des erreurs dans les soldes finals. En deuxième lieu, la simulation est un modèle informatisé interactif qui peut être adapté aux diverses applications d'une entreprise sans avoir à posséder des connaissances en programmation. Un exemple d'application de cette approche de simulation, dans le contexte d'un cycle de paye, est présenté.

Thirty years ago, Gary Becker in his now classic work, Economics of Discrimination, sparked renewed interest in an economic analysis of racial income disparities. The volumes of research papers that built on Becker's contribution over the last three decades added a great deal to what we know about the reasons for the wide income differences between the races. One reason was the emergence of several large scale micro data sets of which the 1960 census was the first. Today, analysis is based not only on the 1980 census file but also on several longitudinal data sets best represented by the Panel Study of Income Dynamics and the Parnes National Longitudinal Surveys. Ironically, it is the release of micro data files from two pre-Becker data sets that appears to offer the greatest potential for answering the important questions that remain. In this paper, we use these two data sets-the 1940 and 1950 census files-in combination with the three subsequent census files to describe long-run trends in black poverty. We begin by describing purely labor market developments, but supplement that depiction with a broader look at events that impacted on the black family. The paper concludes with an examination of the downside of black economic progress-the increasing disengagement of many black men from the labor market.