Strategies for survival

In the debate about relocation to the developing countries of “structurally weak” industries the clothing industry has attracted the special interest of academic and political economists in the Federal Republic of Germany. The following article constitutes a summary of the most important findings of a study of the conditions under which this industry will be able to ensure its continuing existence in the Federal Republic in the future.     

Editorial

Ohne Zusammenfassung     

Strategic provision of local public inputs for oligopolistic firms in the presence of endogenous location choice

We develop a model in which two regional governments compete for a mobile oligopolistic firm by providing local public inputs. The central mechanism of our model is the interaction of an agglomeration advantage (partial nonrivalness of the local public inputs) and an agglomeration disadvantage (costs associated with the change of location of firms). We show that a central government of both regions induces an interregionally optimal allocation of firms by providing the optimal levels of local public inputs. The decentralized provision of local public inputs by regional governments, however, leads in most cases to a (interregionally) suboptimal allocation.     

Can neoclassical economics become social economics?

This essay has both a general and a specific purpose. Its general purpose is to pose the question: Can neoclassical economics be social economics? Its answer to this general question is: Yes, but only if it abandons its methodological soul; that is, by abandoning methodological individualism, positivism, and ahistoricism, and expressly and systematically adopting a methodological perspective which is holistic, normative, and historical. Its specific purpose is to identify and examine the major elements in the economics of one leading figure in the historical development of neoclassical economics who self-consciously attempted to combine, to paraphrase Schumpeter, a neoclassical head with a social economics heart: Alfred Marshall.     

A BAYESIAN AUDITING MODEL

A Bayesian procedure is demonstrated that binds together multiple audit tests in a multiple-stage decision analysis. The analysis uses information provided by one test in the design of subsequent tests even when subsequent tests are directed at a different set of system characteristics. The analysis is applied to compliance and substantive tests undertaken to ascertain the fairness of a particular account balance. Although the analysis is not operational as presented, it provides a logical framework that clarifies the complex conceptual structure of the problem and enables the identification of impediments to its implementation.