Health clubs and body politics: aesthetics and the quest for physical capital

At present, the western world wrestles with an obesity epidemic whilst, paradoxically, maintaining a fascination for the aesthetic ideal body. With the Scottish health and fitness industry providing the empirical backdrop, and drawing on the work of Bourdieu, this paper critically reflects upon processes of embodied production and consumption and the quest for physical capital and its referential symbolism. Using a range of qualitative methods across three case study facilities it is argued that as consumers seek to attain desired forms of physical capital, health and fitness clubs serve both to capitalize on and perpetuate cycles of embodied dissatisfaction. Although willingly subjecting their bodies to constant ocularcentric and objectifying processes, consumers are constantly reminded of their failure to attain the physical capital they desire. These processes not only mirror modern consumerism but also highlight a process of self‐imposed domination. With external medical and media discourses exerting persistent pressure on the embodied state, desire for physical capital produces a self‐legitimating and regulatory regime perpetrated upon the self within the internal environment of the health and fitness club. Therefore, as a venue for playing out aesthetic politics, health and fitness club spaces are anything but healthy as they oil the desire and dreamscape of physical capital, maintaining an aesthetic masochism and thus keeping the treadmills literally and economically turning.     

Audit Probability versus Effectiveness: The Beckerian Approach Revisited

The Beckerian approach to tax compliance examines how a tax authority can maximize social welfare by trading‐off audit probability against the fine rate on undeclared tax. This paper offers an alternative examination of the privately optimal behavior of a tax authority tasked by government to maximize expected revenue. The tax authority is able to trade‐off audit probability against audit effectiveness, but takes the fine rate as fixed in the short run. I find that the tax authority's privately optimal audit strategy does not maximize voluntary compliance, and that voluntary compliance is nonmonotonic as a function of the tax authority's budget. Finally, the tax authority's privately optimal effective fine rate on undeclared tax does not exceed two at interior optima.     

PATENT DAMAGES AND SPATIAL COMPETITION*

We analyze price competition between a spatially differentiated product patentee and an imitator anticipating probabilistic future patent damages. We compare the performance of three damage regimes. The ‘reasonable royalty’ regime, which yields symmetric equilibrium pricing, maximizes static welfare and yields the highest innovation incentives when patent enforcement is nearly certain. The ‘lost profits’ regime, which may deter infringement, yields the highest innovation incentives when patent enforcement is less‐than‐certain and products are sufficiently valuable. The ‘unjust enrichment’ regime yields low static efficiency and low innovation incentives. We offer new insights into the ‘hypothetical negotiation’ that courts use to construct reasonable royalties.     

Free Bank Failures: Risky Bonds versus Undiversified Portfolios

Almost 30% of the 872 banks established under the Free Banking System (1837–62) are considered failures, unable to reimburse noteholders for the full value of their bank notes upon closure. Lacking sufficient data, economists have focused on one of two general failure explanations: poor regulation design or undiversified bank portfolios. I test both explanations within hazard functions using Warren Weber's annual balance sheet data for almost every antebellum bank. My results suggest that free banking's bond‐secured note issue was the underlying problem, but individual banks could have avoided failure by diversifying their assets with loans and controlling their circulation.     

A Simple Supermodular Mechanism that Implements Lindahl Allocations

This paper introduces a new incentive‐compatible mechanism which, for general preference environments, implements Lindahl allocations as Nash equilibria. We provide an example that having a mechanism induce a supermodular game is not typically sufficient to guarantee dynamic stability of equilibrium. However, for the new mechanism, inducing a supermodular game guarantees that the best reply mapping is a contraction. Thus, this new mechanism provides a connection between the desirable welfare properties of Lindahl allocations and the theoretical/convergence properties of games whose best reply mappings are a contraction.     

Industry Returns and the Fisher Effect

We investigate the cross-sectional relation between industry-sorted stock returns and expected inflation, and we find that this relation is linked to cyclical movements in industry output. Stock returns of noncyclical industries tend to covary positively with expected inflation, while the reverse holds for cyclical industries. From a theoretical perspective, we describe a model that captures both (i) the cross-sectional variation in these relations across industries, and (ii) the negative and positive relation between stock returns and inflation at short and long horizons, respectively. The model is developed in an economic environment in which the spirit of the Fisher model is preserved.     

The Takeover Deterrent Effect of Open Market Share Repurchases

This paper examines whether open market share repurchases deter takeovers. We model pre‐repurchase takeover probability as a latent variable and examine its impact on the firm's decision to repurchase shares. Given specification tests reject the Tobit model, we turn to the censored quantile regression method of Powell (1986, Journal of Econometrics 32, 143–155). We find a significantly positive relation between open market share repurchases and takeover probability, and we reconcile empirical findings in previous studies that contradict predictions. Repurchase activity is inversely related to firm size, consistent with smaller firms having greater information asymmetry, and is related to temporary, but not permanent, cash flows.     

Monetary Policy and the Natural Rate of Interest

It is most important for monetary policy to track the natural rate of interest when interest rates take large and sustained swings away from their long‐run equilibrium values. Here, we study two models: a standard New Keynesian model and one in which government bonds provide liquidity. Policy rules that cannot track the natural rate perform poorly in both models, but are especially bad in the second because of sustained movements in the natural rate induced by fiscal shocks. First difference rules, on the other hand, do surprisingly well. When model uncertainty is taken into account, the dominance of the first difference rule is even more pronounced.     

INDIRECT NETWORK EFFECTS AND THE PRODUCT CYCLE: VIDEO GAMES IN THE U.S., 1994–2002*

We examine the importance of indirect network effects in the U.S. video game market between 1994 and 2002. The diffusion of game systems is analyzed by the interaction between console adoption decisions and software supply decisions. Estimation results suggest that introductory pricing is an effective practice at the beginning of the product cycle, and expanding software variety becomes more effective later. We also find a degree of inertia in the software market that does not exist in the hardware market. This observation implies that software providers continue to exploit the installed base of hardware users after hardware demand has slowed.     

THE CAUSALITY BETWEEN STOCK RETURNS AND EXCHANGE RATES: REVISITED

There has been a renewed interest in the determination of causality between stock markets and exchange rates. In nearly all these studies Granger causality tests has been extensively used. In this paper, we employ the standard Granger causality methodology to a research setting similar to that of Granger et al. (2000). We consider the causality between the two markets in nine east Asian economies. We find that the direction of causality tends to demonstrate a hit-and-run behaviour and switches according to the length of period chosen. This implies that great caution should be taken when interpreting Granger causality results.