PATENT LENGTH AND THE TIMING OF INNOVATIVE ACTIVITY

The standard result in patent policy, as demonstrated by Gilbert and Shapiro (1990), is that infinitely lived but very narrow patents are optimal as deadweight losses are minimised and spread through time but inventors can still recover their R&D expenditures. By extending their innovative environment to include timing as an important choice, we demonstrate that a finitely lived, but broader, patent can be socially desirable. This is because a patent breadth is a better instrument than length to encourage socially optimal timing. Thus, patents need not be infinitely long in order to encourage a greater number of inventions     

ENDANGERED SPECIES CONSERVATION ON PRIVATE LAND

This paper analyzes the effect of alternative institutional arrangements on the conservation of endangered species and economic activity on private land. Because a landowner does not capture the full value of species conservation, her preferences on land use will not coincide with social preferences. Under current law, the landowner has incentives to invest in lowering conservation value and to deny access to regulators in order to prevent collection of information. Paying compensation corrects many of these perverse incentives. An alternative approach is to limit the ability of landowners to affect the regulatory outcome. Whether it is better to entice landowners to make socially efficient decisions by paying compensation or to limit the ability of landowners to affect outcomes through changes in the regulatory regime depends on both practical implementation difficulties and distributive justice considerations.     

What Factors Lead Management to Support or Oppose Employee Participation—With and Without Works Councils? Hypotheses and Evidence from Germany

This paper provides the first econometric analysis to distinguish between works councils in establishments where managers have a positive or negative view toward employee involvement in decision making. We similarly distinguish between establishments where no council is present in which management supports or does not support worker participation. We stress the potential role of works councils and participation in motivating employees. Our theoretical analysis and empirical results from German manufacturing establishment data show that the structure of the workforce, principal‐agent problems between owners and managers, collective bargaining, direct employee involvement, human resource management practices, and market strategy and innovativeness all play important roles. Some conflicting conclusions in the works council literature may be due to the failure to distinguish among industrial relations participation regimes characterized by cooperative or uncooperative relationships between works councils and management.     

Testing Market Efficiency: Evidence From The NFL Sports Betting Market

This article examines the efficiency of the National Football League (NFL) betting market. The standard ordinary least squares (OLS) regression methodology is replaced by a probit model. This circumvents potential econometric problems, and allows us to implement more sophisticated betting strategies where bets are placed only when there is a relatively high probability of success. In-sample tests indicate that probit-based betting strategies generate statistically significant profits. Whereas the profitability of a number of these betting strategies is confirmed by out-of-sample testing, there is some inconsistency among the remaining out-of-sample predictions. Our results also suggest that widely documented inefficiencies in this market tend to dissipate over time.     

ECONOMIC MODELING AND THE FALSE TRADEOFF BETWEEN ENVIRONMENTAL PROTECTION AND ECONOMIC GROWTH

One important element of the current policy debate on what measures should be taken to reduce greenhouse gas emissions is the controversy over the costs of reducing those emissions. "Top-down" macroeconomic and general equilibrium models give much higher estimates of the costs than "bottom-up" models based on microeconomic and engineering data. This paper investigates the causes of the divergence between the two modeling approaches. The conventional top-down models incorporate strong implicit assumptions about maximization, technical progress, and organizational efficiency that predetermine their results. However, these assumptions are questionable on both theoretical and empirical grounds. Economic assessment of policy alternatives would benefit. from analyses that take account of the actual characteristics of business firms and other organizations that emit greenhouse gases in the course of their activities.     

Rural Adaptation in Russia: Who Responds and How Do We Measure It?

Utilizing survey data from 800 households in five regions of Russia, this article attempts to measure adaptation to reform stimuli according to socio-economic strata. While the orthodox literature has emphasized rural resistance to reform, in fact one of the main analytical obstacles is differentiating between adaptive and survival strategies. Time horizon is used as the primary criterion to distinguish between adaptive and survival behaviour. The article analyses adaptive responses by examining the use of rural credit, the operation of a household business, the enlargement of household land plots and a set of attitudes that taken together comprise an 'entrepreneurial spirit'.     

The Effectiveness of Alternative Risk Assessment and Program Planning Tools in a Fraud Setting*

This study examines the impact of alternative risk assessment (standard risk checklist versus no checklist) and program development (standard program versus no program) tools on two facets of fraud planning effectiveness: (1) the quality of audit procedures relative to a benchmark validated by a panel of experts, and (2) the propensity to consult fraud experts. A between‐subjects experiment, using an SEC enforcement fraud case, was conducted to examine these relationships. Sixty‐nine auditors made risk assessments and designed an audit program. We found that auditors who used a standard risk checklist, structured by SAS No. 82 risk categories, made lower risk assessments than those without a checklist. This suggests that the use of the checklist was associated with a less effective diagnosis of the fraud. We also found that auditors with a standard audit program designed a relatively less effective fraud program than those without this tool but were not more willing to seek consultation with fraud experts. This suggests that standard programs may impair auditors' ability to respond to fraud risk. Finally, our results show that fraud risk assessment (FRASK) was not associated with the planning of more effective fraud procedures but was directly associated with the desire to consult with fraud specialists. This suggests that one benefit of improved FRASK is its relation with consultation. Overall, the findings call into question the effectiveness of standard audit tools in a fraud setting and highlight the need for a more strategic reasoning approach in an elevated risk situation.     

Defining the Consumer Interest: Challenges for Advocates

From its birth, The Journal of Consumer Affairs has provided a forum for government officials, consumer activists, and academics to discuss the definition of the consumer interest and how best to pursue it. In the inaugural issue of JCA, published in the summer of 1967, three of the first four articles were titled “The View from Washington” (by Deputy Assistant Secretary of Labor David Swankin), “Is It Time to Re‐Evaluate the Consumer Protection Activities of the Federal Government?” (by Consumers Union president Colston E. Warne), and “The Consumer Interest—the Real Issue” (by Professor of Marketing Robert D. Schooler). When JCA began publication in 1967, a few landmark pieces of consumer legislation had already been passed concerning pharmaceuticals, cigarettes, and motor vehicles, but the heyday of the consumer movement—and consumer research—was just beginning. In his article, Warne wrote: “The time has come, I think, for consumers and consumer movements to face some highly unpleasant problems” (p. 24). Schooler chastised the federal government for being “misdirected toward real but secondary issues” (p. 40). Swankin called for an organization and a professional journal capable of creating “an intellectual climate in which the phrases ‘consumer interest,’‘consumer economics,’ and, yes, ‘consumer information’ can be developed and can flourish” (pp. 9–10). Nearly forty years later, and long after the zenith of the U.S. consumer movement, we still face a host of consumer problems and a federal government disinclined to address them. We do, however, have a respected journal in whose pages the consumer interest and consumer policy can be examined. On April 25, 2005, the University of Utah hosted a symposium on consumer policy in honor of the retirement of Dr. John R. Burton. John, who established the consumer studies program at the University of Utah, has devoted his career to teaching, research, and service that advance the consumer interest. Seven nationally renowned speakers, including professors Monroe Friedman, Loren Geistfeld, Jeanne Hogarth, Jean Lown, and Ivan Preston, presented papers pertaining to the consumer interest. Two of the seven papers are reproduced here. The first is by Stephen Brobeck, long‐time executive director of the Consumer Federation of America (CFA) and the editor of The Encyclopedia of the Consumer Movement. Dr. Brobeck's article examines how a major consumer advocacy organization like CFA decides what public policy positions are in the consumer interest. The article applies a general framework to the specific issue of automobile fuel economy standards. In the companion piece to this article, Michael Burton, an assistant professor of political science at Ohio University and the son of the symposium's honoree, draws on his experience as a congressional aide and vice presidential staff member to describe and defend the art of compromise as it applies to consumer politics. – Robert N. Mayer, University of Utah     

LaPlace Transforms as Present Value Rules: A Note

The present value equation in finance is shown to be equivalent to the Laplace transformation in mathematics. Based on this observation, the list of known analytic solutions for the present value problem is increased from a handful to more than one hundred. General properties of the Laplace transform are examined as well in light of the newly discovered significance for finance.