Book notes

International Journal of Technology and Design Education -     

Monopolistic competition and a firm's product range

A model is presented which assumes that firms maximise profits with respect to both the number of varieties supplied as well as the output level of a typical variety. The incentive to produce more than one variety comes from a cost advantage due to inter-product economies. It is found that in a long-run free-entry equilibrium the industry is characterised by too few product varieties and each variety is over supplied compared to the welfare maximum for any conjectural variation elasticity. The former result also holds if the number of firms is held fixed.     

Growth vs basic needs: Is there a trade-off?

Critics of the basic-needs approach to development have argued that by emphasizing activities which are essentially consumption oriented, the basic-needs approach implies a reduction in the rate of growth. On the other hand, proponents of this approach point to the human capital aspects of basic needs, which could be instrumental in increasing productivity and growth in output. This paper attempts to marshal some further evidence of the growth-basic needs trade-off by undertaking econometric estimates of the variables explaining LDC growth during the 1960–1973 period. The general finding is that countries which had done well on basic needs in 1960 had above average growth rates during the period 1960–1973. Improvement in basic needs during the period are also correlated with higher growth rates of GNP, but it is impossible to ascertain if this improvement is a cause of or an effect of the higher growth in output.     

Type of entrepreneur,type of firm,and managerial motivation: Implications for organizational life cycle theory

Miner Sentence Completion Scale measures of managerial motivation for a sample of Oregon entrepreneurs were compared with interview data on entrepreneur and firm type using a system of differentiation derived from the Enterprising Man (Collins, Moore and Unwalla, 1964) research. Certain relationships between aspects of managerial motivation and firm expansion and growth were found. In addition, the overall level of managerial motivation among the entrepreneurs relative to corporate managers was found to be low, and the previously noted association between an opportunistic entrepreneurial type and growthoriented firms was confirmed. These findings are discussed in the context of organizational life cycle theory with special reference to the early stages of transition from entrepreneurial to bureaucratic forms and various typologies of entrepreneurs. It appears that under certain circumstances growth may not require a shift in leadership style, but that in some important respects entrepreneurial and bureaucratic systems are managerially distinct.     

Economic growth in the USSR,Hungary, and East and West Germany

The extensive research on Soviet production functions is here extended to three different economies for the post-war, post-recovery period. Many different forms of CES and Cobb-Douglas function are tested. Estimates for West Germany are plausible and well behaved. Those for East Germany and Hungary are not even plausible. Results for the USSR are plausible, but inspection of residuals via isoquant maps suggests that the whole period is not homogeneous. Further tests suggest a structural change around 1965 as one possibility; the change involves faster technical change and an elasticity of substitution after 1965 not significantly different from unity.     

The strategy of professional forecasting

We develop and compare two theories of professional forecasters’ strategic behavior. The first theory, reputational cheap talk, posits that forecasters endeavor to convince the market that they are well informed. The market evaluates their forecasting talent on the basis of the forecasts and the realized state. If the market expects forecasters to report their posterior expectations honestly, then forecasts are shaded toward the prior mean. With correct market expectations, equilibrium forecasts are imprecise but not shaded. The second theory posits that forecasters compete in a forecasting contest with pre-specified rules. In a winner-take-all contest, equilibrium forecasts are excessively differentiated.     

Progress under pressure: The evolution of antitrust policy in Australia

Australia has developed a balanced and comprehensive antitrust policy. But the process of evolution has seen conflict, misunderstanding and error in applying the relevant economic concepts. Whether antitrust legislation is needed, and in what form, is still debated, as are ways of incorporating new approaches in economics. This is a documented account and commentary on the twenty years of evolution, designed especially for non-Australian readers seeking to gain advantage and avoid error by studying the experience of another country.