Are Housing Price Cycles Driven by Irrational Expectations?

This paper investigates the extent to which condominium apartment prices are set in an efficient asset market. Unlike previous work that focuses on the time-series properties of measures of excess returns, the analysis is framed in terms of the changes in observable house prices over time. More precisely, the paper develops and applies a test of the joint null hypothesis of rational expectations, perfect markets, and no risk premium in the Vancouver condominium apartment market. The empirical results provide significant evidence against the joint null hypothesis. On average, ex post house price changes move in a direction opposite to their rational expectation. This approach offers a methodological advantage over the standard efficiency literature and is shown to provide a more powerful test of market efficiency than conventional return regressions. Another contribution of the paper is to characterize the time-series properties of deviations of condominium prices from those predicted by the risk-neutral rational expectations model, using cointegration and random coefficients techniques. Deviations in house price changes from their (risk-neutral) rational expectations are time varying, stationary, and related to the stage of the real estate price cycle.     

The consumption of radio broadcast technologies in Hong Kong,c.1930–19601

This article uses previously under‐exploited quantitative and qualitative primary sources in Hong Kong, the US, and the UK to chronicle how radio broadcast technologies extended in a Less Developed Country. As incomes were rising and the price of radio receiving sets was falling, demand‐side forces were strong in Hong Kong. Yet, these forces alone cannot explain the pattern of diffusion observed. Innovations accelerated the take‐up of radios. The liberalization and de‐regulation of radio broadcasting provided pre‐requisites for these supply‐side shifts.     

CUSTOMER POWER,STRATEGIC INVESTMENT,AND THE FAILURE OF LEADING FIRMS

Why might firms be regarded as astutely managed at one point, yet subsequently lose their positions of industry leadership when faced with technological change? We present a model, grounded in a study of the world disk drive industry, that charts the process through which the demands of a firm's customers shape the allocation of resources in technological innovation—a model that links theories of resource dependence and resource allocation. We show that established firms led the industry in developing technologies of every sort—even radical ones—whenever the technologies addressed existing customers' needs. The same firms failed to develop simpler technologies that initially were only useful in emerging markets, because impetus coalesces behind, and resources are allocated to, programs targeting powerful customers. Projects targeted at technologies for which no customers yet exist languish for lack of impetus and resources. Because the rate of technical progress can exceed the performance demanded in a market, technologies which initially can only be used in emerging markets later can invade mainstream ones, carrying entrant firms to victory over established companies.     

TRADE‐OFFS AND RIP‐OFFS: IMITATION‐LED INDUSTRIALISATION AND THE EVOLUTION OF TRADEMARK LAW IN HONG KONG*

Hong Kong's development as an industrial exporter was advantaged by a flexible institutional regime, which generated gains from imitation‐led industrialisation and which allowed the mobilisation of public and private resources to enable a transition to a more stringent enforcement regime for intellectual property. Fragmentary industrial structures raised monitoring costs for trademark proprietors and gave opportunities for infringers to exploit information asymmetries. However, colonial state building, the formation of specialist markets in knowledge, and collective actions by business groups caused the law to evolve. These overlapping processes of formal and informal institutional change were mutually reinforcing.