Corrective Taxation for Curbing Pollution and Promoting Green Product Design and Recycling

In this paper we consider a competitive economy with flows of materials from extraction via recycling to landfilling which exhibits distortions due to pollution, external landfilling costs and inefficient product design. The allocative impact of tax-subsidy policies aiming at internalizing the distortions are analyzed when the pertinent tax-subsidy rates were successively raised from zero toward their efficiency restoring levels. Promoting recyclability by greening the product design stimulates recycling as expected. But it also increases primary material extraction and – possibly – the total waste flow, and it reduces the recycling ratio.     

On the concept of appropriate technology for less industrialized countries

A questionnaire-survey, based on notions of external dependence and passive receipt of technology, was addressed to a group of technical and development experts to investigate why the manufacturing technologies applied in the LIC's are considered inappropriate for their resources and conditions. The results are preliminary and cannot be statistically validated, but constitute suggestive and important evidence which raises serious doubts on the validity of conventional wisdom in this field. There are strong indications that LIC's are not generally mere passive recipients of technologies developed in IC's—many instances of technological development carried out in some of these countries were reported and the imported technologies are usually adapted to local conditions. The “inappropriateness” of some industrial technologies was due to factors such as: (a) Inadequate response to market requirements; (b) failure to use and/or adapt to the local supply of materials; (c) failure to adapt to a smaller scale of production; (d) insufficient use of labor due to price distortions and other restrictions; (e) import of unsuitable machinery; (f) selection of unsuitable technology due to restrictions on the acquisition of technology.     

From ability to pay to concepts of equal sacrifice

The ability-to-pay approach to taxation in Mill's tradition is given a rigorous treatment in a social choice theoretic framework. Generalized concepts of equal sacrifice are axiomatized making explicit use of the ability-to-pay principle. Extensive statements on progressivity are derived. However, there is no such axiomatized concept that implies non-excessive progressitivity irrespective of taxpayers' utility function.     

Income instability,terms of trade,and the choice of exchange rate regime

In this article terms of trade fluctuations, which constitute an important source of income instability in many LDC's, are decomposed into three principal components: (a) shifts in world market conditions, (b) shifts in home market conditions and (c) changes in exchange rates. The appropriateness of a ‘basket peg’ is then analyzed in terms of a country's net export-side market power and a weighting formula is derived which would offset variations in third countries' exchange rates on the home country's terms of trade. Initial empirical results tend to support the hypothesis that basket pegs are usually adopted by countries with net export-side market power.     

Trade,structure and linkages in Costa Rica: An input-output approach

Input-output tables for Costa Rica are used first to assess the country's trade performance; it is argued that trade with the rest of Central America has produced a Costa Rican comparative advantage in consumer durables. The paper then uses the input–output tables to examine the economy's structure, which is shown to be block triangular. Finally, measures of linkages are derived from the tables and a critique of the growth-inducing linkage mechanism is presented.     

Regulation of a Risk Averse Firm

We extend the Laffont–Tirole regulation model to the case of risk-averse firms. Our main results are:

• The impact of risk aversion is to shift the optimal contract toward a cost-plus contract.

• As compared with the risk-neutral case, distortions are greater and informational rents are smaller.

• For high levels of risk aversion, the optimal contract involves cost ceilings and the less efficient firms are bunched together.

Journal of Economic LiteratureClassification Numbers: D8, L5.     

Location and the comparative statics of the theory of production

This paper applies modern methods of doing comparative static analysis to the theory of the firm when location as well as input levels are the firm's choice variables. Many results are obtained including all previously known results. Moreover, it is shown that traditional results in the theory of the firm such as downward sloping derived demand curves, generalize to the location problem. New results, such as an increase in a transportation rate decreasing transportation in terms of ton-miles of an input, are also obtained. Many new symmetry conditions are also found.     

Uncertainty and the trade union

Uncertainty is introduced into a model of the trade union. The model's qualitative predictions turn out to be unaltered. Increases in risk are also examined and various results derived.     

A general model of customer-class pricing

A theory of utility customer-class pricing is developed, and a firm's pricing incentives under various objectives are derived. Rate of return regulation is shown to motivate non-optimal prices in an output counterpart to the Averch-Johnson effect.     

Power and publications in Chinese academia

In power-oriented societies, academia may not be immune to the influence of power. This paper studies the power-publication link by applying an event-study strategy to a panel dataset of the publication and biographical information of deans of economics schools in Chinese universities. We find that (i) deanship increases an individual's publication by 0.7 articles per year; (ii) the increased publications stem from work coauthored with other researchers within the same university; (iii) the topics of the increased publications are more likely to deviate from the deans’ research area prior to becoming deans; and (iv) the power effect is smaller for top universities and leading journals, and for scholars with more pre-dean publications. These patterns appear consistent with the role of power in resource allocation rather than the impact of ability or reputation of the deans and thus have implications on distortions in knowledge production.     

Readings books and rankings of macromonetary articles,authors and journals

Articles republished in commercial readings books prove to be a feasible way to rank macromonetary articles, authors, and journals. Rankings are tested by discriminate analysis and by comparison to alternate rankings. Authors' fame is derived from their articles and from the journals in which their articles are published.     

Dividend taxes,corporate investment,and ‘Q’

Taxes on corporate distributions have traditionally been regarded as a ‘double tax’ on corporate income. This view implies that while the total effective tax rate on corporate source income affects real economic decisions, the distribution of this tax burden between the shareholders and the corporation is irrelevant. Recent research has suggested an alternative to this traditional view. One explanation of why firms in the United States pay dividends in spite of the heavy tax liabilities associated with this form of distribution is that the stock market capitalizes the tax payments associated with corporate distributions. This capitalization leaves investors indifferent at the margin between a corporation's decision to pay out dividends or to retain earnings. This alternative view holds that while changes in the dividend tax rate will affect shareholder wealth, they will have no impact on corporate investment decisions.This paper develops econometric tests which distinguish between these two views of dividend taxation. By extending Tobin's ‘q’ theory of investment to incorporate taxes at both the corporate and personal levels, the implications of each view for corporate investment decisions can be derived. The competing views may be tested by comparing the performance of investment equations estimated under each theory's predictions. British time series data are particularly appropriate for testing hypotheses about dividend taxes because of the substantial postwar variation in effective tax rates on corporate distributions. The econometric results suggest that dividend taxes have important effects on investment decisions.     

A sequential stochastic tree problem

We consider here the owner of a plot of land upon which he sequentially plants and harvests trees. The trees' growth paths follow a stochastic process, and the owner must decide when to harvest and replant, given knowledge of the process and each tree's growth history. The results of this analysis are compared with the non-repeated case derived by Brock, Rothschild and Stiglitz (1979) (hereafter B.R.S.) and found to be qualitatively similar.     

The oil price increase and the alleviation of poverty: Income distribution in Caracas,Venezuela, in 1966 and 1975

Two Caracas household budget surveys are used to compare household and individual income distributions. Real 1975 incomes are derived from income-specific price indexes. Minimum food budgets define destitution and poverty levels. During 1966–1975 mean real income rose substantially, especially among the rich. The fraction poor declined markedly, but mean income did not rise for those remaining poor. The poor's share of income growth came entirely from reduction in the number of poor, and exceeded their 1966 income share. The poverty gap expanded with population growth but shrank in per capita terms and relative to total income.     

Competitive price adjustment

A study is made of a competitive trading process in which a price-maker calls prices periodically under the obligation of trading for his own account to satisfy excess demand. Characteristics of the price-maker's optimal behavior are derived. The price-maker system is evaluated with respect to an alternative market clearing system.     

A comparative dynamic analysis of a growth model under alternate policy regimes

Comparative dynamic analysis is conducted on a growth model with variable price levels and wage rates. A perturbation technique is used to compare the economy's time paths near a balanced growth path in response to alternate policy regimes. Various dynamic policy multipliers are calculated in response to some of the alternate policy regimes such as the balanced-budget fiscal regime, the constant price regime, the full-employment regime, etc., to examine their dynamic implications on the economy's behavior. Temporary deviations in the fiscal variables are found to leave no permanent effects under all but one of the regimes examined.     

The formation of expectations: Some evidence from weekly money supply forecasts

This paper investigates the expectations formation process of weekly money supply forecasts derived from survey data. The evidence indicates that forecaster's expectations are modelled best as regressive. Moreover, the results are unaffected by the October 1979 change in monetary operating procedures.     

Information,optimality and pollution control

A mechanism that provides for the efficient production of public goods suggested recently by Groves-Ledyard is reinterpreted as an efficient emissions' rights market scheme. A generalization of the Groves-Ledyard mechanism which Suchanek has shown to comprise an efficient emissions' quotas scheme is restated and then converted into an efficient emissions' charges scheme. The relationship between these schemes yields the standard duality of optimal emissions' charges and optimal emissions' quotas. This duality result is not as strong as one might believe. As an illustration, two emissions' charges schemes are presented each of which generates the charges dual to the optimal quotas given by the specified optimal emissions' quotas government but which are inefficient in general.     

Are Soviet industrial-production statistics significantly distorted by hidden inflation?

In recent years speculation has increased regarding the existence and magnitude of hidden inflation in the Soviet economy. This speculation has unintentionally, but necessarily, called into question a great deal of econometric research predicated on the assumption that Soviet statistics are workably reliable. This paper attempts to evaluate these issues by examining the CIA's unofficial estimates of hidden inflation in the industrial sector calculated by James Steiner. A careful reconstruction of Steiner's arithmetic procedures reveals that the high levels of hidden inflation he estimates are invalid.     

The consumption function and the precautionary demand for savings

Under the assumptions of constant absolute risk aversion and serially correlated, normally distributed, income shocks, an explicit solution to the consumer's intertemporal optimization problem is derived which parameterizes the precautionary demand for savings.