Why is Corruption Tolerated?

It is maintained that a closer analysis of the features of the underlying contract reveals that under many circumstances corruption is in fact a rational and understandable reaction to institutional failures, which are often far from accidental. Sometimes it can even be considered legitimate, when instrumental in achieving goals shared by the vast majority of the electorate.To this purpose, three different stylized institutional frameworks are analyzed: developed, totalitarian and transition countries. The origin, scope and consequences of corruption vary significantly across the different frameworks. The normative conclusions should therefore be adjusted accordingly.     

Why zombies can go out: evidence from Chinese manufacturing

Using an original and unique Chinese manufacturing firm-level data over 2002–2005, this article investigates why firms without productivity advantages could invest abroad. Conducting propensity score matching method, we find strong evidence that government financial support is an important reason underlying this outward foreign direct investment phenomenon.     

Why a new malpractice crisis is coming

This article predicts escalating premiums and a greater risk of malpractice suits based on the increasing frequency and cost of claim payouts. The number of insurance claims increased by 12% in 1978 after a decrease of 11% in 1976 and by 2% in 1977. The percentage of premium income paid out has followed the same pattern. It was a high of 66.5% in 1975 and then fell into the 40% range in the next two years. Last year it bounced back to 60.6%. Some insurance authorities view the 1976-77 drop in claims as artificial and attribute it to a reluctance to file suits during the period immediately following new malpractice laws. The reluctance to sue has apparently relaxed. About 16% of the cases actually go to court. Out of those, 90% of the verdicts favor doctors. The rise in cases going to court shows that reform! legislation passed in several states to reduce malpractice litigation is not yet working. The average payout was up 20% between 1976 and 1978 with the greatest rise in large awards; million-dollar settlements are not uncommon. Escalating payouts are attributed to general inflation anf rising medical costs. In addition, the public has become better medically informed and been taught that for every wrong ther is a remedy.     

Why a well-paid nurse is a better nurse

In an article subtitled "Why is a Badly Paid Nurse a Good Nurse?" economist Anthony Heyes argues that nursing wages should be kept low. Counter arguments are provided based on what the authors consider more adequate economic analysis.     

Why is demand homogeneity so often rejected?

Several statistical tests have indicated that homogeneity of consumer demand must be rejected [see, e.g., Barten (1969), Byron (1970), Lluch (1971), and Deaton (1974)]. A simulation experiment shows that the standard test is seriously biased toward rejecting this hypothesis. For the case presented, a small sample interpretation of the test statistic explains this bias.