A reexamination of the “lemons” market when warranties are not prepurchase quality signals

It is well known that the Akerlof “lemons” problem may occur when sellers possess private information about product quality and that the use of warranties as prepurchase quality signals may mitigate both the informational asymmetry and the attendant market failure. There is, however, evidence suggesting that consumers rarely read and compare alternative warranties before reaching a purchase decision, which casts doubt on the role of warranties as prepurchase quality signals. This paper examines an environment in which the cost to consumers of interpreting warranty terms is prohibitively high so that warranties do not serve in a prepurchasing signalling capacity. Nonetheless, I find that firms will offer warranties in this environment and that the market outcome is often Pareto superior, and never Pareto inferior, to an equilibrium where warranties serve as prepurchase quality signals.     

Socioeconomics and the new “battle of the methods”: Towards a paradigm shift?

During the last ten or fifteen years the old separation between economics and other social sciences has increasingly been challenged by economists applying the neoclassical paradigm to problems that traditionally concern the other social sciences. The main thesis of this paper is that this so-called “economic imperialism” threatens to unleash a new paradigmatic struggle in the social sciences, which is likely to be just as destructive as the old Methodenstreit. It is in this situation that socioeconomics emerges as a viable alternative since it emphasizes the need for a systhesis of the findings of several social sciences when an economic problem is analyzed. The article stresses the original battle of the methods at the turn of the century that gave birth to a set of ideas, analogous to those of Etzioni on socioeconomics, namely what Max Weber called Sozialökonomik. The emergence of “economic imperialism” is described, and the essay ends with a plea for a socioeconomics in the sense of a broad, overarching approach to economic analysis. Economic imperialism, it is concluded, threatens to close the door to new developments in economics; socioeconomics, on the other hand, tries to keep it open.     

Hollander, de Vivo and the 'further evidence' for the corn model interpretation of Ricardo: a conspiracy of silence?

This paper reconsiders the debate between de Vivo and Hollanderover the ‘further evidence’ in favour of Sraffa's‘corn model’ interpretation of Ricardo in the lightof Torrens's Letter to Lord Liverpool (1816). It is argued thatthe Letter provides unique evidence of the influence on Torrensof Ricardo's Essay on Profits (1815); and that, contrary tode Vivo, the evidence is not that of a ‘corn model’influence. It is further argued that the manner in which theLetter has been dealt with is unsatisfactory. The shortcomingsin Hollander's position are traced to peculiarities in his long-standinginterpretation of the early Ricardo.     

Is the economics of time and ignorance a “classic”?

A history of economic thought perspective on The Economics of Time and Ignorance reveals that the book rehabilitates some major themes in the Austrian tradition that were all but lost subsequent to the formalist revolution in economics that took place in the middle of the twentieth-century. The book also anticipates some important ideas that were extended and applied in Austrian economics after it was first published. Reviews have claimed that the book was a “classic” and also “original”. The book is too close in a temporal sense to judge whether or not future generations will canonize it as a “classic”. Using Stigler’s criteria as to what constitutes scientific “originality”, it is concluded that, taken as a whole, the book was not original. From the vantage point of the overall discipline of economics, it was a work advancing controversial ideas that would not easily change the beliefs, practices and interests of economists in general but it offered sound reasons for taking the Austrian thought-trajectory more seriously. It would be more fitting to view the authors as providers of many innovations contributing to the mature Austrian economics of the twenty-first century.     

David Ricardo: on the art of “elucidating economic principles” in the face of a “labyrinth of difficulties”

Abstract

The paper discusses David Ricardo's analytical achievements. These concern his approach to the theory of value and distribution; his analysis of the effects of different forms of technical progress on income distribution; his analysis of exhaustible resources in terms of differential rent; his discussion of machinery and induced technical progress; and his theory of foreign trade and the principle of comparative advantage. It is argued that Ricardo's analysis has been frequently misrepresented and is a great deal more sophisticated than is commonly acknowledged. There are still ideas in his writings that have yet to be fully explored.     

Populism and the return of the “Paranoid Style”: Some evidence and a simple model of demand for incompetence as insurance against elite betrayal

We present a simple model of populism as the rejection of “disloyal” leaders. We show that adding the assumption that people are worse off when they experience low income as a result of leader betrayal (than when it is the result of bad luck) to a simple voter choice model yields a preference for incompetent leaders even if all leaders have the same underlying probability of betrayal. These deliver worse material outcomes in general, but they reduce the feelings of betrayal during bad times. Some evidence consistent with our model is gathered from the Trump–Clinton 2016 election: on average, subjects primed with the importance of competence in policymaking decrease their support for Trump, the candidate who scores lower on competence in our survey (even amongst Trump supporters). But two groups respond to the treatment with a large (approximately 5 percentage points) increase in their support for Donald Trump: those living in rural areas and those that are low educated, white and living in urban and suburban areas.     

Urban–rural income polarization and economic growth in China: evidence from the analysis of a dynamic panel data model

Using a dynamic panel data model and the system GMM, this article examines the relationship between urban–rural income polarization and economic growth at the provincial level in the period 1995 to 2010 in China. The estimated results and significant tests indicate that a certain degree of urban–rural income polarization is beneficial to economic growth at the provincial level in both stages for China as a whole, though the contribution of urban–rural income polarization to economic growth is relatively small. Aggravating urban–rural income polarization has a negative impact on economic growth in China. Based on a cluster analysis of regional economic growth at the provincial level, the authors carried out the same analysis separately for two categories of regions too. The results for those two categories of regions show that positive correlations also exist between urban–rural income polarization and economic growth in both stages, which are very similar to the analysis for the whole of China. In addition, a meaningful finding can be derived that the contribution of consumption growth rate to economic growth rate in the second stage is smaller than that in the first stage obviously.     

Julian Simon,the problem of socio-ecological resilience and the “ultimate resource”: a reinterpretation

The Review of Austrian Economics - The article argues that the debate between “the limits to growth” movement and Julian Simon could be reconstructed and reinterpreted in the light of...     

The socially responsible choice in a duopolistic market: A dynamic model of “ethical product” differentiation

The increasing attention of profit maximizing corporations to corporate social responsibility (CSR) is a new stylized fact of the contemporary economic environment. In our theoretical analysis we model CSR adoption as the optimal response of a profit maximizing firm to the competition of a not for profit corporate pioneer in the presence of a continuum of consumers with heterogeneous preferences towards the social and environmental features of the final good. CSR adoption implies a trade-off since, on the one side, it raises production costs but, on the other side, it leads to accumulation of “ethical capital”. We investigate conditions under which the profit maximizing firm switches from price to price and CSR competition by comparing monopoly and duopoly equilibria and their consequences on aggregate social responsibility and consumer welfare. Our findings provide a theoretical background for competition between profit maximizing incumbents and not for profit entrants in markets such as fair trade, organic food, ethical banking and ethical finance.     

Discusswhen facing the Terrorism,the courts,no less than the elected branches of government,are driven by fear and panic.It is na?ve to expect the courts to protect individual liberty when the much more important of security is at stake.

Introduction:In recent years,the terrorism has been destroying many places of world.No one knows what it is the next terrorism activity and where it will happen.The governments and the army have been guarding any time,because the damage caused by terrorism is very hrse,not only the social economy,hut also the stabilizadon of country,the order of country,civil liberty and the individual life.     

Who are “We The People”? Bruce Ackerman, Thomas Jefferson, and the Problem of Revolutionary Reform

Bruce Ackerman of the Yale Law School proposes new procedures for constitutional reform to supersede the amendment process set forth in Article V of the U.S. Constitution. He argues that the revolutionary character of regime changes in the 1780s, 1860s, and 1930s has been disguised by the fiction of constitutional continuity. Americans will not be prepared for future constitutional crises if they fail to develop new amendment procedures to facilitate future reform efforts.Thomas Jefferson's constitutionalism provides a critical perspective on Ackerman's project. Like Jefferson, Ackerman sees constitutional change as an opportunity for the People to return to revolutionary first principles; unlike Jefferson, he equates American nationhood with the progressive concentration of power in the federal state.     

Using an integrated choice and latent variable model to understand the impact of “professional” respondents in a stated preference survey

Internet panels are increasingly used for stated preference research. Because members of such panels receive compensation for each completed survey, one concern is that over time this creates professional respondents who answer surveys solely for the monetary compensation. We identify professional respondents using data on panel tenure, survey response frequency, completion rate and total number of completed surveys. We find evidence of two types of professional respondents: “hyperactives” who answer surveys frequently and “experienced” who have long panel tenure and a large number of completed surveys. Using an integrated choice and latent variable model on stated preference survey data, we find that “hyperactive” respondents are less likely to choose the 'status quo’ and have a more stochastic choice process as seen from the econometrician's point of view, whereas “experienced” respondents have a relatively more deterministic choice process. Our results show that “hyperactive” respondents significantly impact estimated values.     

Punitive Entanglements: The “War on Gangs” and the Making of a Transnational Penal Apparatus in the Americas

This paper analyses the export-import business of penal policies that accompanies the “war on transnational street gangs” between the United States and Central America. It argues that far from being a unidirectional export of punitive politics from the United States towards Central America, many of these punitive exports travel “back home”. This creates transnational punitive entanglements that contribute to the contingent convergence of punitive geopolitics and domestic politics in the guise of a transnational penal apparatus that integrates law enforcement agencies and military forces, securocratic epistemic communities and national political entrepreneurs into a functionally cohesive but decentred transnational security structure engaged in a multilayered punitive containment of transnational street gangs across the Americas.     

Is China Living a Minsky Moment? Between the “Lender of Last Resort” and the Chinese Shadow Financial System

After Lehman Brothers bankruptcy in 2008, the Central Bank of China (PBOC) created a big 1.8 trillion dollars package to boost the Chinese economy. It was a necessary key measure not only to prop up the economy, but also to try to preserve the two-digit growth of the GDP that existed before the Great Recession. The financial instability of international financial circuits made necessary the involvement of the central bank. Ten years later, China’s debt explosion went up during the financial crisis, from six to twenty-eight trillion dollars between 2007 and 2016. In other words, it went up from 148 to 260 percent of GDP during the same period. The goal of this article is to analyze whether China is living a “Minsky moment” or not, and what its implications are for international financial markets.     

“Alcohol Bans”: Can they reveal the effect of Xi Jinping's anti-corruption campaign?

China is perceived to be one of the most politically corrupt countries in the world. Chinese government officials establish firm ties with trusted people through lavish banquets with flowing alcohol, providing privileged access to scarce resources like licenses, land, bank loans, subsidies, and government contracts. In China, Baijiu, the most popular grain liquor at these parties, works as the currency of bribery and is the lubricant for political connections for corruption. Xi Jinping's anti-corruption policy, known as the “Alcohol Bans,” has targeted Baijiu in an attempt to stop the boozy banquets, and, consequently, to bring an end to this channel of political networking. This paper employs the event study approach and connects cumulative abnormal stock returns of high-end Baijiu companies with the impact of the Alcohol Bans. It applies the difference-in-difference method to rule out unobserved reasons for stock market changes. The result is unchanged in both the efficient market hypothesis test and the abnormal return test. We consider if Baijiu may be substituted for other luxuries, and find little evidence for such “substitution effects.” Our work concludes that the Alcohol Bans has partially contributed to Xi's anti-corruption campaign.