Policy Implications of the Effects of Concentration and Multimarket Contact in China’s Airline Market

Unlike many other mergers in developed countries, which might have been assessed and their effects estimated by antitrust authorities before being granted antitrust immunity, the airline mergers that swept China’s airline industry in 2002 occurred with no antitrust challenge. These mergers provide the opportunity to study important market power issues in China’s airline markets. Given that increased concentration and multimarket contact are the main legacies of an airline merger, the effects of mergers on these variables can raise the potential for the exercise of market power. However, an examination of the period 2002–2004 during which the Chinese airline mergers occurred shows that the resulting increased concentration and enhanced multimarket contact did not have important consequences for airfares in Chinese city-pair markets. The presence of Hainan Airlines appears to have played an important role in suppressing the airfares charged by China Eastern and China Southern.     

International Trends in Economics Degrees During the 1990s

Australia, Canada, Germany, and the United States experienced a substantial decline in undergraduate degrees in economics from 1992 through 1996, followed immediately by a modest recovery. This cycle does not conform to overall degree trends, shifts in the gender composition of undergraduate populations, or changing interests of female students in any of the four countries. There is no evidence that changes in the “price” of a degree to students, tightened marking standards or degree requirements, or changes in pedagogical methods caused the cycle.

Jobs for economics graduates declined in the United States between 1988 and 1990 and thereafter recovered. With a two-year recognition lag, the pattern of employment prospects fits the U.S. slump in economics degrees perfectly. Unfortunately, employment patterns in the other three countries are inconsistent with the degree cycle. The explanation that fits the economic degree pattern best is interest in business education.     

Developments in social accounting methods as applied to the analysis of income distribution and employment issues

Research into the design, construction and use of social accounting matrices (SAMs) for the analysis of income distribution issues in development policy and planning is generally discussed. Specific case studies for Swaziland, Botswana and Kenya are considered and the accounting classifications are compared, especially those for households. The use of the Swaziland and Botswana SAMs to analyse some of the distributional effects of certain exogenous impacts (such as the outbreak of a foot and mouth epidemic in Botswana) is also discussed. This includes a presentation of methodology as well as some results of the analyses.     

Business cycle transmission and interdependence between Japan and Australia

This paper investigates business cycle transmission and interdependence between Australia and Japan over the period 1961.1–1994.4. Vector autoregression (VAR) and vector error correction (VEC) models were constructed utilizing GDP/GNPs, producer prices, interest rates and money supplies. The model is tested for cointegration. Two cointegrating vectors are found, and a vector error correction (VEC) model is estimated. The coefficients and the F-tests of the VEC are used to measure the effect of one economy upon the other. Impulse responses from a VAR are examined for evidence of business cycle transmission, and recursive least squares estimates are used to check for structural change in the relationship. Figures are used to graphically demonstrate these relationships and have been collected in an appendix, which can be found at the end of the text.While the two countries engage in a close trading relationship, the two economies are found to be only somewhat interdependent in macroeconometric terms. Japan is found to transmit some of its business cycle fluctuations to Australia, but there is little reverse transmission.     

On estimating trade flows in interregional input output models

Non-survey techniques have previously been devised for adjusting regional technical requirements matrices so as to account for commodity imports. Surrogates such as the location quotient have been utilised for estimating trading coefficients in a regional input output table. Extensions of these techniques to an interregional system are generally considered. It is shown that non-survey techniques are conceptually improved as a result of this extension. Particular regard is given to calibration methods that achieve consistency between estimates of exports and imports within an interregional system. The RAS method and some variants are compared and an additive algorithm is demonstrated to be efficient for this purpose.     

A SAM for Europe: Problems and Perspectives

This paper examines the conceptual and practical problems of constructing a social accounting matrix for Europe. It involves integrating the accounts of member countries within a complete system of regional accounts. The standard matrix framework first proposed by Stone is modified in two respects. First, functional and geographical transactions are distinguished between in order to simplify the accounting structure. Secondly, supraregional accounts are more formally incorporated so as to include accounts for the rest of the world and EC institutions, as well as to accommodate distribution and other transaction costs involved in moving goods, factors and assets between member countries. The general system of regional accounts can then be aggregated, consolidated or apportioned across member states but this has implications for both harmonizing accounts and classifications and considering the extent to which there is truly a ‘single European market’. Finally, the paper considers the availability of data and presents a preliminary compilation of aggregate accounts for three member countries.     

The effect of domestic and foreign competition on performance in Australian manufacturing industries

Summary and Conclusions This study investigated the role of both domestic structural factors and tariff protection in explaining inter-industry differences in profitability in Australian manufacturing industries. At no stage did concentration have a significant effect on profitability at the four-digit level of analysis, in comparison to its observed significant positive effect at the three-digit level. Other structural factors appear to be more important in explaining inter-industry variations in profitability in Australia. The effective tariff rate was negatively associated with profitability, the relationship notably being more highly significant in those industries enjoying higher than average tariff protection. It is suggested that this negative relationship for Australia may be due to a similar phenomenon noted in relation to Canadian manufacturing, namely that tariff protection has led to the permanent creation of too many sub-optimal production units, resulting in lower efficiency and decreased profits. A reduction in the effective rate of tariff protection given to high cost Australian manufacturing industries may therefore yield greater efficiency, as well as at the same time permitting the possibility of increased potential and actual foreign competition.This paper was written while the author was Visting Associate Professor at the University of Delaware. Thanks are due to members of the Industrial Organization Workshop at the University of Virginia for comments on an earlier draft, and to the Managing Editor for his suggestions. I am grateful to the Reserve Bank of Australia for support for this research from their Economic and Financial Research Fund. The views expressed in this paper are those of the author alone.