Evidence on agglomeration economies,diseconomies, and growth

Conventional urban economic analysis suggests that a local economy's size is closely related to a number of features, including levels of human capital and the availability of specialized inputs, which are likely to influence positively the rate at which it accumulates further economic activity. At the same time, urban theory also suggests that once cities reach a certain level of size, these agglomeration benefits begin to peter out, while diseconomies rise rapidly. Consequently, we should see an ‘inverted U‐shaped’ pattern of growth with respect to economic size—rates of growth first rise, then fall as size increases. This paper shows that, while such a pattern is largely absent from recent data on growth in metropolitan area population and employment, it emerges strikingly in county‐level data. Copyright © 2002 John Wiley & Sons, Ltd.     

A Nonstandard Approach to Option Pricing

Nonstandard probability theory and stochastic analysis, as developed by Loeb, Anderson, and Keisler, has the attractive feature that it allows one to exploit combinatorial aspects of a well-understood discrete theory in a continuous setting. We illustrate this with an example taken from financial economics: a nonstandard construction of the well-known Black-Scholes option pricing model allows us to view the resulting object at the same time as both (the hyperfinite version of) the binomial Cox-Ross-Rubinstein model (that is, a hyperfinite geometric random walk) and the continuous model introduced by Black and Scholes (a geometric Brownian motion). Nonstandard methods provide a means of moving freely back and forth between the discrete and continuous points of view. This enables us to give an elementary derivation of the Black-Scholes option pricing formula from the corresponding formula for the binomial model. We also devise an intuitive but rigorous method for constructing self-financing hedge portfolios for various contingent claims, again using the explicit constructions available in the hyperfinite binomial model, to give the portfolio appropriate to the Black-Scholes model. Thus, nonstandard analysis provides a rigorous basis for the economists' intuitive notion that the Black-Scholes model contains a built-in version of the Cox-Ross-Rubinstein model.     

Hymer and Uneven Development Revisited: Foreign Direct Investment and Regional Inequalities

Picking up on one of Hymer's key contributions, this paper examinesthe impact that inward foreign direct investment (FDI) intothe UK has on the patterns of development, both within and acrossregions. Using a panel of data for the manufacturing sector,the paper illustrates that even where one isolates the effecton the domestic sector alone, inward investment acts to increasethe demand for skilled, relative to unskilled labour, and alsogenerates the expected agglomeration effects in terms of thedemand for capital investment. The paper then goes on to drawcertain policy comparisons between these findings and the desiredaim of attracting FDI, notably to increase demand for labourin those regions suffering structural unemployment, and secondlyto reduce the disparities between regions.     

The teaching of ethics in management accounting: progress and prospects

Recent research has shown that, although still on a limited scale, the teaching of business ethics in UK higher education has been increasing in recent years. This paper reports on a postal questionnaire survey conducted to investigate the extent to which ethical issues are covered in the teaching of management accounting in higher education. The principal findings are that the majority of management accounting lecturers in the British Isles do not incorporate ethics. About a third of the respondents to the survey do address ethical issues, although about half of those say they do so only implicitly. Various factors underlying the findings and prospects for the future are discussed.     

Medical Malpractice Liability and Physician Migration

This paper uses national data on individual physicians and two control groups to provide evidence on the extent to which each of five medical malpractice reforms impacts the decision to move one's medical practice to another state. We find robust evidence that states that have implemented noneconomic damage caps experience less out-migration of physicians than states that do not have these reforms. In addition, we find some evidence that joint and several liability reforms and patient compensation funds also impact the migration decisions of physicians.