On price competition with complementary goods

We consider a duopoly industry with two separate firms each selling an indivisible product. The joint consumption of these goods has a specific value for the consumers which exceeds the mere addition of utilities when products are consumed in isolation: the higher this excess, the larger the complementarity between the goods. We analyse price equilibria in this market as related to the degree of complementarity existing between the two products.     

School Participation in Rural India

This paper presents an analysis of the determinants of school participation in rural north India, based on a recent household survey which includes detailed information on school characteristics. School participation, especially among girls, responds to a wide range of variables, including parental education and motivation, social background, dependency ratios, work opportunities, village development, teacher postings, mid-day meals and infrastructural quality. Mid-day meals are particularly effective: the provision of a mid-day meal in the local school roughly halves the proportion of girls excluded from the schooling system. School quality matters, though it is not related in a simple way to specific inputs.     

On the Applicability of the Sieve Bootstrap in Time Series Panels*

In this article, we investigate the validity of the univariate autoregressive sieve bootstrap applied to time series panels characterized by general forms of cross‐sectional dependence, including but not restricted to cointegration. Using the final equations approach we show that while it is possible to write such a panel as a collection of infinite order autoregressive equations, the innovations of these equations are not vector white noise. This causes the univariate autoregressive sieve bootstrap to be invalid in such panels. We illustrate this result with a small numerical example using a simple DGP for which the sieve bootstrap is invalid, and show that the extent of the invalidity depends on the value of specific parameters. We also show that Monte Carlo simulations in small samples can be misleading about the validity of the univariate autoregressive sieve bootstrap. The results in this article serve as a warning about the practical use of the autoregressive sieve bootstrap in panels where cross‐sectional dependence of general form may be present.     

The Slope of the Credit Yield Curve for Speculative-Grade Issuers

Many theoretical bond pricing models predict that the credit yield curve facing risky bond issuers is downward-sloping. Previous empirical research (Sarig and Warga (1989), Fons (1994)) supports these models. Our study examines sets of bonds issued by the same firm with equal priority in the liability structure, but with different maturities, thus holding credit quality constant. We find, counter to prior research, that risky bonds typically have upward-sloping credit yield curves. Moreover, when we combine our matched sets of bonds (no longer controlling credit quality), the estimated slope is negative, indicating a sample selection bias problem associated with maturity.     

Defence and firm financial structure in France

European defence firms are progressively being privatized and the recourse to private finance in the defence sector is increasing. We use data on French firms to examine at the firm level the impact of defence dependence on firms' financial structure at the end of a period characterised by a decline of defence purchasing. In terms of leverage and financial ratios, we find many significant differences between defence and non-defence firms but also between different categories of defence firms. The results provide some support for the hypothesis of a relationship between defence dependence and financial structure.     

Differences in the Returns to Education for Males by Disability Status and Age of Disability Onset

We examine linkages between disability and the returns to education for males, incorporating the role that age of disability onset may play in these returns. Our analyses are based on the 1993 Panel of the Survey of Income and Program Participation and exploit detailed information regarding productivity-related functional limitations. We estimate a three-state switching regression model that includes a Heckman-type employment correction. The coefficient estimates vary by disability status—early-onset disability, late-onset disability, and non-disabled. Our research contributes to the disability literature by providing details on the role that education may play in the lives of persons with disabilities, depending on the age at which the disability first manifests itself. Overall, we find that males who experience disability onset after reaching adulthood experience substantial wage returns to education, larger than the returns for the non-disabled population. The average wages of individuals with poor health or disability, regardless of age of onset, are below those of the non-disabled, however, so education may serve as a buffer to protect against potential negative wage effects of becoming disabled, but this “insurance” is not sufficient to close the gap.     

The design of patent pools: the determinants of licensing rules

Patent pools are an important but little‐studied economic institution. In this article, we first make a set of predictions about the licensing terms associated with patent pools. The theoretical framework predicts that (i) pools consisting of complementary patents are more likely to allow members to engage in independent licensing and (ii) the requirement that firms license patents to the pool (grantbacks) should be associated with pools that consist of complements and allow independent licensing. We then examine the terms of 63 pools, and show that licensing rules are consistent with these hypotheses.     

Household activities of men and women and their effect upon perceived sense of control and satisfaction with level of living

Abstract Examination of household economic activities including management, interfamily economic exchange and production as they influence level of living was conducted on samples of men and women. Differences in reported activities as well as perceptions were observed for men and women. Forty-five per cent of the variation in men's satisfaction with level of living was explained by economic and management activities and socioeconomic demographic characteristics, whereas 46% of women's variation was explained by these variables. The paths to satisfaction with level of living were different. Perceived sense of control was an intervening variable between activities/characteristics and satisfaction with level of living for women but not for men. The results support the hypothesized relationships in the family economic model. The results document the possibility for household economic activities as sources of real income to maintain and improve level of living, especially in times of decreased purchasing power.