Urban disamenities and the measure of economic welfare

A labor market model is used to estimate elasticities between various disamenity factors of urban areas and the wage in those areas. The results are used to calculate a correction to the personal income (PI) data for use in the construction of an index to be used as a measure of economic welfare. The labor supply equation of the model includes some population-related variables which Tobin and Nordhaus have hypothesized represent disamenities of urban living. The labor demand equation is derived from a production function which includes a measure of agglomeration economies. A two-stage least-squares regression analysis provides results which indicate that the hypothesized factors are actually amenity factors. The resulting correction to the personal income data is thus an addition: Economic welfare is higher than that indicated by the PI statistics.     

Pricing of related products by a multiproduct monopolist

This paper examines the pricing behavior of a multiproduct monopolist (MPM). For a firm selling two products, the profit maximizing price of a particular item is found to depend upon its marginal cost, the own and cross-price elasticities and the budget shares of both products. Conditions are identified under which the price charged by a MPM will be greater than, less than, and equal to the price charged by an otherwise identical single product monopolist as well as the circumstances under which it is profitable for a MPM to utilize one product as a loss leader.     

FINANCING SATELLITE OUTPATIENT CARE IN RURAL HOSPITALS

Providing health care to low income or elderly residents of rural areas remains a serious national health care problem in the United States. This case study evaluates an intervention for primary outpatient care to a particular class of patients – veterans – and shows how it can benefit them. Locating the outpatient clinic in a struggling rural hospital makes an outreach by the urban veterans hospital financially feasible and is profitable for the rural hospital.     

MODELS OF BANKING INSTABILITY: A PARTIAL REVIEW OF THE LITERATURE

Abstract. This paper critically examines the theoretical literature on banking instability that has followed Diamond and Dybvig (1983). It explores the extent to which it (a) explains banking instability within a theoretical context in which financial intermediaries improve on unintermediated markets, and (b) justifies government involvement in the financial intermediation industry. It suggests that the literature has yet to provide a satisfactory theoretical basis for banking instability as such since the intermediaries which arise from it are peculiar mutual funds that bear little resemblance to real-world banks. In addition, the paper challenges the widespread belief that this literature provides a sound foundation for government involvement in the industry. It suggests that arguments for government intervention are open to objection on various grounds, the most important one being that they are inconsistent with the existence of properly motivated financial intermediation in these models.     

Small firms, new technology and the division of labour in Japan

Here the author examines the problems, in adopting new technology, faced by small firms in Japan's machinery industry. A significant part of the concern about the technology gap between large and small firms is attributed to their respective capacities to recruit and train skilled labour.     

Real Estate Settlement Pricing: A Theoretical Framework

This paper examines the pricing of real estate settlement services. Prices charged by real estate brokers, title insurers, private mortgage companies and other settlement service providers have been a public policy issue for a decade. The Real Estate Settlement Procedures Act of 1974 did little to alleviate public concerns or change pricing practices.
The paper provides both a conceptual framework and some observations on how prices for settlement services are determined. It concludes that the demand has little to do with the services themselves, but rather depends on the demand for housing. This creates an environment for unnecessary services to be performed and for prices to be far in excess of cost.     

Type correlated equilibria for games with payoff uncertainty

Summary Aumann's notion of correlated equilibrium is extended to games with payoff uncertainty. A type correlated equilibrium is a correlated equilibrium for Harsanyi's game in player-types. An equivalent definition is a probability distribution over types and actions which is consistent with the prior distribution over types, such that when each player observes its type and action, the observed action is optimal and no further information about other players' types is obtained. Any such equilibrium can be implemented by a type-independent correlation device when players' observations may be type-dependent. The type correlated equilibrium correspondence is shown to be upperhemicontinuous with respect to player information.Support from NSF grant IRI-8609208 is gratefully acknowledged. I am grateful to Maxwell Stinchcombe for comments on an earlier draft of this paper. Any remaining errors are my own.     

Increasing returns and unsynchronized wage adjustment in sunspot models of the business cycle

A challenge to models of equilibrium indeterminacy based on increasing returns is that required increasing returns for generating indeterminacy can be implausibly large and rise quickly with the relative risk aversion in labor. We show that unsynchronized wage adjustment via a relative wage effect can both lower the required degree of increasing returns for indeterminacy to a plausible level and make it invariant to the relative risk aversion in labor. Consequently, indeterminacy and sunspot-driven fluctuations can emerge for plausible increasing returns regardless of the relative risk aversion in labor. Our model generates reasonable dynamics in terms of matching the business cycle, and sunspot shocks become more important with labor market friction.     

Is there an energy paradox in fuel economy? A note on the role of consumer heterogeneity and sorting bias

From the previous literature, it can be found that consumers tend to undervalue discounted future energy costs in their purchase decisions for energy-using durables. We show that this finding could, in part, result from ignoring consumer heterogeneity in empirical analyses as opposed to true undervaluation.