Cost-Padding in Profit-Regulated Firms*

When entry into an industry is restricted, economic regulation of that industry is often directed at preventing existing firms from monopoly pricing behaviour. One form of such regulation is to set prices so as to control the level of profits earned by these firms. This paper briefly reviews the relevant economic literature and presents a model of the regulated firm in which such price-setting procedures provide an incentive to inflate costs above minimum levels. The welfare cost of this form of regulation can then exceed that occurring at the unconstrained monopoly outcome. The setting of air fares under the Two-Airline Policy and the regulation of natural gas in NSW are discussed in the context of this analysis.     

Ancient and early modern mortality: experience and understanding1

This article discusses the various problems associated with the derivation of mortality measures for ancient Greece and Rome. It outlines two new sets of high mortality model life tables that describe the experiences of such populations more effectively than existing models. The issue of ‘demographic borrowing’ is also considered, particularly the use of early modern Europe and East Asia as sources for analogies, together with the ways in which the mortality component of historical demographic regimes has been represented and interpreted.     

Adjusting for Beta Bias: An Assessment of Alternate Techniques: A Note

This paper tests the effectiveness of techniques proposed by: Scholes-Williams; Dimson; Fowler, Rorke, and Jog; and Cohen, Hawawini, Maier, Schwartz, and Whitcomb to control for bias in beta estimates from thin trading and price adjustment delays. Each technique produces beta estimates that reduce the amount of this bias, but the amount of reduction in the best case is only 29%.     

TARGETING METHANOL OR OTHER ALTERNATIVE FUELS: HOW INTRUSIVE SHOULD PUBLIC POLICY BE?

Continuing concerns over air quality have prompted calls for governmental targeting of alternative fuels. This paper uses methanol targeting as an example to address the role for public policy in terms of underlying theory and policy options. The paper shows that mandates promoting a transition to alternative fuels are inferior to other policy alternatives. It proposes market-based alternatives instead.     

Analysis of tenure choice and housing expenditure patterns

This study employs a selectivity model to account for the simultaneity existing between determinations of tenure status and level of spending. Important socio-economic characteristics affecting housing tenure were identified. Results indicate that income had a more important effect on the housing expenditures of renters than owners at a lower household income level. The race of the household head had a significant effect on variations in housing expenditures for owners but not for renters, suggesting that race may be a more important factor in owner-occupant than in renter-occupant housing. While household size may be an important factor in a family's decision-making in terms of buying a home, it is suggested that once tenure status is selected family size had no significant impacts on housing expenditures. Similarly, married couples were most likely to own their own homes than were other household types; however, married households did not spend more or less than other types of households on either owned or rented accommodation. Furthermore, the analysis suggests that in assessing empirical results, attention should be given to meaningful interpretation of estimated selectivity effects as well as to testing for occurrence of selectivity bias.