Regulating product safety: The informational role of the U.S. Federal Trade Commission

Those familiar with the U.S. Federal Trade Commission know that it often deals with product safety issues. Nevertheless it is not generally recognized as a safety agency. This paper undertakes a comprehensive review and analysis of the FTC's safety-related activities. It also presents a preliminary evaluation of the potential for FTC safety-related activities to improve consumer product-related safety as compared to other, more traditional, forms of safety law and regulation. It recommends that the FTC make greater use of its unfairness authority to provide safety information during the period of product use in contrast to the Commission's current focus on regulating pre-purchase information.

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Zusammenfassung Die Regulierung der Produktsicherheit: die informationelle Rolle der U.S. amerikanischenDie Federal Trade Commission ist häufig mit Fragen Wettbewerbsbehörde FTC. der Produktsicherheit befa\t. Dennoch gilt sie nicht als generelle Sicherheitsinstanz. Der Beitrag bietet einen überblick über die Aktivitäten der FTC, die Fragen der Sicherheit berühren, und analysiert dabei die Regulierung werblicher Aussagen zur Produktsicherheit, der Unterlassung von Produktinformationen zur Produktsicherheit vor dem Kauf sowie der Sicherheitsinformationen während des Gebrauchs eines Produktes. Zugleich versucht der Beitrag eine vorläufige Bewertung dieser FTC-Aktivitäten zur Verbesserung der Produktsicherheit im Vergleich zu anderen, eher traditionellen Formen der rechtlichen Regelung der Produktsicherheit. Der Autor schlägt vor, da\ sich die FTC stärker der Regulierung der Sicherheitsinformationen während der Produktverwendung widmet, statt — wie bisher — den Schwerpunkt auf die Regulierung der Information vor dem Kauf zu legen.

     

Book Reviews

Andrew Macintyre, Business and Politics in Indonesia, Sydney: Allen and Unwin, in Association with the Asian Studies Association of Australia, 1991, pp. xv + 282. A$24.95.

Scott Pearson, Walter Falcon, Paul Heytens, Eric Monke and Rosamond Naylor, Rice Policy in Indonesia, Ithaca and London: Cornell University Press, 1991, pp. xii + 180. US$32.95.

Raymond J. Struyk, Michael L. Hoffman and Harold M. Katsura, The Market for Shelter in Indonesian Cities, Jakarta and Washington DC: Hasfarm Dian Konsultan and the Urban Institute Press, 1990, pp. xxiv + 475.

P. Boomgaard and A. J. Gooszen, Changing Economy in Indonesia, Volume 11: Population Trends 1795–1942, Amsterdam: Royal Tropical Institute, 1991, pp. 253. Dfl. 48.00.

Peter Boomgaard, Children of the Colonial State: Population Growth and Economic Development in Java, 1795–1880, Centre for Asian Studies Amsterdam, Monograph 1, Amsterdam: Free University Press, 1989, pp. x + 247. Paper: Dfl. 49.50.

Mohamed Ariff (ed.), The Pacific Economy: Growth and External Stability, Sydney: Allen and Unwin, 1991, pp. xvi + 322. Cloth: A$45.00; Paper: A$29.95.

L. Th. Schmit, Rural Credit Between Subsidy and Market: Adjustment of the Village Units of Bank Rakyat Indonesia in Sociological Perspective, Leiden: Leiden Development Studies No. 11, Leiden University, 1991, pp. 343. US$18.00.

Richard H. Patten and Jay K. Rosengard, Progress with Profits: The Development of Rural Banking in Indonesia, San Francisco: International Centre for Economic Growth and Harvard Institute for International Development, 1991, pp. xix + 114. US$9.95.

Hal Hill (Ed.), Indonesia Assessment 1991, Political and Social Change Monograph 13, Canberra: Department of Political and Social Change, Research School of Pacific Studies, Australian National University, 1991, pp. xx + 196. A$16.00.

Penjabaran Demokrasi Ekonomi [The Understanding of Economic Democracy], Jakarta: Ikatan Sarjana Ekonomi Indonesia [The Indonesian Economists Association], 1990, pp. v + 27 (Indonesian Version), v + 21 (English Version). Available from the ISEI Jakarta Office.

BRIEFLY NOTED: General Agreement On Tariffs and Trade (Gatt), Trade Policy Review — Indonesia 1991, 2 Volumes, Geneva, 1991.     

Is there a diversification discount in financial conglomerates?

This paper investigates whether the diversity of activities conducted by financial institutions influences their market valuations. We find that there is a diversification discount: The market values of financial conglomerates that engage in multiple activities, e.g., lending and non-lending financial services, are lower than if those financial conglomerates were broken into financial intermediaries that specialize in the individual activities. While difficult to identify a single causal factor, the results are consistent with theories that stress intensified agency problems in financial conglomerates engaged in multiple activities and indicate that economies of scope are not sufficiently large to produce a diversification premium.     

Grain demand and consumer preference in Senegal

Nearly 30% of Senegal's grain consumption is met by commercial imports, mainly for the urban Dakar population. Official Senegalese policy is to promote food self-sufficiency by increased domestic rice, millet and maize production. The author addresses two central issues: first, will the domestically produced rice be acceptable to the urban population?; and seond, will the urban population consume more millet and maize as a result? Using survey data collected in Dakar in 1977–1978, the author describes the grain purchasing and consumption patterns of the sample, and focuses on the implications for national food self-sufficiency.     

Book Reviews

Francois Ruf and P.S. Siswoputantro (eds), Cocoa Cycles: The Economics of Cocoa Supply, Woodhead Publishing, Ltd, Cambridge UK, 1995, pp. xi + 384.

Rainer Rohdewohld, Public Administration in Indonesia, MONTECH (Monash University), Melbourne, 1995, pp. 179 + x, npg.

Colin Brown (ed.), Indonesia: Dealing with a Neighbour, Allen & Unwin, Sydney, 1996, pp. xiii + 202.

Thomas P. Tomich, Peter Kilby and Bruce F. Johnston, Transforming Agrarian Economies: Opportunities Seized, Opportunities Missed, Cornell University Press, Ithaca and London, 1995, pp. xx + 474, Paper.

T, van Rheenen, Quantifying Farming Systems: A Multiple Optimization Approach: A Case Study in the Limestone Area of East Java, Mansholt Studies 6, Wageningen Agricultural University, Wageningen, 1996, pp ix + 145, Paper.     

Book Reviews

John Bresnan, Indonesia: The Modern Political Economy, Columbia University Press, New York, 1993, pp. 375.

Sukamdani Sahid Gitosaidjono et al., Bisnis dan Pembangunan Ekonomi [Business and Economic Development], CV Haji Masagung, Jakarta, 1993, pp. xxii + 394.

Soeksmono Besar Martokoesoemo, Beyond the Frontiers of Indonesian Banking and Finance: Financial intermediation to Mobilize the Potential of Small Entrepreneurs, Labyrint Publication, Rotterdam, 1993, pp. xii + 129.

Erik Thorbecke with Roger Downey, Steven Keuning, Byung Kim, David Roland-Hoist, David Berrian and the Centre for World Food Studies, Adjustment and Equity in Indonesia, OECD Development Centre Studies, Paris, 1992, pp. 264.

Norton Ginsburg, Bruce Koppel and T.G. McGee (eds). The Extended Metropolis: Settlement Transition in Asia, University of Hawaii Press, Honolulu, 1991, pp. xviii + 339.

Ursel Wolfram-Seifert, Faktoren der Urbanisierung und die Entwicklung Regionaler Staedtesysteme auf Sumatra [Determinants of Urbanisation and the Development of Regional Urban Centres on Sumatra], Hamburger Geographische Studien No. 46, Hamburg University, Hamburg, 1992, pp. xxi + 532.

P. Boomgaard (ed.), Changing Economy in Indonesia, Volume 14, The Cultivation System, Java 1834–1880, edited by F. Baardewijk, Royal Tropical Institute, Amsterdam, 1993, pp. 327.

Robert Cribb, Historical Dictionary of Indonesia, The Scarecrow Press, New Jersey, 1992, pp. Ixxiv + 661.     

REFORMING FINANCE IN TRANSITIONAL SOCIALIST ECONOMIES

Financial reforms initiated in most transitional socialist economiesdo not yet adequately provide many of the financial servicesassociated with market-oriented financial systems. Such services—mobilizingresources, selecting firms and allocating capital, monitoringfirm managers, and facilitating the management of transactionsand risk—are a necessary condition for economic reformto improve living standards. This article envisages four central strategies to guide reformof the financial sector: • Building an infrastructure based on clear and enforceableproperty rights, modern accounting and auditing standards, reliablepayments systems, sound prudential and enforcement regulations,and professionals trained in finance • Ending the shell game of trying to hide the losses ofstate-owned enterprises, and separating government decisionsto finance "priority" firms from the allocation decisions ofindependent financial institutions • Privatizing some financial institutions early—althoughnot necessarily precipitously—in concert with the privatizationof firms and supervisory capabilities, meanwhile cleaning upbank loans to maximize the chances that firms and banks willsucceed as private entities • Improving the tax system and stressing a prudent interestrate policy to reduce uncertainty, distortions, and excessiverepression of the financial sector.      

Inequality and Growth Reconsidered: Lessons from East Asia

East Asian economies have experienced rapid growth over threedecades, with relatively low levels of income inequality, andappear to have also achieved reductions in income inequality.We argue that policies that reduced poverty and income inequality,such as emphasizing high-quality basic education and augmentinglabor demand, also stimulated growth. Closing two virtuous circles,rapid growth and reduced inequality led to higher demand for,and supply of, education, Moreover, low levels of income inequalitymay have directly stimulated growth. We present cross-economyregression results that are consistent with a positive causaleffect of low inequality on economic growth and with low inequalityof income as an independent contributing factor to Fast Asia'srapid growth. We conclude that policies for sharing growth canalso stimulate growth. In particular, investment in educationis a key to sustained growth, both because it contributes directlythrough productivity effects and because it reduces income inequality.     

On the performance of the minimum VaR portfolio

Alexander and Baptista [2002. Economic implications of using a mean-value-at-risk (VaR) model for portfolio selection: A comparison with mean–variance analysis. Journal of Economic Dynamics and Control 26: 1159–93] develop the concept of mean-VaR efficiency for portfolios and demonstrate its very close connection with mean–variance efficiency. In particular, they identify the minimum VaR portfolio as a special type of mean–variance efficient portfolio. Our empirical analysis finds that, for commonly used VaR breach probabilities, minimum VaR portfolios yield ex post returns that conform well with the specified VaR breach probabilities and with return/risk expectations. These results provide a considerable extension of evidence supporting the empirical validity and tractability of the mean-VaR efficiency concept.