Firm Metrics with Continuous R&;D,Quality Improvement,and Cournot Quantities

The paper considers a dynamic two-firm model of intra-industry trade in which the firms compete for the same market on the basis of product reliability. By assumption, the home firm always has the reliability cost advantage but it may or may not have the manufacturing cost advantage. The results suggest that reliability improvement always helps customers in that they pay a lower full quality price. Comparing the home firm with the foreign firm, metrics such as price, sales, profit margins, and variable profits depend on the relative costs, with the low cost firm performing better. Finally, although this is not the common outcome, the paper suggests that it is possible for the reliability cost advantages gained by R&D expenditures to overcome manufacturing cost disadvantages.     

Religious heterogeneity and municipal spending in the United States

The goal of this paper is to examine the effect of religious heterogeneity on various important metro-area variables such as total expenditure, taxes, property taxes, debt, and employment as well as spending on the specific services of education, roads, police, health, and welfare. Two indices are used to measure religious heterogeneity, a fractionalization index and a polarization index. Polarization, designed to be a measure of social conflict, generally led to less spending and taxes, while fractionalization, the probability that two randomly chosen individuals belong to different religious groups, generally led to more spending and taxes.     

Welfare Measures in Dynamic Firm R&D Games

The present paper examines the welfare effects of a dynamic Research and Development (R&D) game at the firm level in a two-country, two-firm, intra-industry trade context. Economists do not use the trade balance as a measure of economic welfare, but it is often used in the public arena. The primary result of the paper is that the dynamic time path of social surplus and the trade balance do not track well together. This paper suggests that economists thinking about dynamic R&D games will have to defend imports as having a positive effect on social surplus regardless of trade balance effects.     

Landfilling Versus ``Backstop' Recycling When Income Is Growing

The paper considers a dynamic model in which an income stream,growing over time, is optimally divided into consumption andexpenditures on waste disposal, the latter being optimally dividedbetween ``recycling'and ``landfilling.' Recycling is thoughtof as a ``backstop' waste disposal technology – it does notrequire landfill space but is a relatively expensive method ofwaste disposal. Landfilling uses up scarce landfill capacity. While conserving landfill space is the major reason themunicipality recycles, another motive for recycling might be thatrecycling itself generates utility. Our analysis suggests thatthe optimal recycling program varies considerably with bothlandfill capacity and initial income. For example, richermunicipalities are likely to introduce recycling much earlier inthe planning period than poorer municipalities. Thus whenlegislating recycling, national or regional governments must besensitive to the differences between municipalities.