International Commodity Taxation under Monopolistic Competition

We analyze non‐cooperative commodity taxation in a two‐country trade model characterized by monopolistic competition and international firm and capital mobility. In this setting, taxes in one country affect foreign welfare through the relocation of mobile firms and through changes in the rents accruing to capital owners. With consumption‐based taxation, these fiscal externalities exactly offset each other and the non‐cooperative tax equilibrium is Pareto efficient. With production‐based taxation, however, there are additional externalities on the foreign tax base and the foreign price level that lead non‐cooperative tax rates to exceed their Pareto efficient levels.     

Australian evidence on student expectations and perceptions of introductory business finance

This study examines the differences in perceptions and expectations between students at the Caulfield and Peninsula campuses of Monash University with different entrance criteria and degree availability to determine whether two different introductory finance subjects should be offered rather than one. Results reported in this study suggest that students at the Caulfield campus are interested in studying a challenging introductory finance subject, whereas students at the Peninsula campus perceived that introductory finance is ‘difficult’. Capital structure and cost of capital topics are statistically significantly ranked higher by Caulfield students than Peninsula students. The results reported in this study revealed that two different introductory finance subjects would be more effective. The core subject at the finance major campus (Caulfield) follows a traditional structure with more emphasis on finance theory, whereas the new subject at the non‐finance campus (Peninsula) places greater emphasis on applications.     

Conjoining Ethical Theory and Practice: An Australian Study of Business,Accounting, and Police Service Organizations

The purpose of this study, which took place in Western Australia,was to identify situations where management practitioners and academics worked closely together to bridge the `theory-practice gap'in the field of business ethics. Four organizations, two in the accounting field, one a corporate secretaries institute and the Western Australia Police Service were asked if they would participatein a study to examine the extent to which their members made use ofethical theory in their day-to-day activities. A concomitant questionwas whether such theory had an impact on the way organizations carriedout their functions. Each organization was actively involved in teaching ethical theory to their members at an advanced level. The four organizations offered a range of teaching/learning strategies i.e. guest lectures, seminar and discussion groups, training videos and workbooks. The courses that were developed by these organisationswere equal to, and in some cases superior to, ethics courses offered in some business schools. This paper illustrates that by these innovative approaches the four organisations were taking a lead in re-defining ethical practice and teaching ethical theory in their respective organisations. The study illustrates that the programs were effective to the extent that they were instrumental in changingthe behavior and the culture of their members.     

Timothy Messer-Kruse. Banksters, Bosses, and Smart Money: A Social History of the Great Toledo Bank Crash of 1931. Columbus, Ohio: The Ohio State University Press, 2004. xii + 196 pp. ISBN 0-8142-0977-7, $44.95 (paper).

In his book, Timothy Messer-Kruse argues that the financialsector has real effects and examines the causes and effectsof the banking collapse in Toledo, Ohio, during the summer of1931. Messer-Kruse makes an important contribution with hiscomprehensive microeconomic study of a banking panic and collapse,using a social history approach. Much of the book identifiesindividuals and details their actions and relationships to Toledo’sbanks, real estate firms, corporations, and municipal, county,     

Do reductions in tick sizes influence liquidity?

On 4 December 1995, the Australian Stock Exchange reduced the minimum tick size for stocks priced below $A0.50 and stocks priced above $A10. We use this natural experiment to examine the impact of tick size reductions on liquidity. The present paper reports that although lower tick sizes generally lead to increased liquidity, this result is not universal. Stocks with larger relative tick sizes experience the greatest improvement in liquidity, while stocks with small relative tick sizes and low trading volume experience reduced liquidity. There is no change in order exposure as a result of the reduced tick sizes.     

Value versus Glamour

The fragility of the CAPM has led to a resurgence of research that frequently uses trading strategies based on sorting procedures to uncover relations between firm characteristics (such as “value” or “glamour”) and equity returns. We examine the propensity of these strategies to generate statistically and economically significant profits due to our familiarity with the data. Under plausible assumptions, data snooping can account for up to 50 percent of the in‐sample relations between firm characteristics and returns uncovered using single (one‐way) sorts. The biases can be much larger if we simultaneously condition returns on two (or more) characteristics.     

The Envelope Theorem and Comparative Statics of Nash Equilibria

The Envelope Theorem for Nash equilibria shows that the strategic reaction of the other players in the game is important for determining how parameter perturbations affect a given player's indirect objective function. The fundamental comparative statics matrix of Nash equilibria for theithplayer in anN-player static game includes the equilibrium response of the otherN−1players in the game to the parameter perturbation and is symmetric positive semidefinite subject to constraint. This result is fundamental in that it holds for all sufficiently smooth Nash equilibria and is independent of any curvature or stability assumptions imposed on the game.Journal of Economic LiteratureClassification Numbers: C72, C61.