On the Differential Effects of European Patents

Since the invention of the European Patent System, national patent systems have continued to co-exist, although they did lose appeal. How have the different national systems been affected in view of their characteristics? In order to answer this question a constant-market-share (CMS) analysis is carried out. While on a theoretical level, the different elements adding to the appeal of each patent system are discussed, the CMS-analysis reveals the importance of country size in that the national systems of smaller countries lose.     

Telling their own stories: Māori entrepreneurship in the mainstream screen industry

We examined how factors from Indigenous entrepreneurship research (social capital, cultural capital, self-efficacy) help explain the high level of Māori entrepreneurial performance in the mainstream screen industry. Results, based on ten case studies and a one-year series of structured interviews, extend prior research by showing that these Indigenous entrepreneurs benefit jointly from two forms of capital: cultural and social. We found high levels of both forms to increase the desire for emancipation of cultural and community identity – not just individual identity – through entrepreneurship. Self-efficacy and storytelling helped ameliorate discontinuities across Indigenous and mainstream contexts. Our research sheds new light on how Indigenous ventures can pursue mainstream entrepreneurship while maintaining cultural identity. It also makes several distinct contributions to the Indigenous entrepreneurship literature. First, it provides an integrative theoretic review. Second, it illustrates a culturally appropriate methodology for researching Māori entrepreneurs with implications for other Indigenous communities. Third, it proposes cultural capital and social capital as a two-part framework for explaining Indigenous entrepreneurial action. Fourth, it shows how entrepreneurship can be empowering for Indigenous communities. Finally, our paper demonstrates that entrepreneurship is a promising mechanism for preserving and promoting the cultures of Māori and other Indigenous peoples.     

Bounded rationality,expectations, and child labour

This paper develops a model with overlapping generations, where the household's optimal fertility, child labour, and education decisions depend on the parents’ expectations or beliefs about the return to education. It is shown that there exists a range of parental income where the fertility rate is high and children participate in the labour market and receive an incomplete education if a parent believes the return to education is low. The act of participating in the labour market reduces the child's ability to accumulate human capital; thus, the action of sending a child into the labour market is sufficient to ensure that the parents’ initially pessimistic expectations are fulfilled. It is then shown that a one‐time policy intervention, such as banning child labour and mandatory education, can be enough to move a country from the positive child labour equilibrium to an equilibrium with no child labour.     

HIV/AIDS AND BANKING STABILITY IN DEVELOPING COUNTRIES

We argue that the recent large increase in deposits’ turnover in many developing countries with high HIV/AIDS prevalence is associated with the spread of the disease. The point is that the need to pay for individual treatments force large‐scale withdrawals of households’ deposits, and that those large withdrawals put the banking industry at risk. In a standard demand‐deposit model where the HIV/AIDS prevalence among depositors is random, we show that (1) the probability of a large‐scale banking failure without a bank run increases as the odds of any prevalence level increases, and (2) it is always optimal to deposit, and thus to accept the risk of banking failure, to maintain long‐term investments in place.     

Ronald Coase's Method of Building More Realistic Models of Choice

This paper argues that Ronald Coase's major contributions to economic theory are best understood in terms of the distinct method he used to build more realistic models of choice. We call his method the benchmark-comparison method. It consists of building models of choice and then using them as benchmarks in the further investigation of economic interaction, either by comparing the benchmark models with observed interaction or by building additional models of choice, which may themselves function as benchmarks. The paper first describes the method then demonstrates how Coase used it in his two most famous papers. We go on to show how an understanding of the method confirms Coase's own statements about the continuity of his thought. Finally, we assess Coase's critique of Milton Friedman's positivist methodology and discuss a recent paper on Coase's methodology.     

Alcohol-related crashes and alcohol availability in grass-roots communities

This paper employs a unique panel data from 111 small non-metropolitan incorporated cities in California during a 108 month period from January 1981 to December 1989 in order to analyse the effect of alcohol availability on highway safety. Negative binomial regression models are estimated which include alcohol licences per square mile as a measure of alcohol availability. Theoretically, the sign of the alcohol licence density is indeterminate as it reflects a trade-off of its effect on traffic exposure and on the time price alcohol. Among the findings, increases in the density of general alcohol licences for off-site (on-site) alcohol consumption are beneficial (detrimental) to highway safety whereas increasing the density of beer/wine licences have non-uniform effects. Additional findings important to municipal policymakers are that DUI arrests and increasing the price of alcohol reduce alcohol-related crashes.     

Home sweet host: A cross‐country perspective on prudential and monetary policy spillovers through global banks

Prudential regulation of banks is multi‐layered: policy changes by home‐country authorities affect banks’ global operations across many jurisdictions; policy changes by host‐country authorities shape banks’ operations in the host jurisdiction regardless of the nationality of the parent bank. Do these policies create (unintended) cross‐border spillovers? Similarly, monetary policy actions by major central banks may also have effects on the behaviour of banks in other countries. This paper examines the effect that changes in home‐ and host‐country prudential measures have on cross‐border dollar credit provision, and how these interact with US monetary policy. We first run panel regressions with both layers of regulation, to examine which has a greater effect on cross‐border lending. We then use a novel approach to decompose growth in cross‐border bank lending into separate home, host and common components, and then match each with the corresponding home or host policies. Our results suggest that prudential policies can have spillover effects, which depend on the instrument used and on whether a bank's home or host country implemented them. Home policies tend to have larger spillovers on cross‐border US dollar lending than host policies. We also find that a tightening of US monetary policy can compound the spillovers of some prudential measures.     

Thomas Carlyle on the use of numbers in economics

Thomas Carlyle’s criticism of economics goes far beyond his epithet, “Dismal Science.” One aspect of economics that attracted his attention was its use of numbers in both theories and empiricisms. Here is explored his attacks on economist’s use of arithmetic in explaining human behavior, and statistics in addressing the condition of the working class.     

How to estimate market concentration given grouped data

A novel method is proposed of estimating market concentration for the census case in which firms are grouped into size classes and all that is known about the firms in each category is their number and aggregate size. The formula arises as a way of applying an alternative expression for the concentration ratio based upon the original and first moment size distributions of firms. The semi-parametric technique, which includes a method of interval as well as point estimation, is derived, applied and validated using actual and simulated data. It is anticipated that the estimator will be of use in competition analysis as well as in academic research.