Privatization, Competition, and Budget Constraints: Disciplining Enterprises in Russia

We investigate whether privatization, competitive forces, and the hardening of budget constraints played efficiency-enhancing roles in Russia in the immediate post-privatization period. We find evidence of a positive impact of privatization on labor productivity: a 10% point increase in private share ownership raises real sales per employee by 3–5%. The evidence on product market competition is weaker, depending on model specification. Soft budget constraints are usually found to reduce restructuring but the effect is small and insignificant. We find that in terms of their impacts on productivity, privatization and subsidy reduction are substitutes; privatization and competition (measured as the geographic scope of markets) are complements; and that competition and subsidy reduction are independent. This revised version was published online in August 2006 with corrections to the Cover Date.     

The political economy of nature ∗

Suggestions are made for the development of a specific theory of mining by addressing the role of landed property, cartelization and monopolization. Each of these is seen as having a historically contigent relationship to the others and to the growth of mining capital. The spatial expansion of mining is examined as potentially leading to restructuring of, and conflict over, property relations, and cartelization of markets as tending to precede monopolization of production. The argument is illustrated by reference to the UK coal industry, the South African diamond industry and the US oil industry.     

An analysis of the impact of the self-sufficiency project on wages

We measure the impact of the Self-Sufficiency Project (a randomized welfare-to-work experiment in Canada; henceforth, SSP) on relative wage progression. SSP provided a generous 3-year earnings supplement to treatment group members who found a full-time job within a year of the start of the experiment (take-up group). We estimate the treatment on the treated for two sub-groups of the take-up group: the incentivized and non-incentivized groups. Using an econometric model of wage determination, we find evidence of large and significant relative wage progression of approximately 9 percentage points during the 3-year supplement period for the incentivized group. The impact for the non-incentivized group is much smaller (at most 3 percentage points). There is also some limited information that the non-incentivized group in New Brunswick and the incentivized groups in both New Brunswick and British Columbia continued to work more after the 3-year supplement period ended.     

Better Late than Early: Vertical Differentiation in the Adoption of a New Technology

After the initial breakthrough in the research phase of R&D, a new product undergoes a process of change, improvement, and adaptation to market conditions. We model the strategic behavior of firms in this development phase. We emphasize that a key dimension to this competition is the innovation that leads to product differentiation and quality improvement. In a duopoly model with a single adoption choice, we derive endogenously the level and diversity of product innovations. We demonstrate the existence of equilibria in which one firm enters early with a low-quality product while the other continues to develop the technology and eventually markets a high-quality good. In such an equilibrium, no monopoly rent is dissipated and the later innovator makes more profits. Incumbent firms may well be the early innovators, contrary to the predictions of the "incumbency inertia" hypothesis.