Vertical Contracts as Strategic Commitments: How are They Enforced?

This paper addresses the strategic commitment value of various price and nonprice vertical contracts. Assuming contract offers are sufficiently public to have strategic importance, we focus on commitment as a necessary and separable condition to be met. The analysis has two components. First, considering the relationship between a monopolist manufacturer and his imperfectly competing retailers, enforcement conditions necessary for alternative vertical contracts to have commitment value are identified in the static (reputation-free) context. It is shown that external help (i.e., enforcement by nonsignatories) is necessary for bilateral minimum resale price maintenance (price floors) and exclusive territory contracts to have commitment value, whereas maximum resale price maintenance (price ceilings) do not require such help (i.e., they are internally enforcing). Second, the paper provides an analysis of the U.S. case law and discusses the empirical validity of the "external enforcement" assumption that is shown to underlie recent proposals to make certain vertical restraints illegal.     

Social approval,competition and cooperation

Non-monetary rewards are frequently used to promote pro-social behaviors, and these behaviors often result in approval from one’s peers. Nevertheless, we know little about how peer-approval, and particularly competition for peer-approval, influences people’s decisions to cooperate. This paper provides experimental evidence suggesting that people in peer-approval competitions value social approval more when it leads to unique and durable rewards. Our evidence suggests that such rewards act as a signaling mechanism, thereby contributing to the value of approval. We show that this signaling mechanism generates cooperation at least as effectively as cash rewards. Our findings point to the potential value of developing new mechanisms that rely on small non-monetary rewards to promote generosity in groups.     

Uneven development and beyond: regional development theory in post-Mao China

Post-Mao China is marked by priorities which unlike Maoist redistributive policies encourage and tolerate uneven regional development. But this approach has been under severe attack, and the Ninth Five-Year Plan (1996–2000) which calls for narrowing the regional gap signals that new policies are due. These changes reflect shifts in development philosophies and theories, which are overlooked by many existing studies which emphasize only policies and their outcome. This paper explores the thoughts and ideas that underlie post-Mao regional policy, by reviewing the Chinese literature on regional development from about 1985 to 1995. New applications of socialism and the influence of Western theories have helped to remove the stigma associated with uneven regional development, and have guided post-Mao regional policy which favors the more developed eastern region. But the uneven regional development policy is blamed for the escalation in regional inequality, outflows of resources from poorer inland provinces, and regional conflicts and protectionism. More recent research which advocates renewed attention on and regional diffusion to the inland region, has inspired a new generation of regional development models and has influenced urban and regional policy. Nevertheless, the theory of Chinese regional development continues to be constrained by the obligation to justify official policy, and a lack of attention to firms, enterprises, and the relations between production and space. La Chine d’après Mao est caractérisée par des priorités qui, au contraire de la politique redistributive maoï?ste, encouragent et tolèrent le développement régional inégal. Mais cette approche a été l’objet d’attaques virulentes, et le neuvième Plan de Cinq Ans (1996–2000), qui demande une diminution des écarts régionaux, indique qu’une nouvelle politique est nécessaire. Ces changements reflètent les variations dans les philosophies et théories de développement que de nombreuses études ignorent au profit des politiques et de leur résultats. En faisant une revue de la littérature chinoise sur le développement régional de 1985 à 1995, cet article explore les idées fondamentales de la politique régionale post-Mao. De nouvelles applications du socialisme et l’influence des théories occidentales ont aidéà enlever le stigmate associé au développement régional inégal, et ont guidé la politique régionale post-Mao, qui favorise la région de l’est, qui est plus développée. Mais la politique de développement régional inégal a été accusée de causer une escalation de l’inégalité régionale, une perte de ressources dans les provinces intérieures les plus pauvres, des conflits régionaux et du protectionnisme. Les recherches plus récentes, qui attirent l’attention sur la région de l’intérieur et recommandent la diffusion régionale aux terres de l’intérieur, ont inspiré une nouvelle génération de modèles de développement régional et ont influencé la politique urbaine et régionale. Néanmoins, la théorie du développement régional chinois est toujours limitée par l’obligation de justifier la politique officielle et par un manque d’attention aux entreprises et aux rapports entre la production et l’espace.     

Economic Consequences of Political Approval Management in Comparative Perspective

We develop a dynamic, stochastic, computable general equilibrium model of political approval management and fiscal policy in order to analyze how political approval management affects United States' Presidential and United Kingdom's parliamentary business cycles. We find that governments in both systems respond to declining political approval by pursuing suboptimal fiscal policies that stimulate household consumption expenditures. Relative to a baseline optimal policy, we estimate that politically motivated fiscal policy reduces aggregate output in the United Kingdom and United States by 0.35 and 0.20%, respectively. Moreover, we find that most of the difference in output costs can be explained by differences between the American and British polities. J. Comp. Econ., December 2001, 29(4), pp. 692–721. University of Arizona, 401 McClelland Hall, Tucson, Arizona 85721; Department of Political Science, University of Minnesota, 1414 Social Sciences Building, Minneapolis, Minnesota 55455. © 2001 Elsevier ScienceJournal of Economic Literature Classification Numbers: P52, N31, E32.     

Dispersion in Dispersion: Measuring Establishment-Level Differences in Productivity

We describe new experimental productivity dispersion statistics, Dispersion Statistics on Productivity (DiSP), jointly produced by the Bureau of Labor Statistics (BLS) and the Census Bureau, that complement the official BLS industry-level productivity statistics. The BLS has a long history of producing industry-level productivity statistics, which represent the average establishment-level productivity within industries when appropriately weighted. These statistics cannot, however, tell us about the variation in productivity levels across establishments within those industries. Dispersion in productivity across businesses can provide information about the nature of competition and frictions within sectors and the sources of rising wage inequality across businesses. DiSP data show enormous differences in productivity across establishments within industries in the manufacturing sector. We find substantial variation in dispersion across industries, increasing dispersion from 1997 to 2016, and countercyclical total factor productivity dispersion. We hope DiSP will enable further research into understanding productivity differences across industries and establishments and over time.