THE EFFECTS OF LENIENCY PROGRAMS AND FINES ON CARTEL STABILITY

Using a stylized oligopoly model, we analyze the effect of cartel deterring fines, taking into consideration exemptions granted to cartel members cooperating with the competition authorities. We conclude that the fines can act as a deterrent to breaking collusive agreements, thus stabilizing the cartel.     

Creative Destruction, Investment Volatility, and the Average Age of Capital

In this article, a new numerical procedure is used to compute the equilibrium of a vintage capital growth model with nonlinear utility, where the scrapping time is nonconstant. We show that equilibrium investment and output converge nonmonotonically to the balanced growth path due to replacement echoes. We find that the average age of capital is inversely related to output, which is consistent with recent micro evidence reinforcing the importance of the embodied question. We also find that an unanticipated permanent increase in the rate of embodied technological progress causes labor productivity to slowdown in the short run.     

Regional Determinants of Small Firm Loans Under the U.K. Loan Guarantee Scheme

The Loan Guarantee Scheme was initiated in 1981 in order to alleviate a perceived constraint in the ability of small firms to secure bank finance due to a lack of collateral. This paper shows that a national small firms support scheme has, at the point of delivery, had quite different coverage across regions. Briefly, the initial evidence suggests that the Northern regions of England have been the major net beneficiaries of the scheme, primarily at the expense of Northern Ireland and Scotland. Further analysis identified house prices as the single most important determinant of loan size, acting via a collateral effect. On loan numbers and value, fixed regional effects were dominant particularly in the South East and North West.     

Unequal opportunities and human capital formation

This paper develops a tractable, heterogeneous agents general equilibrium model where individuals have different endowments of the factors that complement the schooling process. The paper explores the relationship between inequality of opportunities, inequality of outcomes, and aggregate efficiency in human capital formation. Using numerical solutions we study how the endogenous variables of the model respond to two different interventions in the distribution of opportunities: a mean-preserving spread and a change in the support. The results suggest that a higher degree of inequality of opportunities is associated with lower average level of human capital, a lower fraction of individuals investing in human capital, higher inequality in the distribution of human capital, and higher wage inequality. In particular, the model does not predict a trade-off between aggregate efficiency in human capital formation (as measured by the average level of human capital in the economy) and equality of opportunity.     

Localisation of Industry in Chile, 1895–1967: Mining Cycles and State Policy

Mining cycles have had an enormous impact in the evolution of the localisation of economic activity, in particular of industry, in Chile. The nitrate cycle was characterised by a labour‐intensive extraction process and activity which was geographically very concentrated. The copper cycle was geographically more dispersed and its activity more capital‐intensive. We stress the role played by the State in the latter de‐concentration due to the impact of regional development policies and assess the importance of factor endowments and agglomeration economies, in the localisation of the manufacture.     

Beyond Income and Wealth

This paper proposes four criteria for the selection of a better measure of living standards: it should be comprehensive, correlation sensitive, preference based, and fairness based. These criteria are applied to the following measures: income, equivalent income, capabilities, and satisfaction. The paper then explores the relationship between the space of goods and services, the space of budgets, and the more fundamental space of the aspects of life that people really care about. The importance of the fairness principles guiding interpersonal comparisons is highlighted.     

Analyzing the Memory Impact of Advertising Fragments

Marketers are making increasing use of very brief messages that mention just a brand name or a brand name with a short headline, as in event sponsorship and program endorsements. There has been debate over the effectiveness of these advertising fragments. This paper introduces an approach for controlled testing of the effects of advertising fragments. Using a reaction-time based procedure, we show that a key effect of advertising fragments is to revive established brand associations, even though these associations are not explicitly communicated. This reactivation occurs not only when these names receive focal attention, but also when they receive nonfocal attention.     

The Effects of Escalating Commitment on Ethical Decision-Making

Although scholars have invoked the escalation framework as a means of explaining the occurrence of numerous organizationally undesirable behaviors on the part of decision makers, to date no empirical research on the potential influences of escalating commitment on the likelihood of unethical behavior at the individual level of analysis has been reported in either the escalation or the ethical decision-making literatures. Thus, the main purpose of this project is to provide a theoretical foundation and empirical support for the contention that escalating commitment situations can induce unethical behavior in decision makers. An experimental research design utilizing a computerized investment task was administered to 155 undergraduate business majors as a means of assessing the hypotheses presented here. Results from a hierarchical logistic regression analysis found strong support for the contention that exposure to an escalation situation increases the likelihood of unethical behavior on the part of decision makers. Further, results also supported previous ethical decision-making findings by confirming the effects of locus of control (LOC) on ethical behavior. Specifically, the data indicated that individuals with an external LOC orientation were significantly more likely to select the unethical option than were individuals with an internal LOC orientation. Interestingly, support was not found for the effects of Machiavellianism or gender on ethical decision-making.     

The Effectiveness of Vehicle Safety Inspections: An Analysis Using Panel Data

We examined the effectiveness of state automobile safety inspections and present new evidence from a panel of the 50 states for the years 1981-1993. Our approach incorporated several innovations over previous studies of safety inspections; most significantly, we estimated a fixed-effects model that incorporated state-specific shifts in casualty rates. We found no evidence that inspections significantly reduce fatality or injury rates. Our study also provides evidence on the effects of speed limits, seat belts, and Peltzman's offsetting behavior hypothesis.