Lining Up for Star-Wars Tickets: Some Ruminations On Ethics and Economics Based on An Internet Study of Behavior in Queues

Queues may represent business ethics in microcosm: they provide an opportunity to study in a smaller package the fundamental ethical tension in economic activity between self-interest and civility in the context of uncertainty and stress. In May 1999 people began forming lines to purchase tickets to the new Star Wars movie "The Phantom Menace." This paper reviews responses to a questionnaire on the internet regarding experiences in those lines. It focuses on two behaviors threatening queue discipline – the formation of cooperative groups and "pre-scalping." It concludes that although queues are complex phenomena, exhibiting important ethical, economic, social, and psychological elements, the general organizing principle of "first-come-first-served" still provides the foundation for queues while at the same time making room for a variety of legitimate modifications. Second, this paper concludes that, as with queues, the thought that self-interest is the exclusive guiding principle for business behavior is likewise too narrow, inducing participants to neglect opportunities for personal enrichment and satisfaction.     

Duration and the price behavior of fixed-rate level payment mortgages: An analytical investigation

In this research we use a continuous payment formula for duration to examine the price behavior of a fixed-rate level payment mortgage. In the case where the mortgage is held to maturity, duration increases monotonically as term-to-maturity increases, regardless of changes in the market rate of interest. In the case where the mortgage is prepaid prior to maturity, there exists a unique market interest rate below which duration is a monotonically increasing function of time of prepayment, but above which duration has a global maximum at some time of prepayment prior to the term-to-maturity.     

Whither Monetary Economics?

I argue that monetary economics should be pursued by applying implementation theory to models which contain explicit frictions that make money essential. The argument has two parts. First, I argue that models in which real balances are assumed to be productive—models with money in utility or production functions or with cash-in-advance constraints—contain hidden inconsistencies. Second, I argue that the approach advocated is capable of providing new insights about some of the main issues in monetary economics: the effects of monetary shocks, the welfare cost of inflation, and the roles of inside and outside money.     

High-Involvement Management and Pay in Britain

High‐involvement management practices have well‐established benefits for employers, but what do they do for employees? Using a nationally‐representative survey of British private‐sector workplaces, high‐involvement management is shown to be associated with higher pay. The wage premium is little affected by the choice of employee involvement practices (e.g., teams versus quality circles), but it appears only where employee involvement practices are supported by job security guarantees. Powerful trade unions increase the premium.     

The Effects of Trade Liberalization On Cost-Reducing Horizontal Mergers*

This paper analyzes the effects of tariff reductions on horizontal mergers in a Cournot oligopoly in a two-country world. It is shown that for mergers between two domestic firms and for cross-border mergers which supply both markets from a foreign plant, unilateral tariff reduction encourages mergers which concentrate market power at the expense of mergers which reduce cost, while bilateral tariff reductions have the opposite effect, encouraging mergers which significantly reduce cost. Cross-border mergers which continue to supply each market from a local plant are discouraged by both unilateral and bilateral tariff reduction.     

EUROPE AND CHINA: THE FATAL CONCEIT1

China's recent economic growth has been driven by an apparent acceptance by the Chinese government of many of the key insights of Hayek's economic and social thought. Current Chinese economic policies stand in stark contrast to those being pursued by the EU and many European countries, where interventionist policies of the kind Hayek predicted would lead to relative impoverishment and declining freedom are being pursued. The long‐term consequence of these two trends is likely to be the economic dominance of China over Europe in the present century.     

Deposit Insurance,Banking Reform,and Financial Sector Development in Several Nations of Southeastern Europe

Deposit insurance has spread to many sections of the world. In the newly formed nations of the former Yugoslavia, this has occurred under conditions of post‐conflict reconstruction, hyperinflation, and several different governmental structures. Three cases are examined; Bosnia and Herzegovina, Croatia, and Serbia and Montenegro. They all have developed deposit insurance programs. The implementation process was compared to “best practice” recommendations. It is found that the situation in Bosnia and Herzegovina was difficult due to the fractured nature of the Dayton Accord government structure on the one hand but easier to the strong international presence supporting required actions. In the case of Croatia, a unified state emerged from the war, but it was somewhat isolated. Its bank restructuring was costly, and a fragmented deposit insurance program was introduced in the middle of a banking crisis. In the case of Serbia and Montenegro, the bank restructuring process is still underway, and implementation of a functioning deposit insurance program properly awaits its completion.     

Why Manufacture Offshore? An Empirical Analysis of Valuation Effects

In this study, announcements by U.S. firms of offshore joint venture manufacturing during the 1980s are used to provide more comprehensive evidence than past studies on the wealth effects of offshore joint ventures. Evidence shows that the target country's level of economic development and political stability, currency strength of the originating country (U.S. in this study) relative to that of the target country, U.S. firm's mode of entry, and the relative value of the U.S. firm's investment in the joint venture affect the wealth of U.S. firms which engage in offshore joint ventures. The target country's level of economic development, its political stability, and the currency strength of the originating country relative to the target country are shown to be the dominant economic factors. Of particular importance, evidence indicates that the target country's level of economic development is a more important determinant of excess returns than is its political stability.