Reciprocated unilateralism in trade policy

Using the menu-auction approach to endogenous determination of tariffs and allowing additionally for lobby formation itself to be endogenous, this paper analyzes the impact of unilateral trade liberalization by one country on its partner's trade policies. We find that such unilateral liberalization may induce reciprocal tariff reductions by the partner country. Intuitively, unilateral liberalization by one country has the effect of increasing the incentives for the export lobby in the partner country to form and to lobby effectively against the import-competing lobby there for lower protection.     

Effects of pricing on Internet user behavior

The INternet Demand EXperiment (INDEX) conducts experiments to measure demand for quality-differentiated Internet access as a function of bandwidth, traffic volume, applications, and pricing structure. This paper presents an overview of results based on aggregated data from five pricing experiments. In these experiments, pricing is based either on time, volume, a combination of both, or a flat-rate buy out option. Quality of Service (QoS) is differentiated by varying bandwidth for incoming and outgoing traffic. After describing the experimental design and characterizing our subject pool using demographic data, we examine the change in service usage by comparing the five experiments in terms of traffic generation, QoS selection, and expenditure.     

Folk theorems on transmission access: Proofs and counterexamples

Nodal prices, congestion revenues, transmission capacity rights, and compensation for wire ownership are key concepts used to formulate claims about proposals to organize competitive and open transmission access. Underlying those claims are implicit assertions (folk theorems) concerning the regulation of transmission access, the determination of power flows, properties of economic dispatch, and the operations of competitive nodal markets for power. The paper has two objectives. We first formulate these folk theorems as explicit mathematical assertions. We then prove that some of these assertions are true, and we present counterexamples to other assertions.The counterexamples are interesting because they negate plausible propositions, including: (1) uncongested lines do not receive congestion rents (defined through node price differences); (2) nodal prices clear markets for power only if the allocation is efficient; (3) in an efficient allocation power can only flow from nodes with lower prices to nodes with higher prices; (4) strengthening transmission lines or building additional lines increases transmission capacity; (5) transmission capacity rights are compatible with any economically efficient dispatch.     

Determinants of premiums in acquisition transactions

This paper presents a framework to identify the determinants of acquisition premiums so as to explain their cross-section variability. Observed premiums are predicted to be positively related to (1) the magnitude of the acquiring firm's estimate of acquisition gains and (2) the acquired firm's relative bargaining strength. Increased acquisition gains are argued to result from two sources—underpricing and undermanagement. The variables representing these sources are constructed from pre-acquisition data. A gains variable based on the post-acquisition stock-price reactions of the acquiring and acquired firm is also constructed. It is argued that acquired-firm bargaining strength is enhanced by an increase in the degree of competition in the acquisitions market and by the inclusion of anti-takeover amendments in the acquired firm's corporate charter. The predictions are tested on a sample of 77 completed cash-for-stock and stock-for-stock acquisitions over the time period 1975–80. The empirical results provide strong support for the predicted effects of the determinants of (2) and mixed support for the determinants of (1). This is the first study to document the predicted effects of anti-takeover amendments on observed premiums.     

Effects of congestion on the shape of a city

This paper develops a model for the allocation of urban land among the residential and transportation sectors and the central business district. The model is used to derive the intensity of land use, i.e., the capital per unit of land, in the residential and transportation sectors. Two different institutional arrangements are discussed: a central planning agency, and a competitive market. It is shown that the externalities imposed by traffic congestion results in the market city being larger (for the same population), and with flatter density profiles.     

Division of labour — Simon revisited

The paper builds upon earlier work by Simon upon the effects of increased productivity on the ratio of urban to rural population. The approach is based upon the analysis of excess demands rather than comparative statics. This permits a more complete portrayal of the linkages between measures of productivity change and elasticity, and shifts in the division of labor.