Judging quality by price,snob appeal,and the new consumer theory

Conclusion The analysis contained in this paper has served two purposes. First, it has demonstrated the richness of the new consumer theory by showing how this new approach can incorporate the questions of judging quality by price and price-snob appeal. And second, the paper has derived analytically the conditions under which these phenomena will yield a positively sloping demand curve in a two-commodity, two-attribute world.In traditional theory the consumer's response to a change in the price of a good is conceptually divided into an income effect and a substitution effect. The new approach to consumer theory partitions the consumer's response differently, namely, into an efficiency substitution and a utility substitution. When a general price attribute is introduced each of these divisions retains its individual validity. The conclusion that the efficiency substitution is always non-positive also remains valid. But, the traditional substitution effect may now be positive and of sufficient magnitude to make theentire response to an own-price changepositive,x _i /p _i >0. We have shown analytically, then, as the verbal discussions of traditional consumer theory lead us to believe, that judgment of quality by price and price-snob appeal can result in positively sloped demand curves.The research described in this paper was supported in part by the Econometric Research Program at Princeton University. The authors would like to thank Professors W. J. Baumol, O. Morgenstern, and R. E. Quandt, Messrs. F. D. Gately and R. J. Sweeney, and other members of the Seminar on Research in Progress, Department of Economics, Princeton University, for their helpful comments and suggestions. Of course, any errors that may remain are solely our responsibility.     

Utility functions for simple games

This note characterizes the Shapley-Shubik index and the Banzhaf index on the class of simple games as utility functions which reflect different postures toward risk.     

The Distinction Between Charisma and Vision: An Empirical Study

It is argued that the confusion clouding new leadership theories can be cleared if charisma and vision are treated as distinct constructs. Consistent with the argument, new instruments for measuring the two constructs were developed and the moderating role of cognitive complexity in distinguishing charisma and vision was examined. Further, the study investigated the effects of charisma and vision on motivation, satisfaction, commitment, and performance of followers. Self-reports were obtained from 455 subordinates of 138 managers from 10 companies in Singapore. Findings suggest that both charisma and vision have two dimensions each and that these dimensions affect the four follower-level outcomes differentially.     

A Continental Barley Market: Where Are the Gains?

Under a continental barley marketing system, the Canadian Wheat Board would no longer be the only exporter of barley to the United States. Even though the volume of malting barley exports to the United States would increase, the historic price premium in both Canada and the United States would drop sufficiently to lower total revenue to malting barley producers. The United States' Export Enhancement Program allows the Canadian Wheat Board to sell feed barley at premium prices in some markets, including the United States. Under some conditions the continental barley market would adversely affect optimal trade flows and reduce revenue for feed barley producers. The potential to offset these losses in revenue by reducing grain-handling charges or by growing higher-yielding feed varieties appears to be very limited. Dans un système de marché continental de l'brge, la Commission canadienne du blé ne serait plus le seul exportateur d'orge vers les Etats-Unis. Même si Ie volume des exportations d'orge de malterie augmentait, la prime dont a longtemps bénéficié cette catégorie d'orge, tant au Canada qu'aux Etats-Unis, tomberait suffisamment pour abaisser les recettes totales des producteurs. Par ailleurs, le Programme américain de stimulation des exportations (EEP) autorise actuellement la CCB à vendre son orge fourragère à prime sur certains marchés, dont les Etats-his. Dans certaines circonstances, le marché continental de l'orge aurait un effet négatif sur les courants d'échange et réduirait les recettes des producteurs de ce type d'orge. Les possibilités de compenser ces pertes de revenu parune compression des frais de manutention et de stockage ou par la mise en service de variétés fourragères à rendement plus élevé paraissent très restreintes.     

Misrepresentation and stability in the marriage problem

It has been shown previously that, for two-sided discrete markets of the kind exemplified by the “marriage problem,” no strategy-proof procedure for aggregating preferences into stable outcomes exists. Here it is shown that (Nash) equilibrium misrepresentation of preferences nevertheless results in a stable outcome in terms of the true preferences when the aggregation procedure yields the optimal stable outcome in terms of the stated preferences for one side of the market.     

Price discrimination in physician services markets based on race: New test of an old implicit hypothesis

Prior econometric studies of physician fee determination report that fees are positively related to the proportion of the market area that is black and negatively related to the proportion of the market area that is white, but the studies provide only sketchy explanations for these results. This article presents a price discrimination model which explains the empirical results and provides the specific prediction that low income self-pay consumers in the black community constitute the group that pays higher prices for physician services. The study then replicates prior econometric results on a more recent national database, but finds that the results are sensitive to specification. When geographic differences are controlled for in the empirical model, the results fade and a statistical test indicates that the expanded specification is superior to the specification which replicated the price discrimination result. The conclusion is that there is no compelling evidence of price discrimination in physician services markets based on race.     

Environmental controls and economic growth

A modified form of the Solow growth model is examined to determine the conditions under which environmental controls cause economic growth to cease. When the model is expanded to include a waste treatment sector and the rate at which harmful wastes may be discharged is limited, there is an upper limit on productive capital and hence a steady state for all capital-dependent production functions. If the rate at which harmful wastes are allowed to be discharged is a set fraction of the rate at which they are generated and therefore are allowed to increase, there is no upper limit imposed on productive capital. For given technology there is, however, a limit on the fraction that can be removed.