Profit,productivity, and profit-sharing

This study is an investigation of the effect of profit-sharing on labor productivity. When monitoring labor performance is costly for management, a regular wage/salary contract is insufficient to induce profit-maximizing behavior from the worker. The authors demonstrate that when this profit-maximizing behavior can be induced only through profit-sharing, a linear profit-sharing program will increase productivity and the welfare of both management and labor. The benefit from profit-sharing is increasing up to the point where the utility of additional income is offset by the negative utility of extraordinary effort (working harder or providing higher quality work). The income effect, i.e., the change in negative utility of extraordinary effort given a change in income, can potentially either increase or decrease the point at which the income-effort tradeoff-reaches zero.     

Optimal fiscal zoning when the local government is a discriminating monopolist

Monopoly zoning by local governments has been studied extensively since the original article by White [1975, in: E. Mills and W. Oates, eds., Fiscal zoning and land use controls (Lexington Books, Lexington, MA)]. However, little or no attention has been paid to the possibility of monopolistic discrimination under such a regime. The question is: When will zoning multiple lot sizes be feasible given that buyers with different valuations of land cannot be coerced into purchasing particular lots? The literature on imperfect price discrimination by monopolists is brought to bear on this question. It is shown that the resulting zoning strategy may or may not involve multiple lot sizes. The factors determining the optimal strategy are studied in detail, with particular emphasis on the nature of the market for undeveloped land in the community.     

Abstracts

Quality & Quantity -     

Monotonizing empirical Bayes estimators for a class of of discrete distributions with monotone likelihood ratio

A procedure is given for the construction of a monotone estimator that dominates a given estimator for a class of discrete distributions with monotone likelihood ratio. This procedure is applied to some empirical Bayes estimators. Monte Carlo results are given that demonstrate the usefulness of monotonizing.