ECONOMIES OF THROUGHPUT AND TRANSPORT BOTTLENECKS IN GRAIN DISTRIBUTION SYSTEMS

In this paper, a model is presented which shows the relationship between country grain storage costs and transport bottlenecks that exist in the harvest period. It is shown that transport bottlenecks limit the amount of grain that can be transported from receival points in the peak receival period. This constraint means that the cost of operating country receival points is high because the turnover of storage capacity is limited. However, system costs can be reduced by focusing the peak transport task at sites that are less intensive users of scare transport capacity. This allows more grain to be transported out of the system in the peak period, decreasing the need for costly long term storage at country sites. In the longer term, differences in the intensity of transport use means that optimal levels of investment in storage capacity (relative to grain receivals) will differ between sites. Relatively more storage should be constructed at sites that are intensive users of transport capacity (eg. those sites that are furthest from the port). Less storage capacity is needed at sites that are less intensive users of transport because a large depot-to-port transport task will be concentrated at these sites in the peak period.     

The Role of Learning in Dynamic Portfolio Decisions

This paper analyzes the effect of uncertainty about the mean return on the risky asset on the portfolio decisions of an investor who has a long investment horizon. Building on the earlier work of Detemple (1986), Dothan and Feldman (1986), and Gennotte (1986), it is shown that the possibility of future learning about the mean return on the risky asset induces the investor to take a larger or smaller position in the risky asset than she would if there were no learning, the direction of the effect depending on whether the investor is more or less risk tolerant than the logarithmic investor whose portfolio decisions are unaffected by the possibility of future learning. Numerical calculations show that uncertainty about the mean return on the market portfolio has a significant effect on the portfolio decision of an investor with a 20 year horizon if her assessment of the market risk premium is based solely on the Ibbotson and Sinquefield (1995) data.     

Negative income taxes,inequality and poverty

We use a neoclassical growth model with heterogeneous agents to analyze the redistributive effects of a negative income tax system, which combines a flat rate tax with a fully refundable credit (“demogrant”). We show that changing the demogrant‐to‐output ratio causes significant changes in the distribution of income. Specifically, we find that increasing the demogrant‐to‐output ratio sharply reduces the level of inequality as well as both relative and absolute poverty (all measured in terms of post‐tax total income). However, these reductions in inequality and poverty come at the expense of a significant reduction in output.     

The Post-Internet Order Broadband Sector: Lessons from the Pre-Open Internet Order Experience

A significant component of the contentious debate over the Federal Communications Commission’s (FCC) 2015 Open Internet Order (OI 2015) has been its effects on future broadband investment and the development of Internet content and other applications. Although such debate can advance understanding of the potential consequences of the OI 2015, much of it, albeit informed by economics, is of necessity speculative. It may be useful to see how experience up to OI 2015 might be informative. That experience is notably thin, with the FCC’s citing two to four instances in ten years that would have violated OI 2015. After explaining why the OI 2015 order and its predecessor may be largely non-binding, we look at the four examples for lessons in what kinds of behavior OI 2015 might prevent. This experience suggests that non-economic concerns should have been more explicit in OI 2015.     

Plastic bag politics: modifying consumer behaviour for sustainable development

The adverse environmental impacts of plastic bags, including production energy costs, limited lifespan, increasing landfill content and inability to biodegrade, provide symbolic and practical evidence of a ‘throwaway’ consumer culture which acts as a significant barrier to sustainable consumption in particular and sustainable development in general. Decoupling consumer behaviour from plastic bag use is therefore an important challenge in the pursuit of sustainable consumption as a precursor to achieving sustainable development. This article provides a critical evaluation of that challenge, set within the theoretical framework of sustainable development. It examines the adverse environmental impacts of plastic bag use and evaluates initiatives by governments and businesses internationally to change consumer behaviour regarding the use of plastic bags in line with sustainable development principles. The politics of this agenda are analysed using a combination of consumer policy and public policy perspectives. Finally, the article draws conclusions regarding the earlier analysis.     

The Role of Learning in Dynamic Portfolio Decisions

This paper analyzes the effect of uncertainty about the meanreturn on the risky asset on the portfolio decisions of an investorwho has a long investment horizon. Building on the earlier workof Detemple (1986), Dothan and Feldman (1986), and Gennotte(1986), it is shown that the possibility of future learningabout the mean return on the risky asset induces the investorto take a larger or smaller position in the risky asset thanshe would if there were no learning, the direction of the effectdepending on whether the investor is more or less risk tolerantthan the logarithmic investor whose portfolio decisions areunaffected by the possibility of future learning. Numericalcalculations show that uncertainty about the mean return onthe market portfolio has a significant effect on the portfoliodecision of an investor with a 20 year horizon if her assessmentof the market risk premium is based solely on the Ibbotson andSinquefield (1995) data.     

Queue-rationed equilibria with fixed costs of waiting

The welfare impact of price controls is examined here in an exchange economy where agents may need to queue in order to make a transaction. Time spent in the queue is an endogenously-determined transaction cost, which agents take as given and which adjusts so as to clear markets when prices are prevented from performing this function. When queuing is required, it enters the household’s decision as a fixed cost, rather than increasing in proportion to the amount of good exchanged, as is far more common in the previous literature. Existence of competitive equilibrium is established for this general equilibrium model. Price controls are shown to cause notable inefficiencies, which differ from those of a proportional cost model. Moreover, in certain environments, price controls will unambiguously harm all individuals relative to a Walrasian equilibrium. The author thanks Beth Allen, Chris Phelan, and Jan Werner for their valuable guidance on this work, as well as Michael Magill, Martine Quinzii, Val Lambson, Nuray Akin, participants of the 2005 Midwest Economic Theory Conference, and members of the Mathematical Economics Workshop at the University of Minnesota. This work also benefited from the thoughtful comments of an anonymous referee. Partial funding came from NSF grants DMI-0070257 and DMI-0217974.     

Individual Decision Making and Investor Welfare

This article analyses and quantifies the costs of suboptimal decision making for an investor with a multi-period horizon. In light of the empirical evidence that investors are too conservative and hold portfolios that are insufficiently diversified, we evaluate the costs of suboptimal equity participation both analytically and using simulation, and also estimate the costs of suboptimal diversification using simulation. We find that suboptimal leverage imposes only modest costs on the investor for reasonable parameter values. While the costs of inadequate diversification can be very high, we find that, because of the higher returns on small firms, an equally weighted portfolio of as few as five randomly chosen firms can provide the same level of expected utility as the value weighted market portfolio.
(J.E.L.: G11, G18, G23).