The impact of the California Civil Rights Initiative (CCRI) on university and professional school admissions and the implications for the California Economy

Using data from the University of California and results from previously published research on the returns to higher education, this article presents a preliminary evaluation of the impact of ending affirmative action in admissions at a large, publicly funded university. At the undergraduate level, eliminating race as a factor in the admissions process will redistribute African Americans, Mexican Americans, and Native Americans away from the most competitive campuses (UC-Berkeley, UCLA, UC-San Diego) towards the less competitive campuses in the California State University system. This redistribution will lower the returns to schooling for those affected groups and could have a negative impact on the educational environment for all students. Affirmative action will, in the short run, reduce the number of African American, Mexican American, and Native American students admitted and, in the long run, will have an adverse effect on the delivery of legal and health care services to those racial and ethnic groups.     

Tests of a model of production for the Federal Republic of Germany, 1950–1973

The objective of this paper is to present tests of the theory of production for aggregate time series data from the Federal Republic of Germany for the period 1950–1973. For this purpose we implement two alternative econometric models, based on translog representations of production and price functions. Our test results are consistent with the theory of production and imply that this theory can be employed as an appropriate starting point for construction of a macro-economic model of Germany.     

Price Premiums for Eco-friendly Commodities: Are ‘Green’ Markets the Best Way to Protect Endangered Ecosystems?

‘Green’ markets represent a means through which public goods can be privately provided. A green product is an impure public good consisting of a private good (e.g., rain forest honey) bundled with a jointly produced public good (e.g., biodiversity protection). In the context of ecosystem protection, popular green commodities include eco-tourism excursions, coffee grown under forest canopies (‘shade-grown’), tagua nuts for buttons and ornaments, rainforest nuts and oils for cosmetic products, and rain forest honey. We examine the dynamic efficiency of eco-friendly price premiums in achieving ecosystem protection and rural welfare goals by contrasting the use of price premiums to the use of payments that are tied directly to ecosystem protection. We demonstrate analytically and empirically that direct payments are likely to be more efficient as a conservation policy instrument. Depending on the available funds, the direct payments may be better or worse than green price premiums in achieving rural welfare objectives. If direct payments are not feasible for social or political reasons, we demonstrate analytically and empirically that the price premium approach is likely to be more effective at achieving conservation and development objectives than the currently more popular policy of subsidizing capital acquisition in eco-friendly commercial activities.     

On the design of incentive mechanisms in environmental policy

The objective of this paper is to present environmental policy as a simple game in two stages within a principal-agent framework. At the outset the authority adopts a transfer payment rule. Then the firms react by carrying out abatement activities, based on their chosen levels of emission and output. Next the authority measures the emissions (and residual profit of the industry) and revises the level of its instrument. Then the game starts again. Our purpose is to narrow the scope of ad hoc incentive schemes by characterizing families of optimal linear schemes.We thank two anonymous referees for their valuable suggestions. We have also benefited from comments from I.-M. Andréasson, J. B. Opschoor, H. Verbruggen and the other members of the Task Force II: Environmental Policy instruments of the European Science Foundation Programme: Environment, Science and Society. Wang acknowledges support from the Deutsche Forschungsgemeinschaft (DFG).     

Testing the integrability of consumer demand functions: Federal Republic of Germany, 1950–1973

The purpose of this paper is to implement a new econometric methodology for testing the theory of consumer behavior. We begin by fitting systems of indirect and direct demand functions without requiring integrability. We then impose restrictions on the parameters of these functions implied by integrability. We test restrictions corresponding to homogeneity, summability, symmetry, nonnegativity, and monotonicity of systems of demand functions. We formulate tests based on two-sided critical intervals for restrictions that take the form of equalities. We employ tests based on one-sided critical intervals for restrictions that take the form of inequalities. We present empirical results for tests of integrability for German time series data on personal consumption expenditures for the period 1950–1973.     

The Complexities and Potential of Theorizing Gender,Caste, Race,and Class

Most economists have not yet grappled with the demands of intersectional scholarship, which recognizes the intertwined nature of gender, race, class, caste and other influences on the economic situation of individuals and groups. Among economists, feminist economists may have made the most progress and be best positioned to break further ground, though we can do better and much remains to be done. This article synthesizes the case for intersectional work, reviews the state of the economic literature, describes the contributions of the articles in this special issue of Feminist Economics on "gender, color, caste and class," and sketches directions for the future.     

The State of the Public Corporation: Not So Much an Eclipse as an Evolution

By some measures, the U.S. public corporation appears to be in the midst of a significant decline, as Michael Jensen predicted 25 years ago in a Harvard Business Review article called “The Eclipse of the Public Corporation.” Based on an analysis of ten industries during the 48‐year period from 1966 through the end of 2013, the author reports a 60% drop in the number of publicly traded U.S. companies, as measured from each of the industry peaks to the end of 2013. Mergers and acquisitions, together with the private‐equity transactions hailed by Jensen in his 1989 HBR article, have contributed significantly to this reduction in numbers. But so has the remarkable growth of “uncorporate” (or pass‐through) structures such as Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs), both of which address governance as well as tax problems faced by public C‐corporations. But along with this drop in numbers, the author's analysis of the performance of U.S. public companies—as measured both by operating returns on equity and Tobin's Q ratios—also shows a growing separation of the “best” from the “rest” over time. Intense global product market competition, the growing benefits (and urgency) of achieving efficient scope and scale, high U.S. corporate income tax rates, and a vigorous market for corporate control are all significantly “thinning the herd” of public corporations. The “winners” have been emerging as larger, more efficient, and more influential enterprises than ever before, as the rise of massive U.S. multinationals (and, in countries outside the U.S., state‐owned enterprises) over the past two decades has increasingly blurred the line between private business and government. Viewed in this light, the overall trends, both in the U.S. and abroad, suggest an evolution rather than an eclipse of the public corporation. Such trends also suggest that over the next 25 years, the success of the public corporation will increasingly depend on issues such as its ability to resolve conflicts between controlling shareholders (including sovereign governments) and minority shareholders, regulatory (in particular, antitrust) policy, and the role (and investment horizons) of activist shareholders.     

The structure of consumer preferences,Federal Republic of Germany, 1950–1973

Summary The objective of this paper is to analyze the structure of consumer preferences and changes in preferences over time. Consumer preferences are represented by an indirect translog utility function with time-varying preferences that is quadratic in the logarithms of its arguments. We consider a system of demand functions associated with parameter restrictions consistent with the theory. We characterize groupwise separability and groupwise homotheticity of preferences and derive for each set of restrictions on preferences parametric restrictions on the corresponding system of demand functions. Empirical results of the tests, based on time series data for FRG consumption expenditures on three commodity groups — durables, non-durables, and energy — are presented.