A Cournot–Nash Model of Family Decision Making

This paper models a two-person family. Each family member is utility maximising, yet family members are interdependent because of caring and public goods within the family. The two family members' interdependent utility maximisation problems are first solved using a non-cooperative, or Cournot–Nash, game theoretic framework. The Cournot–Nash equilibrium is then used as a threat point in a bargaining game. The paper provides a rigorous derivation of the properties of household demands, a full analysis of the determinants of intra-household resource allocation, including the effect of varying household bargaining power, and consideration of policy implications.     

Corporate income tax,investment grants,and the cost of capital

While the influence of the corporate tax system on the cost of capital faced by firms in the corporate sector has been studied extensively, these studies generally assume that government intervention is restricted to alterations in the rates and deductibility allowances of the corporate income tax. In this paper the case where government intervention also includes the payment of investment grants to the corporate sector is considered; it is shown that the interactions between the corporate tax system and the grant structure are crucial in determiningthe cost of capital. In particular, conditions are derived under which a higher grant rate will raise the relative cost of capital.     

The Swiss Solution for South Africa

The example of Switzerland in devolving decision-making away from a central state towards community bodies with reduced powers offers a readily adaptable solution to the political turmoil in South Africa. FrancesKendall, co-author with Leon Louw of the best-selling South Africa: The Solution, presents her proposals forreform.     

Foreign Direct Investment in Ireland: Policy Implications for Emerging Economies

Ireland's success in attracting foreign direct investment (FDI) provides guidance for emerging economies. The key to Ireland's success is its consistency of policy towards FDI. Ireland's success suggests that emerging countries should be proactive in seeking FDI, offer a package of incentives that is enterprise‐centred yet is sufficiently selective to build self‐sustaining clusters. Policy consistency is important to inward investors and this can be traded off against selectivity and monitoring of performance.     

Men, children and the future of the family in the third millennium

This paper examines the effects of demographic change on the foundations of the family. The “first” demographic transition — the massive declines in fertility and mortality — is shown to have undermined the traditional male–female relationship based on parenthood. This has led to the gender revolution in the public sphere. The “second” demographic transition — the increases in divorce and cohabitation — is shown to have undermined the father–child relationship, reflecting women's control over children, a control that increased continually during the first demographic transition. This paper argues that the gender revolution needs to be brought into the family, increasing women's ability to compete in employment and men's ability both to choose whether to assume parental responsibility and to maintain active parental roles with their children.     

Made in Europe: Small Companies

This is the third report on the 'Made in Europe' research programme. Earlier reports concentrated on the maturity of implementation of 'best practice' in both the design and manufacturing processes of larger European companies. Here, the authors shift the focus to small and medium-sized enterprises (SMEs) particularly in Britain and Italy. While few SMEs are in the world-class category, small company practices are customer-oriented, responsiveness-focused and concerned with new products. SMEs' competitive edge typically comes from speed, responsiveness and closeness to customers. SMEs exhibit a greater level of confidence than larger companies in their ability to make change, but neglect training and education. Within the SME sector there are sharp differences between micro (5–20 employees), small (21–50) and medium-sized (51–200) companies while those which are subsidiaries of larger companies have significantly higher levels of best practice. There are differences between countries and regions.     

Wage Determination Differences between Chinese State and Non-State Firms

Market-oriented economic reform has given much greater autonomy to state and collective enterprises' managers to make production, investment and marketing decisions. However, as the assets of these enterprises are still owned by government at different levels, the decision-making and risk-bearing functions of enter-prises may be divorced, firms are more likely to maximize income per employee rather than firm's profits. This hypothesis is tested in this paper by analysing Chinese enterprises' earnings determination behaviour using a data set encompassing state, collective and private sectors. The main findings are that the state and the collective sectors behave more like labour managed firms in that they try to maximize income per worker rather than profit, whereas private-sector firms are profit maximizers. Furthermore, collective-sector firms which bear a higher degree of risk, appear to base their profit sharing decisions more on enterprises' economic and financial performance, than do state-owned enterprises. Hence collective enterprises' bonus payments improve productivity more than do state-sector bonuses.     

Decentralisation in Indonesia

This paper attempts to assess the extent of decentralisation efforts and their impact on various dimensions of the development process. We find relatively little ‘real’ decentralisation (devolution): local governments have little tax autonomy and central priorities tightly constrain most funding from the centre. Indeed, increased revenue flows serve as a disincentive to modest local tax efforts, reduce the relative importance of locally controlled funds and thus retard real decentralisation. Central transfers for health, education and infrastructure have nonetheless significantly improved social and economic indicators. Greater local control over funds is found to lead to more expenditure on the social sectors (and within them on priority areas), and to increase spending on small scale locally oriented infrastructure. More decentralisation thus offers the potential for increased allocations to social and economic priorities, enhancing efficiency and equity within regions; but the promotion of national standards and equity across regions requires central government action.