The optimal linear alternative to price and quantity controls in the multifirm case

Linear control schedules in output have been shown superior in the one-firm case to either of the extreme controls—price or quantity; they optimally trade off the desirable characteristics of both extremes. When many firms are regulated, however, that superiority fades. Then total output affects expected benefits and can display a larger (or smaller) variance than the sum of individual firms' output variances (upon which expected costs depend) if costs are positively (negatively) correlated. Output variation must be discouraged (encouraged), therefore, and the linear schedule rotates toward the quantity (price) extreme. The better extreme might thereby become the best choice among all three alternatives.     

Taxation and the stock market valuation of capital gains and dividends: Theory and emphirical results

Dividends seem to be more heavily taxed than capital gains. Why then do corporations pay dividends rather than repurchasing shares or retaining earnings? Either corporations are not acting in the interests of shareholders, or else shareholders desire dividends sufficiently for nontax reasons to offset the tax effect.In this paper, we measure the relative valuation of dividends and capital gains in the stock market, using a variant of the capital asset pricing model. We find that dividends are not valued differently systematically from capital gains. This finding is consistent with share price maximization by firms but inconsistent with the fact that most shareholderspay a heavier tax on dividends.We also show that the relative value of dividends provides an indirect measure of a marginal Tobin's q. The measured value of dividends relative to capital gains tends to be higher during prosperous periods, as is consistent with this interpretation. We hope that this time series on a marginal Tobin's q will prove to be useful in forecasting the rate of investment.     

Resource utilization and charges of patients with and without diagnosed venous thromboembolism during primary hospitalization and after elective inpatient surgery: a retrospective study

Aims: To assess incremental charges of patients experiencing venous thromboembolisms (VTE) across various types of elective inpatient surgical procedures with administration of general anesthesia in the US.

Methods: The authors performed a retrospective study utilizing data from a nationwide hospital operational records database from July 2014 through June 2015 to compare a group of inpatients experiencing a VTE event post-operatively to a propensity score matched group of inpatients who did not experience a VTE. Patients included in the analysis had a hospital admission for an elective inpatient surgical procedure with the use of general anesthesia. Procedures of the heart, brain, lungs, and obstetrical procedures were excluded, as these procedures often require a scheduled ICU stay post-operatively. Outcomes examined included VTE events during hospitalization, length of stay, unscheduled ICU transfers, number of days spent in the ICU if transferred, 3- and 30-day re-admissions, and total hospital charges incurred.

Results: The study included 17,727 patients undergoing elective inpatient surgical procedures. Of these, 36 patients who experienced a VTE event were matched to 108 patients who did not. VTE events occurred in 0.2% of the study population, with most events occurring for patients undergoing total knee replacement. VTE patients had a mean total hospital charge of $60,814 vs $48,325 for non-VTE patients, resulting in a mean incremental charge of $11,979 (p?<?.05). Compared to non-VTE patients, VTE patients had longer length of stay (5.9 days vs 3.7 days, p?<?.001), experienced a higher rate of 3-day re-admissions (3 vs 0 patients) and 30-day re-admissions (7 vs 2 patients).

Conclusions: Patients undergoing elective inpatient surgical procedures with general anesthesia who had a VTE event during their primary hospitalization had a significantly longer length of stay and significantly higher total hospital charges than comparable patients without a VTE event.     

Bank mergers and components of risk: An evaluation

The present study empirically examines the contribution of the acquired banks in only the nonconglomerate types of mergers (i.e., banks with banks), where the bulk of the payment is in the form of equity to the acquiring bank and finds overwhelmingly statistically significant evidence that nonconglomerate types of mergers definitely reduce the total as well as the unsystematic risk while having no statistically significant effect on systematic risk. Therefore, it seems that diversification may be a possible motive for bank mergers.     

THE USE OF UNIT VALUES TO MEASURE DEVIATIONS OF TRANSACTION PRICES FROM LIST PRICES

The results reported in the Searle report have stimulated me to carry out an extensive study of unit value indices, based on a much more extensive body of data and much improved procedures as compared to the preliminary evidence contained in my "Measurement Bias in Price Indices for Capital Goods," published in this journal in June, 1971. Once again, the new study confirms the hypothesis that transaction prices of capital goods exhibit procyclical fluctuations relative to list prices. Machinery prices appear to have been considerably more flexible downward during the period of weak investment demand between 1957 and 1963 than indicated by the Wholesale Price Index (WPI), and more flexible upward during the subsequent expansion during 1963–1969. This brief paper is a summary of the study. A complete and detailed report or results is contained in my forthcoming monograph, Measurement of Durable Goods Prices , to be published by the National Bureau of Economic Research.     

Has the Canada-US trade agreement fostered price integration?

Has the Canada-US Trade Agreement Fostered Price Integration? — This paper assesses the Canada-US Trade Agreement (CUSTA) from the perspective of market integration. Using monthly data on producer price indices and the exchange rate of both countries for the 1974:1–1996:1 period, a Johansen procedure is used to test for a long-run equilibrium or cointegrated price system among the price series. In addition, to determine whether product markets are converging after the implementation of CUSTA, a Kaiman filter or time-varying parameter analysis is used. Empirical evidence supports the conclusion that CUSTA did not cause price integration or convergence, rather for the two markets convergence and integration were well established prior to CUSTA. The success of CUSTA appears to be in maintaining Canadian access to the US market in the face of rising US protectionism.     

A spatial merger estimator with an application to school district consolidation

This paper develops a spatial merger estimator to explain political integration generally and then applies this method to a wave of school district mergers in the state of Iowa during the 1990s. Our estimator is rooted in the economics of matching and thus accounts for three important features of typical merger protocol: two-sided decision making, multiple potential partners, and spatial interdependence. Rather than simply explaining when a particular region is likely to experience a wave of political integration, our method allows us to explore the factors driving which specific subregional mergers take place. This allows us to explore how those districts that merge choose with which of their neighbors to do so. Our results highlight the importance of state financial incentives for consolidation, economies of scale, diseconomies of scale, and a variety of heterogeneity measures in this particular application. We also demonstrate the power of our estimator, relative to existing estimators, to detect a statistically significant role for heterogeneity factors. While our application is limited to school district consolidation, our method can be adapted to include the salient features of many spatial integration problems.