Universal Service: Competition,Interconnection, and Monopoly in the Making of the American Telephone System. Milton L. Miller,Jr.

Review of Industrial Organization -     

Sunk Costs and the Entry Decision

This paper considers the role of sunk costs in the decision to enter a market. Its goal is to provide a policy-relevant approach to the question: when are sunk costs so great as to serve as a barrier to entry? To do this, the model presented nests both a model of pure hit-and-run entry and a simple “lottery-ticket” model of long-term entry in which the entrant knows that entry may or may not ultimately prove successful. It illustrates clearly the strategic differences between sunk and nonsunk fixed costs. The paper also considers the incumbent’s problem of choosing between entry deterrence and accommodation. Finally, out of this model comes a measure of the height of the sunk cost barrier to entry that may be useful for competition policy purposes.     

Environmental social controls and capital investments: Australian evidence

Environmental social controls (ESCs) such as mandatory disclosure, regulations, subsidies, and stakeholder opinion are intended to improve firm environmental performance. This paper reports ESC importance to Australian financial managers in making capital investment decisions. A decision‐making experiment showed managers to be most responsive to stakeholder opinion (42 per cent), followed by subsidization (26 per cent) and regulatory cost (22 per cent). Mandatory disclosure has very little influence (10 per cent). ESC interaction effects are limited so coordination of ESC policy is not a primary concern. High degrees of managerial self‐insight suggest policy changes would be enhanced by close consultations with the managers involved.     

Science and Environmental Policy-Making: Bias-Proofing the Assessment Process

Scientific assessment panels are playing increasingly influential roles in national and international policy formation. Although they typically appeal to the standard of journal peer review as their quality control criterion, there seems to be confusion about what peer review actually does. It is, at best, a necessary condition of reliability, but not a sufficient condition. There is also the problem that assessment panels may be biased in favor of one side or another when evaluating areas in which the science is unclear. In this paper I argue that additional checks and balances are needed on the information going into scientific assessment reports when it will be used to justify major policy investments. I propose two new mechanisms to bias-proof the outcome: an Audit Panel and a Counterweight Panel. The need for such mechanisms is discussed with reference to the "hockey stick" debate in climate change.     

Greater curvature antral flattening: A radiologic sign of NSAID-related gastropathy

We have occasionally encountered patients on nonsteroidal antiinflammatory drugs (NSAIDs) in whom double contrast barium studies revealed persistent flattening and stiffening of the distal greater curvature of the stomach. We therefore performed a study to determine the frequency of this finding in patients with NSAID-related gastropathy. Twenty-one cases of erosive gastritis, gastric ulcers, and/or gastric scarring associated with a known history of NSAID use were reviewed by two radiologists who made a joint decision regarding the presence or absence of greater curvature antral flattening. This finding was seen radiographically in five of the 21 patients (24%). Four of the five patients with antral flattening had associated erosions or ulcers in the gastric antrum. The remaining patient had antral flattening as an isolated finding. Our experience suggests that flattening of the greater curvature of the distal antrum, particularly if associated with erosive gastritis or gastric ulcers, is a useful radiologic sign of NSAID-related gastropathy.