Supply Management and Productivity Growth in Alberta Dairy

Specification of quota licenses as quasi-fixed inputs in a multi-variate flexible accelerator model of dynamic input adjustment reveals supply management's effect on Alberta dairy investment patterns and, thereby, on total factor productivity growth. Estimates of a dynamic dual model of Alberta dairy, using panel data from 1975–91, show that strong complementarity between cattle and quota licenses results in short-run cattle adjustments that are opposite in direction from the long-run adjustments. A model of total factor productivity growth under dynamic input adjustment shows that the distortions to cattle investment caused by investing in quota licenses adversely affects productivity growth. As a result, there is likely to be a significant understatement of single-period estimates of the cost of supply management in the dairy sector.     

The Control of Invasive Species on Private Property with Neighbor-to-Neighbor Spillovers

Invasive pests cross property boundaries. Property managers may have private incentives to control invasive species despite not having sufficient incentive to fully internalize the external costs of their role in spreading the invasion. Each property manager has a right to future use of his own property, but his property may abut others’ properties enabling spread of an invasive species. The incentives for a foresighted property manager to control invasive species have received little attention. We consider the efforts of a foresighted property manager who has rights to future use of a property and has the ability to engage in repeated, discrete control activities. We find that higher rates of dispersal, associated with proximity to neighboring properties, reduce the private incentives for control. Controlling species at one location provides incentives to control at a neighboring location. Control at neighboring locations are strategic complements and coupled with spatial heterogeneity lead to a weaker-link public good problem, in which each property owner is unable to fully appropriate the benefits of his own control activity. Future-use rights and private costs suggest that there is scope for a series of Coase-like exchanges to internalize much of the costs associated with species invasion. Pigouvian taxes on invasive species potentially have qualitatively perverse behavioral effects. A tax with a strong income effect (e.g., failure of effective revenue recycling) can reduce the value of property assets and diminish the incentive to manage insects on one’s own property.     

What Do Progressives Need to Know About Trade? Some observations on the competitiveness debate

In a recent book entitled Pop Internationalism Paul Krugman takes to task several prominent commentators who in recent years have published works decrying the loss of competitive position of the United States in an increasingly global economy. In particular, Krugman critically considers and rejects several arguments that he considers both wrong and dangerous. Among these are (1) the United States has lost, or is in the process of losing, its position of global technological leadership; (2) material standards of living in the US are threatened by the country's excessively liberal trade policies as compared with its trade partners; (3) stagnant or declining wages in the US are the result of trade with low wage Third World countries; (4) the US is in need of a new model and a corresponding policy approach that recognizes the changing structure of new global economic forces. The debate over the validity of the above assertions has been largely conducted between adherents of mainstream interpretations of international economic theory and policy. For Krugman the controversies are mostly a matter of a proper understanding of that theory along with an appreciation of the relevant data. The purpose of this paper is to offer an interpretation of the debate from a progressive left perspective. My position is that Krugman's critique of his imagined opponents on most issues is largely overdone and that there is actually substantive agreement among and between these mainstream views on most matters of trade and trade policy. More importantly, however, these same views, including Krugman's, are bounded by assumptions that are not supportable from a progressive left perspective. The title of the paper is an ironic twist on a title of one of Krugman's chapters, 'What do undergrads need to know about trade?'     

Buy and buy again: The impact of unique reference points on (re)purchase decisions

Behavioral finance has uncovered that investor engage emotionally when trading. We investigate how three psychological factors influence purchase and repurchase decisions: representativeness, the influence of prior gains, and reference points. Using trading data of 7200 UK investors we find that purchase decisions are influenced by representative heuristic and repurchase decisions are influenced by both representative heuristic and prior profitability. Further survival analysis showed that investors use the prior selling price as a unique reference point. Investors are more likely to repurchase a stock when trading above its reference point, but more likely to initiate the repurchase when trading below. Investors are influenced by previous experience and engage learning behavior when they seek to reinforce past success. As reference points are inferred but infrequently researched, this research adds to the literature and provides important and robust results for those engaging with financial planning clients.     

Technologies, products and firms' strategies part 1—a framework for .analysis

This article examines, the character and significance of 'strategies' formulated within the R&D function of a business, and their relatzonship to the broader business strategy of the parent company. The discussion forms a basis for the analysis of case studies of three large UK companies, which will be published later as Part 2 of this article Part 1 of the article identifies three foci of innovation studzes: first, that of the innovations themselves; secondly, that of patterns of innovation within discrete industrial sectors; thirdly, that of the innovating firms and their strategies. The discussion focuses on the third topic nad explores two aspects of the tehnological components of innovation strategies. First, the shape of the prorgolio of products under development, the technical and market specificities they possess, and secondly, the structure of the portfolios of technologies required and used in those products. These dimensions of strategy combine both firm-specific and public-domain tecnoligical competenes. These competences affect both the competitive position and the strategic direction of firms. Finally, the article proposes some analytical devices for making sense of technology strategies in the thre firms studied. Part 2 of the article presetns the substance of the case studies, and reviews the lessons which they reveal.