Cross-country catch-up in the manufacturing sector: Impacts of heterogeneity on convergence and technology adoption

We analyze how technology transfer from a leading economy affects followers productivity growth in manufacturing sectors and Gross Domestic Product. Allowing for heterogeneous technology levels we explore how this impacts rates of catch-up in labor productivity across manufacturing sectors and GDP for 16 OECD nations. Our results indicate that aggregate studies bias downward the estimated rates of catch-up. These rates of catch-up, as well as efficiency levels, also differ across countries. We find that institutional factors such as bureaucratic efficiency are important determinants of the estimated catch-up rates.First version received:October 2001/Final version received:September 2003Earlier versions of this paper have been presented under the titles of Cross-Country Catch-up in Manufacturing and Heterogeneous Rates of Catch-up in Manufacturing Industries. The authors would like to thank participants of the North American Productivity Conference, June 2000, at Union College, N, Y., and the Associate Editor for helpful comments and criticisms.     

Estimating Demand Response with Panel Data

In this paper, we extend to panel data the iterated linear least squares estimator of Blundell and Robin (in J Appl Econometrics 14: 209–232 1999). It is shown to be consistent when total expenditure and regression residuals are correlated, either because of simultaneity or because of unobserved heterogeneity. We propose separate tests for these two effects. Monte Carlo experiments are then conducted and the estimator is applied to data drawn from a French Consumer Panel.     

A characterization of piecemeal second best policy

This paper derives conditions under which prices may be set proportional to marginal cost in some sectors of the economy when fixed distortions exists in other sectors. Two simple neoclassical economies are considered - one with fixed producer prices and one with variable producer prices. In the former case, nacessary and sufficient conditions are derived for piecemeal policy in terms of properties of derivatives of the demand functions. These conditions are then interpreted in terms of separability properties of utility functions where we find that only weak separability is required. In the latter case, sufficient conditions are derived which involved both demand and supply derivatives. These are also interpreted in terms of separability properties of utility and production functions. The analysis differs from previous ones in that we use a dual formulation of the problem and obtain conditions in terms of demand and supply derivatives which are observable, and we explicitly take into consideration the budgetary constraint of the government. Because of the latter, the factor of proportionality in applying piecemeal policy is not necessarily unity. So, in general, complete laissez faire is not optimal.     

On the credibility of harassment in the insider—outsider model

In a well-known version of the insider-outsider model, the decision by outsiders not to underbid follows from the threats made by insiders to harass new entrants, thereby raising the entrants' disutility of work. It has been argued, however, that the harassment threat is not credible, at least in the one-period case. In the current paper we explore this claim, concluding that the existence of a social convention, together with associated social pressure effects, provides a possible explanation of the credibility of the harassment threat. Moreover, we suggest that such a convention is likely to play a role even in a multi-period analysis.     

Bioeconomic analysis of herpetofauna road-kills in a Florida state park

Road-kills are a major cause of mortality for a wide variety of herpetofauna, but management decisions on remediation procedures for reducing losses are based in economic realities. Because funding is finite for species conservation, bioeconomic analysis can assist in justifying, evaluating, and maximizing returns on conservation expenditures, especially for low-profile species such as herpetofauna. Here, we present a bioeconomic analysis of road-killed herpetofauna in Jonathan Dickinson State Park, Florida. Road surveys were conducted daily for four years to identify and enumerate the numbers of each reptile and amphibian species killed by vehicles. Conservative individual valuations applied to the losses formed the basis of a benefit-cost analysis aimed at identifying the thresholds at which remediation expenditures would be justified. We found an average of 64 reptiles and amphibians were killed/year, justifying conservation expenditures up to $32,000/year. However, if less conservative valuations were applied, especially for threatened and endangered species, justifiable expenditures rise dramatically.     

Semiparametric efficient estimation of dynamic panel data models

This paper extends the semiparametric efficient treatment of panel data models pursued by Park and Simar [Park, B.U., Simar, L., 1994. Efficient semiparametric estimation in stochastic frontier models. Journal of the American Statistical Association 89, 929–936] and Park et al. [Park, B.U., Sickles, R.C., Simar, L., 1998. Stochastic frontiers: a semiparametric approach. Journal of Econometrics 84, 273–301; Park, B.U., Sickles, R.C., Simar, L., 2003. Semiparametric efficient estimation of AR(1) panel data models. Journal of Econometrics 117, 279–309] to a dynamic panel setting. We develop a semiparametric efficient estimator under minimal assumptions when the panel model contains a lagged dependent variable. We apply this new estimator to analyze the structure of demand between city pairs for selected U.S. airlines during the period 1979 I–1992 IV.     

Simultaneous Public and Private Provision of Services, Asymmetric Information and Innovation

Public and private provision of a service coexist. There is asymmetric information between the government and the agency providing the public service with respect to the costs, the quality of the service and the innovation effort of the agency. We examine the optimal government design of the funding contracts to induce the agency to reveal its costs and exert high innovation effort. The optimizing behaviour of consumers and private firms generates observable information, which can be used by the government to reduce its information problem. In the optimal contracts, the informational rents of the agency increase with the level of innovation effort that the government induces from the agency. Correlation between public and the private sector costs results in a trade-off in the government's policy between inducing innovation and extracting the informational rent of the agency. To increase the redistribution inherent in the public provision of the service, the government will manipulate the expected profits of the private firms to induce higher innovation effort.     

Cost–raising Strategies in a Symmetric, Dynamic Duopoly

This paper provides a characterization of the set of dynamic models in which symmetric duopolists have incentives to raise a common cost. The advantage of the dynamic analysis over existing static models is that it extends the conditions (restrictive in static models) under which symmetric cost raising is profitable. The model is illustrated by standard examples from industrial organization: quantity and price adjustment, and learning–by–doing.