The division of labour and market structure

Most firms produce most of the time under conditions of substantial economies of scale. The division of labour, according to Adam Smith the mainspring of wealth, is intrinsically an economies of scale phenomenon. Market structure in most industries in characterized by a small number of suppliers and a larger number of customers. I explain this law of small numbers as the equilibrium of two forces: the deconcentration effect of imitation and the market spliting effect of further refinements in the division of labour by innovation. A deconcentrated market creates larger incentives for market splitting (product differentiation) by innovation than a concentrated market. But market splitting raises concentration in the market and it raises the number of different markets in the economy. Before the economies of scale of old products are fully exploited, new products are being offered which again are produced under conditions of economies of scale.     

Optimale Aufteilung des Stichprobenumfangs bei mehreren Merkmalen

Zusammenfassung Es wird gezeigt, daß sich das vonNeyman undTschuprow für ein einziges Merkmal gelöste Problem der optimalen Aufteilung des Stichprobenumfangs auf vorgegebene Schichten auf ein nichtlineares Programm mit linearen Restriktionen und nichtlinearer Zielfunktion zurückführen läßt. Auf Grund der Konvexitätseigenschaft der Zielfunktion ergibt sich, daß das Minimum der Zielfunktion (Minimum der Streuung des Stichprobenmittels ) stets eindeutig ist. Der beiNeyman undTschuprow mögliche Fall, daß sich in derh-ten Schicht ein Stichprobenumfang ergibt, der größer als der Umfang in der Gesamtheit ist, kann hier nicht auftreten.Durch Einführung einer verallgemeinerten Streuung wird das Problem der optimalen Aufteilung bei vorgegebener Schichtung imk-dimensionalen Merkmalsraum aufk Merkmale verallgemeinert. Es wird gezeigt, daß diese verallgemeinerte Streuung (=Zielfunktion eines nichtlinearen Programms) im allgemeinen nicht über dem ganzen konvexen Bereich der zulässigen Lösungen konvex (von unten) ist. Ein Teilbereich des zulässigen Bereichs, über dem die Zielfunktion konvex ist, wird angegeben. Schließlich werden hierzu vergleichende Ergebnisse gebracht.     

Comparative randomized inverse sampling

According to previous literature, we define randomized inverse sampling for comparing two treatments with respect to a binary response as the sampling that stops when a total fixed number of successes, irrespective of the treatments, are observed. We have obtained elsewhere the asymptotic distributions for the counting variables involved and have shown them to be equivalent to the corresponding asymptotic distributions for multinomial sampling. In this paper, we start deriving the same basic results using different techniques, and we then show how they give rise to genuinely novel procedures when translated into finite sample approximations. As the main example, a novel confidence interval for the logarithm of the odds ratio of two success probabilities can be constructed in the case of comparative randomized inverse sampling. Some advantages over the standard multinomial sampling in terms of coverage probabilities are visible when no adjustment for cells with zero counts is applied; otherwise, the two sampling schemes appear to be fairly equivalent. This is a reassurance that under certain circumstances, inverse sampling can be safely chosen over more traditional sampling schemes.     

What drives stock market integration? An analysis using agribusiness stocks

This article explores the drivers of regional stock market integration with a focus on the agribusiness sector across relevant regional trade blocs around the world. We implement panel cointegration models to analyze the stock indices of agribusiness firms in the Southern Common Market (MERCOSUR), European Union (EU), Asia‐Pacific Economic Cooperation (APEC), and North American Free Trade Agreement (NAFTA). Based on the literature on market integration and stock return pricing, we identify nine possible determinants of stock market integration, which we separate into three categories: individual market performance, macroeconomic conditions, and agricultural trade. In our analysis, we account for agriculture‐specific factors to control for possible structural shifts in financial markets regimes by including the two main commodity price bubbles during last 20 years. Our results show that most of the variables included in our categories have been important factors in promoting regional stock market integration. Moreover, integration among regional stock markets was strengthened by the implementation of trade agreements. This effect is stronger in trade blocs with fewer members, such as NAFTA and MERCOSUR, compared with larger and more heterogeneous blocs, such as the EU and APEC.     

Scharfe untere und obere Schranken für die Wahrscheinlichkeit der Realisation vonk untern Ereignissen

Summary LetA ₁,...,A _n be events in a probability space (,A,W). We denote byL _k the event, that at leastk events among then eventsA ₁,...A _n occur, and byK _k the event, that exactlyk events occur. If only the inequalities _i W(A _i ) _i ,i=1,...,n, are known, we calculate sharp lower and upper bounds forW(L _k ) andW(K _k ). These bounds only depend onn, k and _i , _i ,i=1,...,n. They are relevant, when treating combined tests or confidence procedures.     

Reforming Budgetary Institutions in Latin America: The Case for a National Fiscal Council

Latin America's economies have made tremendous improvements in recent years. Following the lost decade of the 1980s, economic growth has resumed. But the fruits of this progress remain to be consolidated. The political consensus supporting reform is fragile, and the economies of the region are still susceptible to destabilizing shocks, as recent events have underscored. Even well-devised economic policy strategies can be thrown off course by disturbances. This article proposes an institutional reform—a National Fiscal Council—designed to allow Latin American countries to break out of this vicious circle.     

FOCUS: The New Germany A United Germany in the New Europe

Last October the German Ambassador to Britain delivered the annual Gresham Special Lecture in Gresham College in the City of London. The text of His Excellency's lecture is reproduced here with permission.