Auctioning the Airwaves: The Contest for Broadband pcs Spectrum

The House and Senate of the United States Congress recently passed legislation that directs the FCC to establish a system for using auctions to allocate the use of radio spectrum for personal communications services. There is a unique and unprecedented set of issues that arise in this context, which are of interest to economists, industry analysts, regulators, and policymakers. We discuss these issues and evaluate their likely impact on the outcome of the spectrum auctions. In addition, we argue that there may be pitfalls in the auction procedure adopted by the FCC, and we discuss possible alternative procedures.     

“Business and Government” Then and Now

Socio-environmental conflicts are widespread, and global economic growth will likely increase them in the coming decades. While political ecology, the analysis of common pool resources, and ecological economics, among others, have provided praiseworthy insights into such conflicts, institutional approaches to these phenomena are still scarce. Classical institutional economics has occasionally been put to work on environmental issues, but proposed frameworks remain relatively underdeveloped. We wish to contribute to institutional research on environmental issues by building upon Bruno Théret’s interpretation of John R. Commons’s transactional model and applying the framework to a case of socio-environmental conflicts. First, we briefly sketch the landscape of institutional contributions (especially those that follow the classical institutionalist tradition) to the analysis of environmental issues. We explain why Commons has largely been ignored on these issues. Then, we analyze some of the key concepts of Commonsian economics that are of particular interest to our theoretical elaboration. Following this, we depict Commons’s transactional scheme and propose an application to a case of socioenvironmental mining conflict in Peru. Our framework could complement existing ones and shed light on the institutional dynamics of natural-resource management through conflict.     

Is Asia Decoupling from the United States (Again)?

The recovery from the recent global financial crisis exhibited a decline in the synchronization of Asian output with the rest of the world. However, a simple model based on output gaps demonstrates that the decline in business cycle synchronization during the recovery from the global financial crisis was exceptionally steep by historical standards. We posit two potential reasons for this exceptionally steep decline. First, financial markets during this recovery improved from particularly distressed conditions relative to previous downturns. Second, monetary policy during the recovery from the crisis was constrained in developed economies by the zero bound, but less so in Asia. To test these potential explanations, we examine the implications of an increase in corporate bond spreads similar to that which took place during the recent European financial crisis in a three‐region open‐economy dynamic stochastic general equilibrium model. Our results confirm that global business cycle synchronization is reduced when zero‐bound constraints across the world differ. However, we find that the impact of reduced financial contagion actually goes modestly against our predictions.     

Financial Turbulence and the Japanese Main Bank Relationship

Under the Japanese main bank relationship, a bank holds equity in a firm and plays a leading role in its decision-making and financing. This may leave a firm dependent on its main bank for financing due to its information advantage over other potential lenders. This dependency may be particularly severe during episodes of financial turbulence. We examine the sensitivity of returns on portfolios of Japanese firm equity to the returns of their main banks using a three-factor arbitrage-pricing model. We find no significant dependence when coefficient values are held constant over the entire sample. However, the data strongly suggest a structural break in the relationship subsequent to the last quarter of 1997, a turbulent period for Japanese financial markets. When a structural break is introduced, main bank sensitivity increases after the break, usually to significantly positive levels.     

Market price accounting and depositor discipline: The case of Japanese regional banks

We examine the determinants of Japanese regional bank pricing-to-market decisions and their impact on the intensity of depositor discipline, in the form of the sensitivity of deposit growth to bank financial conditions. To obtain consistent estimates, we first model and estimate the bank pricing-to-market decision and then estimate the intensity of depositor discipline after conditioning for that decision. We find that banks were less likely to adopt market price accounting the larger were their unrealized securities losses. We also find statistically significant evidence of depositor discipline among banks that elected to price to market. Our results indicate that depositor discipline was more intense for the subset of banks that adopted market price accounting.     

A Note from the Editor

Dear Readers: While those of us editing the RFS seek to do so error free,alas     

The optimum size of the labor-managed firm

Ward's [1958] main result is that an increase in the output price of the labor-managed firm (LMF) decreases its output and members. However, Ward and his followers have not addressed two important elements: the benefit of sharing a public good among LMF members and the increased coordination costs among these members. This paper incorporates these elements to derive the LMF's optimal size and suggests conditions which may alter Ward's perverse result. The example of the Israeli Kibbutzim concerning both incorporating the public goods as well as coordination costs serves as a motivation to the model developed in this paper.