The Under-Exploitation of Natural Resources: A Model with Overlapping Generations*

It is well known that competitive markets may fail to generate an optimal rate of extraction of a natural resource-stock. The barrier to optimality may be uncertainty about tenure, commonality of property rights in the resource, or uncertainty about the extent of the resource. In all these cases, suboptimality takes the form of over-extraction. We draw attention to an additional source of suboptimality. In an economy with overlapping generations, the resource-stock plays the double role of repository of savings and source of productive inputs. The decline in the supply of the resource-stock may eventually force its price so high that it ceases to perform its second function. Extraction comes to an end even though the resource has a positive marginal productivity in producing consumption goods. This is inefficient, hence suboptimal. This time, however, suboptimality takes the form of under-extraction.     

Consumer Awareness of the Legal Obligations of Funeral Providers

The results from a consumer survey that examined consumer knowledge of some parameters of the Funeral Rule are presented. Currently, all funeral home activities are regulated under the Funeral Industry Practices Rule of the Federal Trade Commission. The rule is premised on the assumption that it is difficult for consumers to make careful, informed purchase decisions in at‐need situations because of emotional stress, time pressure, and lack of familiarity with available goods and services. However, limited research has assessed how much consumers know about the legal obligations of funeral providers as provided for by the Funeral Rule. Implications for consumer protection and policy are discussed.     

Some Implications of Uncertainty in a Small Open Economy

Consider a small open economy which produces two commodities, the first a consumers' good and the second a producers' good, by means of a conventional no-joint-products technology. Suppose that one of the two production functions is subject to a random multiplicative disturbance and that factors of production must be allocated to the two industries before the realization of the random variable. It is known that if in the absence of uncertainty production is incompletely specialized then the same is true under uncertainty although the average output of the uncertain industry is lower. In the present paper we suppose that each of the two production functions is subject to a random multiplicative disturbance but restrict our attention to three particular cases: the polar cases of perfect correlation, positive and negative, and the intermediate case of zero correlation. It is shown that in none of these cases does there exist an obvious and complete analogue of the above proposition but that in each case something definite can be said, either about the possibility of complete specialization under uncertainty or about the effect of uncertainty on the allocation of factors (but not about both).     

The Importance of Being Honest*

Given individual propensities to cheat (stealing, overcharging, etc.), the optimality conditions for the amount of resources devoted to law enforcement and for the severity of penalties on convicted cheats are derived. In some interesting cases, the optimal penalty equals the market price divided by the probability of conviction and it is optimal to spend very little on enforcement and impose a severe penalty. These conclusions seem to apply to the practical case of metered parking violation.     

When Do Nutrient Content and Nutrient Content Claims Matter? Assessing Consumer Tradeoffs Between Carbohydrates and Fat

Substantial concern about the wide variety of carbohydrate‐related claims appearing on consumer packaged food products have been expressed by members of both the marketing and public policy communities. As a result, a number of petitions requesting the establishment of carbohydrate levels required for a low‐carbohydrate nutrient content claim have been submitted to the Food and Drug Administration, and the agency is considering the establishment of criteria for such a claim. This research examines the potential effects of a “low‐carbohydrate” claim, relative to the effects of a “low‐fat” claim, across selected product fat and carbohydrate levels. The study also considers whether consumers’ motivation to process nutrition information serves as a potential moderator of the effects of the nutrient content claims and nutrient levels on the dependent measures. As predicted, the results show key differences across consumer motivation levels. The policy implications of our findings are discussed.     

The Death Care Industry: A Review of Regulatory and Consumer Issues

Although virtually every person in the United States will purchase or consume a funeral‐related product or service, relatively little is understood about the processes a consumer undertakes in making these expensive decisions in stressful circumstances. Regulation of the industry has been contentious from the outset, and there have been numerous questions as to regulatory effectiveness. This article outlines and discusses issues related to the death care industry with particular attention to consumer interests.     

The National Economic Summit: Authority,Persuasion and Exchange*

The National Economic Summit can be viewed as a symptom of the extensive use of authority in the Australian economy and equally an expression of the limitations of what can be achieved with centralized authority. An examination of the documentation left by the summit provides an opportunity to assess the implications of policy choices which use persuasion and authority rather than market disciplines.