Economic Theory Commons^™

Working Paper No. 30, On The Origins Of Laissez-Faire, Thomas Breaden

Working Papers in Economics

This paper traces laissez-faire back to its French roots, and in particular, to its origins as a political philosophy evoking an economic approach. Related to his visit to France in the 1760s and his personal contacts, we suggest that Adam Smith serves as the link between selected French thinkers and what after Smith’s Inquiry would be widely accepted as a quintessentially Anglo-Saxon tradition in economics. Exploring doctrine, we offer linkages between F. Quesnay, A. Turgot, J.J. Rousseau, and Smith’s ideas. Similarities in Smith’s understanding and the French exponents regarding economic activity vis-a- vis a public sector are presented, along with …

Firm-Sponsored General Training, Felipe Balmaceda Assoc Prof.

Felipe Balmaceda

This article analyzes firm and worker’s incentives to invest in general and specific training when these are separable in the production technology and wages are determined by the outside-option principle. It is shown that firms pay for general training, while workers receive the full return on it, and firms and workers share both the costs and benefits of specific training. The case of delayed general training is also studied. When general training is delayed, it is shown that the strategic complementarity between specific and general training increases the worker’s incentives to invest in specific training.

Competitive Auction Markets In British Columbia, Peter Cramton, Susan Athey

Peter Cramton

US-Canada Softwood Lumber Trade Dispute, On behalf of British Columbia Ministry of Forests.

(Review) Pierre Force, Self-Interest Before Adam Smith: A Genealogy Of Economic Science, Spencer J. Pack

Economics Faculty Publications

Pierre Force, Self-Interest Before Adam Smith: A Genealogy of Economic Science (Cambridge: Cambridge University Press, 2003), pp. ix, 279, $65.00. ISBN 0-52183060-5.

(Review) Self-Interest Before Adam Smith: A Genealogy Of Economic Science, Spencer J. Pack

Economics Faculty Publications

Pierre Force, Self-Interest Before Adam Smith: A Genealogy of Economic Science (Cambridge: Cambridge University Press, 2003), pp. ix, 279, $65.00. ISBN 0-521 83060-5.

Peace In Unity: 19th Century Irenic Motivations In European Unification, Robert Taft Keele

Undergraduate Honors Theses

The Hauptargumenten of politicians and citizens concerning the advantages and disadvantages of the EU are almost exclusively economic or political in nature: lower tariffs; loss of monetary instruments; immigration; disenfranchisement; etc. The object of my thesis is to remind everyone, amid the flurry of speculation and uncertainty prevalent in Europe since the French rejection of the EU constitution, that a major benefit of the European integration is peace, on a continent that has been ravaged by war for centuries. I prove that the establishment of peace was a major element in European unification by confirming links between peace movements and …

A New Approach To Robust Inference In Cointegration, Sainan Jin, Peter Phillips, Yixiao Sun

Research Collection School Of Economics

A new approach to robust testing in cointegrated systems is proposed using non-parametric HAC estimators without truncation. While such HAC estimates are inconsistent, they still produce asymptotically pivotal tests and, as in conventional regression settings, can improve testing and inference.

Liberalisation Of The European Services Market And Its Impact On Switzerland: Assessing The Potential Impacts Of Following The Eu's 2004 Services Directive, Henk Lm Kox, Arjan Lejour

Henk LM Kox

A Capacity Market That Makes Sense, Peter Cramton, Steven Stoft

Peter Cramton

We argue that a capacity market is needed in most restructured electricity markets, and present a design that avoids problems found in the early capacity markets. The proposed market only rewards capacity that contributes to reliability as demonstrated by its performance during hours in which there is a shortage of operating reserves. The capacity price responds to market conditions, increasing when and where capacity is scarce and decreasing to zero when and where it is sufficiently plentiful. Market power in the capacity market is addressed by basing the capacity price on actual capacity, rather than bid capacity, so generators cannot …

Comments On Doc Notice Of Preliminary Results Of Countervailing Duty Review, Peter Cramton, Susan Athey

Peter Cramton

US-Canada Softwood Lumber Trade Dispute, On behalf of British Columbia Ministry of Forests.

Financial Development And Financial Liberalization In Asia: Thresholds, Institutions And The Sequence Of Liberalization, Hiro Ito

Economics Faculty Publications and Presentations

I investigate whether financial openness leads to financial development after controlling for the level of legal/institutional development, and whether trade opening is a precondition for financial opening, focusing on Asia. Utilizing a panel encompassing 87 less developed countries over the period 1980 to 2000, I find that a higher level of financial openness spurs equity market development only if a threshold level of legal development has been attained, a condition prevalent particularly among emerging market Asian countries. On the issue of sequencing, trade openness is found to be a prerequisite for successful inducement of financial development via capital account liberalization.

Movement Of Economics Professors Among Top Research Universities In The Us, Benjamin E. Resnick

Honors Capstone Projects - All

Abstract not Included

The College Football Gambling Market An Empirical Approach, Brian Mcneil

Honors Capstone Projects - All

This study tests the efficiency of the college football gambling market and whether the market allows for profitable wagering. Operating upon the theoretical framework that, at any given time, prices fully reflect all information available in a particular market, I test for the existence of residual information that is not currently incorporated into the market, thus rendering it inefficient. This project expands upon several previous studies performed on sports betting – most notably that of Zuber, Gandar, and Bowers (1985), which examined the gambling market efficiency for National Football League games. The findings prove to be consistent with the conclusions …

Empleo En El Sector De La Producción Transable No Agrícola En El Paraguay. Un Análisis Del Comportamiento De Los Rubros No Tradicionales En La Década De Los Noventa, Francisco Carlos Ruiz Diaz

Francisco Carlos Ruiz Diaz

Varios estudios publicados sobre las reformas impulsadas por los países de América Latina y el Caribe, específicamente aquellas relacionadas con la liberalización del comercio, destacan que ellas pudieron haber contribuido significativamente al crecimiento económico de los años noventa, especialmente durante la primera mitad de la década. Sin embargo, los resultados finales de estas reformas demuestran que las mismas no tuvieron el impacto esperado, específicamente sobre la dinámica de las exportaciones. El crecimiento de las exportaciones de los países latinoamericanos en la década del noventa estuvo por debajo del promedio del crecimiento las exportaciones mundiales. En el caso particular de la …

Is Exchange Risk Priced Beyond Intertemporal Risk?, Ines Chaieb, Stefano Mazzoto, Oumar Sy

Faculty and Research Publications

Recent conditional tests show that exchange risk is priced in integrated international markets. However, these results are typically obtained assuming that intertemporal risk does not matter. We test an intertemporal international asset-pricing model where the investment opportunity set is dynamic. Using a conditional orthogonalization approach, we investigate whether the exchange risk is priced once the market and intertemporal risks are fully taken into account. We find that, in addition to the market and intertemporal risks, the exchange risk is an important determinant of risk premium. We also find that the intertemporal risk, which is often overlooked in the literature, is …

Some Patterns Of Market Shares Of Brands Within And Across Product Categories, Rajeev Kohli, Raaj Sah

Research Collection School Of Economics

This paper: (i) reports an empirical regularity in the market shares of brands; (ii) presents a theoretical framework for understanding the observed regularity; (iii) adduces additional empirical consequences of the framework, which are some counterintuitive relationships among market shares of brands across different product categories; and (iv) presents empirical evidence for these consequences, thus providing additional support for the theoretical framework. Our cross-sectional data on market shares consists of 1171 brands in 91 product categories of foods and sporting goods sold in the US. If we assign a lower rank to a brand with a higher market share, then the …

Norman Wallace Lermond And His Quest For The Cooperative Commonwealth, Charles Scontras

Maine History

Norman Wallace Lermond was Maine's premier socialist leader from 1900, when he first appeared on the state party ticket, until his death in 1944. As such, he represents both the persistence and the frustration of radical politics in a state renowned for its individualism and political conservatism. Lermond's career entailed a series of compromises and contradictions as the socialist leader navigated the shoals of reform and revolution—endorsing political action but eschewing its practical “step-at-a-time" agenda. Through all this, Lermond remained committed to his utopian vision of a classless and harmonious society, in which the failings of capitalism would be swept …

Ciclos Econômicos: Uma Análise Comparativa Entre A Teoria De Kondratieff E Da Escola Austríaca De Economia, Lucas Mendes

Lucas Mendes

Monografia de Graduação para obtenção do título de Bacharel em Economia pela Universidade Regional do Noroeste do Estado do Rio Grande do Sul - UNIJUÍ, Curso de Economia.

From Lane To Lee A Quarry's Potential, Center For Economic Development

Center for Economic Development Technical Reports

In collaboration with a student team from the Department of Landscape Architecture and Regional Planning at the University of Massachusetts Amherst, the Community Development Corporation of Lee explored the potential reuse of an industrial parcel owned by Lane Construction Corporation in Lee, Massachusetts. The 243-acre property is currently in operation as a gravel and sand operation and asphalt processing plant in Lenox Dale, north of Lee center.

Identified as one of the largest industrial zoned parcels in New England, the Lane site has great economic potential in the future development of the town and the surrounding region. However, the site …

On Measuring The Efficiency Of The Social Security System Reforms. The Case Of Poland, Joanna Tyrowicz, Piotr Mularczyk

Joanna Tyrowicz

As other European countries, transition economies face the reform of the social security system. As one of the first, Poland has introduced a pension reform in 1999, which changed a standard pay-as-you-go system into a one constructed of three pillars and based on addressed contributions. The five years from the reform allow to take a first look at the reform, both in terms of assessing the legal implementation as well as the realization of main assumptions and aims. In this paper we consider the effectiveness of the reform. We find that in many aspects this reform should not be considered …

Career Concerns Of Bargainers, Michael Raith, John Fingleton

Michael Raith

This article studies strategic bargaining in which a seller and a buyer are each represented by an agent. Potential agents differ in their ability to obtain information about the other party’s reservation price; neither principal knows the other’s reservation price or her agent’s type. Agents are motivated by career concerns; they want to be perceived as skilled bargainers by their principals. In equilibrium, skilled agents use their private information optimally, while unskilled agents randomize between aggressive and soft price bids, attempting to imitate skilled types. We compare ‘‘open-door’’ bargaining, in which principals can observe the entire bargaining game as well …

Review Of The Proposed Reserve Markets In New England, Peter Cramton, Hung-Po Chao, Robert Wilson

Peter Cramton

New England Power Pool, Federal Energy Regulatory Commission.

Review Of The Proposed Reserve Markets In New England, Peter Cramton, Hung-Po Chao, Robert Wilson

Peter Cramton

ISO New England proposes reserve markets designed to improve the existing forward reserve market and improve pricing during real-time reserve shortages. We support all of the main elements of the proposal. For example, we agree that little is gained by allowing reserve availability bids in the day-ahead market. Doing so greatly increases the complexity of the market without the prospect of more efficient pricing. Rather, offline reserves are most efficiently priced and awarded well in advance, as is done by the improved forward reserve market.

Adam Smith And Greed, Jonathan B. Wight

Economics Faculty Publications

The virtues of greed have been widely promoted by some economists in the 20th century. Allegedly it is Adam Smith who provides this new dignity to greed (Lerner, 1937, ix). Kenneth Arrow and Frank Hahn in the General Equilibrium Analysis (1971), for example, implicitly assume that Adam Smith's self-interest is the greed that promotes economic efficiency (quoted in Evensky, 1993, 203). Walter Williams (1999), a devoted follower of Smith, writes in his column that, "Free markets, private property rights, voluntary exchange, and greed produce preferable outcomes most times and under most conditions." These pronouncements have become part of the cultural …

Comparative Analysis Of Litigation Systems: An Auction‐Theoretic Approach, Michael R. Baye, Dan Kovenock, Casper G. De Vries

Economics Faculty Articles and Research

A simple auction-theoretic framework is used to examine symmetric litigation environments where the legal ownership of a disputed asset is unknown to the court. The court observes only the quality of the case presented by each party, and awards the asset to the party presenting the best case. Rational litigants influence the quality of their cases by hiring skilful attorneys. This framework permits us to compare the equilibrium legal expenditures that arise under a continuum of legal systems. The British rule, Continental rule, American rule, and some recently proposed legal reforms are special cases of our model.

The Relationship Between Import Prices And Inflation In The United States, Thomas D. Corrigan

WCBT Faculty Publications

Inflation has been a non-issue in the United States in recent years despite strong economic growth, on balance, and falling unemployment. Some analysts believe that "new economy" dynamics are responsible for this favorable outcome and further claim that the traditional Phillips curve tradeoff between growth and inflation is no longer a valid assumption underlying economic policy decisions. Others believe that the Phillips curve is indeed alive and well but that favorable "supply shocks" have masked the still relevant tradeoff between growth and price stability. One potential "supply shock" candidate is a declining trend in the cost of imports into the …

Beyond Network Neutrality, Christopher S. Yoo

All Faculty Scholarship

In this Article, Professor Yoo takes issue with the emerging scholarly consensus in favor of ""network neutrality,"" which would prohibit network owners from employing proprietary protocols or entering into exclusivity agreements with content providers that would reduce the transparency of the Internet. Economic theory suggests that network neutrality advocates are focusing on the wrong policy problem. Rather than directing attention on the market for Internet content and applications, the segments of the industry that are the most competitive and the most likely to remain that way, communications policy would be better served if the focus were placed on the segment …

Wealth, Utility, And The Human Dimension, Jonathan Klick, Francesco Parisi

All Faculty Scholarship

Functional law and economics, which draws its influence from the public choice school of economic thought, stands in stark contrast to both the Chicago and Yale schools of law and economics. While the Chicago school emphasizes the inherent efficiency of legal rules, and the Yale school views law as a solution to market failure and distributional inequality, functional law and economics recognizes the possibility for both market and legal failure. That is, while there are economic forces that lead to failures in the market, there are also structural forces that limit the law’s ability to remedy those failures on an …

Free Riding In Noncooperative Entry Deterrence With Differentiated Products, Dan Kovenock, Suddhasatwa Roy

Economics Faculty Articles and Research

We examine free riding and underinvestment in noncooperative entry deterrence in the Gilbert and Vives (1986) model with differentiated products. Our analysis proves that for products that are differentiated enough, when both entry allowing and entry deterring equilibria coexist, the symmetric entry deterring equilibrium may Pareto dominate the entry equilibrium. Hence, "coordination failure" underinvestment in entry prevention can occur. However, as claimed, the overinvestment result of Gilbert and Vives remains robust to moderate amounts of product differentiation. We also show that coordination failure underinvestment arises in a wide variety of entry deterrence models and does not rely on assumptions regarding …

Attitudes Toward Race, Hierarchy And Transformation In The 19th Century, Sandra J. Peart, David M. Levy

Jepson School of Leadership Studies articles, book chapters and other publications

Using the debates between Classical political economists and their critics as our lens, this paper examines the question of whether we're the same or different. Starting with Adam Smith, Classical economics presumed that humans are the same in their capacity for language and trade ; observed differences were then explained by incentives, luck and history, and it is the "vanity of the philosopher" incorrectly to conclude otherwise. Such "analytical egalitarianism" was overthrown sometime after 1850 , when notions of race and hierarchy came to infect social analysis as a result of attacks on homogeneity by the Victorian Sages (including Thomas …