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Demand for wood products is falling and prices are rising; the industry is expected to do better in the future.

Tables provide statistical information for the forest products and paper industries.

The article gives an in-depth analysis of the forest products and paper industries.

Article History: Registration Date: 30/09/2004

Byline: Panagiotis Liargovas (1) Abstract: This paper makes an assessment of the homo-genous approach and policy measures towards SMEs, adopted by the White Paper on Growth, Competitiveness and Employment and by national policies in Greece. It is demonstrated that there is a key distinction between the structure of competitive, high-tech, highly-specialized SMEs in advanced countries, whose size is determined by the size of the international niche market where they compete, on the one hand and on the other, SMEs in Greece or in other less developed member-states, whose (micro) size is determined by the local markets they serve, while in most cases they do not have the marketing skills/approach to address export markets. Copying successful instruments for SMEs in advanced countries can thus be most dangerous for the less developed countries, since the industrial organization of the typical SME is very different from those SMEs in Northern Europe. Therefore, the effects of policy measures, without further modifications, will be different from those envisioned by the EU policy-makers. Increasing the utilization of assistance by SMEs in less developed member-states is likely to be more effective if the assistance focuses on incentives and services, which support cooperative action in local and foreign markets, rather than on direct SME financing. Author Affiliation: (1) Department of Political Science and Public Administration, University of Athens, Athens, Greece Article History: Registration Date: 06/10/2004

Byline: Paul Lanoie (1), Mark Thomas (2), Joan Fearnley (3) Abstract: This paper explores the effects of effluent regulatory activity in the Ontarian pulp and paper industry. The model uses instrumental variables to distinguish between that correlation between emission limits and emissions coming from regulatory capture and that coming from true influence on the part of the regulator. Results suggest that total suspended solids (TSS) limits were more effective than biological oxygen demand (BOD) limits. Firm responses to TSS limits were in part through modulating output and these responses lowered emissions. In contrast, firms reported investing in abatement technology in response to BOD limits, but these investments had no discernible impact on emissions. Author Affiliation: (1) Ecole des Hautes Etudes Commerciales and CIRANO, 3000 Cote-Ste-Catherine, Montreal, Quebec, H3T 2A7 (2) Department of Economics, Princeton University, Princeton, NJ, 08544 (3) Brogan Inc, Suite 410, 2249 avenue Carling, Ottawa, Ontario, K2B 7E9 Article History: Registration Date: 03/10/2004

Byline: Marius Schwartz (1) Author Affiliation: (1) Antitrust Division, U.S. Department of Justice, Washington, DC, 20530, U.S.A. Article History: Registration Date: 16/10/2004

MINNA-MAARI H. KARVONEN [*] Traditional neoclassical production theory analyzes the relationship in a production process between inputs and outputs which have a positive market value for the producer. The externalities [...]

Byline: David A.J. Macey (1) Full Title: Karen Brooks, Elmira Krylatykh, Zvi Lerman, Aleksandr Petrikov, and Vasilii Uzun, Agricultural Reform in Russia: A View from the Farm Level. World Bank Discussion Paper 327, Washington, DC: The World Bank, 1996, 75 pp Georgia: Reform in the Food and Agriculture Sector. A World Bank Country Study, Washington, DC: The World Bank, 1996, 152 pp. John Channon, Agrarian Reforms in Russia, 1992--95, Post-Soviet Business Forum, Third Series, London: The Royal Institute of International Affairs, 1995, 32 pp. Agro-Food Sector Policy in OECD Countries and the Russian Federation, Center for Cooperation with Economies in Transition, Paris: OECD, 1996, 266 pp. Mark Kramer, Travels with a Hungry Bear: A Journey to the Russian Heartland, Boston/New York: Houghton Mifflin Company, 1996, 320 pp. Author Affiliation: (1) Middlebury College, ??? Article History: Registration Date: 13/10/2004

Article History: Registration Date: 03/10/2004

Article History: Registration Date: 06/10/2004

The function I manage at Weyerhaeuser is called the Marketing and Economic Research group or M&ER. The group has been operational at the company for nearly thirty years. The composition, [...]

Byline: Laurence Schumann (1), James D. Reitzes (2), Robert P. Rogers (3) Abstract: This article examines Weyerhaeuser's acquisition of Menasha Corporation's west-coast corrugating medium and corrugated box operations. The Federal Trade Commission challenged the acquisition based on anticompetitive concerns arising from concentration in the corrugating medium market and ignored the potential for efficiencies in corrugated box production due to Weyerhaeuser's increased vertical integration. Our analysis also considers pricing behavior during the 'hold-separate' period when the court attempted to maintain the acquired corrugating-medium mill as an 'independent' entity. We find that the unfettered acquisition likely led to lower prices, and the hold-separate order may have created agency problems that permitted anticompetitive behavior and prevented efficiencies. Author Affiliation: (1) Glassman-Oliver Economic Consultants, Inc, 1828 L Street, NW, Suite 405, Washington, DC, 20036 (2) Ernst &amp Young LLP, 1225 Connecticut Avenue, NW, Washington, DC, 20036 (3) Ashland University Gill Center, Ashland, OH, 44805 Article History: Registration Date: 29/09/2004

Abstract This paper presents an overview of the internet sector. The paper begins by introducing key concepts and definitions, particularly around technology, the internet, and the digital economy. It then [...]

The healthcare sector is one of the largest industries in most countries. It is also an outstanding case for a multi-tier system of the participating parties' incentives and their conflicting interests. This paper focuses on a few of the multifactorial interrelationships between the different actors in healthcare services. The novel approach of this paper is the assumption of double-information asymmetry between the transacting parties that describes the actors' relationships more realistically than the traditional principal-agent models. It will be shown that any system of incentivization may only apply perverse incentives in this case. Notably, efficient, high-quality healthcare units will be punished while less efficient and lower quality ones will be rewarded for their accomplishment. The theoretical analysis is supported by facts regarding Central and Eastern-European countries. Some symptoms and causes of the current decline can also be found in advanced West European countries and even in the United States. They are closely related to the ill-designed regulatory systems of publicly funded healthcare in these countries. Keywords Asymmetric information in healthcare * Incentive theory * Two-sided information asymmetry JEL C73-D82-I11, Introduction The health care sector has become one of the largest industries in most of the advanced and medium-developed countries. It is also an outstanding case for a complex multi-tier [...]

This paper investigates the relationship between carbon dioxide emissions and gross domestic product in the Middle East and North Africa region using World Bank data covering the period 1980 to 2010 on the eve of the Arab Spring. Unlike extant studies using parametric models, the results provide evidence against the postulated inverted-U shaped relationship between pollution and the level of economic development. Using a non-parametric model, new evidence is found against the existence of a carbon Environmental Kuznets Curve in contrast to previous studies on the region. The paper provides a cautionary note against the use of parametric models to draw policy implications about the trade-off (or lack thereof) between environmental quality and the level of economic development. Keywords Carbon emissions * Environmental Kuznets curve * Non-parametric regression JEL Classification C14 * C23 * Q54, Introduction The relationship between pollution levels and economic development has been a contentious issue within the economics literature. The discussion was typically examined using the so-called Environmental Kuznets Curve (EKC) [...]

While Joseph A. Schumpeter is classified as a pioneer of evolutionary economics in a wide sense and of entrepreneurship and innovation management in a narrower sense, Schumpeter is less known for his contributions in the area of scientific methodology and history of science. The paper deals with methodological premises in Schumpeter's scientific positioning. In 1908, in his Das Wesen und der Hauptinhalt der theoretischen Nationalokonomie, Schumpeter developed and pioneered his methodological individualism which is very much acknowledged. However, comparing these early positions with methodological writings in his History of Economic Analysis (1954) shows that he has not really shifted from methodological individualism to an institutional perspective that addresses the academic interplay and sees economic action rooted in historical predispositions, paths and social constraints. Keywords Methodological individualism * Institutional economics * Joseph A. Schumpeter * Economic methodology JEL B25 * B30 * B41 * F14 * F01 * F20 * O10, Introduction The paper deals with Joseph A. Schumpeter and his efforts to treat economics methodologically. Some authors argue that Schumpeter maintained his principal scientific positions over the course of his [...]

The paper focuses on tax expenditures of individuals, which are one of the fiscal tools of the state. In the Czech Republic they are primarily aimed at housing policy, pension policy, and philanthropy, and the question is the extent to which tax expenditures can influence the preferences of tax payers. The aim of this paper is to evaluate the effect of tax expenditures of individuals in the form of tax deductions for social policy, housing support and retirement savings. We also evaluate whether these tax deductions fulfill the fiscal functions for which they were introduced and the extent to which taxpayers use them. Methodically, the research is based on the analysis of secondary statistical data of the Financial Administration of the Czech Republic and results from aggregated tax returns filed for the period 2005-2015. The effect of tax deductions was decreased by abolition of the progressive rate of personal income taxes and by introduction of a uniform tax rate of 15%. Tax deductions for retirement savings do not have a sufficiently strong motivational impact and do not affect taxpayers in the context of public policy. Deductions for mortgage interest can be regarded as a form of major housing support, but are related to taxpayer income and favor those with higher incomes. Keywords Tax policy * Tax deductions * Individuals * Mortgage interest * Life insurance * Retirement contributions JEL Classification H2 * D14 * E62, Introduction Tax expenditures are one of the state's primary fiscal tools for allocating private funds to preferred areas. The principle of tax incentives concerns the extent to which expenditures are [...]

In this paper, we investigate the extent of monetary independence in a group of ten Asian countries: China, Malaysia, Japan, India, Indonesia, Philippines, Thailand, Korea, Singapore, and Hong Kong. While the traditional investigation has considered only the bivariate relationship between the home interest rate and the base rate, we employ both single-equation and vector autoregressive representations of the bivariate and the trivariate relationship including the desired (or optimal) interest rate. We find in most countries, that the ranking of monetary independence is relatively consistent across the models and methodologies although model specifications produce important differences for some countries such as Japan, Indonesia, and India. Trilemma suggests that a country cannot accomplish all three policy objectives: monetary independence, exchange rate stability, and free capital mobility. To increase monetary independence a country must choose between greater exchange rate flexibility or a lower degree of capital mobility. The fact that China and Malaysia, the two countries that are known to have imposed the strictest capital controls, consistently rank high in various scenarios while Hong Kong, which has maintained nearly the freest regime in capital markets, is lowest in monetary independence, indicates that perhaps capital controls may play a more important role than does exchange rate flexibility in securing independence in monetary policy making. On the other hand, countries that maintain greater exchange rate stability do not necessarily rank low, unless it is combined with greater capital mobility as in the case of Hong Kong. Keywords Trilemma * Monetary independence * Capital controls * Exchange rate flexibility This paper has been written with a generous support from The A P J Kalam India Studies Research Program. We have benefitted from very useful and constructive comments from two referees. JEL Classification F3 F4, Introduction In an open economy, a monetary authority is subject to the trilemma, which states that it is impossible to have all three policy objectives of (a) unrestricted capital movement, [...]

This paper contributes to the sparse literature on inequality convergence by empirically testing convergence across states in the U.S. This sample period encompasses a series of different periods that the existing literature discusses--the Great Depression (1929-1944), the Great Compression (1945-1979), the Great Divergence (1980-present), the Great Moderation (1982-2007), and the Great Recession (2007-2009). This paper implements the relatively new method of panel convergence testing, recommended by Phillips and Sul (2007). This method examines the club convergence hypothesis, which argues that certain countries, states, sectors, or regions belong to a club that moves from disequilibrium positions to their club-specific steady-state positions. We find strong support for convergence through the late 1970s and early 1980s, and then evidence of divergence. The divergence, however, moves the dispersion of inequality measures across states only a fraction of the way back to their levels in the early part of the twentieth century. Keywords Club convergence * Inequality measures * Panel data * U.S. JEL Classification C22 * D63, Introduction Dew-Becker and Gordon (2005) show that from 1966 to 2001, only the top 10% of the income distribution in the U.S. gained real income equal to the growth in [...]

Several studies identified a positive relationship between a firm's knowledge assets and its productivity. Knowledge assets are usually considered as the level of human and technological capital of the firm. Knowledge assets of the firm may also increase by the so-called spillover effect, especially in less developed host economies of foreign direct investment, which means diffusion of the technology, knowledge and managerial skills from foreign companies to local ones. Beyond the impact of the human and technological capital of firms, this paper also examines the effect of spillover of knowledge on the firms' performance in Hungary within a linear regression model. The model is based on individual data of Hungarian enterprises, examining the change in performance as the difference of the variables between 1996 and 2014. The paper shows that knowledge assets (concerning human capital) basically determine the firms' production in Hungary from 2000. The effect of research and development activity was not significant in the investigated period. Foreign shares in the industries' total equity (proxy for spillover effect) have a weak and, after 2005, a negative influence on performance. The spillover effect in the Hungarian economy was not demonstrated by the regression model. Keywords Human capital * Spillover effect * Hungary * FDI * Productivity * Knowledge asset JEL classification F20 * G30, Introduction Productivity can be regarded as a measure of outputs that are obtained by a combination of inputs. In total factor productivity all inputs are considered, which generally include physical [...]

In this paper, we develop a theoretical framework to investigate the impact of adopting a strategy of know-how trading on the degree of research and development (R&D) cooperation. We show that the consequences of cooperation in know-how sharing under the conditions of the model are similar to a policy of cooperation in R&D investments in areas with large spillovers. An industry-wide policy of cooperation among competitors with respect to R&D investment and sharing would simply result in maximal joint profits. This cooperative R&D outcome could be generalized to any degree of spillover other than 100%. In this paper, the commitment to a policy of know-how trading by the participants in an industry is explained by the firm's attempt to induce the equilibrium of a single industry-wide cooperative research joint venture. In a repeated game framework, we show that pre-commitments by non-cooperative firms to disclose their own know-how to the industry can be effective in inducing cooperative R&D investments by the participants. Keywords Cooperative R&D * Repeated games * Know-how trading * Policy JEL Classifications L13 * 031 * 033, Introduction Innovation originates from a network of firms interacting in a variety of ways, and adopting various external technology sourcing strategies that move beyond traditional research and development (R&D) contracting. [...]

The paper considers a monetary union composed of two representative countries characterized by different inflation aversions. The model derives Nash equilibria after a country-specific shock in which the countries have a costly option to abandon the common currency. The main results are that the higher the inflation aversion of the country affected by the shock, the lower its exit probability. The higher the inflation aversion in both countries, the lower the probability that the country not directly hit also abandons the monetary union (contagion). Keywords Monetary unions * Contagion * Nash equilibria * Inflation aversion JEL Classification F30 * F31 * F41 * G01, Introduction This is a very short stylized paper focused on assessing the stability of a monetary union. The paper aims to analyze the role played by heterogeneous inflation aversions of [...]

Abstract The Coronavirus Aid, Relief, and Economic Security (CARES) Act was the largest stimulus package in US history. In this paper, I look into whether public sentiment improved in response [...]

Health spending has grown faster than the U.S. economy for decades and currently represents approximately 18% of gross domestic product. As with other sectors of the economy, the COVID-19 pandemic has had a significant impact on this growth of the health sector and the labor force that supports it. This paper examines that impact, describing how health care spending, employment, and prices have evolved since the start of the pandemic, using data from the authors' Health Sector Economic Indicators (HSEI) series. After unprecedented drops in March and April of 2020, both spending and employment have gradually recovered but, by the end of the summer, remained below their pre-COVID levels. Prices, on the other hand, have continued to rise. The paper compares these patterns with those observed in earlier recessions and describes some likely reasons for them. Keywords Health sector * Health spending * Health employment * Health care prices * COVID-19 * Health sector economic indicators, 1 Introduction At nearly 4 trillion dollars in annual revenues and 18% of gross domestic product (GDP), the health sector is one of the largest components of the U.S. economy [...]

Abstract This paper analyzes strategic interactions and contagion effects in the peripheral countries of a monetary union. Using game theory and cost-benefit analysis, the paper determines the set of equilibrium [...]

Using an autoregressive distributed lag model, this paper examines the factors that influence the credit risk of the Bulgarian banking system over the decade 2001-2010, as measured by non-performing loans. Recent papers aim to identify the determinants of non-performing loans using a cross-country modelling framework. As the South East European region (SEE) is non-homogeneous, our analysis is country-specific and captures the timeline between the bank privatisation era up to the global financial crisis and the ensuing Greek crisis. The contribution of our paper is twofold: it uses the ARDL modelling framework that is scarcely employed in related studies but also investigates spillover effects from the Greek crisis in view of the material presence of Greek banks in Bulgaria. In accordance with previous studies, the findings suggest that the credit risk determinants of Bulgarian banks should be sought endogenously in macroeconomic variables and industry-specific factors but also in exogenous factors. We evidence a pronounced role of the global financial crisis and the country's bank regulatory framework. The Greek debt crisis appears to play an immaterial role indicating that Greek banks have not been a Trojan horse in the Bulgarian banking system. Keywords Credit risk * Non-performing loans * Bulgarian banking system * Greek crisis JEL Classification C10 * G20 * O57, Introduction Before the global financial crisis, the countries in the SEE region relied to a large extend in foreign funding. The region had seen a stunningly high credit expansion with [...]

The service value broker(SVB) pattern integrates business modeling, knowledge management and economic anal- ysis with relieved complexity, enhanced reusability and effi- ciency,etc. The study of SVB is an emerging interdisciplinary subject which will help to promote the reuse of knowledge, strategy and experience in service based designs and solutions. In this paper, we focus on enumerating collected SVBs empir- ically with initial analysis on their composition manners. The results from this paper will play a dominating role in fueling a coming E-service Economics era.

Abstract This paper uses an econometric approach to examine the inflation consequences of the American Rescue Plan Act of 2021. Price equations are estimated and used to forecast future inflation. [...]

Byline: Charles Bellemare (1), Luc Bissonnette (2), Sabine Kroger (1) Keywords: Partial identification; Preferences; Beliefs; Decision making under uncertainty; Investment game; C81 Abstract: We show how bounds around preferences parameters can be estimated under various levels of assumptions concerning the beliefs of senders in the investment game. We contrast these bounds with point estimates of the preference parameters obtained using non-incentivized subjective belief data. Our point estimates suggest that expected responses and social preferences both play a significant role in determining investment in the game. Moreover, these point estimates fall within our most reasonable bounds. This suggests that credible inferences can be obtained using non-incentivized beliefs. Author Affiliation: (1) Departement d'economique, Universite Laval, Quebec, Canada (2) Department of Econometrics and OR, Tilburg University, Tilburg, The Netherlands Article History: Registration Date: 07/05/2010 Received Date: 29/07/2009 Accepted Date: 07/05/2010 Online Date: 19/05/2010 Article note: Part of this paper first appeared in Bellemare et al. (2007). An OX code with files implementing all the procedures discussed in this paper can be downloaded at http://www.ecn.ulaval.ca/charles.bellemare/. We thank Jim Cox and the Economic Science Laboratory in Tucson, Arizona, for financial and technical support, Urs Fischbacher for his support in programming the experiment, Wafa Hakim for her research assistance in conducting the experiment, and two reviewers for comments.

Byline: Anthony Ziegelmeyer (1,2), Frederic Koessler (3), Juergen Bracht (4), Eyal Winter (5) Keywords: Information cascades; Fragility; Elicited beliefs; Depth-of-reasoning analysis; Experimental economics; C72; C92; D82 Abstract: This paper examines the occurrence and fragility of information cascades in two laboratory experiments. One group of low informed participants sequentially guess which of two states has been randomly chosen. In a matched pairs design, another group of high informed participants make similar guesses after having observed the guesses of the low informed participants. In the second experiment, participants' beliefs about the chosen state are elicited. In equilibrium, low informed players who observe an established pattern of identical guesses herd without regard to their private information whereas high informed players always guess according to their private information. Equilibrium behavior implies that information cascades emerge in the group of low informed participants, the belief based solely on cascade guesses is stationary, and information cascades are systematically broken by high informed participants endowed with private information contradicting the cascade guesses. Experimental results show that the behavior of low informed participants is qualitatively in line with the equilibrium prediction. Information cascades often emerge in our experiments. The tendency of low informed participants to engage in cascade behavior increases with the number of identical guesses. Our main finding is that information cascades are not fragile. The behavior of high informed participants differs markedly from the equilibrium prediction. Only one-third of laboratory cascades are broken by high informed participants endowed with private information contradicting the cascade guesses. The relative frequency of cascade breaks is 15% for the situations where five or more identical guesses are observed. Participants' elicited beliefs are strongly consistent with their own behavior and show that, unlike in equilibrium, the more cascade guesses participants observe the more they believe in the state favored by those guesses. Author Affiliation: (1) Strategic Interaction Group, Max Planck Institute of Economics, Jena, Germany (2) Faculty of Economics and Management, Technical University of Berlin, Berlin, Germany (3) Paris School of Economics and CNRS, Paris, France (4) University of Aberdeen Business School, University of Aberdeen, Aberdeen, Scotland, UK (5) Department of Economics and Center for the Study of Rationality, Hebrew University of Jerusalem, Jerusalem, Israel Article History: Registration Date: 04/12/2009 Received Date: 23/12/2008 Accepted Date: 03/12/2009 Online Date: 18/12/2009 Article note: This paper is a revised version of Chapter V of Ziegelmeyer's dissertation (Ziegelmeyer 2001) which resulted from a collaboration with Frederic Koessler. It circulated earlier under the title 'Behaviors and Beliefs in Information Cascades'. Electronic Supplementary Material The online version of this article ( 10.1007/s10683-009-9232-x) contains supplementary material, which is available to authorized users.

Abstract This paper assesses an investment model for firms making decisions on interconnected assets. Introducing heterogeneity and interconnections implies new considerations about investment decision drivers. The paper also analyzes the [...]

Byline: James C. Cox (1), Maros Servatka (2), Radovan Vadovic (3) Keywords: Saliency; Outside options; Lost wallet game; C70; C91 Abstract: This paper reports an experiment designed to shed light on an empirical puzzle observed by Dufwenberg and Gneezy (Games and Economic Behavior 30:163--182, 2000) that the size of the foregone outside option by the first mover does not affect the behavior of the second mover in a lost wallet game. Our conjecture was that the original protocol may not have made the size of the forgone outside option salient to second movers. Therefore, we change two features of the Dufwenberg and Gneezy protocol: (i) instead of the strategy method we implement a direct response method (sequential play) for the decision of the second mover and (ii) we use paper money certificates that are passed between the subjects rather than having subjects write down numbers representing their decisions. We observe that our procedure yields qualitatively the same result as the Dufwenberg and Gneezy experiment, i.e., the second movers do not respond to the change in the outside option of the first movers. Author Affiliation: (1) Experimental Economics Center, Georgia State University, P.O. Box 3992, Atlanta, GA, 30302-3992, USA (2) Department of Economics and Finance, University of Canterbury, Private Bag 4800, Christchurch, 8140, New Zealand (3) Center for Economic Research (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM), Av. Camino a Sta. Teresa 930, Col. Heroes de Padierna, Mexico City, D.F., 01000, Mexico Article History: Registration Date: 05/10/2009 Received Date: 10/01/2009 Accepted Date: 05/10/2009 Online Date: 20/10/2009 Article note: Electronic Supplementary Material The online version of this article ( 10.1007/s10683-009-9229-5) contains supplementary material, which is available to authorized users.

Byline: David M. Bruner (1) Keywords: Risk; Uncertainty; Experiments; C91; D81 Abstract: There are two means of changing the expected value of a risk: changing the probability of a reward or changing the reward. Theoretically, the former produces a greater change in expected utility for risk averse agents. This paper uses two formats of a risk preference elicitation mechanism under two decision frames to test this hypothesis. After controlling for decision error, probability weighting, and order effects, subjects, on average, are slightly risk averse and prefer an increase in the expected value of a risk due to increasing the probability over a compensated increase in the reward. There is substantial across-format inconsistency but very little within-format inconsistency at the individual level. Author Affiliation: (1) Department of Economics, Appalachian State University, 3111 Raley Hall, 416 Howard St., Boone, NC, 28608, USA Article History: Registration Date: 23/06/2009 Received Date: 01/11/2007 Accepted Date: 23/06/2009 Online Date: 21/07/2009 Article note: This research was undertaken at the University of Calgary Behavioural and Experimental Economics Laboratory (CBEEL). I would like to thank Christopher Auld, John Boyce, Glenn Harrison, Michael McKee, Bill Neilson, Rob Oxoby, Christian Vossler, Nat Wilcox, and two anonymous referees for their many helpful comments and suggestions. I would also like to thank participants at the 2007 North American Economic Science Association Meetings where an earlier version of this paper was presented. Electronic Supplementary Material The online version of this article ( 10.1007/s10683-009-9219-7) contains supplementary material, which is available to authorized users.

Byline: Wolfgang J. Luhan (1), Martin G. Kocher (2,3), Matthias Sutter (3,4) Keywords: Experiment; Dictator game; Team behavior; Social preferences; C72; C91; C92; D70 Abstract: While most papers on team decision-making find that teams behave more selfishly, less trustingly and less altruistically than individuals, Cason and Mui (1997) report that teams are more altruistic than individuals in a dictator game. Using a within-subjects design we re-examine group polarization by letting subjects make individual as well as team decisions in an experimental dictator game. In our experiment teams are more selfish than individuals, and the most selfish team member has the strongest influence on team decisions. Various explanations for the different findings in Cason and Mui (1997) and in our paper are discussed. Author Affiliation: (1) Center for Social Science Methodology, University of Oldenburg, Ammerlaender Heerstrasse 114-118, 26129, Oldenburg, Germany (2) Department of Economics, CREED, University of Amsterdam, Roetersstraat 11, 1018 WB, Amsterdam, The Netherlands (3) Department of Public Finance, University of Innsbruck, Universitaetsstrasse 15/4, 6020, Innsbruck, Austria (4) Department of Economics, University of Goteborg, P.O. Box 640, 40530, Goteborg, Sweden Article History: Registration Date: 26/07/2007 Received Date: 08/08/2006 Accepted Date: 26/07/2007 Online Date: 02/11/2007

This paper empirically tests the law of one price by applying unit root tests to three panels consisting of data on 90 consumer price indices for the EU-25, the EU-15 and the 10 new EU member countries that joined the EU in 2004. The four major findings of this paper are: (1) panel unit root tests find evidence of price convergence for about 70% of all product groups, (2) the results are sensitive to the choice of the numeraire country implying that any conclusions must be based on all bilateral combinations, (3) the average half life across all product groups is 2.0 years, (4) the overall evidence for the law of one price is weaker in the 10 new EU member countries than in the EU-15. Keywords Law of one price * Panel unit root test * Mean reversion * Speed of adjustment JEL classification F3 * F31, Introduction According to the law of one price (LOOP), identical goods sold at different geographical locations should sell for the same price when prices are expressed in the same currency. [...]

Byline: Ted Gayer (1), Robert W. Hahn (2) Keywords: Regulation; Cost-benefit analysis; Environmental economics; D61; L50; L51; Q52 Abstract: In its waning days, the Clinton administration decided that it was appropriate to regulate mercury emissions from power plants. The incoming Bush administration had to decide how best to regulate these emissions. The Bush administration offered two approaches for regulating mercury emissions from power plants. The first was to establish uniform emission rates across utilities, as mandated by the 1990 Amendments. The second was to establish a cap on mercury emissions while allowing emissions trading in order to reduce the cost of achieving the goal. This paper presents the first cost-benefit analysis of this issue that takes account of IQ benefits. We find that the benefits of the mercury regulation are likely to fall short of the cost. This assessment is based on a number of assumptions that are highly uncertain. The finding of negative net benefits is robust to many, though not all, reasonable variations in the model assumptions. We also find that the emissions trading proposal is roughly $15 billion less expensive than the command-and-control proposal. Author Affiliation: (1) Public Policy Institute, Georgetown University, 3520 Prospect Street, NW, 4th Floor, Washington, D.C., 20007, USA (2) AEI-Brookings Joint Center, 1150 17th Street, NW, Washington, D.C., 20036, USA Article History: Registration Date: 21/08/2006 Online Date: 05/10/2006 Article note: Mr. Gayer is associate professor of public policy at Georgetown University and a visiting scholar at the American Enterprise Institute. Mr. Hahn is co-founder and executive director of the American Enterprise Institute-Brookings Joint Center for Regulatory Studies and a scholar at AEI. We would like to thank Mary Jo Krolewski, Leonard Levin, Joel Schwartz, Anne Smith, Nik Wada, and Chris Whipple for helpful comments and Jordan Connors, Laura Goodman and Molly Wells for valuable research assistance. The views expressed in this paper represent those of the authors and do not necessarily represent the views of the institutions with which they are affiliated.

Byline: Jeffrey I. Bernstein (1), Juan Hernandez (2,3), Jose Maria Rodriguez (2,3), Agustin J. Ros (2,3) Keywords: Peru; Telecommunications; Regulation; Productivity; X-Factor; L51; D24 Abstract: This paper measures TFP growth of Telefonica del Peru, and based on this growth rate computes a telecommunications X-factor or offset. More broadly the paper analyses the problem of updating an X-factor under existing price cap regulation. A revised offset must account for the possible restructuring of service offerings resulting from improved efficiencies in response to price cap incentives. Our updating framework focuses on efficiency criteria, and based on economic principles emphasizes the continuity between prior and continuing standards. In the case of Peru, based on annual average TFP growth of 1.66%, the X-factor is computed to be 4.06% per year. Author Affiliation: (1) Department of Economics, Carleton University, 1125 Colonel By Drive, Ottawa, ON, K1S5B6, Canada (2) NERA Economic Consulting, 200 Clarendon St. Boston, Massachusetts, 02116, USA (3) Paseo de La Castellana 13, Madrid, 28046, Spain Article History: Registration Date: 27/07/2006 Online Date: 04/10/2006 Article note: The authors worked on behalf of Telefonica de Peru (TdP) in the 2004--2007 price cap proceedings in Lima, Peru. The opinions of the authors do not necessarily reflect the opinions of Carleton University, the NBER, NERA, and TdP. An erratum to this article can be found at http://dx.doi.org/10.1007/s11149-007-9029-9

Byline: Gary R. Saxonhouse (1), Robert M. Stern (1) Abstract: This essay provides an introduction and overview for a symposium on macroeconomic policy, international finance and banking in Japan. The symposium consists of thirteen papers. Nine of the papers including most of those on macroeconomic policy and international finance appear in this issue. The remaining papers including one on macroeconomic relations within the Asia-Pacific region and three on Japan's banking system will appear in a special section of the next issue of this journal. Author Affiliation: (1) University of Michigan, Ann Arbor, USA Article History: Registration Date: 19/07/2005 Online Date: 29/11/2005

Byline: Masahiro Hori (1), Satoshi Shimizutani (2) Abstract: The Japanese economy has experienced price deflation since the mid-1990s. Despite the importance of overcoming deflation, there has been little recent research on price expectations in Japan. This paper takes advantage of an original and rich quarterly household-level data set from the 'Kokumin Seikatsu Monitors' to estimate average price expectations, examine the factors that affect price expectations, and examine how changes in price expectations have affected household consumption. Our estimates indicate that average price expectations ranged from minus 0.2 to 0% in 2001 and 2002. However, there was an increase to 1% in the first quarter of 2003, followed by a decline to 0.2% in the second quarter, and a steady increase toward 0.8% by the first quarter of 2004. Price expectations depend on current price movements and lagged expectations. A series of quantitative easing monetary policies were not very effective in changing the price expectations, since the policy announcements caused revision of price expectations only for a small portion, i.e., 5--10% of people surveyed. The jump observed in the first quarter of 2003 was a reaction to the outbreak of the Iraq war. Our study also confirms that deflationary expectations discourage household consumption, mainly durable consumption, by delaying the timing of purchases, suggesting that the deflationary expectations should be upwardly revised to restore a vital Japanese economy. Author Affiliation: (1) Economic and Social Research Institute, Cabinet Office, Japanese Government, 3-1-1 Kasumigaseki, Chiyoda-ku, Tokyo, 100-8970, Japan (2) Institute of Economic Research, Hitotsubashi University, 2-1 Naka, Kunitachi-shi, Tokyo, 189-8603, Japan Article History: Registration Date: 19/07/2005 Online Date: 01/12/2005 Article note: This paper is a revised version of Hori and Shimizutani (2003). We thank David Weinstein, Fumio Hayashi, Koichi Hamada, Anil Kashyap, and Yutaka Kosai for their constructive suggestions. We also appreciate useful comments from participants in the May 2004 and October 2004 conferences in Tokyo and Ann Arbor sponsored by the University of Michigan and Hitotsubashi University, as well as those in the conference 'Japanese Monetary Policy: Experience and Future' (June 2004) organized by the ESRI, especially Tutomu Watanabe. Moreover, we wish to thank the Price Policy Division, especially Hitoshi Otose, Yoshio Kanda and Masaru Hadano for providing us with micro-level data from the 'Kokumin Seikatsu Monitors.' The views expressed in this paper are those of the authors and do not represent those of the Cabinet Office or the Japanese government.

Byline: Koichi Hamada (1), Asahi Noguchi (2) Abstract: This paper examines the role of misleading economic ideas that most likely promoted the economic disasters of the two deflationary periods in Japanese economic history. Misleading ideas deepened the depression during the interwar years, and erroneous thinking has prolonged the stagnation of the Japanese economy since the 1990s. While the current framework of political economy is based on the self-interest of political agents as well as of voters, we highlight the role of ideas in policy making, in particular, in the field of macroeconomy where the incidence of a particular policy is not clear to the public. Using two significant examples, this paper illustrates the role of preconceived ideas, in contrast to economic interests, as dominant forces influencing economic policy making. Author Affiliation: (1) Department of Economics, Yale University, New Haven, CT, 06520-8269, USA (2) Senshu University, Tokyo, Japan Article History: Registration Date: 19/07/2005 Online Date: 26/11/2005 Article note: We thank Muneyoshi Nakamura, who originally prepared the documentations of editorials during the interwar period. We also thank Michael Bordo, Takeo Hoshi, Frances Rosenbluth, and Edwin Truman for their encouraging as well as critical comments on our approach.

Abstract This paper provides new insights in understanding the adjustments of the labor market to trade liberalization policies in an economy producing tradeables and nontradeables. The results of the paper [...]

Abstract. The paper analyses the EU fiscal rules from a political economy perspective and derives some policy lessons. Following a literature survey, the paper stresses the importance of appropriate incentives [...]

Byline: John T. Addison (1), Paulino Teixeira (2) Keywords: employment adjustment; employment protection; error correction model; panel estimation; labor reallocation; C22; C23; J23 Abstract: This paper supplements aggregate time-series analysis of the speed of employment adjustment with evidence from firm panel and flow data for two countries -- Portugal and Germany -- sharing unenviable labor market reputations. The Portuguese labor market is often portrayed as terminally inert, while that of Germany as badly ailing. We report broad consistency in the results across data sets in favor of Portugal. In benchmarking Portugal against Germany, the adverse reputation of the former -- if not necessarily that of the latter country -- may have been exaggerated in contemporary policy debate. Author Affiliation: (1) Department of Economics, University of South Carolina (USA) and IZA, Bonn (2) Faculdade de Economia, Universidade de Coimbra, and GEMF, Portugal Article History: Registration Date: 01/01/2004 Article note: We thank, without implicating, two anonymous reviewers of this journal for their helpful remarks on an earlier version of the paper.

Byline: Andre Jungmittag (1) Keywords: Growth; innovation; technological specialisation; technology diffusion; convergence; panel data; C23; O30; O47 Abstract: The paper analyses the effects of innovations, technological specialisation and technology diffusion on economic growth and convergence of the EU countries from 1969 to 1998. The empirical analysis is based on a panel data model, which enables us to assess the impacts of these three factors as well as of the usual production factors on long-term economic growth, and to calculate their partial contributions to [beta]- and [sigma]-convergence of labour productivities within the EU. The results show that besides capital accumulation, transferable technical knowledge is a driving force of growth for catching-up EU countries, while it is the level of Ricardian technological specialisation for advanced EU countries. Author Affiliation: (1) European Institute for International Economic Relations at the university of Wuppertal, Rainer-Gruenter-Str. 21, 42119, Wuppertal, Germany Article History: Registration Date: 01/01/2004 Article note: A previous version of the paper was prepared while the author was a Visiting Fellow at the Directorate General for Economic and Financial Affairs, EU Commission. I gratefully acknowledge the stimulating research atmosphere at DG ECFIN and would like to thank Werner Roger and Klaus Walde for helpful comments. Furthermore, I would like to thank Jurgen Wolters, FU Berlin, for further helpful comments at the workshop for the special issue of this journal in Brussels, February 6--8, 2004.

Byline: Bart van Ark (1,3), Marcin Piatkowski (2) Keywords: O31; O47; O52; P27 Abstract: This paper investigates the productivity performance of CEE countries vis-a-vis the EU-15 during the 1990s to detect sources of convergence between the two regions. The paper shows that changes in labour intensity have been an important source of productivity convergence during the 1990s, and are likely to remain so in the near future. It is also found that despite lower income levels, ICT capital in the CEE-10 has contributed as much to labour productivity growth as in the EU-15. Industry analysis shows that manufacturing industries that have invested heavily in ICT have been key to the restructuring process. As such ICT may therefore have been an important source of growth but probably temporary source of convergence. In the longer run the impact of ICT on growth will have to come primarily from its productive use in services. The paper therefore includes a New Economy Indicator that reflects the existence of conducive environment for continued ICT investment and diffusion. It shows that further reforms are much needed for CEE countries to enter a second convergence phase in the coming decades. Author Affiliation: (1) Groningen Growth and Development Centre, The Netherlands (2) TIGER (Transformation, Integration and Globalization Economic Research) Leon Kozminski Academy of Entrepreneurship and Management, Warsaw, Poland (3) The Conference Board, New York, USA Article History: Registration Date: 01/01/2004 Article note: This paper is written as part of a project on 'Information &amp Communication Technologies as Drivers of Economic Development in Post-Communist Countries' sponsored by USAid (Grant No. 220/001.6). The industry data for the EU-15 (section 4) are updated estimates derived from a study sponsored by DG Enterprise of the European Union (O'Mahony and van Ark 2003). We are grateful to Robert Inklaar and Edwin Stuivenwold for statistical assistance, and to various commentators on this paper at seminars and workshops. We benefited in particular from comments by Bart Los and Marcel Timmer. The authors are solely responsible for the results presented and any remaining omissions.

Byline: Hideki Yamawaki (1) Keywords: vertical foreign direct investment; R&amp D; manufacturing; distribution; F21; F23; L22 Abstract: This paper attempts to identify the determinants of the multinational enterprise's decision to locate value chain activities, such as R&amp D, procurement, production, and distribution, among the source and the host countries. Using data of foreign firms in Japanese manufacturing, the statistical analysis found that the determinants of direct investment in one business activity are not necessarily the same as the determinants for another activity, while they are linked each other through complex mechanisms. For example, foreign subsidiaries in R&amp D intensive industries in Japan are more likely to import intermediate goods, use contractors for production, and distribute through fragmented distribution system. It appears that the traditional transaction-cost model is less consistent with the pattern of investments in R&amp D, productions, and distribution at least for the sample used in this paper. Author Affiliation: (1) The Peter F. Drucker Graduate School of Management, Claremont Graduate University, 1021 N. Dartmouth Avenue Claremont, CA, 91711, USA Article History: Registration Date: 01/01/2004 Article note: I would like to thank Werner Pascha and the editors, Paul Welfens and David Audretsch, for thoughtful comments and suggestions.

Byline: Yukihiro Nishimura (1) Keywords: Tax implementability; envy-free; egalitarian-equivalence Abstract: This paper examines the tax implementability of allocations based on fairness as no-envy (or envy-freeness) and its alternatives, by a tax schedule that depends on labor supply and gross income ((y,l)-implementability). A relevant incentive constraint is perishability of abilities, where agents can exert a lower ability level than they actually possess. We first show that in any economy, every envy-free allocation is (y,l)-implementable. On the other hand, whereas we already know that no-envy may be incompatible with first-best Pareto efficiency, the alternative equity concepts which circumvent this first-best equity-efficiency trade-off meet the obstacle of tax implementability even when labor supply is observable. We also clarify necessary and sufficient domain restrictions under which the egalitarian equivalent allocations satisfy the (y,l)-implementability condition. Author Affiliation: (1) Department of Economics, Yokohama National University, 79-3 Tokiwadai, 240-8501, Hodogaya-ku, Yokohama, Japan Article History: Registration Date: 01/01/2004 Article note: Received: 15 November 2002, Accepted: 7 July 2004, JEL Classification: Yukihiro Nishimura: A preliminary version of this paper was presented at the 35th Annual Meeting of the Canadian Economics Association (McGill University, Montreal, Quebec, Canada) and the Sixth International Conference of Society of Social Choice and Welfare (California Institute of Technology, Pasadena, USA). The author acknowledges Koichi Tadenuma, Francois Maniquet, Shinji Yamashige, Kotaro Suzumura, Paul Makdissi, Robin Boadway, Georg Tillmann, Stefan Dodds, the Associate Editor and anonymous referees for helpful comments. The usual disclaimer follows. Financial support from the Department of Economics and the School of Graduate Studies of Queen's University, the Yokohama Academic Foundation and the Grant-in-Aid for Young Scientists (B) from the Ministery of Education, Culture, Sports, Science and Technology is gratefully acknowledged.

Byline: Luis C. Corchon (1), Ramon Fauli-Oller (2) Keywords: Merger; antitrust; implementation Abstract: In this paper we analyze the implementation of socially optimal mergers when the regulator is not informed about all parameters that determine social and private gains from potential mergers. We show that implementation requires a certain degree of agreement between social and private incentives. The most important example where this congruence is present is when the uncertainty refers to cost savings, because in this case society and firms want costs savings to be as high as possible. Then, it is possible to induce firms to truthfully reveal the costs savings induced by the merger. Author Affiliation: (1) Departamento de Economia, C/ Madrid 126, Universidad Carlos III, 28093, Getafe, Spain (2) Departament Fonaments de l'Analisi Economica, Universitat d'Alacant, Campus de Sant Vicent, 03071, Alacant, Spain Article History: Registration Date: 01/01/2004 Article note: Received: 7 June 2001, Accepted: 14 June 2004, JEL Classification: This paper was presented at the First CODE meeting held in Barcelona, June 1997 and in seminars at the universities of Alicante, Caen, Carlos III, Bilbao, Complutense (Madrid) and Malaga. We would like to thank P. Amor os, D. Cardona-Coll, P. Hammond, A. Lozano, C. Martinez, V. Merlin, D. Moreno, B. Moreno, D. Mookherjee, J. Naeve, P. Pereira, R. Renault, A. Snoy and F. Vega-Redondo for their useful comments. The authors are solely responsible for any remaining errors. They acknowledge financial support from CICYT BEC2002-02194, PB97-0120, BEC2001-0535 and the IVIE.