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Drug testing in the United States is currently biased toward the minimization of "Type I" error, that is, toward minimizing the chance of approving drugs that are unsafe or ineffective. This regulatory focus of the Food and Drug Administration (FDA) ignores the potential for committing the alternative "Type II" error, that is, the error of not approving drugs that are, in fact, safe and effective. Such Type II errors can result in the loss of significant benefits to society when the sale of drugs that are safe and effective is prohibited. The present drug approval system puts enormous stress on Type I errors and largely ignores Type II errors, thereby raising the cost of drug testing and delaying the availability of safe and effective drugs. A more balanced set of FDA drug approval standards, accounting for the consequences of both Type I and Type II errors, could result in better outcomes, as compared to the present system.

1. INTRODUCTION Some of the issues involved in understanding energy security today for the Asia-Pacific region that are treated in this paper include the dangers stemming from energy supply disruptions [...]

This paper treats terrorism as an economic phenomenon--as a way to understand it and to control it. It uses the tools of substitution, innovation, and cycles and concludes by noting the importance of intelligence and that the most valuable approach to defeating terrorism is that of denying resources to the terrorists rather than attempting to protect assets at risk. It notes that we are probably not any safer than before the implementation of the post-9/11 strategies and emphasizes that new initiatives must be undertaken to prevent terrorist use of weapons of mass destruction., I. INTRODUCTION The purpose of this paper is to treat terrorism as an economic phenomenon--as a way to understand it and to control it. It uses the tools of economic [...]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jpubeco.2005.08.004 Byline: Dagobert L. Brito (a), Jonathan H. Hamilton (b)(e), Michael D. Intriligator (c), Eytan Sheshinski (d), Steven M. Slutsky (b) Keywords: Coasian bargaining; Asymmetric information; Welfare theorems; Externalities Abstract: Most of the debate about Coasian bargaining in the presence of externalities relates to the First Welfare Theorem: is the outcome under bargaining efficient? This debate has involved the definition and importance of transaction costs, the significance of private information, and the effect of entry. There has been little analysis of how Coasian bargaining relates to the Second Welfare Theorem: even if the bargaining outcome is efficient, does the process limit the set of Pareto optimal allocations which can be achieved? We consider a model in which individuals utilize a common resource and may affect each other's output. The individuals differ in their productivities or tastes and this information is private to each of them. The government can manage the common resource and use nonlinear taxes to correct for the externality or it can turn the common resource over to a private owner who can charge individuals to utilize it with a nonlinear fee schedule. The government and the owner have the same information about tastes and productivities of the individuals. Except for the private information, there are no bargaining or administrative costs for collecting the taxes or fees. Whether there is public or private ownership, the government desires to redistribute, but it faces self-selection constraints. We show that the outcome of Coasian bargaining is constrained Pareto efficient. That is, given the information constraints, no Pareto improvement is possible. However, private ownership may limit what Pareto optimal allocations the government can achieve. The private owner in seeking to maximize profits always proposes contracts which counteract the government's attempts to redistribute across individuals with different characteristics. Under public management, any Pareto optimum can be sustained. In this context, private ownership, while not inefficient, does limit the government's ability to redistribute. Author Affiliation: (a) Department of Economics, Rice University, 6100 Main, Houston, TX 77005, USA (b) Department of Economics, PO Box 117140, University of Florida, Gainesville, FL 32611, USA (c) Department of Economics, UCLA, Los Angeles, CA 90095-1477, USA (d) Department of Economics, The Hebrew University of Jerusalem, Jerusalem, Israel (e) Centro de Investigacion y Docencia Economicas (CIDE) Mexico, D.F. Article History: Received 16 February 2005; Revised 26 July 2005; Accepted 18 August 2005

The globalization of the world economy, its benefits and the expected problems are examined. The benefits of integration of markets internationally, trade liberalizations, cultural development and the problems of equal distribution of gains between countries, regional or global instabilities, and shifts in the control of national economies are discussed.