Asghar Zardkoohi

A Test of the Property-Rights Theory of the Firm: Water Utilities in the United States

CONTROVERSY over the relative efficiency of public versus private enterprise has a long history in economic thought. Many of the same issues that concerned Chadwick and Mill in their debates in the 1850s over nationalizing certain British industries and von Mises and Hayek versus Lange and Lerner in their well-known exchanges about the efficacy of a centrally planned economy continue to come up in the literature.1 In fact the modern property rights theory of the firm, postulated by theorists such as Alchian, Becker, and Demsetz follows in the tradition of von Mises and Hayek in stressing the impact on economic efficiency of alternative ownership forms. Special emphasis is placed on cost-reward arrangements within private and public enterprises in this approach to the theory of the firm. Where a direct connection between productivity and reward is severed, as in public enterprises, production will be less economically efficient. While this is a very appealing approach to firm behavior, it is yet to be subjected to a rigorous test with respect to firm costs. De Alessi purports to examine the implication of the property rights theory for managerial tenure.2

Board Leadership Structure and Firm Performance

We suggest that the equivocal empirical results of board leadership structure on firm performance have both methodological and conceptual roots. We stress that whether board leadership structure enhances or lowers performance depends on its fit with a firms internal and external conditions, a point that has not been comprehensively addressed by the extant literature. To guide future research in this field, we develop five testable propositions and offer some suggestions on how these propositions may be empirically tested.

Branch office economies of scale and scope: evidence from savings banks in Finland

Abstract The present paper provides empirical estimates of economies of scale and scope for 615 branch offices representing 43 savings banks in Finland at year-end 1988. A translog cost model is employed with detailed branch office level data for operating costs and outputs. Input prices are measured at the bank level. The results indicate that the cost curve for branch offices is downward-sloping regardless of whether or not the number of branches in the organization is included in the analyses. Also, the operating costs of individual branch offices decline as the number of branches in the branch bank organization increases, with most cost savings obtained at around five branches. Scope economies are negative but statistically insignificant. These findings suggest both that large branch offices operate more efficiently than smaller offices and that operating costs can be further reduced by membership in a branching organization with at least five offices.

Market structure and campaign contributions: Does concentration matter? A reply

ConclusionEconomic rents may be obtained through the process of market competition or be obtained by resorting to governmental protection. Rational firms choose the least costly alternative. Collusion to obtain governmental protection will be less costly, the higher the concentration, ceteris paribus. However, high concentration in itself is neither necessary nor sufficient to induce governmental protection.The result that rent-seeking activity is triggered when firms are affected by government regulation has a clear implication: to reduce rent-seeking waste, governmental interference in the market place needs to be attenuated. Pittmans suggested approach, however, is ‘to maintain a vigorous antitrust policy’ (p. 181). In fact, a more strict antitrust policy may exacerbate rent-seeking. For example, the firms which will be affected by a vigorous application of antitrust laws would have incentive to seek moderation (or rents) from Congress or from the enforcement officials.

Congressional support for unions’ positions across diverse legislation

Organized labor has become increasingly active in national politics. This development has encouraged research into union political activities, particularly in the area of legislative politics. But little research has been published on the basis of congressional support for union positions on diverse public policy items. This paper has examined the correlates of congressional support for unions’ positions across 33 roll-call votes taken in the first session of the 98th Congress. Empirical analyses suggest that certain factors, such as legislators’ party affiliation and constituents’ ideology, are consistent correlates of such support across diverse legislation.

Economies of Scale and Scope in Thrift Institutions: The Case of Finnish Cooperative and Savings Banks*

Accounting data on operating costs and outputs for cooperative and savings banks in 1983 and 1984 are used to provide empirical evidence on the cost structure of thrift institutions in Finland. A modified translog cost model is fitted to the data. Economies of scale and scope are estimated based on the coefficients of the cost model. Using advances and bills as outputs, the results indicate that cost curves for both cooperative banks and savings banks generally tend to be L-shaped at the plant level and U-shaped at the firm level. Scope diseconomies are found in the joint production of advances and bills. This evidenceindicates that natural monopoly conditions are not present in the Finnish thrift industry.

Production costs for consolidated multibank holding companies compared to one-bank organizational forms

Abstract Economies of scale and scope for consolidated multibank holding companies (MBHCs) are examined with a translog cost function and are compared with one-bank holding companies (OBHCs) and independent banks. Empirical results indicate that costs curves are generally U-shaped for independent banks and OBHCs but are relatively flat for MBHCs. This evidence implies that banking organizations should prefer the MBHC to one-bank forms at higher output levels. Implications for bank regulatory policy and interstate banking are discussed.

Ownership structure, deregulation, and risk in the savings and loan industry

Abstract We provide evidence on two noncompeting hypotheses concerning risk in the savings and loan industry: (1) the ownership structure hypothesis which argues that stock associations operate with more risk than mutual associations, and (2) the deregulation hypothesis which argues that savings and loans take more risk in a deregulated environment. Evidence from data on individual savings and loans for the 1976–1986 period is consistent with both hypotheses. Savings and loan associations took more risk because of the demutualization of the industry and also took more risk because regulations permitted greater risk-taking. Our results thus suggest that the thrift crisis may have reflected a unique confluence of structural and regulatory events.

Unanticipated Money Growth, Unemployment, Output and the Price Level in the United Kingdom: 1946-1977*

*We gratefully acknowledge the assistance of Michael Parkin, James MaKokha, John Jackson, Tim Deyak, Warren Weber and an anonymous referee. However, they are in no way responsible for remaining errors. The views in this paper do not necessarily reflect those of either the Federal Reserve Board or the Federal Reserve Bank of Atlanta. 1. The justification for a model such as (1) is given by Sargent [19].

Branch bank operating costs: evidence from savings banks in Finland

Empirical findings on branch bank operating costs are presented. The analyses examine 1988 data for 646 individual branch offices representing 43 savings banks in Finland. Another sample of 48 unit banks with no branches is collected. Comparisons of plant scale economics are made using the more traditional approach based on aggregate branch bank data versus individual branch office data. Moreover, effects of the number of branches in the branching organization on individual branch office operating costs are examined. Finally, direct comparisons of branch office versus unit bank operating costs are provided.