Brian Hindley

New Institutions for Transatlantic Trade

In late 1994 and 1995, senior figures on both sides of the Atlantic advocated a transatlantic free trade area: in December 1995 the EU and the United States signed the New transatlantic agenda and the Joint EU–US action plan in Madrid; in March 1998, the European Commission proposed ‘a new transatlantic marketplace’, which was vetoed by France in the following month; and in September 1998 the Commission offered its latest plan–the Draft action plan for transatlantic economic partnership. This article examines the political and economic case for new institutions, drawing on the arguments the Commission used to support its proposal for a new transatlantic marketplace. These arguments are found to be unpersuasive. For an EU stance in trade policy matters to be improved by a French veto may be unprecedented. That is what has happened, however. The French veto actually led to the Draft action plan which provides transatlantic trade relations with a better framework than the proposal for a new transatlantic marketplace could possibly have done.

Accident liability rules and externality

By and large, the focus of the recent literature on the efficiency properties of liability rules has been upon the individual decision-maker and effects on the overall level of accident-related activity have been ignored. Exceptions are Posnert and Shavel12 Of the cases discussed by Shavell, we shall be concerned with one: that of accidents between strangers who have no market relationship to one another, as is the case, for example, in the typical automobile accident. For this case, Shave11 concludes that there is ‘. . . no conceivable liability rule that induces the parties to act efficiently.‘3 This is, we believe, a correct and important conclusion. We attempt to press it further here by explicitly treating the issue of the appropriate level of accidentrelated activities as a problem within the economics of externality. Two distinct externalities are identified, one which a liability rule cannot conceivably correct and one whose effects on resource allocation a conventional liability rule may make either better or worse. We then show that the liability rule that Tullock4 has attributed to Earl Thompson (under which both parties to an accident pay all of its costs: their own costs plus a fine equal to the costs of the other party) provides a solution to the second externality though not to the first. We conclude with a discussion of the relative merits of Earl Thompson’s liability rule and conventional rules.

The Pigou effect: An elaboration

Abstract The ‘Pigou effect’ has drawn the attention of monetary theorists for three decades. We argue in this paper that the nature and significance of Pigous (1943, 1947) comments on Keynes have been frequently misinterpreted. In particular, we suggest that Pigous logic implies not only that monetary policy will be successful in escaping unemployment in the liquidity trap situation, but also that it is a Pareto optimal means of doing so.

Does British economic policy have a future

It is frequently claimed that Britains withdrawal from the EU would be tantamount to national economic suicide. The paper examines that proposition by assessing the costs and benefits of EU membership, concluding that the net effect of withdrawal on the British economy would be small-certainly not large enough to stop British governments standing up for British interests in Europe.

Creating an Integrated EEC Market for Financial Services

The European Commission estimates that a very large gain will result from the integration of financial services (banking and credit, insurance, brokerage, and securities) in the European Community. Cecchini (1988, p. 42), gives a figure of ECU 21.7 billion as the potential gain in consumer surplus.