Charles D. DeLorme

Structure, conduct and performance: a simultaneous equations approach

A simultaneous equations framework is used to study the relationship between structure, conduct and performance in US manufacturing in the 1980s and 1990s. The paper expands on earlier structure-conduct-performance studies by using a lag structure to signify that structure, conduct and performance do not affect one another contemporaneously. Findings support some aspects of the traditional structure-conduct-performance model, but challenge others. First, the data suggest that industry structure does not depend on current industry performance. Second, little evidence is found that industry conduct, proxied by advertising, is affected by industry structure. Third, results show that industry performance does not depend on industry conduct, though it is sensitive to industry structure. The main findings are that (1) concentration does not depend on firm profitability, though profitability depends on concentration, (2) advertising follows a process that is independent of the factors considered here, and (3) advertising seems to have no effect on profitability.

Consumer confidence and rational expectations in the United States compared with the United Kingdom

This paper examines the relationship between consumer confidence and the Rational Expectations Permanent Income Hypothesis in the USA and compares the results with those obtained for the UK. The study expands previous analysis by defining consumption as motor vehicles, goods excluding motor vehicles, and services. The results suggest that predictive ability of the USAs consumer confidence is less than that of the UK, but that contrary to the UK study, confidence does not predict future consumption growth of services and is therefore consistent with Rational Expectations Permanent Income Hypothesis.

The determinants of voting by the National Labor Relations Board on unfair labor practice cases: 1955–1975

ConclusionThis study has employed logit analysis in an attempt to determine important variables that influence the voting by the NLRB on unfair labor practice cases. Pooled regression results on the odds of voting prolabor were reported for the administrations of Eisenhower, Kennedy-Johnson and Nixon and for the entire period 1955–1975. A number of interesting findings are offered in this empirical investigation of the NLRB.First, it was found that if a Board member is reappointed to the Board, the greater will be the odds that the member will vote prolabor. This verifies the speculation that the Democrats preferred a solidly prolabor voting Board, and that the Republicans desired a strong prolabor voting minority on the Board.Secondly, political variables such as the party of the administration appointing the NLRB member and the members own political party had an influence on the odds of voting prolabor. If the administration in power was Democratic or if the Board member was a Democrat, the greater were the odds that the member would vote prolabor. Even if a member of the Board professed to be an independent politically, which was the case for two members during the Eisenhower Administration, this variable was found to have a positive effect on prolabor voting for that particular administration and for the entire study period. Also, in the Eisenhower and Nixon administrations, being a former nonmember employee of the NLRB may have had some impact on the voting behavior.Finally, variables for economic conditions in the economy were introduced into the regression equations to test whether or not these variables had any effect on the voting behavior of the NLRB members. In almost all of the logit models reported, the unemployment rate had an influence on voting by Board members. The effect was found to be positive in the Eisenhower period and negative in the Kennedy-Johnson and Nixon periods. The effect for the entire period was positive. It is suggested that whether or not the influence of the unemployment rate on the voting on unfair labor practice cases was positive or negative depended on how the Board perceived the role of organized labor in the tradeoff between inflation and unemployment. If the members believe that organized labors demands for higher wages caused accelerated inflation when the administration in power was simultaneously trying to reduce unemployment, then the odds of the member voting prolabor were reduced. Besides the unemployment rate, some other economic condition variables that were found to have a possible effect on NLRB voting during the Kennedy-Johnson administration were real GNP, strike days lost, and union membership in the United States. While admittedly this study is only a first attempt at modeling the voting behavior of the NLRB on important unfair labor practice decisions, we believe that we have captured some of the most important political and economic variables that effect the behavior of a quasi-judicial agency — the NLRB.

Analysis of a Quantitative Method of Determining Faculty Salaries.

Several researchers have systematically examined the factors that relate to faculty promotions and salary increases. In this paper, the authors report on a faculty-evaluation system used at the College of Business Administration of the University of Georgia. Using a linear regression model to analyze the data, they considered the effects of publications, teaching experience, departmental affiliation, school from which Ph.D. was granted, and teaching effectiveness on the faculty members salary. They found that variables not included in the quantitative reward system were statistically significant. The impact of teaching effectiveness (as measured by student evaluations of faculty) varied over the four-year period covered, the quality of teaching actually having a negative influence during some years.

On the Limits to Rent-Seeking Waste

ConclusionsThe general equilibrium framework developed in this paper for analyzing the limits to rent-seeking waste goes beyond the existing literature by incorporating tax-financed, public subsidies and rent-protecting activities into a rent-seeking environment. We show that the limits to rent-seeking waste depend on the extent to which government subsidizes rent seekers and rent defenders through tax-financed grants, contracts and favors. As observed by Tullock (1967), the diversion of resources toward efforts to acquire a monopoly rent causes a social waste in addition to the excess burden of monopoly pricing measured by the Harberger triangle. In the absence of government subsidies to rent-seeking and under competitive conditions, this additional waste cannot exceed the maximum monopoly rent attainable. However, if government subsidizes expenditures on rent-seeking, then the additional waste can exceed the Tullock rectangle of monopoly rent and, in the limit, equal the economys maximum potential social surplus.Rent avoidance expenditures reduce the rent to be captured and thus discourage rent-seeking. If rent avoidance is a relatively efficient mechanism for transferring consumer surplus to rent granters, then rent-seeking expenditures are displaced by less wasteful expenditures on rent defending. As a result, under competitive conditions, unsubsidized demand for private rent protection may be socially efficient. Nonetheless, the upper limit to rent-seeking waste depends on constitutionally determined maximum rates of public subsidies to rent-seeking and rent-avoidance activities.

Cross national money-income causality for the floating exchange rate period: Has the influence of U.S. and German money persisted?

Abstract This study examines how U.S. and German money affected the domestic money and income of a number of open economies for the floating exchange rate period from 1973 to 1986. We use a multivariate simultaneous equation technique proposed by Geweke and extended by Sheehan, and quarterly historical data. Variance decomposition analyses were performed as well to verify our findings. Our results suggest that changes in the U.S. money stock influence domestic money or income, or both, of countries with fully floating exchange rates. German money causes either domestic income or money of selected European Monetary System (EMS) countries as well as of non-EMS members. The tests indicate that German money influences other European countries at least as pervasively as U.S. money does.

Rent seeking and taxation in the Ancient Roman Empire

Historians maintain that an increase in taxation of the peasant farmers, government corruption and misuse of its revenue by the ruling class led to a weakening of the Roman Empire that culminated in its western demise in the fifth century. But it was not just the taxation issue doomed the Roman Empire, but political change from a Republic to an emperor that exacerbated the climate of rent-seeking behaviour by the ruling classes that culminated in the misallocation of tax resources. One category of rent seeking involves the spending of money that the average taxpayer sees as foolish but that benefits a particular group. The groups who bear the costs can stop the rent seeking if they are informed. These average citizens were peasant farmers who no doubt recognized the costs but were unable to form political coalitions to protect themselves because military control of Roman legions was under the tight control of the emperor. This was not the case under the Republic. With the emperors, public funds were being diverted from the public infrastructure such as road building and repair to more frivolous activities.

Taxation and the Wife's Use of Time

This study examines the influence of taxation on the wifes choice between home and market production by treating the marginal tax rate as a decision variable. The data analyzed, from the Panel Study of Income Dynamics, provide information on the annual hours that husbands and wives devote to market work and housework, including child care, whereas previous studies have measured only changes in market hours and have assumed, in effect, that all other hours were devoted to nonproductive leisure. The empirical results indicate that wives working outside the home react to higher levels of taxation by reducing their market hours and increasing their home production time. In fact, the hypothesis cannot be rejected that wives completely reallocate time lost from the labor market to nonmarket production in an attempt to restore household real income. The authors conclude that the production loss from progressive taxation is usually overstated, though wives may lose through depreciation of their market skills and society loses to the extent that specialization in the economy declines.

Pricing in the Nuclear Power Industry: Public or Private Interest?

This paper tests empirically the Ramsey version of the public-interest theory of regulation by examining the pricing practices in the nuclear power industry, using a 1985 cross-sectional sample of 40 electric utilities. Other researchers have avoided this segment of the industry because of difficulties with nuclear fuel data, or perceived differences in the underlying production function. We show that regulators respond to political influences according to the Stigler-Peltzman version of regulation and that Ramsey pricing cannot be validated, at least for the nuclear segment of the electric power industry.

The by-product theory of revolution: Some empirical evidence

ConclusionThis study has focused on the by-product theory of revolution and has employed tobit analysis in an attempt to determine economic variables that increase the likelihood of revolution in developing countries. Regression results on the duration of revolution were reported for fifty-four developing countries located in Asia and Africa based upon data collected for the period 1955–1975. While we examined a number of economic variables, interesting findings on only three variables are offered in this empirical investigation of revolution in Asia and Africa.First, it was found that the rate of inflation does have a positive influence on revolution in developing countries. If revolution does occur in such a country, the rate of inflation increases the duration of revolution which serves as a proxy for revolutionary victory. That is, an increase in the rate of inflation increases widespread complaints and heightens public hostility toward the central government which induces further participation in revolution. Thus, our finding about inflation and revolution seems to support the thesis by Milton Friedman that high rates of inflation in developing countries, caused by erratic monetary growth, can result in political unrest or revolutionary activity.Secondly, we were not able to determine if the size of the military budget had any influence on revolutionary behavior. Since an increase in the size of the military budget indicates a decrease in the likelihood of a long revolution, we expected that our results would show a negative relationship between military expenditures as a percent of GNP and the duration of revolution. Our findings did not confirm our expectations since the coefficient on the variable was found not to be significant. Finally, we introduced into our model a variable for the annual rate of growth in GNP to test the thesis by Olson that rapid economic growth can be socially destabilizing. The effect in our tobit model was found to be negative and not significant. Although this study is only a first attempt to use tobit analysis to model revolutionary behavior in developing countries in Asia and Africa, we believe that we have captured an important economic variable in the by-product theory of revolution and that variable is the rate of inflation.