Joseph P. Kalt

Where’s the glue? Institutional and cultural foundations of American Indian economic development

Abstract Since the mid-1970s, the hundreds of American Indian reservations in the United States have been afforded substantial powers of self-government –from law enforcement and taxation to environmental and business regulation. The result has been a set of diverse efforts to overcome widespread poverty, with equally diverse outcomes. This study reports the results of research into the sources of development success during the “take-off” stage of self-government. Little evidence is found to support hypotheses that resource or human capital endowments hold keys to launching Indian economies. Instead, tribal constitutional forms appear to be make-or-break keys to development. Development takes hold when these forms provide for separations of powers and when their structures match indigenous norms of political legitimacy.

Exhaustible resource price policy, international trade, and intertemporal welfare

Abstract This study examines the welfare effects of alternative price policies for exhaustible resource markets. Dynamically optimal plans for resource producers are derived under laissez faire, temporary price controls, and import tariffs. The associated paths of consumer, producer, and aggregate social surplus are compared to produce rankings of the policies. In the presence of monopsonistic power on the part of a net importing nation, an import levy can be optimal. In general, price controls are welfare-inferior to laissez faire, unless the social cost of imports exceeds the private cost by an amount that rises rapidly over time.

A note on nonrenewable resource extraction under discontinuous price policy

Temporal discontinuities in public policy with respect to nonrenewable resource pricing can have significant impacts on the time patterns of resource extraction. These impacts arise from the effect of price discontinuities on the relative values of Hotelling rents across time periods. Whether faced with intertemporal price continuity or price discontinuity, the planning task of the wealth-maximizing producer is to equate the present value of each periods marginal contribution to the stream of net revenues from production across time. This rule for extraction provides the key to understanding the response to a price jump such as occurs upon the removal of price controls. The rational producer holds back at least some output until the price jump occurs. At the moment, the producer pushes output up sharply, raising marginal extraction cost by the absolute amount of the price jump and, thereby, maintaining the value of the Hotelling rent given by the gap between price and marginal extraction cost. US natural gas policy options, as well as plausible alternatives, are simulated to illustrate the effects of discontinuous regulatory regimes. 15 references, 1 table.

Public Policy Analysis of Indian Gaming in Massachusetts

This study finds that Massachusetts has much to gain and little to lose from a casino being proposed for southeastern Massachusetts by the government of the Wampanoag Tribe of Gay Head (Aquinnah). The proposed Wampanoag facility would not only retain the bulk of the very large number of Massachusetts’ casino customers who currently spend heavily in Connecticut’s casinos, but would also attract New Hampshire and Maine residents who currently pass through the Commonwealth on their way to casinos in Connecticut. It also notes that, because the Wampanoag facility is proposed for Bristol and Plymouth Counties—two counties with below-average incomes—the facility could bring greater balance to the Massachusetts economy. The study also examines two areas of potential concern to Massachusetts policymakers: competition with the Commonwealth’s lottery and social change. It notes that the Massachusetts State Lottery’s growth continued upward through the introduction and expansion in Connecticut of the largest casino in the world—Foxwoods—and its neighbor, Mohegan Sun. With regard to possible social problems that might be thought to be associated with gaming, the study finds that problems such as pathological gambling are not likely to be materially increased: Massachusetts residents already have had (and made use of) ready and extensive access to gambling opportunities through the Connecticut casinos, the State Lottery, and other venues. The study also addresses additional concerns of state policymakers, in particular, traffic, police, and other public infrastructure concerns. It finds that these issues do not loom so large as to necessitate the rejection of the Wampanoag proposal, and Federal law provides for negotiations between tribal and state governments over funding of incremental demands on local and state systems.

Intertemporal consumer surplus in lagged-adjustment demand models: An application to natural gas pricing

Abstract Applied welfare analyses of policy options typically measure surplus as a single-period ‘snapshot’ or a flow over time assuming stationary supply and demand curves. These curves, however, generally are not independent of time; therefore, the effects of various policy changes are likely to differ in type and magnitude over time as adjustments are made. This paper presents an algorithm for calculating the welfare effects of a policy change in the context of commonly used lagged-adjustment demand models. An example, involving natural gas price decontrol, is presented. In this example, assuming stationary demand curves would overestimate lost consumer surplus by 15%.

Problems of minority fuel-oil dealers

Claims that minority fuel oil dealers are hampered by severe impediments in the competition for contracts for oil, loan funds from banks, and assistance from the Federal government are explored. Possible remedial actions are recommended. The study focused on the metropolitan areas of Boston, Providence, and New York City. Following the introductory section, the evolving role of minority oil retailers in the Northeast market is reviewed in the second section. The third section examines the specific problems confronting minority dealers, including obtaining start-up capital and finding sources of supply. The fourth section addresses the problems associated with serving the inner-city markets. The fifth section introduces specific recommendations to meet the problems outlined.