Martin Currie

Footloose Entrepreneurs, Taxes and Subsidies

Abstract This paper challenges the robustness of policy propositions of the New Economic Geography. Simply altering the temporal framework of the Footloose Entrepreneur model implies that the system can exhibit periodic cycles, chaotic orbits or agglomeration. Minute changes in a tax or subsidy rate can have dramatic, unpredictable and/or irreversible repercussions on the spatial location of manufacturing industry and on social welfare. The complexity of the dynamics is likely to be exacerbated by competition between governments employing subsidies to attract or retain entrepreneurs. The possibility of complex dynamical behaviour is not eliminated by assuming that entrepreneurs are ‘rational’.

Non-linearities and partial analysis

Abstract This paper argues that, where there are non-linearities, the fundamental postulate of partial analysis — the principle of the negligibility of indirect effects — may be undermined: any feedback effects, however seemingly negligible, may have profound implications.

Firm routines, customer switching and market selection under duopoly

Abstract. This paper explores the dynamics of market selection for an industry in which firms employ relatively simple pricing, production and investment routines and in which consumers switch between rival firms in response to price differentials but do not all do so instantaneously. The key issue is whether market processes result in the elimination of less efficient firms by their more efficient rivals. That is to say, do such processes unfailingly increase the efficiency with which available economic resources are used? In the context of duopoly, we show that the survival of the more efficient firm is not guaranteed and that, more generally, the outcome depends upon the speeds with which firms adjust prices and capacities and with which customers switch between rival firms.

The Ordinality of Effort Revisited

Where effort is an ordinal variable, representations of effort levels cannot be added together and thus the function Q = F(eN) with which efficiency-wage theorists routinely start is incoherent. Furthermore, the ordinality of effort implies that the convexity of the distribution function condition, as invoked by principal-agent theorists, is meaningless.

A DYNAMICAL ANALYSIS OF ALTERNATIVE FORMS OF AGRICULTURAL LAND TENURE

This paper explores a dynamic model of an agricultural sector in which farms are leased to cultivators on fixed rent contracts or on sharecropping contracts and in which cultivators are subject to credit rationing by banks. The model, which can exhibit complex dynamics, is used to compare the two pure forms of land tenure and to explore some implications of the coexistence of both types of tenure. The central conclusion from the dynamic simulations is that, contrary to the conventional proposition based on static analysis, both landowners and cultivators may be better-off under sharecropping.

Competitive Industry Dynamics with Constant Costs

This paper integrates investment and production decisions in a dynamic model of a competitive industry where producers, facing a technology involving fixed input–output coefficients, employ quantity adjustment rules. Whether complex dynamic price behaviour is consistent with producers breaking-even over time is explored. The proportion of costs which are sunk through investment is shown to have a potentially dramatic impact on the price dynamics. The implications of an alternative hypothesis— that producers ‘normally’ use their avail able capacities and only do otherwise if events are sufficiently dramatic—are explored