Economic Inquiry

Articles from Vol. 29, No. 3, July

An Objective Measure of Search versus Experience Goods
I. INTRODUCTION "Search" goods and "experience" goods have been part of the lexicon of economics for twenty years now. During this time a substantial body of research has been influenced by Nelson's 1970 and 1974 papers, which enlarged upon...
Customer Discrimination and Affirmative Action
I. INTRODUCTION Beginning with the work of Becker [1957], economists have been concerned with the relationship between competitive market forces and the persistence of labor market discrimination. (1) A major insight of Becker and the literature...
Efficiency Wages and Equilibrium Wages
I. INTRODUCTION Economists have long sought to explain unemployment in ways consistent with individual agents' optimizing behavior. A recent, although controversial, model in this vein is the efficiency wage paradigm, which focuses on the difficulty...
Exchange Rate Systems and Investor Preferences
I. INTRODUCTION Dissatisfaction with the performance in the 1980s of floating exchange rates has lead to renewed interest in a system of target zones for foreign exchange rates or a partial return to fixed exchange rates. Consideration of these...
Intertemporal Resource Allocation: Distributive Issues Surrounding Gasoline Price Hikes
I. INTRODUCTION When Iraq invaded Kuwait in August 1990, millions of barrels of daily oil production suddenly dried up. Because of delivery lags, however, this production shortfall did not actually materialize in downstream markets for several...
Is the Budget Deficit "Too Large?"
I. INTRODUCTION The question--'Is the government's budget deficit too large?'--has received an immense amount of public attention. Recently, economists have begun to study this question more intensively in a series of articles that explicitly...
On the Relative Efficiency of Cash Transfers and Subsidies
I. INTRODUCTION Economic theory has long argued that to raise the welfare of an individual at the lowest possible cost, cash grants are more efficient than subsidies to the consumption of specific commodities. Indeed, a demonstration of this...
Production Costs, Transaction Costs, and Local Government Contractor Choice
I. INTRODUCTION Declining fiscal conditions, increasing service obligations, and public clamor for more effective government have led local governments to examine alternatives to the bureaucratic supply of publicly provided services. The alternative...
Solvency Regulation and the Property-Liability "Insurance Cycle"
I. INTRODUCTION The supply of property-liability insurance in the U.S. appears to be extraordinarily cyclical. Liability insurance lines in particular fluctuate between "soft markets" of stable premiums and low returns to insurers, and tight...
The 1920-21 Deflation: The Role of Aggregate Supply
I. INTRODUCTION The 1920-21 recession in the United States was brief relative to the Great Depression of a decade later, but it included a remarkably sharp price deflation. The decline in the GNP price deflator from 1920 to 1921 is the largest...
The Influence of Ideology on Congressional Voting
I. INTRODUCTION The question of what determines congressional voting on legislation has inspired a number of recent empirical analyses. All are in agreement that congressional voting on specific bills is correlated with the economic self-interest...
The Political Economy of New Deal Fiscal Federalism
In 1930, the average American received somewhat more than 50 percent of his government services from local government, 20 percent from state government, and the remainder from the federal government. By 1940 this pattern had been reversed, with the...
The Social Role of Not-for-Profit Organizations: Hospital Provision of Charity Care
I. INTRODUCTION Private, as well as public, institutions may be granted tax-exempt status to induce socially desirable behaviors on their part. Specifically, the tax treatment of not-for-profit hospitals exists in part to encourage the provision...
Transaction Cost, Two-Part Tariffs, and Collusion
I. INTRODUCTION This paper studies a situation in which cartelization serves to reduce prices and improve social welfare. The unusual outcome can be attributed to demand complementarity that exists between the goods under consideration. Because...
Why Doesn't Society Minimize Central Bank Secrecy?
I. INTRODUCTION Central banks have repeatedly revealed a preference for secrecy in conducting monetary policy. In the United States, for example, the Federal Reserve has expressed its bias towards policy secrecy in a number of ways, ranging...