Economic Inquiry

Articles from Vol. 46, No. 2, April

2006 Presidential Address Water Markets in the West: Prices, Trading, and Contractual Forms
I. INTRODUCTION Farmers in the American West use roughly 80% of the region's water, often in low-value or subsidized crops, such as alfalfa, cotton, or rice. Farmers typically pay only for the pumping or conveyance costs for the water and not for...
Do Nonprofit and Government Nursing Homes Enter Unprofitable Markets?
I. INTRODUCTION Nursing home care is provided in the United States by for-profit, private nonprofit, and government organizations. (1) These three organizational forms may compete directly in the same markets--with either differentiated or nondifferentiated...
Efficiency Wages and Subjective Performance Pay
I. INTRODUCTION How to design incentive schemes to motivate workers is an important topic in economics. The shirking models of efficiency wages, such as Shapiro and Stiglitz (1984), establish that firms need to pay a wage premium (efficiency wages)...
Institutional Quality and Trade: Which Institutions? Which Trade?
I. INTRODUCTION The contention that "institutions rule," as Rodrick, Subramanian, and Trebbi (2004) put it, has become a core belief among both scholars and practitioners of economic development. This consensus results from a wide body of evidence...
Is Status Quo Bias Consistent with Downward-Sloping Demand?
By now, there is a large experimental literature showing some kind of status quo bias. (1) If the subject is given a coffee mug (candy bar) and later given the possibility of trading it for a candy bar (coffee mug) of equal value, the subject is likely...
Natural Disasters as Creative Destruction? Evidence from Developing Countries
I. INTRODUCTION The literature on the economic effects of natural disasters has concentrated traditionally on the short-run response of economic variables to catastrophic events. Most of the research carried out on this topic, starting with Dacy...
On the Social Dimension of Time and Risk Preferences: An Experimental Study
I. INTRODUCTION There is ample empirical evidence that people do not behave rationally when rationality implies maximization of one's own material rewards. To gain flexibility, economists have taken into account nonlinear evaluation of material...
Relief for the Environment? the Importance of an Increasingly Unimportant Industrial Sector
I. INTRODUCTION Among the more controversial views about economic growth and globalization is that both will eventually benefit the environment (Arrow et al. 1995). In part, this view is predicated on the nature of structural changes that are normally...
Stock Returns, Asymmetric Volatility, Risk Aversion, and Business Cycle: Some New Evidence
I. INTRODUCTION Most asset pricing models, starting with Intertemporal Capital Asset Pricing Model of Merton (1973), suggest a positive relation between risk and return for the aggregate stock market. There is an extensive empirical literature that...
The Auction Market for Modern Prints: Confirmations, Contradictions, and New Puzzles
I. INTRODUCTION Financial assets such as stocks and bonds are traded almost continuously, while the sales of art objects are episodic and often infrequent. The most significant challenge to those seeking to estimate the risk and return of investing...
The Demand for Casino Gaming with Special Reference to a Smoking Ban
I. INTRODUCTION There is a sparse literature on the determinants of the demand for casino-style gaming. This study adds to that literature. A major focus of this analysis is on the effect on gaming demand of the introduction of a smoking ban into...
Tracing the Dynamics of Competition: Evidence from Company Profits
I. INTRODUCTION Since the seminal contributions of Mueller (1977, 1986), there is a fruitful and steadily growing literature aimed at investigating empirically the persistence of company profits. While the competitive environment hypothesis predicts...
Who Is Afraid of the Friedman Rule?
I. INTRODUCTION In almost every standard monetary economy populated by representative infinitely lived agents, the optimal long run monetary policy is one in which the nominal interest rate is zero, also known as the Friedman rule (Friedman 1969)....
Why Do Europeans Work (Much) Less? It Is Taxes and Government Spending
I. INTRODUCTION The reason why Europeans work less than Americans is the subject of intense discussion in recent literature. Prescott (2004), Cardia, Kozhaya, and Ruge-Murcia (2003), and Roeger and De Fiore (1999) emphasize the negative effects...