Economic Inquiry

Articles from Vol. 42, No. 3, July

Durable-Goods Monopoly with Privately Known Impatience: A Theoretical and Experimental Study
I. INTRODUCTION Ever since Plato's Republic, (1) people seem to be aware that they may suffer from rational anticipation of own future behavior. (2) A very prominent intrapersonal decision conflict is one faced by the durable-goods monopolist introduced...
High Stakes in High Technology: High-Tech Market Values as Options
I. INTRODUCTION High-technology industries are frequently formed or transformed as a result of scientific breakthroughs that open new technological opportunities. Major technological innovations are extremely important for the success of a high-tech...
Monetary Policy and the U.S. Stock Market
I. INTRODUCTION The monetary policy goals of the Federal Reserve System, as often stated in publications and testimony of Fed officials, are "price stability" and "sustainable economic growth." Recently, Fed officials and academic economists have...
Price Discrimination with Differentiated Products: Definition and Identification
I. INTRODUCTION Price discrimination is said to exist when the same product is sold to different consumers at different prices. Most economists also agree that price discrimination is at work when similar--but not identical--products are sold at...
Shipping the Good Apples Out: A New Perspective
I. INTRODUCTION The Alchian and Allen substitution theorem posits that a per unit tax or shipping fee applied to similar goods will increase the relative consumption of the higher-quality good. Originally formulated in Alchian and Allen's 1964 textbook...
Subgame-Perfect Punishment for Repeat Offenders
I. INTRODUCTION The literature on optimal law enforcement typically assumes that the government can commit to sanction schemes. (1) This means the government can use any set of threats to penalize wrongdoers. In particular, if a crime occurs, the...
Tax Uncertainty and Investment: A Cross-Country Empirical Examination
I. INTRODUCTION Spanning a period of nearly 100 years of economic research, a substantial body of literature has developed with the goal of explaining the behavior of investment over time. (1) Although many of these studies have considered the implications...
Testing the Determinants of Income Distribution in Major League Baseball
I. INTRODUCTION Income of professional athletes is a frequent topic of discussion of fans, sportscasters, and the general public. Economists have also increasingly been attracted to this topic, because the distribution of income of these players...
The Demand for Bank Reserves and Other Monetary Aggregates
I. INTRODUCTION Modeling the monetary aggregates in general equilibrium has been a challenge. There are some examples such as Chari et al. (1996), and Gordon et al. (1998), who present models that are compared to Base money. Ireland (1995) presents...
The Importance of Gifts in Marriage
I. INTRODUCTION The basic nature of marriage has changed as it has shifted from being an institution primarily based on increasing the family members' material well-being to one based increasingly on improving the spouses' psychological welfare....
The International Price Transmission in Stock Index Futures Markets
I. INTRODUCTION Numerous studies have investigated market linkages and price transmission mechanisms in major international equity markets, employing the analytical framework of the vector autoregression (VAR) or its variant, the error-correction...
The Welfare Effects of the Reagan Deficits: A Portfolio Choice Approach
I. INTRODUCTION The election of Ronald Reagan as U.S. president in 1980, prompted a series of changes in tax policy that, combined with an increase in spending, led to a large increase in the ratio of debt to gross domestic product (GDP). Work by...
Voter Preferences and State Regulation of Smoking
I. INTRODUCTION Tobacco taxation and smoking restrictions are two areas of regulation for which states have maintained a high level of control relative to the federal government. (1) Given this flexibility, states have established a wide range of...
Willingness to Pay, Compensating Variation, and the Cost of Commitment
I. INTRODUCTION Hicksian welfare theory, which is static in nature, forms the basis of modern welfare analysis. This theory has provided a wealth of compelling principles with direct applicability for empirical welfare analysis (see, for example,...