Destructive Competition or Competition Destroyed?

January, 1998

The principal aim of our study is to contribute to the debate over whether regulation is enacted in the interest of consumers, producers, political agents, or some combination of these. We examine the legislative debates and subsequent regulatory bills surrounding road transportation regulation in Ireland in light of the three dominant theories which purport to explain the existence of regulation: the public interest theory and the so-called Chicago and Virginia theories. A unique feature of our study is an attempt to integrate specific rhetorical concepts used in the public policy debates into the theoretical analysis of regulation. One noteworthy conclusion of our study is that theories of economic processes affect the shaping and results of public policy.

Continue reading at Springer Link. 

The Welfare State as a Fiscal Commons

November, 2002

A mounting empirical literature clearly indicates that the core programs of the welfare state are unsustainable in their present form. The proximate cause of this growing fiscal instability is a demographic imbalance between younger contributors and older beneficiaries. The authors argue, however, that the ultimate cause is the institutional structure of the welfare state itself. Specifically, if its fiscal institutions are modeled as a common-pool resource, the tools and analysis emerging from the growing literature on common pools can be used. Such an analysis suggests that the apparent nonsustainability of current welfare state programs is rooted in the failure to resolve two distinct problems in institutional design. The first problem concerns how to limit the scope of opportunism among rational self-interested individuals. The second problem concerns how to limit the adverse effects of the knowledge problem among boundedly rational individual actors.

Continue reading at ResearchGate. 

Uncertainty, Institutional Structure and the Entrepreneurial Process

May, 2003

While there exist numerous theories of entrepreneurship, we aim to construct an account that is thoroughly process-oriented and is thus consistent with non-teleological evolutionary foundations. To accomplish this, we combine theories of structural uncertainty with recent work in the theory of social institutions. From such a perspective, creatively thinking and acting entrepreneurial individuals can account for endogenous social change through their effect on institutions. Our approach helps to clarify many of the inconsistencies that arise in the existing entrepreneurial literature and we are able to clarify issues of entrepreneurial failure, self-employment versus entrepreneurship, entrepreneurs versus managers, and incentive for entrepreneurs in formal versus informal institutional settings.

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Praxeology, Entrepreneurship, and the Market Process

December, 2003

 

It is surely Israel M. Kirzner who has promoted the role of the entrepreneur more than any other author in the second half of the twentieth century. His description of the market process and entrepreneurship in his Competition and the Market Process (1973) represents a seminal contribution to Austrian thinking, although it has been slow to catch on in broader circles. As Humberto Barreto argues above, for example, an entrepreneurial role seems to have disappeared from mainstream economics as the theory of the firm progressed (1989, pp. 95–98). The standard core of microeconomics allows little room for entrepreneurial elements, particularly if the latter are defined in terms of uncertainty, intuition, ignorance, and disequilibrium. In light of this intellectual discord and given his recent retirement, it is timely to reconsider Kirzner's unceasing efforts to resurrect the role of the entrepreneur, and especially his effort to reconcile this role with conventional neoclassical approaches.
 

It is surely Israel M. Kirzner who has promoted the role of the entrepreneur more than any other author in the second half of the twentieth century. His description of the market process and entrepreneurship in his Competition and the Market Process (1973) represents a seminal contribution to Austrian thinking, although it has been slow to catch on in broader circles. As Humberto Barreto argues above, for example, an entrepreneurial role seems to have disappeared from mainstream economics as the theory of the firm progressed (1989, pp. 95–98). The standard core of microeconomics allows little room for entrepreneurial elements, particularly if the latter are defined in terms of uncertainty, intuition, ignorance, and disequilibrium. In light of this intellectual discord and given his recent retirement, it is timely to reconsider Kirzner's unceasing efforts to resurrect the role of the entrepreneur, and especially his effort to reconcile this role with conventional neoclassical approaches.

 

Continue reading at Cambridge Journals. 

Australian Beer Wars and Pub Demand

May, 2004

Recently, Australia's two largest brewers, Carlton and United Breweries and Lion Nathan, have been aggressively competing for market share in the state of Victoria. Among other strategies, the two breweries have implemented vertical restraints in the form of ‘extensive’ agreements with retailers and the outright purchase of pubs. A key outcome of these purchases and agreements is the renovation of many pubs as brewers attempt to attract increasingly sophisticated drinkers. This paper attempts to quantify the value of these renovations and measure their associated impact on consumers, relying on insights from the hedonic literature. A simple, but novel approach, is used to estimate the implicit price of the pub environment and the effects of renovations on that price.

Continue reading at Taylor & Francis Online. 

External Habit Formation and Dependency in the Welfare State

May, 2005

External habit formation explains why welfare states can be expected to exhibit increasing dependency over time expressed in the share of the population receiving welfare transfers. At the same time, the average number of hours worked decreases. Under plausible parameter values, the rate of taxation and the welfare expenditure share of national income monotonically increase over time and asymptotically approach a steady state. A positive interactive feedback loop between slow-moving external habits and welfare policies makes the extent of redistribution a “moving target”. Consequently, setting arbitrary redistributive goals may never satisfy redistributional demands in future periods. Technological progress may mask the underlying dynamic effects of the welfare state.

Continue reading at ScienceDirect. 

Is Compulsory Voting More Democratic?

October, 2006

Lijphart (1997) endorses compulsory voting as a means to increase voter turnout. Considering the likely effects of the role of information (including its costs) on the decision to vote and taking an expressive view of voting, however, compels us to investigate two unexamined claims by such advocates: (i) that individuals are transformed by forcing them to vote, and (ii) that a compulsory electoral outcome is a more accurate reflection of community preferences. We argue that compelling those who are not particularly interested in, or informed about, the political process to vote increases the proportion of random votes and we show that under simple majority rule, compulsory voting may violate the Pareto principle; the less popular candidate is more likely to be elected. Our results cast doubt on the "miracle of aggregation" argument, which optimistically concludes that as long as uninformed votes are not systematically biased, they will have no effect on voting outcomes. We also briefly consider how information cascades can exacerbate this problem.

Continue reading at JSTOR.

Satellite Accounts for the Tourism Industry

September, 2012

This article constructs tourism satellite accounts (TSAs) for Ireland and provides a simple matrix representation of how TSAs estimate value added, domestic product and employment. The authors calculate how much tourism has contributed, directly and in total, to Irish value added, domestic product and employment. They find that TSA-measured domestic tourism consumption in Ireland is over five times the traditional official estimate and that tourism indirectly contributes around a further 50% of its direct contribution to Irish GDP. As such, tourism is found to be Ireland’s second largest ‘industry’ in terms of gross value added and that it is Ireland’s largest employer. The analysis shows why tourism policies based on traditional estimates of the tourism industry are likely to be misguided.

Continue reading here. 

The 1992-93 Swedish Crisis Debate

March, 2013

The very survival of Sweden’s famed welfare state was fiercely debated during its 1992–93 financial crisis, and as such, this experience is highly relevant for the debate over financial crises faced by the developed world, post-2007. This paper examines the role economists and other social scientists played in the Swedish public debate over that crisis. Ultimately, Sweden’s welfare state survived, but was fundamentally reformed. Contemporary policy analysts can gain insights into the process whereby expert, theoretical views of the economy clash with the world views of both laymen and other non-economist experts. This chapter, based on unpublished interviews performed during the spring and summer of 1993, examines the clash between different generations of economists (with different theoretical outlooks) and between economists and other social scientists. In particular, it focuses on the strong degree of consensus over Swedish economic analysis that dominated the public forums in Sweden. Besides simply understanding the Swedish case better, I attempt to add to the literature on policy formation and change and to add to a separate literature on the “rhetoric of economics.”

Find this article at ResearchGate.

 

Asymmetries in Scheduling Slots Can Drive Asymmetries in Game-Day Revenues: An Example

February, 2010

This article investigates three related questions: first, whether the Australian Football League exhibits attendance asymmetries across the available playing slots; second, whether various subgroups of teams in the AFL have equal access to the more highly attended time slots; and, third, whether asymmetries in the first two phenomena can drive meaningful asymmetries in match-day revenues across clubs. We find that asymmetries exist not only across the various playing slots, but also in various teams’ access to the more highly attended slots. Further, by providing some novel estimates of revenue streams from television and gate receipts, we show that these asymmetries can drive substantial differences in game-day revenues. A key implication is that scheduling should be treated with the same critical analysis as the many other factors that affect the financial performance of clubs.

Find article at Science Direct

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