Changes In Output Prices Research Articles

Variable Depreciation and Some of Its Implications

Variable Depreciation and Some of Its Implications

Output, Work Hours and Employment in the Short Run of a Labour-Managed Firm

In its pure form the organisation of a labour-managed firm (LMF) differs radically from that of a profit-maximising firm (PMF). LMFs are found not only in Yugoslavia. Many forms of producers' cooperatives and employee-owned firms appear in capitalist economies (e.g. Jones and Svejnar, I982). The theory of the LMF is also relevant to the economics of trade unions, profit sharing, codetermination, and internal labour markets. This is because, where worker participation exists, elements of the economic forces prevalent in an LMF can influence management policies on wages, employment and investment. It follows that by studying the LMF in relation to the PMF we may be better able to grasp the workings of more realistic firm organisations in which both labour and management vie over the division of firm-specific rents. From this perspective on the theory of the firm we examine the short-run behaviour of the competitive LMF, and in particular the tendency for output supply, employment demand and work hours to differ from the neoclassical norm. Traditionally, the short-run analysis of the LMF has focused on its employment response to output price changes. The theorem due to Ward (I958) and Vanek (I970) holds that an increase in output price causes paradoxically a reduction in employment and output if the LMF maximises per capita remuneration. More recent work, in which the LMF maximises the member's expected utility over layoff probabilities and remuneration, demonstrates that the LMF's response to a higher output price is essentially to increase both output and employment (e.g. Steinherr and Thisse (I979), Bonin (I98I) and Miyazaki and Neary (I983a)). The key to this result is that these authors distinguish actual workforce, which is variable in the short run, from LMF membership size which is variable in the long run but fixed in the short run. The precise features of this LMF short-run behaviour also depend on the nature of the LMF's bankruptcy constraint, which is largely determined by the LMF's access to capital markets. In this line of analysis, however, authors have effectively assumed that work hours are institutionally fixed. But variability in work hours (or effort intensity) can also be an important factor in the LMF's response to output price changes. Because a change in the LMF's output price immediately affects the member worker's per capita * Some of the basic results of this paper were originally reported in Sections 7-8 of our July 1979 mimeographed paper, which was read at the Second International Conference on the Economics of Worker's Self-Management, Istanbul, June I980 and also in seminars at Berkeley, British Columbia, Bell Labs, Cornell, Hitotsubashi, Kyoto, Osaka, Tokyo, and Toronto in I979-I980. We thank J. Bonin and the participants of the above conference and seminars for comments on earlier versions. In writing the present version, we especially benefited from the comments of anonymous referees, P. Evans, and T. MaCurdy. We are responsible for any remaining errors, omissions and ambiguities. A detailed computational appendix for our theorems and examples is available on request.

The Relative Effects of Demand and Supply on Output Growth and Price Change

This study demonstrates an analytical model for evaluating the relative importance of demand and supply factors in determining output growth and price change. Empirical analysis of the 1947-80 data shows that, for most industry groups, demand effects are more dominant in determining output growth, whereas supply effects are more dominant in determining price change. The conclusion remains the same when the effects of uncontrollable variables such as taste and technology are excluded. The study provides useful information for analyzing the effectiveness of demand and supply management policies in affecting output growth and price change. Introduction Recently the stability and validity of the Phillips Curve and the effectiveness of demand management policies to deal with stagflation have been questioned by many economists. Evidence has been accumulated, e.g., Eckstein (1984), to suggest that variations in aggregate supply price were the predominant influences on the general price level of the U.S. economy. But little is known about whether demand or supply factors were more dominant in determining economic growth. Studies on the relative importance of demand and supply factors at the industry level have been very few. But the recent studies by Houthakker (1979 and 1981) suggested the importance of supply shifts and/or economies of

Real Exchange Rate Risk, Expectations, and the Level of Direct Investment

Four models of direct investment are analyzed assuming various relationships between foreign and domestic production. The direct effect of risk-adjusted expected real foreign currency appreciation is to lower foreign capital cost, thus stimulating direct investment. However, when costs of other inputs are also affected, induced productivity changes or output price changes may offset the direct effect, reducing direct investment. Pooled estimation results for U.S. annual, bilateral direct investment flows to five industrialized countries show significant reductions associated with expected appreciation of real foreign currency and significant increases associated with risk. These results are consistent with the model where, in response to risk, the multinational firm reduces exports to the foreign country but offsets this somewhat by increasing foreign capital input and production.

The Link between Supply Response and Production Elasticities

The economics of supply response concerns how output price changes are transmitted into input changes and, thence, to production changes. This paper investigates this linkage using production elasticities and their interrelations as the basic elements which describe production conditions. Some relatively simple and illuminating results emerge. These results can be useful when the focus is on the economics of supply response rather than on the production process itself.

Technical Change, Labor Use, and Income Distribution in the Muda Irrigation Project

Previous articleNext article No AccessTechnical Change, Labor Use, and Income Distribution in the Muda Irrigation ProjectRichard H. Goldman, and Lyn SquireRichard H. Goldman Search for more articles by this author , and Lyn Squire Search for more articles by this author PDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by Economic Development and Cultural Change Volume 30, Number 4Jul., 1982 Article DOIhttps://doi.org/10.1086/452588 Views: 2Total views on this site Citations: 5Citations are reported from Crossref Copyright 1982 The University of ChicagoPDF download Crossref reports the following articles citing this article:Andrew Dillon, Ram Fishman Dams: Effects of Hydrological Infrastructure on Development, Annual Review of Resource Economics 11, no.11 (Oct 2019): 125–148.https://doi.org/10.1146/annurev-resource-100518-093913CLARE L. JOHNSON Government Intervention in the Muda Irrigation Scheme, Malaysia: 'actors', expectations and outcomes, The Geographical Journal 166, no.33 (Sep 2000): 192–214.https://doi.org/10.1111/j.1475-4959.2000.tb00020.xJONATHAN HAUGHTON TACKLING RURAL POVERTY: AN ASSESSMENT OF ALTERNATIVE STRATEGIES FOR MIXED-FARMING AREAS IN PENINSULAR MALAYSIA, The Developing Economies 32, no.33 (Mar 2007): 256–278.https://doi.org/10.1111/j.1746-1049.1994.tb00836.xGillian Hart Engendering everyday resistance: Gender, patronage and production politics in rural Malaysia, Journal of Peasant Studies 19, no.11 (Oct 1991): 93–121.https://doi.org/10.1080/03066159108438472C. Peter Timmer Chapter 8 The agricultural transformation, (Jan 1988): 275–331.https://doi.org/10.1016/S1573-4471(88)01011-3

A Model of an Agricultural Household in a Multi-Crop Economy: The Case of Korea

It is the purpose of this paper to describe one method of extending the empirical applicability of the theory of the farm-household to multi-crop economies by integrating the econometric and linear programming models already available in the literature. Section I introduces the subject. In Section II the theoretical model is presented. In Section III Korean data are used to assess the quantitative significance of the approach by calculating and comparing household response to changes in input and output prices for two different specifications of the models. First, the household is analyzed from the consumption side on the assumption that farm profits are exogenous; this corresponds to the standard approach in consumer demand theory. And second, results are presented for a model in which consumption and production responses are integrated in a theoretically consistent fashion, and farm profits are allowed to reflect production responses to price changes. The results from this and other studies that use an integrated approach to production and consumption decisions highlight the need to change perceptions concerning agricultural household response to economic incentives in developing countries and to revise the design of economic projects and policies accordingly.

Optimum Location and the Theory of Production: A Comparative Static Approach

Location theory of the firm in a simple context was pioneered by Weber, whose analysis involved a firm with fixed coefficient technology attempting to determine the profit maximizing location with respect to input sources and market location. This paper uses methods presented by Khalili et al. It is a comparative static analysis of the location problem of a profit maximizing firm in which the effect of several changes in the exogenous variables on the location decision of the firm with and without prior locational constraint are determined. Specifically, it formulates a profit maximization location problem and analyzes the effect of changes in output price, output transport rates, and input prices on the location decision with and without prior constraint on the location distance from the market.

Alternative Financial Schemes Based on Value Added

Employees are guaranteed a proportionate share of total value-added financial incentive schemes that are not affected by changes in price of output, input, and labor.

Migration: Chicken or Egg?

This paper is concerned principally with the relationship between migration and the growth of employment in U.S. cities during the 1950's. The more popular explanation for the strong association between the two, probably, is that differential rates of migration are induced by differential growth in job opportunities or employment. Among the more recent proponents of this first view are Blanco [1], Mazek [4], and Lowry [3]. It is fundamental to the so-called export-base theory of regional growth. An alternative, suggested in particular by Borts and Stein [2], is that differential changes in employment are induced by differential rates of in-migration. In the following section I shall describe these two quite different viewpoints in somewhat greater detail. In a recent paper [5] I made a preliminary examination of these two theories. My empirical findings tended rather strongly to support the Borts-Stein hypothesis. I found no tendency for manufacturing wages to grow at below-average rates in cities with an above-average total employment growth. The former tended to vary directly with changes in the average national price of a city's manufacturing output, however, as the Borts-Stein hypothesis predicts. More important for the purposes of this paper, when employment growth and migration were treated as simultaneously determined it appeared that in-migrants tended to find

Empirical Determination of a Multidimensional Marginal Cost Function

An empirical cost function for fuel consumption in air transportation is obtained from a consideration of the engineering determinants of the relationship between physical inputs and physical outputs. The accuracy of fuel consumption estimates so obtained is considered in the light of operating data for Northeast Airlines. Marginal cost functions are derived which facilitate theanalysis of the impact upon cost, not only of changes in output and factor prices, but also of changes in quality of the product and the techniques of production. The advantages and limitations of the approach are indicated. (Из JStore)