Gains from Trade When Firms Matter

[Symposium: International Trade]

By Marc J. Melitz and Daniel Trefler

Journal of Economic Perspectives, Spring 2012

The rising prominence of intra-industry trade and huge multinationals has transformed the way economists think about the gains from trade. In the past, we focused on gains that stemmed either from endowment differences (wheat for iron ore) or inter-indust...

Liquidity Constraints and Deforestation: The Limitations of Payments for Ecosystem Services

By Seema Jayachandran

American Economic Review, May 2013

A popular environmental policy is to pay forest owners for avoiding deforestation on their land. This is an example of "payments for ecosystem services" (PES). This paper shows that liquidity constraints can limit the effectiveness of PES programs. If an ...

Retrospectives: How Joan Robinson and B. L. Hallward Named Monopsony

By Robert J. Thornton

Journal of Economic Perspectives, Spring 2004

The term "monopsony" was introduced by Joan Robinson in her 1932 classic The Economics of Imperfect Competition, although she gives credit to classics scholar B.L. Hallward of Cambridge for the actual coining of the term. Even though the term has become w...

Health Insurance and Income Inequality

[Symposium: Inequality Beyond Income]

By Robert Kaestner and Darren Lubotsky

Journal of Economic Perspectives, Spring 2016

Health insurance and other in-kind forms of compensation and government benefits are typically not included in measures of income and analyses of inequality. This omission is important. Given the large and growing cost of health care in the United States...

The Economics of Contingent Re-auctions

By Sandro Brusco, Giuseppe Lopomo, and Leslie M. Marx

American Economic Journal: Microeconomics, May 2011

We consider an auction environment where an object can be sold with usage restrictions that generate benefits to the seller but decrease buyers' valuations. In this environment, sellers such as the FCC have used "contingent re-auctions," offering the rest...

How Much Would US Style Fiscal Integration Buffer European Unemployment and Income Shocks? (A Comparative Empirical Analysis)

By James Feyrer and Bruce Sacerdote

American Economic Review, May 2013

We examine the degree to which federal fiscal integration smoothes income and unemployment shocks across US States. We find that roughly 25 cents of every dollar of income shock at the state level is offset by federal fiscal policy. This stabilization com...

Not the Opium of the People: Income and Secularization in a Panel of Prussian Counties

By Sascha O. Becker and Ludger Woessmann

American Economic Review, May 2013

The interplay between religion and the economy has long occupied social scientists. We construct a unique panel of income and Protestant church attendance using 175 Prussian counties, presented in six waves from 1886 to 1911. The data reveal a marked decl...

Loyalty, Exit, and Enforcement: Evidence from a Kenya Dairy Cooperative

By Lorenzo Casaburi and Rocco Macchiavello

American Economic Review, May 2015

Organizations depend on members' "loyalty" for their success. Studying a cooperative's attempt to increase deliveries by members, we show that the threat of sanctions leads to highly heterogeneous response among members. Despite the cooperative not actual...

Incentive Effects of Inheritances and Optimal Estate Taxation

By Wojciech Kopczuk

American Economic Review, May 2013

I consider optimal nonlinear taxation of income and bequests with a joy-of-giving bequest motive and explicitly characterize the optimal estate tax rate. The optimal formula trades off correction of externality from giving and discouraging effort of child...

Does Product Market Competition Lead Firms to Decentralize?

By Nicholas Bloom, Raffaella Sadun, and John Van Reenen

American Economic Review, May 2010

The General Equilibrium Incidence of Environmental Mandates

By Don Fullerton and Garth Heutel

American Economic Journal: Economic Policy, August 2010

Pollution regulations affect factor demands, relative returns, production, and output prices. In our model, one sector includes pollution as an input that can be a complement or substitute for labor or capital. For each type of mandate, we find condition...

Subsidizing Creativity through Network Design: Zero-Pricing and Net Neutrality

[Symposium: Internet Economics]

By Robin S. Lee and Tim Wu

Journal of Economic Perspectives, Summer 2009

This paper focuses on the pricing aspect of the "net neutrality" debate -- in particular, the de facto ban on fees levied by Internet service providers on content providers to reach users. This "zero-price" rule may prove desirable for several reasons. ...

Racial Integration as an Innovation: Empirical Evidence from Sports Leagues

By Brian L. Goff, Robert E. McCormick, and Robert D. Tollison

American Economic Review, March 2002

This paper treats racial integration as an innovation in economic process in which economic entities find it advantageous to utilize potentially more productive inputs previously unavailable due to law, custom, or managerial discretion. Data on the racial...

Kin Groups and Reciprocity: A Model of Credit Transactions in Ghana

By Eliana La Ferrara

American Economic Review, December 2003

This paper studies kinship band networks as capital market institutions. Membership in a community where individuals are dynastically linked has two effects on informal credit. First, the nonanonymity of the dynastic link allows to sanction the defaulters...

Symposium on the Slowdown in Productivity Growth

[Symposium: The Slowdown in Productivity Growth]

By Stanley Fischer

Journal of Economic Perspectives, Fall 1988

The growth slowdown that began in the late 1960s or early 1970s is the most significant macroeconomic development of the last two decades. The four papers in this symposium address the question of the causes of the growth slowdown and, to a lesser extent,...

An Interview with Edmond Malinvaud

By Alan B. Krueger

Journal of Economic Perspectives, Winter 2003

This article contains an interview with Edmond Malinvaud. Professor Malinvaud describes the origins of his interest in economics, teachers who had a major influence on his development as an economist, his visit to the Cowles Commission in 1950, the substa...

What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns

By Glenn Ellison, Edward L. Glaeser, and William R. Kerr

American Economic Review, June 2010

Why do firms cluster near one another? We test Marshall's theories of industrial agglomeration by examining which industries locate near one another, or coagglomerate. We construct pairwise coagglomeration indices for US manufacturing industries from the ...

Liquidity and Risk Management

By Nicolae Gârleanu and Lasse Heje Pedersen

American Economic Review, May 2007

The Effect of Alcohol Consumption on Mortality: Regression Discontinuity Evidence from the Minimum Drinking Age

By Christopher Carpenter and Carlos Dobkin

American Economic Journal: Applied Economics, January 2009

We estimate the effect of alcohol consumption on mortality using the minimum drinking age in a regression discontinuity design. We find large and immediate increases in drinking at age 21, including a 21 percent increase in recent drinking days. We als...

Team Production in International Labor Markets: Experimental Evidence from the Field

By Elizabeth Lyons

American Economic Journal: Applied Economics, July 2017

Coworkers are increasingly diverse in their nationality and skill sets. This paper studies the effect of diversity on how workers are organized using data from a field experiment conducted in an environment where diversity is pervasive. Findings show that...