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The article presents comments of Paul T. David on the paper related to competition in air transport written by Kent T. Healy. According to David, the first half of Healy's paper is an analysis in terms of input-output factors, while the second is concerned mainly with geographic patterns, homogeneity of markets geographically, and the question of the optimum number of competing carriers in a single market. This order of analysis might possibly have been reversed with some advantage, since the input-output factors acquire competitive importance mainly within the framework of geographic relationships. Commenting on professor Healy's paper, he says that he found it most stimulating. He was particularly glad to see the emphasis upon the need for a sufficient number of air transport enterprises to provide full scope for innovation and fresh talent. The tendency abroad has been in the opposite direction. For this and other reasons, the problem of establishing workable conditions of competition on the international air routes is full of special complexities and will continue to present major difficulties.

The article presents discussions by economists on various papers published in the May 1, 1970 issue of the journal "American Economic Review." It discusses effects of tax policy measures when consumers behave rationally and markets function, as they should, in a model embodying conditions of a full and general equilibrium. It states that in the analysis of tax policy, the most important effects to consider are long-term effects. They are what the economy has to live with indefinitely. "Announcement effects" are instantaneous and for that reason evanescent, the transition between announcement and the longer-term equilibrium is by definition transitory. The long run is precisely what economist Lauritis R. Christensen focused on in his paper. Christensen noted that saving is likely to be insensitive to the rate of return and produced two cases, one in which the counterpart of the reduction in revenue caused by the tax incentives was added borrowing from the household sector and the other in which the counterpart was reduced government investment, which resulted in opposite directions of movement of private investment.

This article focuses on economist Frederick T. Sparrow's paper. Mr. Sparrow's paper on the determinants of volume in a probabilistic market is the second of two papers, the first of which deals with expected price and the second with expected quantity flow. This bisection is highly artificial and ideally should be remedied before their publication. Mr. Sparrow has formulated a probability model of basic supply, demand, and price adjustment relationships as a means of improving the insight into the role of uncertainty in the operation of competitive markets. By the use of queuing theory and numerical methods, he has succeeded in obtaining the stochastic equilibria of a number of quantitative models. As an approach to the formulation and solution of theoretical problems in this area, Mr. Sparrow's paper merits high praise. Mr. Sparrow has made an important contribution in showing the relevance of queuing concepts to market phenomena, and particularly in pointing up the identification problem that can occur when supply and demand interact stochastically. A great deal more needs to be done along the lines that Mr. Sparrow has pursued but increasing stress should be laid on the empirical base underlying such theoretical analyses.

The article presents discussions by economists on some papers that are published in the May 1, 1970 issue of the journal "American Economic Review." The author states that economist Harry Magdoff's paper, published in the present issue of the journal, reminds its readers that neoclassical economics deals with market relations and not with power relations. The study of imperialism, in contrast, is mainly concerned with the level of coordination above that of the market where state power is used to manipulate the economic framework within which supply and demand interplay. The analytical focus is the way one-country exercises power over another and how this affects trade, development and the distribution of income. According to the author, the first point to be stressed is that the neoclassical model, which includes market equations and excludes political equations is misspecified and yields biased estimates and wrong predictions. The comfortable assumption that one can concentrate on economic relations and leave the analysis of power to other disciplines is not tenable when one admits the crucial role of the state in shaping the economy through its policies on infrastructure, education, production and other things.

The crude oil industry in the U.S. has been characterized by wasteful production practices. Many members of the industry, who are normally among the most outspoken advocates of freely competitive markets, as well as many disinterested observers, agree on the desirability of a public conservation policy. The purpose of this paper is to provide a complete model of the domestic crude oil industry. This model casts light on the short-run question of the optimum level of production from existing facilities, as well as on the long-run question of incentives to add capacity by exploring presently nonproductive oil lands. The paper uses a short-run model, which takes stock of production facilities as given. Under this assumption it is possible to show why the free competitive market improperly allocates oil production over time. It is also possible to derive simple economic criteria, which can be used to formulate a public policy, which will assure the optimum output of crude oil through time. The paper also deals with the longer-run question of the incentives to increase capacity by exploring presently nonproductive oil land. It is this long-run view, which is relevant for the appraisal of the desirability of granting a tax concession in the form of percentage depletion to the crude oil industry. The major conclusion of this section is that percentage depletion primarily increases the income of landowners rather than encouraging exploration of non-producing oil lands.

This article presents a discussion on the research paper "Foreign Trade and Balanced Growth: The Historical Framework," by J.R.T. Hughes, a professor at Purdue University, Indiana and "Balanced Economic Growth in History," by Goran Ohlin of Stanford University, California published in the May 1959 issue of the journal "American Economic Review." Hughes has used somewhat different concepts of "balanced growth" and therefore some clarification of terminology seems warranted. For some people balanced growth may suggest some kind of a master plan. This master plan would be in the nature of an input-output matrix calling for balance not only in the composition of final goods but also for balance vertically in the different stages of production. Just how complete such balances would have to be to deserve the approbation of balanced growth would be a matter of judgment and tolerance. The second concept of balanced growth by Ohlin is a more modest one. It focuses mainly on the possible mutual sustaining expansion of a number of final goods markets. However, both Hughes and Ohlin are critical for different reasons of the concept of balanced growth and hold that it is not likely to explain much about the historical processes of economic development.

The article presents a discussion by the author on two papers by Richard B. Heflebower and Richard Ruggles about price and market theory. According to the author Ruggles has given a lucid appraisal of the limitation to orthodox value theory concepts for purposes of empirical analysis while Heflebower has pointed toward an inductive theory derived from observations on the real world. Each is an appropriate complement to the other. Unfortunately, throughout his analysis Heflebower mostly disregards the analytical tools of orthodox value theory and appears to rely heavily upon something bearing close resemblance to the principle of cost-plus pricing. Heflebower's analysis must be appraised against the objective sought to attain and the principal conclusion to which it led. Ruggles' paper raises significant questions about the very heart of economic theory, namely, value theory and its usefulness. Value theory, historically considered, has been concerned with the relative importance of goods and services.

The central problem in the theory of price formation under conditions of oligopoly is the problem of how the "implicit bargain" among the oligopolistic rivals is made. The classical theories of oligopoly failed to recognize this as a problem. This omission was the essential weak point in all these theories, which tried to derive price results from market demand curves and the cost conditions of the individual producer alone, a weakness which has been elegantly exposed in the historical review of these theories. The bulk of researcher W.J. Feliner's study is devoted to the analysis of all factors which condition the implicit bargain. They are examined in sequence and their total effect on the outcome in the market is considered. But Feilner does not present an explicit mechanism which shows how particular values of the relevant factors interact to determine a particular bargain, or quasi agreement, among the oligopolistic rivals. It is the purpose of this paper to present, schematically and in simple form, outlines of such a mechanism. It is appropriate to emphasize, at the outset of this paper, the limited claims that are advanced for the scheme here presented, it is only a mechanism, it does not, in itself, pretend to add much in a substantive way to insights into the behavior of oligopolists provided by Feilner's analysis, but only to organize some of them into a more wieldy formal apparatus which can be applied, perhaps, to other problems than the extremely simplified schematic one examined in what

Repeated visits and residence in twenty-one countries have made possible the following survey of the methods of payment for automobiles which have been usual in various countries and the terms which today are acceptable and seem reasonably safe to our manufacturers, bankers, and finance companies. While lack of credit facilities has been one of the acknowledged obstacles retarding a more thorough distribution of automobile vehicles in many foreign markets, during the present depression foreign traders should endeavor to avoid competition in the field of credit and eliminate excessive credit terms. Personal experience suggests that the Export Trade act (Webb-Pomerene law) can, in this respect, stilt prove to be a serviceable legislation for those interested in promoting the expansion of our foreign trade by presenting a solid front to foreign competitors and by creating standardised practices and a concerted policy. With greater efficiency in financial service we may succeed in further satisfying the foreign buyer and in gaining his confidence. On the other band do the laws of importing countries afford the seller adequate guarantees? [ABSTRACT FROM AUTHOR]

The article presents comments of the author on the article "Equity Yields, Growth and the Structure of Share Prices," by Burton G. Malkiel published in the December 1963 ossue of the periodical "American Economic Review." Malkiel devotes most of his paper to three subjects: the construction of a model of stock price determination which takes into account expected growth in earnings and dividends, second, the use of this model to estimate the market discount rate on a representative standard share in the stock market and third, on the basis of certain assumptions, the further application of the model to explain deviations in the prices of growth shares from the general level of stock prices. While the article gives many valuable insights into the problems involved, it should be pointed out that the basic model presented by Malkiel had been developed before and that the principal assumptions in his two main applications seem questionable. The only significant difference I can find between Malkiel and his predecessors in the development of the above formula is that he seems to assume that certainty is required for its validity. This assumption does not appear to be necessary and it is not clear why it is made.

The great polemics of thirties between proponents of liquidity preference and loanable funds theories of interest have flared up again recently. Nevertheless, no general agreement seems to have been reached on the two main issues namely similarity in two theories and if they are not similar than which theory is correct. The purpose of the first two parts of this paper is to show that two theories are indeed identical in the sense that two sets of demand and supply functions, that is, the demand for and the supply of loanable funds, and the demand for money to hold and the stock of money in existence, would determine the same rate of interest in all circumstances, if both sets of demand and supply functions are formulated correctly in the ex ante sense. The third part shows that the reconciliation between loanable funds and liquidity preference theories of interest provides also a key for the reconciliation of the multiplier and velocity analyses of income expansion. To give a convincing demonstration of the equivalence of two theories, one must explain how the decision of any economic subject on how much to borrow or to lend necessarily implies a corresponding decision to hold money for one purpose or another.

Many of the underdeveloped areas of the world have large agrarian populations in which there is either persistent open unemployment or in which the marginal productivity of the working force is so low that withdrawal of a sizable fraction would not significantly affect output. It is a common feature of the unemployment in these countries that it fails to respond to fiscal policy measures designed to increase employment by stimulating effective demand. Use of conventional income-generating techniques appears in fact to create inflationary pressures and balance-of-payments difficulties long before full employment is approached. This paper intends to help clarify some of the underlying issues and provide a theoretical basis for debate of capital-intensive vs. labor-intensive economy. A number of alternative explanatory hypotheses are presented and one of these hypotheses, which appears to be particularly fruitful in casting light on some of the outstanding characteristics of underdeveloped areas is elaborated. The hypotheses presented below suggest that the unemployment difficulties of underdeveloped areas are not basically due to lack of effective demand but stem from "market imperfections," limited opportunities for technical substitution of factors, and inappropriate factor endowments.

In this paper, the author attempts to make a modest contribution to a subject which has suffered neglect by the transportation economists. I think that the subject is important and I regret the neglect. I am not certain that I can advance any facts or theories that are not already known to you, but I think that results will justify the effort if, by re exploring perhaps familiar ground in what I hope is an interesting and challenging way, I can arouse your interest sufficiently to give the matter further consideration. In any event, I take some comfort in a great statement by researcher D. Johnson, "People need not so much to be informed as to be reminded." In what follows I make three assumptions, which I bring to your attention early in my discussion in order to avoid possible confusion or misunderstanding. My first assumption is that our transportation system will continue to be a mixed one, that is, one owned and operated partly by government and partly by private enterprise. My second assumption is that the private sector will continue to be regulated by government substantially along present lines, because of the persistence of monopoly and other market imperfections. Third, I assume that travelers and shippers will continue to have legal freedom in their choice of means of transportation, even though government powerfully influences bases of such choice by provision of facilities and by regulation of rates and services. The pertinence and importance of these assumptions will become evident as my discussion proceeds.

This paper will discuss some international aspects of the problem of economic development. It will take up only a few points and cannot even attempt to give anything like a balanced picture. The inducement to invest is limited by the size of the market. That is essentially what economy Allyn Young brought out in his reinterpretation of economist Adam Smith's famous thesis. What determines the size of the market? Not simply money demand, nor mere numbers of people, nor physical area. Transport facilities, which Adam Smith singled out for special emphasis, are important, reductions in transport costs do enlarge the market in the economic as well as the geographical sense. But reductions in any cost of production tend to have that effect. So the size of the market is determined by the general level of productivity. Capacity to buy means capacity to produce. In its turn, the level of productivity depends not entirely by any means, but largely on the use of capital in production. But the use of capital is inhibited, to start with, by the small size of the market.

A brief consideration of the relative liquidity of money and other things may serve to throw light on some troublesome matters. If monetary management is to be relied upon, along with fiscal management, to control the level of activity in a free market economy, the quantity of money must have dimensions. If a dividing line between money and other things cannot be established both in theory and in practice, monetary policy discussions are meaningless. The paper begins with the categorical statement that money is different in its fundamental character from securities and commodities. Money serves as a standard of value and as a medium of exchange. Commonly the list of functions is much more extensive, but the tendency to lengthen the list is to be deplored. Conceptually one needs only the minimum essential functions to establish a dividing line, and these two functions serve to bring out the essence of money. That thing which has parity and the capacity to mediate exchange is money, whether it be a pure token or something having value in another connection.

This paper examines the welfare effects of taxes on factors of production. The analysis will demonstrate two major propositions: Most importantly, given the usual derived demand curve for a productive factor, the social cost of a tax on that factor is correctly, completely, and most readily measured by the relevant area between the factor's demand and supply schedules; under variable proportions, the social cost that is so measured will entail two terms corresponding precisely to the scale and substitution effects of derived demand theory-both of which represent true deadweight losses. Although these propositions will be obvious to the practitioner of applied well are economics, each has nevertheless been the source of considerable confusion in the recent literature. The first confusion is of double counting. The model uses the concept of a social welfare function to depict the aggregate loss of welfare that is occasioned by an input market distortion. This is defined to be the decrease in utility that society incurs when it is forced to move from an indifference curve.

This article focuses on the microeconomics of information or the production, dissemination, and manipulation of information in a market context. As the knowledge industry booms in the world of affairs, the economics of information has been blooming with striking and novel ideas in the intellectual realm. The microeconomics of information in this narrower sense is an outgrowth of the economic theory of uncertainty. Uncertainty is summarized by the dispersion of individuals' subjective probability distributions over possible states of the world. Information consists of events tending to change these probability distributions. Table 1 classifies behavior modes for possessors and for seekers of economically valuable information. Listed in Table 2 are a number of attributes affecting the value of information to potential users or producers. Certainty refers to the degree of concentration of posterior belief distributions dictated by the information; fully certain information assigns 100 percent probability to a single value of the variable being predicted. The literature dealing with information about market parameters assumes away any uncertainty about technological and other exogenous features of the economic problem.

The article discusses planning within a firm. It argues that "planning" is, for practical purposes, a complex process which, in addition to intellectual activities of perception and analysis, involves the social process of implementing formulated policies by means of organizational structure, systems of measurement and allocation, systems for reward and punishment and finally, involves a dynamic process of revising policy as shifts in organizational resources and the environment change the context of the original planning problem. The outcome of what I shall call "the planning process" is the choice of major markets and products to serve them and the commitment to allocate resources to the implementation of planning choices. The most critical aspect of the large corporation is the degree to which it is specialized and the extent to which those specializations are reflected in sub-units of the organization. In order to accomplish the many tasks involved in conducting business efficiently, the large corporation has organized its physical and human resources to provide dedicated facilities for each of the many kinds of activities in which it is engaged.

This paper examines the price and output behavior of the restrained monopoly firm. Economists H. Averch and L. Johnson have examined the impact of a regulatory restraint on the behavior of the monopoly firm whose management has a preference for profits. Models describing firms which voluntarily restrain profits have been developed by economist O. Williamson under the assumption of a managerial preference for expense and by economist W. Baumol under the assumption of revenue preference. As one would suspect, these alternative formulations of the restrained firm reveal wide variations in price and output behavior. However, they do not reveal the range of possibilities when costs are increasing, when the firm seeks to maximize output or scale of operations, or when the firm employs price discrimination. Under these circumstances the output of the restrained monopoly may exceed that predicted by existing models and may even be pushed beyond optimum as a result of sales at prices below marginal cost. This prediction of excess monopoly output, even in restrained or regulated situations, is the opposite of what one generally expects.

Is price elasticity of demand an important element of market structure. Economist Jesse Markham says it is and cites the conduct of producers of rayon and copper in support of his contention. Economist Richard Caves agrees that elasticity is an element of structure but apparently not a very important one. He cites no empirical evidence for his views but gives a simple theoretical argument which will be expanded upon momentarily. This paper describes theoretical grounds that elasticity of demand may well be an extremely important dimension of market structure where by structure mean the set of environmental elements that influence market conduct and performance. There is little reason to suppose that elasticity of demand is even roughly the same from one industry to the next. Indeed, the evidence suggests considerable variation. If demand elasticity is an important dimension of structure, one might first look for performance consequences in industries characterized by extreme elasticity or inelasticity.

The purpose of this article is to present an intuitive model for determining the expected volume, or quantity traded, in a market that is known to contain substantial random elements, and to test some hypotheses about the determinants of expected volume suggested by the intuitive model against the results of an exact, but extremely unintuitive, formulation of expected volume described in the mathematical appendix of this article. This article presents two models, one intuitive and one exact, that are useful in developing and testing hypotheses about the influence of the economic variables on the mean volume of the market. The treatment suggests that the conventional conclusion that volume is governed exclusively by the demand curve above and the supply curve below the equilibrium price holds true only in the unlikely case of an infinitely weak price-change mechanism. The models show that except in limiting cases, both the demand and supply curves enter into the determination of the mean volume of the market at all prices.

This article attempts to explore the implications of three recent developments in aggregative economic analysis for an improved understanding of the forces generating growth, fluctuation and stability in an advanced private capitalistic economy. The first of these developments is the theory of consumption function as a description of the behavior of consumers in their effort to adjust the level of their asset holdings over time. The second is the modification of the acceleration principle which permits to look at the investment function as a description of the behavior of producers in their endeavor to adjust their productive facilities, fixed and circulating capital-over time. The third is the reintroduction of the price mechanism in the analysis of economic growth. In the classical models, the major equilibrating device was the price mechanism, and this mechanism was considered sufficiently effective to prevent significant and systematic departures from a situation in which all relevant markets are cleared. By contrast, in most of the business cycles and growth models which stem, directly or indirectly, from the analysis of economist John Maynard Keynes, the price mechanism is conspicuously absent.

In an abstract, economists have developed a rationale for the allocation of productive agents in which existing institutional arrangements could be counted upon to perform fairly satisfactorily, especially if public policy were to follow certain easily discerned paths. Given a few simple assumptions with respect to the productive process, the market mechanism could be relied upon to allocate productive agents adequately, and public agencies could devote themselves to the preservation of conditions favorable to the satisfactory operation of the market mechanism, and, perhaps, to the adjustment of the distribution of the output of the economic system in directions more nearly in accordance with desirable standards of social ethics-taking care to see to it that such alterations did not interfere with the proper allocation of productive agents. But the assumptions on which this system is based-the assumptions of firm capacities small in relation to the size of the market, of discriminating appreciation of quality variations by purchasers, and of undifferentiated products have always been unreal for the major part of our productive activity; and changes in the economic structure-due largely to advancing technology have tended to make them more unreal.

The article comments on Professor Machlup's efforts to clarify the terminology of competition and monopoly in his article in the September 1937 issue. It explores whether the classification of market positions which he offers is justified in all cases. Machlup has asserted that "the only criterion that distinguishes monopolistic imperfect competition from monopoly is the time element." The paper suggests that any monopolistic position can reasonably be treated under monopolistic imperfect competition, with emphasis upon one or the other component of the term as each case may require.

In his interesting paper on "The Nature of Quantities in Market Disequilibrium" Herschel Grossman correctly observes that in disequilibrium situations "quantity" is a multifaceted concept, and that the determination of quantity is a multifaceted process. Having labeled and discussed these facets, he formulates a price-quantity adjustment mechanism which is then used to evaluate the mechanisms proposed by Martin Beckmann and Han Ryder. On the supply side of the market-the one relevant for the present discussion Grossman distinguishes between the quantity supplied (S), the quantity offered (s), the quantity sold (X), and the quantity produced (Y). The label "quantity supplied" should, according to Grossman, be reserved for the quantity that sellers would like to supply at a given price on the assumption that all units can be sold, since such usage corresponds to text book terminology. It should be noted, however, that these textbook discussions are essentially limited to equilibrium situations; and to the extent that disequilibrium is discussed adjustments are usually of the tâtonnement variety.

The article presents a further comment on the article "Windfall Income and Consumption," by the author. My original paper pointed to the incomparability of the U.S. and Israeli data. References to the "availability of goods in the market" and the possible earmarking of the restitution receipts "for future consumption" alluded in part to the phenomena which researcher Ronald Bodkin discusses here. They were hypothetical then and remain so now. Bodkin makes them explicit but sheds no light on the magnitude of their effect. Suppositions are not an adequate substitute for empirical measurements.

This article presents a list of books related to business finance, insurance, investments and securities markets. Various books that have been included in the list are "Forces Affecting Investment in Business Enterprise After the Transition Period," by C.C. Abbott, "Competitive Bidding for Corporate Securities," by D.J. Emblen, "The Background of Investment," by D. Ferguson, "The Federal Regulation of Security Exchanges," by F.W. Harrison, "Practical Fire and Casualty Insurance," by J.F. Hedges. The article also provides information on publishers of these books.

The perfect labor market usually assumed in discussions of wages tends toward an equilibrium position in which workers of equal ability working equally hard at identical jobs under uniform conditions would receive equal wage rates. While actual labor markets are obviously far from perfect, one is still inclined to believe that some such tendency toward wage equalization is operative. It is always somewhat disturbing, therefore, to observe the great variety of rates for apparently comparable jobs which prevails in actual labor markets. The U.S. National War Labor Board has during the past several years collected the rates paid by different firms for certain "key occupations" in a large number of industrial areas. The article has attempted to advance hypotheses around which the wealth of data available in any local labor market may profitably be organized. It has been suggested that attention should be concentrated primarily on the supply conditions of labor to the individual firm, the characteristics of the product market in which each firm deals and its cost position relative to other firms in its industry, the considerations influencing the exercise of managerial discretion with respect to wage rates, and the way in which changes are transmitted among firms and labor market areas.

The article focuses on policies and operations of price control. It should be possible to draw from the experience of two years of price administration some lessons for price theory and price management, which will be of permanent value to the economist. But to do this, there must be opportunity for reflection. The Office of Price Administration will be a rich source of information and experience on the price economy for a generation to come. It is that fruitful price analysis must emphasize the differentiation between types of market situations rather than features common to markets as a whole. The author believes that the impressive depth of differences between markets and the limited character of the residual of generalization applicable to markets as a whole have even yet been insufficiently stressed. The practical impact of these differences in market organization on the administration of prices has been very great indeed. Price control in the perfectly competitive market is a matter of classic difficulty. Price control in the imperfectly competitive market is, by comparison, at least, a simple matter.

The article presents information on monopolistic competition theory and public price policy. In monopolistic competition theory duopoly is usually defined as a case "where there are only two competing sellers" and oligopoly is treated as an extension of the case to "a few sellers." A characteristic of these two situations is that there are "not so many sellers as to render negligible the contribution of each to the total supply." In evaluating the assumptions underlying duopoly and oligopoly it should be observed that an essential feature of ordinary market competition is that traders have as complete a knowledge as possible of supplies, bids, offers, prices, etc. In the light of all the available information, traders are constantly readjusting their buying and selling valuations; each one is constantly forced to consider the action of his rivals, as well as his own reserve valuations at the going price. When an independent seller reduces his price, he may expect his rivals also to reduce theirs, if his estimate of market forces is correct. In initiating the lower price, however, a seller secures a temporary advantage in being able to make sales.

The freezing of retail prices, on May 18, 1942, brought to an end the period of so-called selective price control. In September 1940 when efforts at price control were first informally begun, there were already those, marked by the experience of 1917-1918, who advocated a general freezing of prices and wages. The majority of economists, however, opposed such wide and drastic action at that time. The impact of the armament program was still extremely uneven, and it was felt that price and wage increases in certain areas might usefully serve to redistribute resources and to stimulate output, at least up to the level of current fixed capacity. Control was instituted in those individual markets where existing and anticipated war demands were most strongly felt and where substantial price increases had already taken place, at first largely metals and metal products, and lumber. It is, however, evident that aside from the formal correctness of the quantitative and qualitative judgments made by the various administrators charged with price control, rationing, and wage and fiscal policy, the success of the program as a whole will depend heavily on the good will and self -discipline of a public on which severe and unaccustomed restraints are being imposed.

The article presents a theoretical classification of the different types of economic control to address a need for a more uniform terminology and provide distinction between the types. After providing an overview of the earlier classifications of the different types of economic control, it is argued that an economic classification of the different types of economic control suggests a distinction between planned economy, regulated economy and free market economy. To further highlight the argument, the criteria of the classification based on economic considerations are analyzed. It is concluded that an approach to economic problems from a broader point of view than that of the market is required for any evaluation of the different economic orders.

This article suggests a discussion of the inadequacy of the present housing supply from a qualitative standpoint, in terms of surroundings, structural condition, heating and lighting facilities, toilets, bathtubs, and the like. It is not the author's intention, however, to deal with these matters, since he wish to devote the brief time at his disposal to a discussion of the present and future inadequacy of housing considered quantitatively, in terms of family units, and by reference to the practical standard of what the market will absorb. To put the matter in another way, he proposes to discuss the effective demand for housing, not the need for it. It is true that a considerable fraction of the population lives in dwellings that are generally considered to be below an acceptable minimum standard of decency and comfort, but this is a chronic condition in U.S. society which may, and often does, co-exist with a state of housing surplus as reflected by market demand. The article is limited to non-farming housing.

The 100 per cent reserve plan raises the question of the location of the right of issue as well as that of the principles which should govern issue--The former only will be here discussed--Principles governing the location of the issue power and historical deviations therefrom--Commercial bank demand deposits as money and the factors affecting their use--Delegation of the power of issue to the banks and the fiscal consequences--Net equity or inequity of the system difficult to determine but the economic results warrant suspicious scrutiny--Frustration of banking functions and the evil effects both on society at large and on the banks themselves--The 100 per cent reserve system as a remedy--Demands for the socialization of banking arise from misconceptions--The real need is for socialization of the supply of money with practical laissez faire for commercial banking operations. [ABSTRACT FROM AUTHOR]

There are two tendencies often marking the formulation of economic laws or theories which expose them to much justifiable criticism. One is the tendency to make the application of a law or principle broader in scope than the facts warrant, a common fallacy in all scientific investigation. The other is a disposition to assume that an economic force operates with the same or similar effects irrespective of the nature of the units involved and the conditions determining their relationship to one another. Both these tendencies have marked much of the discussion concerning the scope and influence of competition in economic life. Competition has always been a potent force not only in industry but in most phases of social life. It has also played an important role in the evolution of the varied forms of life now occupying the earth. Broad and potent as this influence has been, there have always been limits to its full operation. In economic life the play of competitive forces has been more or less restricted by various institutional growths or cultural traditions, by differences in the mobility of the factors of production, and by numerous trade barriers to the free movement of goods and services in both national and international commerce. Recent developments in industrial technique in several lines of business are favoring large-scale production. In some instances such growth has been accompanied by a pronounced reduction in the number of producing units. This reduction has facilitated the movement toward large combinations, both nationally and across national frontiers, capable of exerting a considerable measure of control over prices and output. Preventive measures against such monopolistic growths have largely failed.

This article focuses on investments in fixed assets and its bearing on price flexibility. The chief purpose of the managers is to earn profits or a return on invested capital. As long as the invested capital is predominantly working capital it is not generally profitable to sell below cost and dissipate this captial. But as the invested capital becomes predominantly fixed assets such as plant and machinery, it may be advisable in a period of overcapacitation to sell in a competitive market at a price which slightly more than covers the additional cost of getting additional business, thus reducing the loss which would otherwise be incurred. This is an application of railroad rate theory involving parallel lines to overcapacitation in manufacturing enterprise with a large overhead in the way of fixed investment. In the matter of fixed overhead the question of a minimum organization for expansion in a later period of less overcapacitation is also involved. So far as the present business volume is concerned the American telephone and telegraph and the large tire and rubber plants might tend to reduce heavily their research staffs and their technicians in various lines, but these organizations must think in longer terms and maintain a minimum staff of technicians and skilled workmen so that they will be in a flexible position when times are better.

The complex nature of monopoly control has required the best efforts of judges, legislators, and economists to define it. But as yet, there is practically no agreement as to the description of its classification. Therefore in this article, theories and tests of monopoly control in the U.S. are examined. English and American courts have taken at least six different attitudes in applying the theory of monopoly to concrete cases. For instance, under the early common law, a person possessed a monopoly if he had secured a differential advantage which allowed him to maintain permanently a fixed price for any single commodity. And whether this monopoly is public or private, he is compelled under the provisions of this law to offer reasonable rates to all persons.

The article focuses on the prevalent market conditions in the year 1916. The middleman these days is expected to justify his functions which were earlier accepted as natural and necessary. Because of the many complexities of the market, particularly the existence of set prices for many commodities, protective duties may be so adjusted, so as to secure to the producer a somewhat higher price than he would be able to get without the tariff. If sufficient data are obtained as to actual market conditions for each protected commodity, a point can be found at which to adjust the duty so that the increase in the producer's price will be great enough to be really protective, and at the same time slight enough so that the increase in the price paid by the retailer, assuming the manufacturer's increase is not absorbed before it reaches him, will be so insignificant that he will not raise the price paid by the consumer. The author says that we may hope to learn more definitely from studies in marketing, the limitations of our premises and conclusions. One may hope also to gain light on the relative importance of non-economic factors in the determination of price. One may hope, further, to increase his/her knowledge of the elasticity of organization.

In this article, the author reassesses a model which he and a colleague developed in the 1960s regarding the behavior of U.S. firms under regulatory constraints. This was a model of the firm's behavior under the constraint that the return on capital investment not exceed a given level, specified by a governmental regulatory body. Major assumptions of the model are that: the firm seeks to maximize profit; the market cost of capital is constant; the allowable or fair rate of return exceeds the cost of capital; and no regulatory lag exists. Under these assumptions the model leads to conclusions that the capital-labor ratio is greater than that which would minimize cost at the level of output selected by the firm, and that the firm may have an incentive to serve competitive markets even if revenues fall below incremental cost in those markets, with the difference more than compensated by increased net revenues permitted through price increases in its monopoly services. This formulation has attracted numerous comments, critiques, and replies. However, virtually all the discussion has remained on theoretical grounds. This article briefly notes major developments in the theory, examines bits of evidence that have come to light, and addresses possibilities for further empirical work.

This article examines the option demand and consumer's surplus. The authors of this article found out that if no markets for claims contingent on incomes and tastes exist, option price may exceed or fall short of expected consumer's surplus. On the other hand, the authors showed that if a complete set of perfect contingent markets exists, option price is just the market value of the relevant contingent consumer's surpluses. Finally, the authors briefly attempt to relate the result to the real world.

This article analyzes a market which is periodically open and closed, such as the stock market in the U.S. Trading occurs continuously when the market is open, and it is prohibited when the market is closed. The existence of groups of traders who operate on information obtained only when the market is open, and of different groups of traders who operate on information which can be obtained only after the market closes, implies that the exclusive use of either differential or difference equations will result in an inadequate representation of the dynamic behavior of prices. Therefore, stability of this periodic market will be studied by using a mixed difference-differential equation model.

This article responds to the study presented by Oliver E. Williamson which focuses on the market failure considerations in the vertical integration of production. The author's criticism are that Williamson might have helped the reader by: (1) showing more fully how the various points fit together (2) looking more consistently at property rights and probing further into the reasons for the behavior that has been described. The author stated that he do not mean that changes in claim structures are the only variables at work. The authors has suggested that changes in rights with vertical integration constitute a major factor in the reduction of transaction costs.

This article presents a formal model of forward exchange market speculation which is based upon the present structure of the international monetary system with binomial speculative expectations. The recognition of the binomial character of speculative expectations which is embodied in our speculative excess demand function for forward exchange alters the traditional interest rate parity theory model in two ways: first, the position of the speculative market schedule becomes highly sensitive to speculative expectations about devaluation; second, the speculative market schedule is asymmetric in the presence of devaluation fear.

This article discusses the measurement of investment portfolio performance under uncertainty. Section 1 of the article briefly reviews the portfolio theory, including the assumptions on which it is based, and discusses the different one-parameter measures of performance that have been derived from the theory. Section 2 examines the adequacy of the one-parameter measures of performance by measuring empirically the relationship between the said measures and the risk from which they are supposed to abstract. The article then attempts to explain the apparent discrepancies between the market-line theory and the empirical findings in terms of specific deficiencies in the underlying assumptions.

This article presents the results of an empirical study of year-end common-stock prices in the U.S. from 1961 to 1965. Several previous empirical studies have tried to explain share prices on the basis of such variables, but these investigations were forced to rely on published accounting data and untested hypotheses about the formation of expectations. The present study determines whether the goodness of fit can be improved still further by substituting the estimates from several securities firms for the expectations of a single predictor and by using a wider variety of such expectational variables. The data used are described in Section 2. It is noted that an extremely close fit to the empirical structures of share prices is obtained with the use of such expectations data. The results are also contrasted with those obtained when only historic data are used. Section 3 of the article then examines further the stability and predictive power of the mode used in the study. Section 4 discusses the usefulness of the model for security selection.

The article focuses on market and price mechanism in socialist countries. It discusses the rise and fall of economic reform in Czechoslovakia. According to the author, before August 21, 1968, the Czechoslovak economic reform had been considered the most far-reaching reform in Eastern Europe. It is not anymore. During the 1950's Czechoslovak economics belonged to the most sterile and dogmatic in Eastern Europe. Unlike Poland, the new wind came very late. In 1962-63, Czechoslovak economists were still discussing whether mathematical methods can in any sense contribute to the development of economic theory and so-called "bourgeois" economic theory was virtually unknown. Since that time, however, very much has happened. Especially, the young generation of economists quickly learned how to use modern tools of economic analysis and even the older generation abandoned most ideological prejudices, which had hampered the previous progress in theory. Still, much remained to be desired. The acquaintance with modern analytical tools was casual, as it probably could not have been otherwise. Thus, for example, basic ideas of the reform were originally developed without any knowledge of the famous Lange-Lerner model of market socialism.

The article discusses spectrum allocation without market in the U.S. It states that the growing demand for spectrum, that is communication frequencies, has once more come to out-strip its supply. Electrical interference, congestion and resultant spectrum scarcities threaten to make air, ground and sea travel slower and less safe, construction, distribution, mining and manufacturing more costly, data transmission and information processing networks harder to develop for wide use and some potential advances in education, law enforcement and national security difficult to realize. This "silent crisis" seems due at least as much to deficiencies in allocational practices as to any inherent characteristics of the radio spectrum resource. Nowadays the U.S. Federal Communications Commission and the U .S. President's Office of Telecommunications Management award rights gratis. With right-holders prohibited from selling any portion, they lack incentives to economize use today, to withhold current use if greater future value will result, or to transfer rights to others who may value them more highly. Large portions of spectrum are allocated to different services with no chance for interservice transfers despite sometimes-permissive policies that govern intraservice usage.

The theory of economic policy upon which arguments for the collectivization of any activity must be based embodies the prediction that the behavior of individuals in markets does not produce socially desirable results. In the orthodox analysis, this prediction stems from the presence of significant externalities that the market is presumed unable to internalize. In his independent behavior, the individual is assumed to take into account only effects of his actions on his own utility or that of his family group. From this it follows that, if private behavior exerts Pareto-relevant external economies, the market generated supply of resources to the activity in question falls short of the "social optimum," as this is defined by the Paretian criteria. For example, if citizens of a social group secure, generally, genuine benefit from the existence of a healthy, disease free population, the behavior of individual in purchasing health services independently in private markets appears to commit, relatively, too small a share of total community resources to the provision of such services.

There is little doubt that residential construction moved through a series of long swings prior to World War II. These long movements appear with regularity in the available estimates of housing starts and residential capital formation. There is less agreement about the nature and causes of these long swings than there is about their existence. However, it can be shown that whatever other factors may have influenced the timing and relative amplitude of the long swings in residential construction, it would have experienced essentially the same fluctuations as recorded if demographic changes alone determined the level of residential construction. In other words, the prewar fluctuations in residential construction apparently constitute a family of long swings resulting from similar causes and very likely inherent in the growth process in the U.S. A particular task is to see if events in housing markets in the last fifteen years involve an exception to this prewar experience or simply continue the long swings of the past. This past experience provides the necessary framework for analyzing and evaluating recent history.