STICKY WAGES AND IMPLICIT CONTRACTS: A TRANSACTIONAL APPROACH

Sticky wages have been explained in the recent implicit contracts literature as a risk shifting device. Risk averse employees purchase insurance via an implicit contract from risk neutral firms. This paper offers an alternative explanation of the phenomenon. Various alternative organizational forms for labor markets are analyzed from a transactions cost viewpoint. Observed labor market institutions (including sticky wages) are seen as ways to economize on transactions costs. In fact, it is argued that sticky wages would be observed even if workers were risk neutral. Thus the emphasis on risk shifting in the implicit contracts literature seems misplaced.
A fall (in price) arising from temporary distress will be attended probably with no correspondent fall in the rate of wages: for the fall in price, and the distress, will be understood to be temporary, and the rate of wages, we know, is not so variable as the price of goods.     

Presidential Popularity and Presidential Elections: An Update and Extension

The popularity of the president as ascertained months priorto a presidential election permits an accurate prediction ofthe election outcome, even when the incumbent president is notrunning for reelection.     

THE DEMAND FOR CIGARETTE SMUGGLING

When taxes raise the full price of a good above that in nearby jurisdictions consumers have an incentive to cross into the lower-price jurisdiction to make purchases. Using a simple microeconomic model of the consumer's border-crossing decision, we derive an econometric model to test the significance of border crossing and estimate the magnitude of the resulting sales. Examining cigarette sales in the continental U.S. over the period 1960 to 1986, we find strong evidence that border crossing is a significant factor in explaining sales differentials between states. Implications for demand estimation and excise tax policy are discussed.     

PRODUCTION FACTORS IN POLICING SERVICES*

The demand for increased public protection has become a major public issue of our times. The usual American response of increased resources has been applied but has had less than the desired effects. This paper analyzes the existing production factors in the provision of policing services in terms of the efficiency with which these services are delivered. The efficiency analysis occurs on a number of levels: (1) the use of existing resources, (2) alternative allocation at the existing resource level, (3) alternative technologies, and (4) the tasks and services which should be undertaken. The effects and implications of exogenous changes upon crime and policing services are considered and the problems and needs for change in the production factors for policing services are presented.     

INCREMENTAL (MARGINAL) ANALYSIS OF BASIC INVENTORY MODELS

For simple inventory models with linear costs and stochastic demands, the technique of incremental analysis is applied to the problem of determining both the optimum number of units to stock and the associated expected profit. The cases where there are shortage costs and where reordering is possible are covered. Sensitivity analysis of optimum solutions is shown to be useful and straightforward. Problems involving cost minimization, rather than profit maximization, are discussed. The emphasis is on discrete probability distributions of demand, but the extensions to continuous probability distributions are clearly indicated.