nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2011‒09‒05
sixteen papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. A Detailed Analysis of the Productivity Performance of the Canadian Food Manufacturing Subsector By Chris Ross
  2. Dinámica de Precios en Chile: Evidencia con datos de Supermercados By Gastón Chaumont; Miguel Fuentes; Felipe Labbé; Alberto Naudon
  3. A Reassessment of Flexible Price Evidence Using Scanner Data: Evidence from an Emerging Economy. By Gastón Chaumont; Miguel Fuentes; Felipe Labbé; Alberto Naudon
  4. The Trend over Time of the Gender Wage Gap in Italy By Mussida, Chiara; Picchio, Matteo
  5. O uso de heurísticas no estudo das decisões econômicas By Adriana Sbicca
  6. Will Electric Cars Transform the U.S. Market? By Lee, Henry; Lovellette, Grant
  7. Limite econômico ou metamorfoses do capitalismo? By Eduardo da Motta e Albuquerque
  8. Mercado, tecnologia e socialismo: notas sobre a rodada atual de um debate histórico By Eduardo da Motta e Albuquerque
  9. Regulatory federalism and industrial policy in broadband telecommunications By Daniel Montolio; Francesc Trillas
  10. Downward wage rigidity in Hungary By Gábor Kátay
  11. From national monopoly to Multinational Corporation: how regulation shaped the road towards telecommunications internationalization By Clifton, Judith; Díaz-Fuentes, Daniel; Comín Comín, Francisco
  12. An anarchist’s reflection on the political economy of everyday life By Boettke, Peter
  13. Bringing Citizens Back In: Renewing Public Service Regulation By Clifton, Judith; Díaz-Fuentes, Daniel; Fernández Gutiérrez, Marcos; Revuelta, Julio
  14. Incentive pay and gender gaps in the Nordic countries By Westling, Tatu
  15. Anarchism and Austrian economics By Boettke, Peter
  16. Quasimarket failure By Boettke, Peter; Coyne, Christopher; Leeson, Peter

  1. By: Chris Ross
    Abstract: This report analyzes labour productivity, multifactor productivity and input trends in Canadian food manufacturing since 1961, with a focus on the entire time period and developments since 2000. It is found that the subsector experienced labour productivity growth stronger than the business sector over both the long and short term, but has outperformed manufacturing only in the more recent period. Labour productivity growth is decomposed into capital intensity and multifactor productivity growth, which are found to have contributed to growth almost equally, and labour composition growth accounted for less than 15 per cent over the 1961-2007 period. Underlying drivers of growth are identified and trends in technology, capacity utilization, human capital, economies of scale, machinery and equipment, international trade, and regulation are explored. Policy implications for fostering labour productivity growth based on the drivers are outlined. Finally, a conclusion summarizes the key findings of the paper.
    Keywords: labour productivity, multifactor productivity, input trends, food manufacturing, capital intensity, multifactor productivity growth, labour composition
    JEL: O47 D24 J24 L66 Q18
    Date: 2011–08
  2. By: Gastón Chaumont; Miguel Fuentes; Felipe Labbé; Alberto Naudon
    Abstract: In this paper we use a new weekly database of scanner-level prices for the Chilean economy to characterize the price-setting behavior in the supermarket industry. This period corresponds to an episode of relatively high inflation marked by a boom and a subsequent bust (from July 2007 to July 2009). Results show that prices have an average duration slightly greater than two weeks and that price changes are more frequent in Chilean supermarket than in those of other countries. Besides, changes are smaller in absolute value and price change distributions are roughly symmetric. We also find a positive and robust correlation between the absolute size of price changes and price duration. In addition, an inflation variance decomposition exercise shows that price variability is mainly explained by price change variability. Altogether, this evidence points toward a time-dependent pricing behavior in Chilean supermarkets.
    Date: 2011–08
  3. By: Gastón Chaumont; Miguel Fuentes; Felipe Labbé; Alberto Naudon
    Abstract: In this paper we use a new database of scanner-level prices for the Chilean economy to characterize the microeconomic behavior of prices during a period of high inflation. We are able to characterize the price-setting behavior by supermarket chain. The evidence indicates that there is significant heterogeneity in the pricing behavior of individual retailers. Analyzing the source of shocks, results show that even though chain-specific shocks account for a sizable fraction of the observed variation, common (i.e. countrywide) shocks to individual goods and product categories are the most important factors to explain the behavior of prices. In other words, the pricing strategy of retailers seems less important in developing countries to explain microeconomic price dynamics.
    Date: 2011–08
  4. By: Mussida, Chiara (University of Milan); Picchio, Matteo (Tilburg University)
    Abstract: We analyse gender wage inequalities in Italy in the mid-1990s and in the mid-2000s. In this period important labour market developments occurred: institutional changes have loosened the use of flexible and atypical contracts; the female employment rates and educational levels have substantially increased. We identify the time trends of different components of the gender wage gap by estimating wage distributions in the presence of covariates and sample selection and by counterfactual microsimulations. We find that women swam against the tide: whilst the trend in female qualifications slightly reduced the gender wage gap, the gender relative trends in the wage structure significantly increased it.
    Keywords: gender wage gap, counterfactual distributions, decompositions, hazard function, labour market reforms
    JEL: C21 C41 J16 J31 J71
    Date: 2011–08
  5. By: Adriana Sbicca (Universidade Federal do Paraná)
    Abstract: Herbert Simon disseminated his bounded rationality approach in his vast academic production. The recognition of the complex environment and the cognitive limits led him to study about the use of heuristics in the decision-making. Around this idea, a new path to the study of human decisions has been developed. More recently, Daniel Kahneman and Amos Tversky have analysed the relation between heuristics and biases of behaviour, and this approach has gained great space in the academic world. This paper discusses the Simon´s, Kahneman and Tversky’s contributions and proposes a promising complement to the construction of behavioural fundations of Economy.
    Keywords: bounded rationality, heuristics, Herbert Simon, Daniel Kahneman, Amos Tversky
    JEL: B50 D83
    Date: 2011
  6. By: Lee, Henry (Harvard University); Lovellette, Grant (Harvard University)
    Abstract: For the past forty years, United States Presidents have repeatedly called for a reduction in the country's dependence on fossil fuels in general and foreign oil specifically. Stronger efficiency standards and higher taxes on motor fuels are a step in this direction, but achieving even greater reductions in oil consumption will require changing the way Americans power their transportation system. Some officials advocate the electrification of the passenger vehicle fleet as a path to meeting this goal. The Obama administration has, for example, embraced a goal of having one million electric-powered vehicles on U.S. roads by 2015, while others proposed a medium-term goal where electric vehicles would consist of 20% of the passenger vehicle fleet by 2030--approximately 30 million electric vehicles. The technology itself is not in question--many of the global automobile companies are planning to sell plug-in hybrid electric vehicles (PHEVs) and/or battery electric vehicles (BEVs) by 2012. The key question is, will Americans buy them? The answer depends on four additional questions: 1. Is the cost of purchasing and operating an electric vehicle more or less expensive than the cost of a comparable conventional gasoline-powered vehicle? 2. Are the comparative costs likely to change over the next twenty years? 3. Do electric vehicles provide the same attributes as conventional cars, and if not, do the differences matter? 4. Will electric car owners be able to access the electricity needed to power their vehicles? This paper attempts to answer these four questions.
    Date: 2011–08
  7. By: Eduardo da Motta e Albuquerque (Cedeplar/UFMG)
    Abstract: Metamorphoses of capitalism may be investigated following a dialogue between two theoretical approaches: long waves of capitalist development (Freeman & Louçã, 2001) and systemic cycles of accumulation (Arrighi, 1994). This dialogue organizes this paper. The first section associates the metamorphoses of capitalism with the counteracting factors against the tendency of the profit rate to fall. The second section presents the matching and mismatching between changes in the state and metamorphoses of capitalism. The third section evaluates the changes in the position of the United States as the hegemonic power. The final section discusses the limits to capitalism.
    Keywords: metamorphoses of capitalism; economic cycles, State.
    JEL: B51 B52
    Date: 2011–08
  8. By: Eduardo da Motta e Albuquerque (Cedeplar/UFMG)
    Abstract: This paper reviews two elaborations on alternatives to capitalism (Roemer, 1994 e Burczak, 2006). The present round of the controversy on socialism, planning vs. market, was triggered by the collapse of the bureaucratic regime in the URSS. One key feature of the present round is the influence of Hayek. One important argument for the fundamental role of markets in these models of socialism is technology – seen as a product of market forces. This paper evaluates the present round as an introduction to a suggestion of new terms for this important debate.
    Keywords: Socialism, Roemer, Burczak, technology.
    JEL: B51 B52
    Date: 2011–08
  9. By: Daniel Montolio (Universitat de Barcelona & IEB); Francesc Trillas (Universitat Autònoma de Barcelona, SP-SP Center (IESE) & IEB)
    Abstract: We analyse the impact of regulation, industrial policy and jurisdictional allocation on broadband deployment using a theoretical model and an empirical estimation. Although central powers may be more focused and internalize interjurisdictional externalities, decentralized powers may internalize local horizontal policy spillovers and use a diversity of objectives as a commitment device in the presence of sunk investments. The latter may, for instance, alleviate the collective action problem of the joint use of rights of way and other physical infrastructures. In the empirical exercise, using data for OECD and EU countries for the period 1999-2006, we examine whether centralization promotes new telecommunications markets, in particular the broadband access market. The existing literature, in the main, claims it does, but we find no support for this claim in our data. Our results show that indicators of national industrial policy are a weakly positive determinant of broadband deployment and that different measures of centralization are either irrelevant or have a negative impact on broadband penetration.
    Keywords: Regulation, industrial policy, decentralization, broadband
    JEL: L50 L96 K23 H77
    Date: 2011
  10. By: Gábor Kátay (Magyar Nemzeti Bank, Department of Economics, 1850 Budapest, Szabadság tér 8-9, Hungary.)
    Abstract: Following the approach recently developed for the International Wage Flexibility Project (IWFP), the paper presents new estimates of downward real and nominal wage rigidity for Hungary. Results suggest that nominal rigidity is more prominent in Hungary than real rigidity. When compared to other countries participating in the IWFP, Hungary ranks among the countries with the lowest degree of downward real rigidity. The estimated downward nominal rigidity for Hungary is higher, the measure is close to but still below the overall cross-country average. Using the same methodology, the paper also con…firms the widespread view that the wage growth bargained at the national level has little compulsory power in Hungary. On the other hand, the minimum wage remains an important source of potential downward wage rigidity in Hungary. JEL Classification: C23, E24, J3, J5.
    Keywords: Downward nominal and real wage rigidity, wage change distributions, wage flexibility.
    Date: 2011–08
  11. By: Clifton, Judith; Díaz-Fuentes, Daniel; Comín Comín, Francisco
    Abstract: One of the consequences of major regulatory reform of the telecommunications sector from the end of the 1970s – particularly, privatization, liberalization and deregulation – was the establishment of a new business environment which permitted former national telecommunications monopolies to expand internationally. From the 1990s, a number of these firms, particularly those based in Europe, joined the rankings of the world’s leading Multinational Corporations. Their internationalization was uneven, however: while some firms internationalised strongly, others went abroad much slower. This article explores how the regulatory framework within which telecommunications incumbents evolved over the long-term helped shape their subsequent, uneven, paths to internationalization. Two cases representing ´maximum variation´ are selected: Telefónica, whose early and unrelenting expansion transformed it into one of the world’s most international of Multinational Corporations, and BT, whose international ventures failed and, with decline domestic shares, forced the firm to partial de-internationalization, becoming the least international of the large European incumbents. Long-term ownership, access to capital, management style and exposure to liberalization strongly influenced firms’ approaches to internationalization.
    Keywords: Regulation; Telecommunications; Internationalization; Europe; Privatization; Liberalization; Multinational Corporations
    JEL: L96 N74 L51 F23 N44 N84 L98 H82
    Date: 2011
  12. By: Boettke, Peter
    Abstract: James Scott has written a detailed ethnography on the lives of the peoples of upland Southeast Asia who choose to escape oppressive government by living at the edge of their civilization. To the political economist the fascinating story told by Scott provides useful narratives in need of analytical exposition. There remains in this work a “plea for mechanism”; the mechanisms that enable social cooperation to emerge among individuals living outside the realm of state control. Social cooperation outside the formal rules of governance, nevertheless require “rules” of social intercourse, and techniques of “enforcement” to ensure the disciplining of opportunistic behavior.
    Keywords: economic development; self-regulation; political economy; peasant economy
    JEL: O17 P48
    Date: 2011
  13. By: Clifton, Judith; Díaz-Fuentes, Daniel; Fernández Gutiérrez, Marcos; Revuelta, Julio
    Abstract: This essay concerns the ways in which public services – particularly household services such as communications, energy, water and transportation – have been regulated and deregulated, and analyses what consequences this has for users and citizens. Much of the deregulation of public services from the 1980s – liberalization, privatization and New Public Management – was justified by claims that reform would provide users with more choice, whilst they would receive cheaper and better quality services. Little account was taken of the fact that users are highly heterogeneous, that socio-economic differences might be important in determining their consumption of public services, and that this may not lead to socially optimum outcomes. By examining consumption patterns in two large European countries, Spain and the UK, through an analysis of revealed and declared preferences, this paper sheds light on how socio-economic differences among households help determine public service consumption. The main findings are that the supposed benefits of public service deregulation are not evenly spread across populations, and that specifically targeted “bottom-up” regulation from the demand-side could usefully address these issues, thus improving social welfare.
    Keywords: Regulation; Privatization; Public Services; Telecommunications; Electricity; Gas and water
    JEL: D18 L96 L51 D12 L95 L94
    Date: 2011
  14. By: Westling, Tatu
    Abstract: This paper explores the effect of incentive pay on gender pay gaps in Finland, Norway and Sweden among professionals and managers within MNCs. Mercer 2009 Total Remuneration Survey data is utilised. Uniform job ladder, occupation, industry and wage definitions enable consistent cross-country comparisons. In addition to the between-country variation, the within-country variation of gender gap with respect to incentive pay is analysed. The results indicate that gender pay gaps differ among the Nordics and that occupation and industry controls have dissimilar effects across countries. Irrespective of wage element, Finland and Norway are characterised by higher gender gaps than Sweden. Incentives tend to accentuate gender pay gaps. In intention to alleviate the absence of job performance data, this study utilises a rudimentary, promotion-based measure for job performance. In Finland it does affect the gender gap. However, irrespective of gender, high-performers are penalised in Sweden but not in Finland or Norway. The Finnish data also allows the identification of low-performers. Low job performance is rewarded in Finland. Nonetheless, the job performance findings should be interpreted with cautions.
    Keywords: Wage differential; incentive pay; job ladder; gender; job performance
    JEL: J31 J70
    Date: 2011–08–31
  15. By: Boettke, Peter
    Abstract: In the 2011 Franz Cuhel Memorial Lecture, I argue that the study of endogenous rule formation in economic life (what I term the positive political economy of anarchism) should be studied in-depth and that the economic analysis of the Austrian school of economics provides many of the key analytical insights necessary for such study.
    Keywords: Rule formation; Enterprise of Law; Austrian Economics
    JEL: O17 B41 B53 P16
    Date: 2011
  16. By: Boettke, Peter; Coyne, Christopher; Leeson, Peter
    Abstract: The efficiency of “quasimarkets”—decentralized public goods provision subjected to Tiebout competition—is a staple of public choice conventional wisdom. Yet in the 1990s a countermovement in political economy called “neoconsolidationism” began to challenge this wisdom. The neoconsolidationists use the logic of government failure central to public choice economics to argue that quasimarkets fail and that jurisdictional consolidation is a superior way to supply public goods and services in metropolitan areas. Public choice scholars have largely ignored the neoconsolidationists’ challenge. This paper brings that challenge to public choice scholars’ attention with the hope of encouraging responses. It also offers some preliminary thoughts about the directions such responses might take.
    Keywords: Public Goods; Quasimarkets
    JEL: D73 H41 H44
    Date: 2011

This nep-hme issue is ©2011 by Frederic S. Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.