nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2013‒12‒15
fourteen papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. Consumption as a Social Process within Social Provisioning and Capitalism: Implications for Heterodox Economics By Todorova, Zdravka
  2. Wage Flexibility and the Great Recession: The Response of the Irish Labour Market By Doris, Aedin; O'Neill, Donal; Sweetman, Olive
  3. Economic History or History of Economics? A Review Essay on Sylvia Nasar’s Grand Pursuit: the Story of Economic Genius By Orley Ashenfelter
  4. The Study of Middle Eastern Industrial History: Notes on the Interrelationship between Factories and Small-Scale Manufacturing with Special References to Lebanese Silk and Egyptian Sugar, 1900-1930 By Roger Owen
  5. Comparing Real Wage Rates By Orley Ashenfelter
  6. Nonprofit Roles in For-profit Firms: The Institutionalization of Corporate Philanthropy in France By Arthur Gautier; Anne-Claire Pache; Imran Chowdhury
  7. Colombian SOEs: A Review Against the OECD Guidelines on Corporate Governance of State-owned Enterprises By Héctor Lehuedé
  8. Who Disseminates Technology to Whom, How, and Why: Evidence from Buyer-Seller Business Networks By Tomohiro MACHIKITA; Yasushi UEKI
  9. “One more lie: the ‘Monday effect’ in Spain’s retail petrol market” By Juan Luis Jiménez; Jordi Perdiguero
  10. Exclusive Dealing: Before Bork, and Beyond By J. Mark Ramseyer; Eric Rasmusen
  11. The Economic Performance of Clustered and Non Clustered Firms along the different Phases of the Cluster Life Cycle: The Portuguese Cork Industry Case By Amélia Branco; João Carlos Lopes
  12. An anniversary to mark: the who, what, when, and why of California's trademark registration law of 1863 By Paul, Duguid
  13. Do MSRPs Decrease Prices? By Babur De los Santos; In Kyung Kim; Dmitry Lubensky
  14. Evolution of Machinery Production Networks: Linkage of North America with East Asia By Mitsuyo ANDO; Fukunari KIMURA

  1. By: Todorova, Zdravka
    Abstract: The article discusses consumption as a social process that is a part of social provisioning and is in an evolutionary interplay with other social processes. The discussion is grounded in, but is not limited to the contributions of Thorstein Veblen. The first section delineates social provisioning as a framework for consumption inquiry. This section emphasizes that social provisioning is a part of collective life process embedded in culture and nature, and that it is comprised by two general sets of activities – those motivated by money and those that are not motivated by making money. The second section delineates features of capitalism as a system, so that it provides a social context for consumption inquiry. The third section formulates a categorization of social processes, one of which is the consumption process. Further, the section delineates the meaning and components of the concepts: social activities, institutions, and habits of life and thought. The fourth section applies these concepts to consumption social process in the specific context of capitalism. The section discusses consumption activities; institutions and systems of provision; and habits of life and thought – illustrating with examples obtained from various disciplines. The section introduces “gated consumption” as an example of a habit of life and thought. It is argued that the formulated analysis transcends the cultural-material dualism. Finally, the article draws implications of the offered analysis, concluding that the category of “consumers” is of little use to heterodox economics.
    Keywords: Consumption Process; Social Process; Institutions; Consumption Activities; Social Provisioning; Habits of Life and Thought; Heterodox Economics; Class; Thorstein Veblen
    JEL: B41 B50 B52 B54 D11 P10
    Date: 2013–12–08
  2. By: Doris, Aedin (National University of Ireland, Maynooth); O'Neill, Donal (National University of Ireland, Maynooth); Sweetman, Olive (National University of Ireland, Maynooth)
    Abstract: There is considerable debate about the role of wage rigidity in explaining unemployment. Despite a large body of empirical work, no consensus has emerged on the extent of wage rigidity. Previous attempts to empirically examine wage rigidity have been hampered by small samples and measurement error. In this paper we examine nominal wage flexibility in Ireland both in the build up to, and during the Great Recession. The Irish case is particularly interesting because it has been one of the countries most affected by the crisis. Our main analysis is based on earnings data for the entire population of workers in Ireland taken from tax returns, which are free of reporting error. We find a substantial degree of downward wage flexibility in the pre-crisis period. We also observe a significant change in wage dynamics since the crisis began; the proportion of workers receiving wage cuts more than doubled and the proportion receiving wage freezes increased substantially. However, there is considerable heterogeneity in wage changes, with a significant proportion of workers continuing to receive pay rises at the same time as other were receiving pay cuts.
    Keywords: wage flexibility, Great Recession
    JEL: J31 J38 D31
    Date: 2013–11
  3. By: Orley Ashenfelter
    Abstract: In this essay I review Sylvia Nasar’s long awaited new history of economics, Grand Pursuit. I describe how the book is an economic history of the period from 1850-1950, with distinguished economists’ stories inserted in appropriate places. Nasar’s goal is to show how economists work, but also to show that they are people too--with more than enough warts and foibles to show they are human! I contrast the general view of the role of economics in Grand Pursuit with Robert Heilbroner’s remarkably different conception in The Worldly Philosophers. I also discuss more generally the question of why economists might be interested in their history at all.
    Keywords: economic history, book review, Nassar, Keynes
    JEL: B10 B20
    Date: 2012–01
  4. By: Roger Owen
    Abstract: The growth and transformation of Middle Eastern manufacturing industry has been little studied for the period before the advent of tariff autonomy, and thus protectionism, in the early 1930s The reasons for this are various but must have much to do with the many difficult problems involved. There is an obvious lack of data, particularly about the activities of the craft or small-scale sector which, even to this day, is regularly under-counted by government statisticians. There are also serious problems of definition which hage generally been ignored by the vast majority of economic historians who remain content to analyse manufacturing activity in terms of such simple dichotomies as modern/factory/capitalist versus traditional/workshop/pre-capitalist, a method which not only masks the fact that there are a whole range of activities which do not fall into such apparently neat categories but also — to introduce the major theme of this essay — makes it impossible to examine the complex interrelationship between plants of different size and degree of capitalisation. Finally, much of what passes for a ducussion of manufacturing activity has, in fact, got muddled with the much larger debate about the whole process of industrialisation, about whether particular areas of the Middle East could have developed their own industrial base before 1930, and about why they might have been prevented from doing so.
  5. By: Orley Ashenfelter (Princeton University)
    Abstract: A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. In this paper I set out the conceptual basis for such measures, provide some historical examples, and then provide my own preliminary analysis of a decade long project designed to measure the wages of workers doing the same job in over 60 countries workers at McDonald’s restaurants. The results demonstrate that the wage rates of workers using the same skills and doing the same jobs differ by as much as 10 to 1, and that these gaps declined over the period 2000-2007, but with much less progress since the Great Recession.
    Keywords: wage rate, nominal wage, workers, living standards
    JEL: C81 C82 D24 J31 N30 O57
    Date: 2012–03
  6. By: Arthur Gautier (Chaire entrepreneuriat social - ESSEC Business School); Anne-Claire Pache (Public and Private Policy Department - ESSEC Business School); Imran Chowdhury (Lubin School of Business - Pace University)
    Abstract: In this research project we aim to understand the role of institutional entrepreneurship across multiple levels - field, organization, and micro levels - in the institutionalization of a new professional role within organizations. Specifically, we study the rise of the "corporate philanthropy manager," a position inspired by nonprofit values and goals which developed within large French corporations during the period 1979 to 2011. The process of creating, maintaining and legitimizing this new role - philanthropy as a new business function - is the central focus of our study, and we explore how elements of the nonprofit and for-profit worlds came together in this new role, as well as the role of various actors across multiple levels in influencing this combination.
    Keywords: Corporate Philanthropy ; Institutional Change ; Institutional Entrepreneurship ; Institutional Work ; Professions
    Date: 2013–11
  7. By: Héctor Lehuedé
    Abstract: This report evaluates the corporate governance practices of Colombian SOEs against the OECD Guidelines on Corporate Governance of State-Owned Enterprises (SOEs). The assessment was prepared based on information provided by the Colombian authorities, an analysis of the available literature and interviews with authorities, consultants, academics, and company as well as stakeholder representatives. Following a brief introduction, Part A of the report provides information about the context in which Colombian SOEs operate, including the main aspects of the regulatory framework and its key actors. Part B refers successively to the different chapters of the Guidelines, evaluating Colombian norms and practices in their light. The final section sets out the report’s conclusions and recommendations. Complementary information can be found in the five annexes. The review was prepared at the request of the Colombian authorities and approved by the OECD Working Party on State Ownership and Privatisation Practices.
    JEL: G3 G30 G34 K22 L22
    Date: 2013–12–03
  8. By: Tomohiro MACHIKITA (Institute of Developing Economies and Stanford University); Yasushi UEKI (Institute of Developing Economies)
    Abstract: This paper investigates the relationship between firm-level upgrading and buyer-seller business networks in order to better understand how and to whom technology transfer occurs. Using firm’s self-reported buyer and supplier network data from business–to–business (B2B) markets in Southeast Asia, this paper finds the following results: (1) Firms are more likely to achieve product and process innovation if they invest in inhouse R&D and transfer technology from their production partners; (2) product and process innovation varies considerably across different types of buyers and suppliers; (3) negative impacts of local suppliers suggest the importance of input quality for product and process innovation; and (4) large differences in product and process innovations among firms with similar buyers and suppliers can be explained by differences in embodied technology transfer even within narrowly defined production partners’ ownership. Data from technology transfer in buyer-seller business networks provide the basis for detecting the key drivers of industrial upgrading in the context of B2B markets in emerging economies.
    Keywords: embodied technology transfer; linked manufacturer–supplier analysis.
    JEL: O12 O14 O32 L14 F14
    Date: 2013–11
  9. By: Juan Luis Jiménez (Universidad de Las Palmas de Gran Canaria); Jordi Perdiguero (Universitat Autònoma de Barcelona)
    Abstract: Empirical evidence drawn from the economic literature points to a low level of competition in the retail petrol market. Similar evidence can be found for the Spanish market. In fact, both Spain’s antitrust authority (Comisión Nacional de la Competencia) and its energy regulator (Comisión Nacional de la Energía) have recently initiated disciplinary proceedings against the majors on the grounds of suspected price manipulation in the retail petrol market. They are accused of cutting retail prices on Mondays so as to distort the rank position of Spain in European Union statistics in a practice that has received the name of the ‘Monday effect’. Here, we analyze this effect by constructing a database that includes daily retail prices for all petrol stations in Spain in the period 2009-2012, and a more detailed database for the city of Barcelona in 2013. Our estimations confirm that: i) in 2011 and 2012 prices fell on Mondays at retailers branded by majors; ii) prices were unchanged at stations in our two control groups; iii) prices were also seen to fall when a more detailed analysis was conducted, and this price cut was also found in 2013. In short, one more indicator of collusion in this sector and … one more lie.
    Keywords: Petrol; Antitrust; Monday effect. JEL classification: L13, L59, L71.
    Date: 2013–12
  10. By: J. Mark Ramseyer (Harvard Law School); Eric Rasmusen (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
    Abstract: Antitrust scholars have come to accept the basic ideas about exclusive dealing that Bork articulated in The Antitrust Paradox. Indeed, they have even extended his list of reasons why exclusive dealing can promote economic efficiency. Yet they have also taken up his challenge to explain how exclusive dealing could possibly cause harm, and have modelled a variety of special cases where it does. Some (albeit not all) of these are sufficiently plausible to be useful to prosecutors and judges.
    JEL: L0 K21
    Date: 2013–10
  11. By: Amélia Branco; João Carlos Lopes
    Abstract: This paper is about the relative economic performance of clustered and non-clustered companies in the different phases of the cluster life cycle. It starts with the explanation of a puzzling localization behaviour, namely that most of the Portuguese cork manufacturing firms are concentrated in Santa Maria da Feira, a small county in the north of the country, whereas the bulk of the cork is produced in the south (Alentejo and Ribatejo). The historical roots and past and path dependence of the trajectory of this cluster are examined, as well as the identification of its life cycle phases. A comparative analysis of the economic performance of firms localized in Santa Maria da Feira and in other regions of the country is then made, using labour productivity data for a long time span of several decades. This exercise is a quantitative illustration of the crucial importance of history for the understanding of cluster dynamics, as well as many other (evolutionary) economic phenomena.
    Keywords: Cork Industry, Cluster Life Cycle, Santa Maria da Feira, Portugal.
    JEL: R12 L73 N60 O14
    Date: 2013–12
  12. By: Paul, Duguid
    Abstract: In 1863, a one-term senator introduced a trademark bill to the California legislature that the Daily Alta California at first reported as of little more than parochial interest. In fact, when seen in local context, the bill might seem to have been aimed primarily at the senator's own business interests. Yet the ensuing law represents the first trademark registration law in the common law jurisdictions. As such, the law is particularly intriguing, because standard histories of law and business usually credit manufacturing interests and states for pioneering trademark law, and in 1863 California was hardly a classic manufacturing state. This essay thus attempts to explore the background of this law in order to answer the questions why California and why then?
    Keywords: trademark registration, California, Second Industrial Revolution, wine
    JEL: K0 L2 N4
    Date: 2013–10–27
  13. By: Babur De los Santos (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); In Kyung Kim (Department of Economics, Indiana University); Dmitry Lubensky (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
    Abstract: The nature of manufacturer’s suggested retail prices (MSRP) and whether their effect is pro or anticompetitive is not well understood. Opposing theories suggest that manufacturers may attempt to reduce retail prices to deter double marginalization or increase retail prices to foster upstream or downstream collusion. We exploit a policy experiment in South Korea in which MSRPs were banned and then reinstated one year later to estimate their impact on prices. The ban increased prices by 2.3 percent and the reinstatement decreased prices by 2.6 percent, demonstrating the pro-competitive effect of MSRPs. Based on a lack of evidence that recommendations act as binding price ceilings, we offer an alternative explanation in which MSRPs provide information to searching consumers. We demonstrate that the removal of recommendations can reduce search and increase prices.
    Keywords: recommended retail price, suggested retail price, list price, non-binding price, search with uncertainty, vertical restraints, resale price maintenance
    JEL: L11 L40 L81
    Date: 2013–12
  14. By: Mitsuyo ANDO (Keio University); Fukunari KIMURA (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: This paper investigates the developing pattern of machinery trade and the extent and depth of production networks in North America from the perspective of their links with East Asia in the last two decades. Our descriptive analysis based on the total value of trade and the extensive margin demonstrates the expanding fragmentation of production in North America with a strong connection of Mexico, in addition to the US, with East Asia, particularly in the electric machinery sector. Our quantitative analysis on the total value of trade as well as extensive and intensive margins verifies the existence of such a strong connection with East Asia for machinery imports by North America, where Mexico enhanced a bridging role between East Asia and the US. These results reflect the reduction in services link costs, the further evolution of production sharing in the US-Mexico nexus, and the strengthening competitiveness for production networks in East Asia.
    Keywords: the 2nd unbundling, fragmentation, agglomeration, free trade agreement (FTA), extensive margin
    JEL: F14 F15 F23 L23
    Date: 2013–11

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