MEASURING THE EFFECT OF COST VARIATION ON INDUSTRIAL OUTPUTS*

ABSTRACT. This paper introduces the household interactive variable input-output (HIVIO) model to measure the effect of cost variation on industrial outputs. The model produces a variety of cost elasticities that separate out impacts on industrial prices, imports, and outputs, with “own” and “cross” elasticity components. Like the conventional input-output multipliers, these cost elasticities can be useful parameters to evaluate the substituting behavior of firms and consumers. By using the 1980 Korean input-output transactions table, we find the wage and import price effects on industrial prices, outputs, and import demands.     

Rationality test in the housing market: Project-level evidence from China

We test whether investors rationally react to rent news when pricing houses. Previous literature on house pricing uses aggregated housing price and rent data to estimate the rent news. We analytically demonstrate that using aggregated data biases the rationality test because it forces researchers to estimate the rent news using the cross-project average dynamic relationship among the housing return, rent growth, and macroeconomic dynamics and, hence, misses the heterogeneity in the dynamic relationship. Our empirical tests using proprietary project-level housing data from China's megacities find that the bias from missing the heterogeneity is economically substantial.     

MARKET DEFINITION AND ASSESSING THE COMPETITIVE RELATIONSHIP BETWEEN RAIL AND TRUCK TRANSPORTATION*

ABSTRACT. In this paper we develop a method for establishing market definition in studies of intermodal competition. We employ the proposed method in a transportation model that yields estimates of the substitutability between truck and rail services for the transport of fresh fruits and vegetables. The model includes the produce being shipped as an input into the production of delivered produce. Our results demonstrate that fairly disaggregate market definitions are required to characterize adequately the intermodal substitution possibilities of interest. While disaggregate data are required for econometric estimation of the cost function, it is essential that elasticities be calculated at a disaggregate level as well. The elasticities reported are larger than reported in earlier work and provide strong evidence of vigorous intermodal competition in produce transportation markets.     

Working,Shopping, and House Rents

The interaction between household demand for goods and for leisure and the supply of labor at various distances from an urban center is investigated for the case where rents are endogenous and adjust to equalize differences in utility produced by the greater time and money costs of the journey to shop and the journey to work. The model is solved for a set of realistic parameter values and this confirms that when rents are equal everywhere the demand for leisure can increase and the supply of labor decrease for households nearer the center, while once rents are endogenous the reverse must be true. For a household at a given location the elasticities of demand for goods and leisure and the elasticity of labor supply are calculated for all the parameters of the model. It is shown that the unavoidable costs of travel to work have strong effects on the rent gradient while the costs of the journey to shop have only weak effects, being offset by the variable frequency of shopping.     

EMPIRICAL POLYCENTRICITY: THE COMPLEX RELATIONSHIP BETWEEN EMPLOYMENT CENTERS

Our paper empirically demonstrates that employment subcenters in large urban areas have important economic relationships with each other, and not solely with the central business district (CBD). Using data from Houston, Texas, we estimate polycentric density functions and show that “total” gradients differ from gradients using only own‐center coefficients. We model asymmetry by showing density is very different for centers with overlapping areas of influence. We conclude that subcenters have important yet heterogeneous linkages to each other in addition to the CBD, and that therefore the polycentric city is more complex than simply having additional centers mimicking the CBD.     

Abnormally pressured beds as barriers to diffusive solute transport in sedimentary basins

Diffusion can drive significant solute transport over millions of years, but ancient brines and large salinity gradients are still observed in deep sedimentary basins. Fluid flow within abnormally pressured beds may prevent diffusive transfer over geologically significant periods, if the abnormally pressured bed is surrounded by normally pressured beds. Analytic solutions based on sediment loading and unloading demonstrate that this effect should be considered in beds with a compressibility exceeding 10^?8 Pa^?1, with a thickness of 100 m or more, or a sedimentation rate exceeding 10^?5 m year^?1. Conditions favourable for our model of abnormally pressured beds appear common in sedimentary basins. Large salinity gradients associated with clay beds have previously been attributed to membrane effects, but flow patterns associated with abnormally pressured beds appear more robust in the presence of heterogeneity and discontinuities than membrane effects. Calculations suggest that thick underpressured shales in the Alberta basin may have allowed ancient evaporatively concentrated brines to be preserved beneath a vigorous topography‐driven flow system over the last 60 My. In the Illinois basin, drained overpressured beds may have limited solute transport across the New Albany shale until approximately 250 Ma. It is unlikely, however, that overpressures could have persisted long enough to explain concentration gradients observed in the modern basin. These gradients may instead reflect relatively recent halite dissolution above the New Albany shale.     

Artificial Scarcity in Housebuilding and the Impact on Affordability: The Return of Absolute Rent

The slow response of volume housebuilders to changes in demand has been cited as a contributing cause of a global crisis of housing affordability and allegations of land banking have persistently dogged the industry. This article reviews the supply responsiveness of speculative housebuilders in the United Kingdom and Australia through the neglected Marxian analytic category of absolute rent. Absolute rent directs attention to the relationship between the value of land and the cost of housing and models a market in which landowners may withdraw land from supply to inflate prices. Through the lens of absolute rent, the real estate practices of the housebuilding industry can be understood as a strategy of artificial scarcity straddling land and housing markets. The findings of this investigation demonstrate the insights to be gained by a return to absolute rent that valuably expand the current debate on the supply and cost of housing.     

The Value of Rents: Global Commodity Chains and Small Cocoa Producers in Ecuador

Drawing on the Marxian theory of ground rent, this paper develops an analysis of “global commodity chains” (GCCs) with agrarian roots. There is an acknowledgement that the concentrated downstream governance of primary commodity‐based GCCs has created a set of “asymmetrical” power relations which blocks the transmission of value upstream towards small producers. This paper argues that this research under‐specifies what is meant by value and rent, and in doing so marginalises the analysis of value production before its journey through inter‐firm relations. We demonstrate the importance of theorising the value constitution of commodities produced on the land and the forces that contest the payment of ground rent and thereby shape the geography of GCCs. Based on empirical research conducted around Ecuador's “post‐neoliberal” cocoa re‐activation plan, we identify the class politics and production mechanisms through which value and rent escapes the hands of a stratified network of small owner producers.     

The Effect of Public Infrastructure on the Private Productive Sector of Spanish Regions

In this paper we analyze the effect of infrastructure on the cost and productivity performance of the private productive sector of Spanish regions over the period 1980–1993. We use a dual approach based on cost functions that allows us to recover the usual parameters estimated with production functions. In addition, we obtain rates of return and cost elasticities of production factors at the regional level. Our framework explicitly considers that some factors are quasi-fixed and their volume can differ from their optimal endowment levels. Our results indicate that the public sector has contributed significantly to enhance productivity and reduce costs in the private sector of almost every Spanish region. Nevertheless, there is still scope for the government to continue its investment efforts, given that there remains an appreciable gap between observed and optimal public capital, and we find that in the long run, public capital promotes private investment.     

TARIFF PROTECTION IN AN OPEN SPATIAL ECONOMY*

Spatial pricing models have been used to illustrate a tariff's asymmetric effects on consumers located at different points in the protected economy, and to demonstrate that the optimum tariff for a small open spatial economy may be positive. In these models, the distribution of households has been taken as uniform and fixed. We extend the spatial model by allowing households to optimally locate and consume variable amounts of land, as well as the domestic- or foreign-produced good. Land consumption, location rents, and the distribution of consumers are endogenous, responding to tariff-induced changes in the delivered prices of the domestic and foreign goods. Within this limited general equilibrium framework, a neoclassical result resurfaces: from the perspective of private consumers, the optimum tariff in a small open economy is zero. The possibility of a positive optimum tariff, however, may remain intact in a more integrated model where domestic profits and tariff revenues are redistributed within the spatial economy.     

American home: Predatory mortgage capital and neighbourhood spaces of race and class exploitation in the United States

Predatory home mortgage lending has become a central concern for housing research, public policy and community activism in US cities. Regulatory attempts to stop abuses, however, are undermined by claims that ‘predatory’ cannot be defined or distinguished from legitimate subprime lending, and claims that the industry performs a public service by meeting the needs of low‐income, high‐risk consumers (many of them racially marginalized) who would have been denied credit in previous years. We evaluate these claims in historical‐geographical context, drawing on David Harvey's theory of class‐monopoly rent to analyse what is new (and what is not) in contemporary financial exploitation. We use a mixed‐methods approach to (1) provide econometric measures of subprime racial targeting and disparate impact that cannot be blamed on the supposed deficiencies of borrowers, (2) qualitatively assess the rationale for judging particular subprime practices and lenders as predatory, and (3) trace the connections between local practices and transnational investment networks. The fight against predatory lending cannot succeed, we argue, without a renewed analytical and strategic emphasis on the class dimensions of financial exploitation and racial‐geographical discrimination.     

A Nested Logit Approach to Household Mobility

This study analyzes personal and site characteristics in a model of intraMSA and interMSA mobility. Households are assumed to choose a single type of move, intraMSA or interMSA, while simultaneously choosing a central city or suburban destination. We demonstrate that a nested logit model is appropriate on both theoretical and empirical grounds. The sample consists of intrametropolitan and intermetropolitan movers drawn from the 1990 U.S. Census PUMS. Personal characteristics drawn from the PUMS are matched to numerous site characteristics (climatic measures, other amenities, state and local fiscal characteristics, and other urban quality measures) drawn from a variety of sources. Nested logit direct and cross elasticities are presented for a number of site attributes.     

ELASTICITIES OF CONSTRAINED GRAVITY MODELS*

ABSTRACT Doubly constrained gravity models require a balancing procedure to make estimated origin and destination totals consistent. We show through a series of examples that not just the magnitudes but even the signs of derivatives and elasticities of gravity model flows depend on the specific balancing procedure used. Hence, if such elasticities are regarded as meaningful, then the balancing of origin and destination totals must be regarded as an integral part of the gravity theory itself.     

HOUSING SUBSIDIES AND URBAN HOUSEHOLD BEHAVIOR*

ABSTRACT. This paper examines how housing subsidies affect housing and location demands in a monocentric market, identifying the extent to which policies prompt targeted populations to congregate more or less intensely in the central city. Various subsidies are studied: rents based on ability to pay, lump-sum housing aid, housing vouchers, and subsidies based on percentage of rent. The demand effects are seen to hinge critically upon whether or not subsidies are tied to binding consumption restrictions. Policy impacts are shown to be identical for both CBD employed and locally employed consumers targeted for the housing policies.     

A STRUCTURAL EMPIRICAL ANALYSIS OF METROPOLITAN LABOR DEMAND*

ABSTRACT. This paper uses a large data base to study metropolitan labor demand functions. The data are disaggregated by two-digit SICs in manufacturing for SMS As, and are corrected for changing SMSA boundaries. Labor demand elasticities are estimated for factor and commodity prices, transportation costs, state and local taxes and expenditures, and production-function shifters. Estimates from different years allow one to test Le Chatelier's principle in the context of interregional change.     

THE STRUCTURE OF METROPOLITAN FACTOR AND PRODUCT MARKETS*

ABSTRACT. In this study we use a translog profit function and iterate seemingly unrelated regressions to estimate a system of factor demand and output supply functions for metropolitan economies. Our sample includes all metropolitan areas defined by the Census in 1977 for the period 1962 to 1982. Estimation shows that all price elasticities are elastic and that the signs are as expected. These results hold true for virtually all model specifications. Our findings indicate that federal, state, and local tax policies have significant impacts on factor demand and output supply. Public investment plays a positive and significant, but small, role in increasing output and in complementing other factors, although this influence has declined over time. Additionally, capital provided by the private sector has a substantially larger impact on output and employment than does capital provided by the public sector.     

Evidence for a large scale electric field gradient at the onset of equatorial spread-F

Barium-strontium release experiments were conducted at Sriharikota Rocket Range (SHAR. 5.5 N dip latitude) at the onset of equatorial spread-F. We report here an unusual phenomenon of the development of two barium ion clouds from a single release around 200 km altitude, moving with different speeds indifferent directions. This is the first experimental evidence for the presence of large scale electric field gradients with a scale size of 15km. By incorporating neutral wind measured during spread-F into a numerical model for equatorial electrojet we interpret these gradients to be the manifestation of effects due to the meridional winds and wind shears. It is possible that the electric field gradients observed may lead to the generation of plasma holes during the onset of equatorial spread-F.     

A MODEL OF SHOPPING CENTERS*

ABSTRACT In this paper, we propose a model of developers' strategies for tenant mixes and the locations of shopping centers (SCs). Consumers have preferences for product variety, and tenants in the SCs sell differentiated goods. The consumers can choose two shopping behaviors: patronizing one or both of the two SCs. We show that if the consumers have strong preferences for product variety, the SCs agglomerate to free‐ride on the rivals' product varieties, and the consumers patronize both SCs. On the other hand, if consumer preferences are weak, the SCs locate at different locations, and the consumers patronize one of the two SCs.     

THE IMPACT OF RENT CONTROLS IN NON-WALRASIAN MARKETS: AN AGENT-BASED MODELING APPROACH

ABSTRACT.  We use agent-based models to consider rent ceilings in non-Walrasian housing markets, where bargaining between landlord and tenant leads to exchange at a range of prices. In the non-Walrasian setting agents who would be extramarginal in the Walrasian setting frequently are successful in renting, and actually account for a significant share of the units rented. This has several implications. First, rent ceilings above the Walrasian equilibrium price (WEP) can affect the market outcome. Second, rent ceilings that reduce the number of units rented do not necessarily reduce total market surplus. Finally, the distributional impact of rent controls differs from the Walrasian setting.     

FUNCTION AND COMPETITION AMONG URBAN CENTERS*

ABSTRACT This paper uses a logit model of consumer choice to examine how changes in the spatial behavior of rural consumers will affect the commercial base of smaller urban places. Various socio-economic changes in a region can be expected to cause a number of behavioral changes, including changes in where people work and shop. The analysis presented in the paper emphasizes the importance of location to the commercial prospects of small trade centers as consumers become more spatially mobile and engage in more multipurpose shopping. Places that are centrally located have the best prospects for ensuring that functions are either maintained or suffer the least decline as a result of competition from higher-order centers. Remoter locations will be adversely affected by these competitive pressures.