RISK AND INCOME TRADEOFFS IN REGIONAL POLICY: A PORTFOLIO THEORETIC APPROACH*

ABSTRACT. Policy makers often try to raise a region's income by altering its industrial mix. However, such attempts to increase local income may have an adverse effect on the stability of the region's economy. In this paper, we develop single-, aggregate-, and multiregional portfolio models that can be used by policy makers to generate frontiers of risk/income-efficient industrial mixtures for a regional economy. These portfolio models are modified for application to the tourist industry in six regions of Spain. In practice, we find that the introduction of bounds on the magnitude of sector rebalancing has a major effect on the model solutions.     

LOGNORMAL EXTRAPOLATION AND INCOME ESTIMATION FOR POOR BLACK FAMILIES*

ABSTRACT. In studies of urban and state income distribution, the estimation of percentile incomes within intervals reported by the Bureau of the Census has often been done under the assumption that incomes are uniformly distributed. This paper shows that income may be significantly underestimated if the assumption is applied to lower-level percentiles in the black family income distribution. Consequently, conclusions about the level and determinants of the relative income of poor black families may be misleading.     

INDIAN RESOURCES AND THE NATIONAL ECONOMY: BUSINESS CYCLES AND POLICY CYCLES

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SOCIAL COST MINIMIZATION: A NATIONAL POLICY APPROACH TO THE PROBLEMS OF DISTRESSED ECONOMIC REGIONS*

This paper makes a distinction between output maximizing and cost minimizing approaches to national economic policy. The paper argues that because the benefits of economic activity and its cost are frequently conferred upon distinct groups in society, it is not automatically true that output maximization is the best strategy, as is presently assumed. This result is especially true when the problems of distressed economic regions are the focus of our concern. The national and multi-national firms which make decisions pertaining to the economic life of local communities make those decisions not on the basis of the costs and benefits to the community, but with regard to their private balance sheet. As a result, it frequently happens that communities of individuals must bear social costs far in excess of the private gains to the firms in question. From a policy standpoint, this is not an efficient use of our social and economic resources. In the absence of any type of comprehensive economic planning a rational market-oriented economic strategy would be one which seeks to minimize social costs.     

SPATIAL COMPETITION AND THE JOINT CONSUMPTION OF SERVICES*

In Hotelling location models, an implicit assumption has been made that a customer uses the service provided by the firm, independent of other customers. However, for firms that supply meeting rooms, wedding halls, tennis courts, and golf links it is essential to incorporate the fact that the customer only uses the service in conjunction with other customers. The objective of this paper is to formulate the Hotelling location model n consideration of the interdependence among customers in one-dimensional space, and to characterize the state of equilibrium. In our model, each group of members within a given distance enjoys a fixed amount of service of the firms, under the assumption that the travel cost incurred by each group is defined as the travel cost of the farthest customer in the group.