American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Bones, Bombs, and Break Points: The Geography of Economic Activity Donald R.Davis David E.Weinstein 1269 1289 We consider the distribution of economic activity within a country in light of three leading theories—increasing returns, random growth, and locational fundamentals. To do so, we examine the distribution of regional population in Japan from the Stone Age to the modern era. We also consider the Allied bombing of Japanese cities in WWII as a shock to relative city sizes. Our results support a hybrid theory in which locational fundamentals establish the spatial pattern of relative regional densities, but increasing returns help to determine the degree of spatial differentiation. Long-run city size is robust even to large temporary shocks. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=1&issue_date=December 2002 10.1257/000282802762024502 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Knowledge Spillovers and Inequality JanEeckhout BoyanJovanovic 1290 1307 We develop a dynamic model with knowledge spillovers in production. The model contains two opposing forces. Imitation of other firms helps followers catch up with leaders, but the prospect of doing so makes followers want to free ride. The second force dominates and creates permanent inequality. We show that the greater are the average spillovers and the easier they are to obtain, the greater is the free-riding and inequality. More directed copying raises inequality by raising the free-riding advantages of hanging back. Using Compustat and patent-citation data we find that copying is highly undirected. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=2&issue_date=December 2002 10.1257/000282802762024511 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Economic Status and Health in Childhood: The Origins of the Gradient AnneCase DarrenLubotsky ChristinaPaxson 1308 1334 The well-known positive association between health and income in adulthood has antecedents in childhood. Not only is children's health positively related to household income, but the relationship between household income and children's health becomes more pronounced as children age. Part of the relationship can be explained by the arrival and impact of chronic conditions. Children from lowerincome households with chronic conditions have worse health than do those from higher-income households. The adverse health effects of lower income accumulate over children's lives. Part of the intergenerational transmission of socioeconomic status may work through the impact of parents' income on children's health. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=3&issue_date=December 2002 10.1257/000282802762024520 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Property Rights and Finance SimonJohnson JohnMcMillan ChristopherWoodruff 1335 1356 Which is the tighter constraint on private sector investment: weak property rights or limited access to external finance? From a survey of new firms in post-communist countries, we find that weak property rights discourage firms from reinvesting their profits, even when bank loans are available. Where property rights are relatively strong, firms reinvest their profits; where they are relatively weak, entrepreneurs do not want to invest from retained earnings. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=4&issue_date=December 2002 10.1257/000282802762024539 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Airport Congestion When Carriers Have Market Power Jan K.Brueckner 1357 1375 This paper analyzes airport congestion when carriers are nonatomistic, showing how the results of the road-pricing literature are modified when the economic agents causing congestion have market power. The analysis shows that when an airport is dominated by a monopolist, congestion is fully internalized, yielding no role for congestion pricing under monopoly conditions. Under a Cournot oligopoly, however, carriers are shown to internalize only the congestion they impose on themselves. A toll that captures the uninternalized portion of congestion may then improve the allocation of traffic. The analysis is supported by some rudimentary empirical evidence. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=5&issue_date=December 2002 10.1257/000282802762024548 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market SeverinBorenstein James B.Bushnell Frank A.Wolak 1376 1405 We present a method for decomposing wholesale electricity payments into production costs, inframarginal competitive rents, and payments resulting from the exercise of market power. Using data from June 1998 to October 2000 in California, we find significant departures from competitive pricing during the high-demand summer months and near-competitive pricing during the lower-demand months of the first two years. In summer 2000, wholesale electricity expenditures were $8.98 billion up from $2.04 billion in summer 1999. We find that 21 percent of this increase was due to production costs, 20 percent to competitive rents, and 59 percent to market power. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=6&issue_date=December 2002 10.1257/000282802762024557 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Transport Costs and the Geography of Arbitrage in Eighteenth-Century China Carol H.Shiue 1406 1419 Trade has been considered a condition for growth and development, a view that might have merits in explaining the rise of the Western world. I use a new data set from archival sources of eighteenth-century China to revisit this question. This analysis suggests previous studies of market integration, which attribute much growth to a reduction in transport costs, have overestimated these effects. I find the overall level of market integration in China was higher than previously thought, and, intertemporal effects are important substitutes for trade. Both factors reduce the importance of trade as a unique explanation for subsequent growth. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=7&issue_date=December 2002 10.1257/000282802762024566 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Hazards of Expropriation: Tenure Insecurity and Investment in Rural China Hanan G.Jacoby GuoLi ScottRozelle 1420 1447 We use household data from northeast China to examine the link between investment and land tenure insecurity induced by China's system of village-level land reallocation. We quantify expropriation risk using a hazard analysis of individual plot tenures and incorporate the predicted "hazards of expropriation" into an empirical analysis of plot-level investment. Our focus is on organic fertilizer use, which has long-lasting benefits for soil quality. Although we find that higher expropriation risk significantly reduces application of organic fertilizer, a welfare analysis shows that guaranteeing land tenure in this part of China would yield only minimal efficiency gains. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=8&issue_date=December 2002 10.1257/000282802762024575 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Two-Class Voting: A Mechanism for Conflict Resolution ErnstMaug BilgeYilmaz 1448 1471 We discuss two-class voting procedures where voters are divided into classes and a separate majority is required in each class. Examples include Chapter 11 bankruptcy proceedings and some political mechanisms. We investigate how voting mechanisms aggregate information dispersed among voters when voters have conflicts of interests as well as different information regarding a proposal. We find that two-class voting provides a significant improvement over one-class voting in all situations where voters have significant conflicts of interests, and where the voters are relatively evenly divided between interest groups. However, two-class voting is inefficient absent conflicts of interests. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=9&issue_date=December 2002 10.1257/000282802762024584 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Racial Profiling, Fairness, and Effectiveness of Policing NicolaPersico 1472 1497 Citizens of two groups may engage in crime, depending on their legal earning opportunities and on the probability of being audited. Police audit citizens. Police behavior is fair if both groups are policed with the same intensity. We provide exact conditions under which forcing the police to behave more fairly reduces the total amount of crime. These conditions are expressed as constraints on the quantile-quantile plot of the distributions of legal earning opportunities in the two groups. We also investigate the definition of fairness when the cost of being searched reflects the stigma of being singled out by police. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=10&issue_date=December 2002 10.1257/000282802762024593 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Learning-by-Doing as a Propagation Mechanism YongsungChang Joao F.Gomes FrankSchorfheide 1498 1520 This paper suggests that skill accumulation through past work experience, or "learning-by-doing" (LBD), can provide an important propagation mechanism in a dynamic stochastic general-equilibrium model, as the current labor supply affects future productivity. Our econometric analysis uses a Bayesian approach to combine micro-level panel data with aggregate time series. Formal model evaluation shows that the introduction of the LBD mechanism improves the model's ability to fit the dynamics of aggregate output and hours. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=11&issue_date=December 2002 10.1257/000282802762024601 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Social Value of Public Information StephenMorris Hyun SongShin 1521 1534 What are the welfare effects of enhanced dissemination of public information through the media and disclosures by market participants with high public visibility? We examine the impact of public information in a setting where agents take actions appropriate to the underlying fundamentals, but they also have a coordination motive arising from a strategic complementarity in their actions. When the agents have no socially valuable private information, greater provision of public information always increases welfare. However, when agents also have access to independent sources of information, the welfare effect of increased public disclosures is ambiguous. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=12&issue_date=December 2002 10.1257/000282802762024610 http://www.e-aer.org/data/dec02_app_morris.pdf American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Vouchers for Private Schooling in Colombia: Evidence from a Randomized Natural Experiment JoshuaAngrist EricBettinger ErikBloom ElizabethKing MichaelKremer 1535 1558 Colombia used lotteries to distribute vouchers which partially covered the cost of private secondary school for students who maintained satisfactory academic progress. Three years after the lotteries, winners were about 10 percentage points more likely to have finished 8th grade, primarily because they were less likely to repeat grades, and scored 0.2 standard deviations higher on achievement tests. There is some evidence that winners worked less than losers and were less likely to marry or cohabit as teenagers. Benefits to participants likely exceeded the $24 per winner additional cost to the government of supplying vouchers instead of public-school places. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=13&issue_date=December 2002 10.1257/000282802762024629 Download data appendix for this article American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Information Technology and the U.S. Productivity Revival: What Do the Industry Data Say? Kevin J.Stiroh 1559 1576 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=14&issue_date=December 2002 10.1257/000282802762024638 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Choosing Wisely: A Multibidding Approach DavidPérez-Castrillo DavidWettstein 1577 1587 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=15&issue_date=December 2002 10.1257/000282802762024647 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Effects of Environmental and Land Use Regulation in the Oil and Gas Industry Using the Wyoming Checkerboard as an Experimental Design MitchKunce ShelbyGerking WilliamMorgan 1588 1593 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=16&issue_date=December 2002 10.1257/000282802762024656 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Winning Isn't Everything: Corruption in Sumo Wrestling MarkDuggan Steven D.Levitt 1594 1605 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=17&issue_date=December 2002 10.1257/000282802762024665 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Estimating Individual Discount Rates in Denmark: A Field Experiment Glenn W.Harrison Morten I.Lau Melonie B.Williams 1606 1617 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=18&issue_date=December 2002 10.1257/000282802762024674 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article The Halloween Indicator, "Sell in May and Go Away": Another Puzzle SvenBouman BenJacobsen 1618 1635 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=19&issue_date=December 2002 10.1257/000282802762024683 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Preference Reversals of a Different Kind: The "More Is Less" Phenomenon John A.List 1636 1643 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=20&issue_date=December 2002 10.1257/000282802762024692 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Risk Aversion and Incentive Effects Charles A.Holt Susan K.Laury 1644 1655 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=21&issue_date=December 2002 10.1257/000282802762024700 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Art as an Investment and the Underperformance of Masterpieces JianpingMei MichaelMoses 1656 1668 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=22&issue_date=December 2002 10.1257/000282802762024719 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Improving Efficiency of On-Campus Housing: An Experimental Study YanChen TayfunSönmez 1669 1686 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=23&issue_date=December 2002 10.1257/000282802762024728 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article One, Two, (Three), Infinity, ...: Newspaper and Lab Beauty-Contest Experiments AntoniBosch-Domènech José G.Montalvo RosemarieNagel AlbertSatorra 1687 1701 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=24&issue_date=December 2002 10.1257/000282802762024737 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Protection for Sale: An Empirical Investigation: Comment TheoEicher ThomasOsang 1702 1710 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=25&issue_date=December 2002 10.1257/000282802762024746 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 5 December 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=5&issue_date=December 2002 Journal Article Optimal Incentives for Teams: Comment ShingoIshiguro 1711 1711 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=5&article=26&issue_date=December 2002 10.1257/000282802762024755