Front Matter

American Economic Review, March 2000

Economic Growth and the Elasticity of Substitution: Two Theorems and Some Suggestions

By Rainer Klump and Olivier de La Grandville

American Economic Review, March 2000

Economies of Scale and Constant Returns to Capital: A Neglected Early Contribution to the Theory of Economic Growth

By Edmund S. Cannon

American Economic Review, March 2000

Naked Exclusion: Comment

By Ilya R. Segal and Michael D. Whinston

American Economic Review, March 2000

Naked Exclusion: Reply

By Eric B. Rasmusen, J. Mark Ramseyer, and John Shepard Wiley

American Economic Review, March 2000

The Phillips Curve, the Persistence of Inflation, and the Lucas Critique: Evidence from Exchange-Rate Regimes: Comment

By Clemens J. M. Kool and Alex Lammertsma

American Economic Review, March 2000

Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks: Comment

By Frank Heinemann

American Economic Review, March 2000

Third-Degree Price Discrimination in Input Markets: Output and Welfare

By Yoshihiro Yoshida

American Economic Review, March 2000

A Simple Mechanism for the Efficient Provision of Public Goods: Experimental Evidence

By Josef Falkinger, Ernst Fehr, Simon Gächter, and Rudolf Winter-Ember

American Economic Review, March 2000

Limiting Buyer Discretion: Effects on Performance and Price in Long-Term Contracts

By Lisa J. Cameron

American Economic Review, March 2000

Credit Rationing?

By Dan Bernhardt

American Economic Review, March 2000

Elephants

By Michael Kremer and Charles Morcom

American Economic Review, March 2000

Many open-access resources, such as elephants, are used to produce storable goods. Anticipated future scarcity of these resources will increase current prices and poaching. This implies that, for given initial conditions, there may be rational expectation...

ERC: A Theory of Equity, Reciprocity, and Competition

By Gary E. Bolton and Axel Ockenfels

American Economic Review, March 2000

We demonstrate that a simple model, constructed on the premise that people are motivated by both their pecuniary payoff and their relative payoff standing, organizes a large and seemingly disparate set of laboratory observations as one consistent pattern....

The Choice between Market Failures and Corruption

By Daron Acemoglu and Thierry Verdier

American Economic Review, March 2000

Because government intervention transfers resources from one party to another, it creates room for corruption. As corruption often undermines the purpose of the intervention, governments will try to prevent it. They may create rents for bureaucrats, induc...

Liberalization, Moral Hazard in Banking, and Prudential Regulation: Are Capital Requirements Enough?

By Thomas F. Hellmann, Kevin C. Murdock, and Joseph E. Stiglitz

American Economic Review, March 2000

In a dynamic model of moral hazard, competition can undermine prudent bank behavior. While capital-requirement regulation can induce prudent behavior, the policy yields Pareto-inefficient outcomes. Capital requirements reduce gambling incentives by puttin...

Mobility, Targeting, and Private-School Vouchers

By Thomas J. Nechyba

American Economic Review, March 2000

This paper uses general-equilibrium simulations to explore the role of residential mobility in shaping the impact of different private-school voucher policies. The simulations are derived from a three-district model of low-, middle-, and high-income schoo...

Unequal Societies: Income Distribution and the Social Contract

By Roland Benabou

American Economic Review, March 2000

This paper develops a theory of inequality and the social contract aiming to explain how countries with similar economic and political "fundamentals" can sustain such different systems of social insurance, fiscal redistribution, and education finance as t...

Labor-Market Integration, Investment in Risky Human Capital, and Fiscal Competition

By David E. Wildasin

American Economic Review, March 2000

This paper presents a general-equilibrium model where human capital investment increases specialization and exposes skilled workers to region-specific earnings risk Interjurisdictional mobility of skilled labor mitigates these risks; state-contingent migr...

Endogenous Inequality in Integrated Labor Markets with Two-Sided Search

By George J. Mailath, Larry Samuelson, and Avner Shaked

American Economic Review, March 2000

We consider a market with "red" and "green" workers, where labels are payoff irrelevant. Workers may acquire skills. Skilled workers search for vacancies, while firms search for workers. A unique symmetric equilibrium exists in which color is irrelevant. ...

Collateral Damage: Effects of the Japanese Bank Crisis on Real Activity in the United States

By Joe Peek and Eric S. Rosengren

American Economic Review, March 2000

The Japanese banking crisis provides a natural experiment to test whether a loan supply shock can affect real economic activity. Because the shock was external to U.S. credit markets, yet connected through the Japanese bank penetration of U.S. markets, th...