Archive for October, 2007

J-PAL Update

| Peter Klein |

We reported earlier on MIT’s Poverty Action Lab (J-PAL), a research and policy center that advocates using randomized controlled trials instead of traditional econometric methods to evaluate the effects of various programs. J-PAL is featured in this week’s issue of Nature, an unusual recognition for social-science research. (HT: 3quarks)

25 October 2007 at 11:36 pm Leave a comment

Why the Resistance to Prices?

| Peter Klein |

When the quantity demanded exceeds the quantity supplied — causing shortages, delays, congestion, misallocation — the solution is to raise the price. Every freshman economics student knows this. Why, then, are regulators, industry groups, and consumer representatives so often opposed to rationing by the price mechanism? Is it simply Bryan Caplan’s anti-market bias? Is it interest-group politics? Or is there something specific people don’t like, or don’t understand, about prices?

Two examples: (1) Airline landing slots. I worked on this problem with Dorothy Robyn back at the CEA in 2000. The US FAA prices airport landing slots, and access to the air traffic control system, on a per-passenger basis, regardless of time of day, season, overall stress on the system, and so on. In other words, the price charged has no relation to the marginal cost of provision. The obvious solution is some kind of congestion pricing mechanism. But the major players are generally opposed. Mike Giberson provides details on the latest attempt to use prices to reduce air-travel delays. Time-of-day pricing? “We are unalterably, adamantly opposed to it,” says the head of the Air Transport Association, the airlines’ lobby group. (more…)

25 October 2007 at 8:56 am 5 comments

Reflections on the McQuinn Entrepreneurship Conference

| Peter Klein |

Last week’s McQuinn Center conference on entrepreneurship in Kansas City was a great success, with some 75 participants from places like Nepal, Norway, the UK, and Peru as well as the US and Canada. Keynoters Cornelia Flora, Pierre DesrochersSandy Kemper, and Randy Westgren challenged and inspired the group and the papers and discussions highlighted a variety of innovative entrepreneurship research topics, theories, and methods. Papers and presentations are now available on the conference website.

I had the pleasure of offering introductory and closing remarks, and I’ll share here some reflections about the state of the field and suggestions for moving forward. (more…)

24 October 2007 at 11:49 am 1 comment

Tribute to Bob Higgs

| Peter Klein |

It was a great pleasure watching Robert Higgs accept the 2007 Schlarbaum Award for Lifetime Defense of Liberty at the Mises Institutes’s 25th Anniversary Celebration in New York. Bob is an outstanding scholar whose 1987 book, Crisis and Leviathan, should be required reading for Naomi Klein. He is a fierce defender of political and economic freedom, private property, and the rule of law. Bob also edits the Independent Review, a terrific interdisciplinary journal that values clear exposition as well as academic rigor (a rare combination, these days).

Earlier this year a group of Bob’s friends, colleagues, and former students produced a Festschrift volume, Government and the American Economy: A New History, in his honor. Contributors include Price Fishback (the editor), Gary Libecap, Stanley Engerman, Robert McGuire, Richard Sylla, John Wallis, Jeff Hummel, Robert Margo, Mark Guglielmo, Werner Troesken, Sumner La Croix, Randal Rucker, E. C. Pasour, Jr., Lee Alston, and Joseph Ferrie. The result is “a series of stimulating cameos by a distinguished assemblage of economic historians,” writes reviewer Gavin Wright (himself a distinguished economic historian). Check it out!

24 October 2007 at 11:30 am Leave a comment

Celebrating the Index Card

1041042_id1.jpg1041042_id1.jpg| Peter Klein |

Old-timers like me learned to write research papers by taking notes on index cards, spreading them out on a table, and placing them in a coherent sequence. Nowadays people just open up Word (or, for geekier types, \LaTeX) and start typing. Of course, ex ante preparation and ex post revision are substitutes and, as the cost of the latter has fallen, investment in the former has dropped sharply. The net effect on quality — well, let’s just say the jury is out.

One of my favorite tech blogs, Web Worker Daily, which features retro-analog stuff like the Hipster PDA, offers this list of things you can do with an index card. I’ve tried many of these (not #7 and #13) and have found them quite effective.

I guess you could use something like ndxCards, but would it be as much fun?

23 October 2007 at 2:54 pm 2 comments

Contract Design Capabilities

| Nicolai Foss |

In his thoughtful appraisal of Milgrom and Roberts (1992), Brian Loasby pointed out that the ability to transact and exchange is itself a capability, that firms may differ in terms of such capabilities, but that organizational economics routinely assume that firms have perfect transacting capabilities. This insight has been curiously neglected in the lenghty debate on the relations between transaction costs and capabilities. Former O&M guest blogger Dick Langlois is one of the few scholars who have embraced the insight, mainly from the capabilities side of the debate and casting it in terms of his notion of “dynamic transaction costs.”

A recent line of research initiated by Nick Argyres and Kyle Mayer addresses the issue more from the organizational economics, mainly TCE, side. Thus, Nick and Kyle’s excellent 2004 Organization Science paper, “Learning to Contract,” makes the empirically grounded point that changes in the structure of the contracts that govern a relationship may (for complex contracts in uncertain environments) reflect joint learning rather than the risks of specific assets.  (more…)

22 October 2007 at 1:55 pm 2 comments

Nobel Nugget of the Day

| Peter Klein |

Mike Giberson: “In some respects the Nobel is just a beauty contest for academic economists without a swimsuit competition (thank the gods!).”

We do have trading cards and t-shirts, however.

20 October 2007 at 9:59 pm Leave a comment

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Our Recent Books

Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).