Demand Uncertainty and Cost Behavior

We investigate analytically and empirically the relationship between demand uncertainty and cost behavior. We argue that with more uncertain demand, unusually high realizations of demand become more likely. Accordingly, firms will choose a higher capacity of fixed inputs when uncertainty increases in order to reduce congestion costs. Higher capacity levels imply a more rigid short-run cost structure with higher fixed and lower variable costs. We formalize this “counterintuitive” argument in a simple analytical model of capacity choice. Following this logic, we hypothesize that firms facing higher demand uncertainty have a more rigid short-run cost structure with higher fixed and lower variable costs. We test this hypothesis for the manufacturing sector using data from Compustat and the NBER-CES Industry Database. Evidence strongly supports our hypothesis for multiple cost categories in both datasets. The results are robust to alternative specifications

Oncogene-transformed granulosa cells as a model system for the study of steroidogenic processes

Highly steroidogenic granulosa cell lines were established by transfection of primary granulosa cells from preovulatory follicles with SV40 DNA and Ha-ras oncogene. Progesterone production in these cells was enhanced to levels comparable to normal steroidogenic cells, by prolonged (> 12 h) stimulation with 8-Br-cAMP, forskolin and cholera toxin, which elevate intracellular cAMP. The steroidogenic capacity of individual lines correlated with the expression of the ras oncogene product (p21) and the morphology of the cells. Formation of the steroid hormones was associated with de novo synthesis of the mitochondrial cytochrome P450scc system proteins. Since cholesterol import into mitochondria is essential for steroidogenesis, the expression of the peripheral benzodiazepine receptor (PBR) and the sterol carrier protein 2 was characterized in these cells. The induction of the expression of the genes coding for both proteins appeared to be mediated, at least in part, by cAMP. Stimulation of the PBR by specific agonists enhanced progesterone production in these cells. The phorbol ester 12-O-tetradecanoyl-phorbol 13-acetate (TPA) dramatically suppressed the cAMP-induced steroidogenesis, in spite of enhanced intracellular cAMP levels, suggesting that TPA can modify the effects of cAMP. cAMP stimulation suppressed growth of transformed cells concomitantly with induction of steroidogenesis. The transformed cells lacked receptors for the native stimulants, the gonadotropic hormones. After transfection of the cells with a lutropin (LH) receptor expression plasmid, the LH and hCG response was reconstituted. In these newly established cell lines gonadotropins were able to stimulate the formation of cAMP and progesterone in a dose-dependent manner with an ED₅₀ characteristic of the native receptor. High doses caused desensitization to gonadotropins as observed in normal cells. These newly established oncogene-transformed granulosa cell lines can serve as a useful model to study inducible steroidogenesis and the effect of oncogene expression on this process

Coordinate inhibition of expression of several genes for protein subunits of human nuclear RNase P

The deliberate inhibition of expression of one of the protein subunits (Rpp38) of human nuclear RNase P is achievable by using external guide sequence (EGS) technology. Both the protein product and the mRNA are greatly reduced 24 h after transient transfection with a gene coding for an appropriate EGS. Control experiments indicated that four other protein subunits of RNase P and their RNAs are also inhibited with no external manipulation. The remaining RNase P proteins, their mRNAs, and the RNA subunit of RNase P all are unchanged. Several short nucleotide sequences adjacent to the ORFs for the inhibited genes are similar and could be targets for transcriptional repression. The explanation of coordinate inhibition of the expression of the product of one particular gene by the transfection of an EGS (or RNA interference) requires some care in terms of interpreting phenotypic effects because, in our case, several gene products that are not targeted are also inhibited