Le contrôle des prix et des revenus au Canada

This paper is a summary of the Legal Factum submitted by the Canadian Labor Congress to the Supreme Court of Canada. It intends to demonstrate the irrelevance of the Anti-Inflationnary Act of October 1975. Three main questions are dealt with.First, was there an economic crisis in October 1975? Analysing various sets of data, the paper concludes that, by no stretch of imagination, could October 1975 be called an economic crisis. Second, was there a policy crisis in the sense that traditional methods had been tried and failed? It establishes here that no serious attempt had been made to contain inflation by traditional fiscal and monetary tools by October 1975. Third, what results can be expected from income policies? This part gives a summary of the voluminous evidence for the U.K. and the U.S., and concludes that the evidence of other incomes policies is that their effects on slowing the rate of inflation are small and often transitory

Policies for Green Growth Versus Policies for No Growth: A Matter of Timing

Advocates of green-growth policies and those who advocate policies to stop growth both accept that the world faces serious environmental problems. They disagree on and debate about appropriate remedies. Green-growth advocates argue that it is possible to create a green economy compatible with sustained growth. The no-growth advocates argue that the whole growth process must be stopped if the planet is to be saved from catastrophe. This short paper argues that choosing the optimal policy for dealing with these serious problems does not require deciding which group is right. Instead it is argued that the optimal policy is to act as if the green-growth advocates are right and only if they are proved wrong by the failure of their policies to do the job, should no-growth policies be attempted

Generality Versus Context Specificity: First, Second and Third Best in Theory and Policy

Second-best theory established that a policy\u27s effect on community welfare (or any other objective function) varies with its specific context. In contrast, Ng argues that fulfilling first-best conditions piecemeal is optimal whenever the policy maker\u27s information is insufficient to determine the direction of the change in the variable under consideration that will raise welfare, irrespective of the conditions in that market. We argue: (1) that Ng\u27s own assumptions imply not that first-best conditions should be established under these circumstances, but that the status quo should be maintained; (2) that when Ng\u27s key assumption is altered to be empirically relevant, all policy decisions become fully context-specific; (3) that Woo\u27s argument for accepting Ng\u27s conclusions in spite of point (2) is incorrect. The conclusion discusses valid uses of piecemeal welfare theory in spite of second best

Economic Policy with and Without Maximizing Rules

This paper contrasts the static neoclassical and the evolutionary views of the economy and economic policy. It responds to Ng\u27s comments on Lipsey\u27s original criticism of third-best theory. Under a relevant definition of informational poverty and Ng\u27s other assumptions, the expected value of any policy-created divergence from the status quo is negative: If there is not enough known to determine what to do, nothing should be done, rather than establishing first-best conditions as Ng\u27s analysis has it. It is argued that Ng\u27s analysis of his two other information states adds little to what common sense suggests. To address Ng\u27s argument that policies using context-specific objective functions lack the required welfare basis, the paper studies how economic policy is actually pursued absent guides provided by welfare economics. Policies that follow from evolutionary economic theory imply that what are seen as \u27distortions\u27 in welfare economics are actually desirable forces that drive economic growth

Joseph Agassi, the M2t Seminar, and His Influence on My Work

This paper discusses the influence on my research and writings of several methodological principles that we, the members of the LSE Staff Seminar on Methodology, Measurement and Testing learned directly from Joseph Agassi and indirectly from Karl Popper. It begins  with the origins of the seminar and my text book, An Introduction to Positive Economics. It goes on to cover methodological issues that arose in my subsequent papers including: the importance of having empirical content in economic theories, the poverty of theories that are built only to pass sunrise tests, why non-robust assumptions need to be tested, the concept of refutability, the fussy distinction between normative and positive statements, the impossibility of giving purely positive policy advice, the testing of existential statements, fallacious attempts to deduce empirical propositions from definitional identities, the distinction between internally and externally driven research programs, the poverty of modern welfare economics as a guide  to policy and the possibility of deriving policy advice without such guidance. It concludes with a short discussion of the revolutionary implications of accepting technological change as being generated endogenously under conditions of genuine uncertainty rather than measurable risk

A Reconsideration of the Theory of Non-Linear Scale Effects: The Sources of Varying Returns to, and Economies of, Scale

The main thrust of this paper is a critical assessment of the theory and evidence concerning the sources of scale effects. It is argued that the analysis of static scale effects is important because scale effects are embedding in our world and new technologies associated with an evolving economy often allow their exploitation when they cannot be exploited in less technically advanced and smaller economies. So, although static equilibrium theory is not a good vehicle for studying economic growth, showing how scale effects operate when output varies with given technology helps us to understand the scale effects that occur when output rises as a result of economic growth, even though that is typically driven by technological change. The set of production functions that are consistent with Viner’s treatment of long run cost curves are distinguished from the single production function that is found in virtually all modern microeconomic textbooks. It is argued that the inconsistencies and ambiguities relating to the use of such a single production function to cover all possible scales of a firm’s operations are such that it is an imperfect tool for analysing the scale effects that firms actually face. The relation between scale effects and the size of the firm are discussed. It is shown that under certain commonly occurring circumstances the ability to replicate production facilities is consistent with short ranges of diseconomies of scale and an indefinite range of increasing returns. Next comes a detailed analysis of the sources of positive scale effects and a critical assessment of the treatment of these in a large sample of the existing literature. It is argued that the nature of our world, with its 3-dimensions, its physical laws and the many random elements in its behaviour, is such that when the scale of anything changes, we should always expect to encounter non-linear scale effects. Most authors list a series of examples of sources that are assumed to give rise to scale effects but seldom attempt to show in any detail how these are supposed to work. When we do this, some alleged sources are found not to give rise to scale effects at all, while others have effects that differ from what has been assumed. Furthermore, there is seldom agreement among authors whether a particular source is a cause of varying returns to scale or economies of scale. Most authors argue that indivisibilities are an important source of scale effects, although these are seldom well defined, nor are the precise ways in which these are supposed to work typically analysed. When we do this, we identify two basic types of indivisibilities, ex post and ex ante, plus several variations of each of these main types. We then argue that the discussion of indivisibilities has been confused by use of different implicit definitions of the term and also that only one of these types of indivisibility can be a source of scale effects. Constant returns production functions are found to be inconsistent with much that is known about actual production techniques, even when firms expand by duplicating identical plants. Unless ruled out by definition, diseconomies of scale are found to be a real possibility in many circumstances. When these occur in some parts of complex capital goods or plants, they limit the extent to which economies in other parts can be exploited by increasing the scale of the whole operation. Finally, brief consideration is given to the literature concerning the factors that limit the exploitation of the scale effects that are ubiquitous in the real world and to the consequences of their exploitation

El libre comercio entre países desiguales

This paper discusses some aspects of trade among unequal countries, where this inequality can be in terms of economic development or sheer size. It is argued in particular that small countries such as Canada and Mexico can benefit from establishing free trade agreements with larger countries. The author also recommends a trilateral agreement among Canada, Mexico and the United States, instead of bilateral accords between the latter and each of the other two countries.

The Principle of Minimum Differentiation Reconsidered: Some New Developments in the Theory of Spatial Competition

The paper is divided into two parts: one-dimensional markets and two-dimensional markets. Also, we develop both one and two-dimensional models. Within each, we distinguish (a) bounded, (b) unbounded but finite, and (c) unbounded, infinite spaces. Among other things, we show: in one dimension, the nature of the space is not, as many investigators have thought, critical; in two dimensions, however, the very existence of equilibrium is seen to depend upon the nature of the space; the commonly-used rectangular customer density function yields results that do not generalize to any other density function; the existence of multiple equilibria in both one and two dimensions is a pervasive phenomenon in any of the spaces studied, and MD occurs only when the number of firms is restricted to two. Although the analysis and discussion are in terms of location theory and are concerned with the relationship between equilibrium configuration of firms and the transport-cost minimizing configuration, many of the results generalize to other forms of differenciation. The conditions under which the results generalize are considered in the concluding section of the paper.

Unsuspected Perversities in the Theory of Location

On an infinitely-extensible plane (with uniform customer-density) the socially-optimal configuration of firms is a regular hexagonal lattice. Will the free market necessarily produce this configuration? We argue that the currently-accepted, affirmative answer has been erroneously derived from models in which equilibrium is undefined, and in which equilibrium conditions are asserted rather than being derived from behavioural postulates. We answer the question negatively, showing that, in a standard location model: (a) many configurations, including the hexagonal, satisfy the equilibrium conditions (and in no case is zero profits a necessary condition for equilibrium); and (b) if a hexagonal configuration is initially imposed, it is much less likely to persist through successive rounds of entry than is a square or a rectangular configuration.