2 comments about A Theory of Incentives in Procurement and Regulation.

1. This is a MUST own for scholars teaching advanced microeconomic theory, in particular for courses that emphasize in labor contracts under asymmetric information. It is written in a crisp, approachable style (for advanced undergraduate and graduate level) relying wherever possible with rigorous proofs. This book provides not only an "action packed" and up to date guide to economic theory, it takes you to the knowledge frontier in this field. I recommend it to all serious scholars and economic practitioners.



2. I bought this book for the grand name of "Jean Tirole" and the title. Pretty disappointed. This book only focus on modeling factors, nonetheless, quite through compiled.
   If you're interesting about this field, might want to refer to;
   1. Willison, the institution of capitalism ( also hierarchy )
   2. Olsen, the collective action ( and other books from Olsen )
   3. Tirole, the theory of industrial organization
   Some books regarding "principle and agent" (no recommendation here )

No comments about Ecological Economics: The Science and Management of Sustainability.

5 comments about For the Common Good.

1. Because of the large number of issues and sometimes conflicting solutions proposed, this is a difficult book to classify. Key, however, is the authors' profound refusal to subordinate the common good of the community to the god of the free market. This does not mean the elimination of markets where they have proven effective and non-destructive. It does mean keeping their operation within strict limits, so that people can regain a sense of community and a sustainable environment. Much of the book is taken up with showing the limits of market theory and practice, and in that sense should be studied by all with an interest in America's secular religion. Proposed solutions are decidedly non-ideological and largely eclectic. Both the left and the right should find points of agreement. All in all, this is an invaluable guide to many of the planet's most pressing problems and should be required reading for college undergraduates.



2. The opening criticisms of how economics is taught in today's university structure along with the inappropriate credence given this largely theoretical topic's conclusions are well-presented and well-received. Similarly, the general theme of the recommendations is presented very nicely. Basically, we must focus on more local goods, more self-sufficiency in communities. The authors take the time and care to address such technicalities as what exactly they mean by communities. In general their care is a strength of the book, though perhaps more of the details could have been put in appendices or footnotes rather than disturbing the flow of the text. My main complaint is that no EXAMPLES are given--real-life attempts, either successful or failed, at some of their recommendations. Without examples, all their suggestions seem unsubstantiated. A lengthy but decent read, with a nice underlying philosophy.



3. Edit of 21 Dec 07 to add links
   
   Dr. Herman E. Daly may well be a future Nobel Prize winner ...he is especially well-regarded in Norway and Sweden, where he has received prizes one step short of the Nobel. He is the author, co-author, or primary contributing editor of many books that fully integrate the disciplines of economics and ecology. I bought the three most recent for the purpose of selecting one to give out at my annual Global Information Forum. I ended up choosing this book to give away to hundreds, in part because it is available in paperback and is not a more expensive "trade" publication; and in part because it is strong in laying out specific ecological policy areas in the context of a strong theological or ethical perspective.
   
   Of the three books I reviewed, (the newest Ecological Economics: Principles And Applications, the oldest, updated, Valuing the Earth: Economics, Ecology, Ethics) the first, the text-book, is assuredly the most up-to-date and the most detailed. If you are buying only one book for yourself, that is the one that I recommend, because these are important issues and a detailed understanding is required with the level of detail that this book provided. It should, ideally, be read with "Valuing the Earth" first (see my separate review of that book, from the 1970's updated with 1990's material and new contributions), then this book ("For the Common Good"), and finally the text book as a capstone. But if you buy only one, buy the text book.
   
   This is a second-edition work, updated from the 1984 first edition. I like it very much in part because it comes across as less academic and more common-sense in nature. Part One does a lovely job of tearing apart the fallacy of misplaced concreteness with respect to economics, the market, measuring economic success, the reduction of the human to a "good" that can be traded without regard to humanity and ethics and community, and land. Part Two gently introduces the reader to the many distinguished thought-leaders and practitioners who have gradually matured the discipline of economics to embrace humanity, community, and sustainability as non-negotiable realities that cannot be ignored.
   
   Part Three, a major factor in my choosing this book over the others for broad pro-bono distribution, addresses the specifics of policies one element at a time: free trade versus community; population; land use; agriculture; industry; labor; income policies and taxes; from world domination to national security as an objective. Finally, Part Four, without being corny or preachy, describes the religious or ethical vision (I still think the Golden Rule works as a one-sentence definition of common interest).
   
   An afterword on debt in relation to money and wealth is particularly timely as the American public foolishly allows the White House carpetbaggers to run up a $7 trillion deficit that our great-grandchilden will never be able to pay off if we continue is these evil and irresponsible directions, all in sharp opposition to the sensible and ethical constructs in this book.
   
   Of the three books, none of which really duplicate one another in any negative way, albeit with overlaps, this is the second that I recommend for purchase, after the textbook.
   
   See also, with reviews, published since then:
   The Battle for the Soul of Capitalism: How the Financial System Underminded Social Ideals, Damaged Trust in the Markets, Robbed Investors of Trillions - and What to Do About It
   Natural Capitalism: Creating the Next Industrial Revolution
   Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage
   Cradle to Cradle: Remaking the Way We Make Things



4. I have been a fan of Professor Daly's for some time. This book has some excellent analysis and some truly great commentary. The writing is a bit dry; if you're new to Professor Daly's work, you might want to try one of his other books first, like "Beyond Growth." "For the Common Good" does have some wonderfully thought-provoking lines. Just to give you a taste: "Economics cannot do without simplifying assumptions, but the trick is to use the right assumptions at the right time." Or, with regards to relying on technological fixes for environmental problems: "It is one thing to say that knowledge will grow (no one rejects that), but it is something else to presuppose that the content of new knowledge will abolish old limits faster than it discovers new ones." Another on the same subject: "If it ain't broke, don't fix it; if you must tinker, save all the pieces; and if you don't know where you're going, slow down." On population control: "Nature's way is not always best, but in this instance it seems more responsible than our current practice of allowing new human beings to be unintended by-products of the sexual fumblings of teenagers whose natural urges have been stimulated by drugs, alcohol, TV, and ill-constructed welfare incentives." Daly's Index of Sustainable Economic Welfare deserves to be far better known than it is. The analysis of misplaced concreteness, especially as it relates to the nature of debt, is very good.
   The authors sometimes come across as a little naive in this book. For example, they propose making the government the employer of last resort. I think they do not realize just how hard it is to make such programs work; they inevitably decline into a morass of dependency and corruption. The Washington DC municipal government has taken precisely this approach in the past few decades, with predictable results.
   I think the authors would also do well to do some research on the failures of utopian communities; since I was raised a Mormon, I know a lot about some of these. The chapter on religion strikes me as a bit silly. They want to bring God into the building of a more humane society; this is not necessarily bad, but I tend to think that science will take us farther than God will. In my opinion, Christianity's idea that the Second Coming of Christ is not far off is a very serious barrier to giving humanity's long-term future the attention it deserves. Talking about ethics, the authors say "But to believe that God does exist makes the ethical life more authentic." Well, that's only true if God really does exist, which I doubt.
   Overall, the book has some excellent points to make. If you're interested in economics and public policy, don't miss it.



5. This is a seminal work in the field of Ecological Economics, a real primer.
   
   Neatly organized in parallel chapters dealing, one point-of-view at a time, with some of the main consequences from the fallacy of misplaced concreteness.
   
   I just have restrictions to his views at the chapter on Population, where he advocates for abortion and euthanasia. See, on the former I'd rather advocate sending unwanted children for adoption. As for the latter, ortothanasia (no desperate measures) is ethically right, but euthanasia is quite selfish stuff, not to be advocated for by people bent on reconstructing community. That is why I didn't grade it as 5-star.
   
   Except for that, just another fine book by one of the finest thinkers in our time.

No comments about A practical guide to Box-Jenkins forecasting.

3 comments about Oligopoly Pricing: Old Ideas and New Tools.

1. This book is quite impressive in theoretical concept. This is appropriate for (really) very advanced undergrates, graduates with IO major (theoretical and analytical aspects) and researchers in IO. This book is absolutely not for introductory IO. The topics focus mainly on Quantity, Price, Spatial competition and Asymmetric Information. Tools used in the book are quite advanced. The good point of the book is strength in precise consideration of price discovery in oligopoly market. (how the price is formed, uniqueness and existence of the solution.) Other topics, e.g. advertising and entry, are not good stated here.
   

   If you are looking for introductory text (advanced undergrates or graduate) in IO, see Tirole 1988. However if you are finding for the advanced books, see Handbook of IO (vol1 for pure theory, vol2 for empirical and extension ;esp. in international aspect of IO) and pick this one (if you are interested in Q, P and Spatialy concepts) also. Enjoy reading...




2. i liked this book but some bits were hard to understand.



3. Make sure your maths is good and you already know abit about oligopoly pricing. It is thorough, detailed, and pushes the boundaries, but takes some concentration to follow.
   
   Post graduate level I believe.

2 comments about Microeconomics: Principles and Policy with Xtra! Student CD-ROM and InfoTrac College Edition.

1. i bought this book for an economics class and it is one of the best textbooks i have ever used. it is easy to read and understand, plus it doesn't get nearly as boring as a lot of other textbooks. it is written for the common person and uses lots of examples to illustrate ideas - this is a great book!



2. Of all the economics books I've seen as a college student, this is the best one I've read.

4 comments about A Bicentennial Malthusian Essay: Conservation, Population and the Indifference to Limits.

1. Rohe addresses the natural limits that we face, population, resources, environmental degradation, the earths carrying capacity whose totality is a disease of being indifferent toward these limits. He write with the precision and logic of a lawyer which he is.



2. At a time when many people downplay Malthus, or even ridiculed him, his predictions are coming true-if we just take notice. This is certainly not visible in the suburban supermarket where many of the people who affect what is happening shop. However, for growing numbers of malnourished people on our planet, this is all too apparent. This fine book looks at the underlying causes for this predicament and suggest that the only final way to resolve this problem is to face up to our population problem. Increasing food production, if that were still possible, only postpones the worst, and because the world's population would be larger, would make the suffering even more terrible. Everyone should read this book.



3. A Bicentennial Malthusian Essay(Conservation, population, and the Indifference to Limits) by John F.Rohe is an extremely interesting, must-reading, for all responsible people. Alarming, yet exciting, to gain a realistic understanding of conservation. Thinking non-conservationists will become conservationists. Conservationists will find the back-up information to substantiate their beliefs.

   Richard M. Shuster, Retired Circuit Judge
   5th Judicial Circuit Court, Barry County,
   Michigan




4. A Bicentennial Malthusian Essay(Conservation, population, and the Indifference to Limits) by John F.Rohe is an extremely interesting, must-reading, for all responsible people. Alarming, yet exciting, to gain a realistic understanding of conservation. Thinking non-conservationists will become conservationists. Conservationists will find the back-up information to substantiate their beliefs.

   Richard M. Shuster, Retired Circuit Judge
   5th Judicial Circuit Court, Barry County,
   Michigan

5 comments about The Failure of the "New Economics".

1. Hazlitt crushes Keynes' theory bij pinpointing the flaws in the basic premises of the GT. Nevertheless it doesn't take an intellectual to see that absurdities like consumption limits production are completely fallacious. Economics is about voluntary actions not about psychological constructs. In addition I dare to state that Keynes' socialist propaganda has ruined many countries and people, e.g. The Netherlands.
   
   I personally prefer Murray Rothbard's critics of the GT (in man, Economy and State). I would also recommend Hoppe's 'Misesian case against Keynes' (1992), available for free [...]
   
   I'd like to conclude with the words of Hoppe:
   "Here we have Keynes, then: the twentieth century's most famous "economist." Out of false theories of employment, money, and interest, he has distilled a fantastically wrong theory of capitalism and of a socialist paradise erected out of paper money."



2. An excellent critique of the time honored tenets of Keynesian economic principles. A very good look at economics from another angle which, is always a good thing.



3. Henry Hazlitt's "The Failure of the New Economics" is an excellent discussion on the many Keynesian fallacies. Hazlitt clearly explains that the "The General Theory" by John Maynard Keynes is perhaps the most destructive book ever written and that Keynesian economics inevitably leads to socialism. Like Marx, Keynes attributes the business cycle to the market economy. Throughout "The General Theory", Keynes emphasizes the superiority of government and the inadequacy of individuals operating in free markets.
   
   Hazlitt begins by reasserting the validity of Say's Law. He shows the Keynes didn't understand that Say's Law was a refutation of the popular belief that business downturns are a result of general overproduction. Of course, there can be no general overproduction, only relative overproduction. Say's Law is the economic truth that demand in the market place is derived from that which has been produced, that purchasing power grows out of production, and that people produce not for the sake of production but for the sake of consumption. Hazlitt reminds us that we must affirm the validity of Say's Law when anybody is foolish enough to reject it.[...]
   
   Hazlitt illustrates Keynes's utter confusion on the Savings = Investment issue. Keynes foolishly argued that Savings did not equal Investment in "A Treatise on Money." Keynes was embarrassed to admit his confusion in the General Theory and states that Savings does equal Investment. Of course the whole Keynesian theory of unemployment rests upon Savings being unequal to Investment, so Keynes contradicts himself and returns to his older concepts in the latter part of "The General Theory".
   
   Hazlitt points out that the Propensity to Consume is littered with fallacy. In short, The Consumption Function declares that consumption, extravagance, and improvidence are virtuous while savings, frugality, and financial prudence are society's great plagues. Hazlitt shows that the whole concept of the Propensity to Consume is meaningless if Savings=Investment. Hazlitt continues by showing that the spending Multiplier (1/MPS) would be infinity if the MPS was zero. Translation: if individuals chose not to save any portion of their income, a small expenditure on public works by government would increase income without limit. This proposition is obviously ridiculous.
   
   Hazlitt turns to the liquidity preference, the Keynesian theory of interest. Hazlitt demonstrates that if the Liquidity Preference were valid, short term interest rates would be highest at the bottom of the depression. Experience shows just the opposite, short term interest rates are lowest near the bottom of the depression. Clearly, as Hazlitt explains, the Keynesian interest rate theory is illogical.
   
   This review is only the tip of the iceberg. Henry Hazlitt reminds us that business cycles are not caused by the inadequacy of the free market economy, but are the result of expansionary bank credit made possible by fractional reserve banking. Of course, government control of money makes fractional reserve banking possible. Hence government is the problem, not the solution. "The Failure of the New Economics" is an outstanding critique of the Keynes's magnum opus and it will destroy the Keynesian system.
   
   Also recommend: "Man, Economy, and State" by Rothbard, "Human Action" by Mises, "A Guide to Keynes" By Hansen, and "The Mystery of Banking" by Rothbard



4. A must read if you study economics. It explains fallacies contained within todays economy theories and their failures.



5. Henry Hazlitt critiqued Keynes at a time when Keynesian ideas dominated professional opinion (1959). Hazlitt lacked credentials as an economist, but he still weighed in with an effective critique of Keynes. First of all, Hazlitt makes the historical point that the ideas attributed to Keynes were largely not original to Keynes. While it is true that Keynes was involved in the development and popularization of what came to be known as Keynesian economics, the fact of the matter is that other economists published similar ideas years before Keynes, and aggregate demand type explanations of The Great Depression were already widely known and well on the way to broad acceptance.
   
   Hazlitt also defends the idea that excessively high wages are the primary cause of unemployment, and rightly so. A recent study by two UCLA economists confirms that Great Depression unemployment was driven by excessively high wages. Hazlitt also picks apart the details of Keynes theoretical arguments, and defends Say's Law of Markets. Hazlitt further points out the absurdity of Keynes' contention that capital can be made abundant, so the marginal efficiency of capital can go to zero. Hazlitt also notes that Keynes advocated ultimate policies that would result in socialism (i.e. the euthanasia of the rentier and the socialization of investment).
   
   Hazlitt pointed to serious deficiencies in Keynes' so called General Theory. In doing so he was ahead of the trend among professional economists, who rejected Keynesian economics in the late sixties and early seventies. Nowadays there is less need for a critique of Keynes actual writings, because his "General" theory is seldom read, even by professional economists. Consequently, Hazlitt's book may fall into obscurity. Yet it is important to note that Hazlitt was able to critique Keynesian ideas simply from having familiarized himself with proper economic concepts (i.e. by reading Mises and Hayek). The Failure of the New Economics is at this point primarily for those interested in history.

2 comments about Is the Market Moral?: A Dialogue on Religion, Economics, and Justice (The Pew Forum Dialogues on Religion and Public Life).

1. The collaboration of Rebecca M. Blank (Dean of the Gerald R.FordSchool of Public Policy and Professor of Economics, University of Michigan) and William McGurn (Chief Editorial Writer, Wall Street Journal), Is The Market Moral?: A Dialogue On Religion, Economics & Justice is a literate discussion of serious issues of economic equality, efficiency, productivity, and social justice. The contrasting views of two strong-willed, intelligent, faithful, and astutely reasoned individuals - one a "cultural Protestant", the other a Roman Catholic, both concerned with issues of morality and human feedom to choose as surely as technical problems of supply and demand. Add in drastic changes wrought by increased globalization in today's world, and the evaluations followed by direct and personally addressed rebuttals in Is The Market Moral? take on an ever-growing sense of direct contemporary relevance, even urgency.



2. Is the Market Moral? by Rebecca Blank and William McGurn is the second volume in the Pew Forum Dialogues on Religion & Public Life, a series of printed debates being published by the Brookings Institute. This debate reminded me why I enjoy reading economics as much as I do. The authors are both well-trained economists whose views fall well within the mainstream of the field, yet in this text they turn to a topic that receives little attention in the academic press, the interplay between religion and economic life. The format is a written debate, each author writes a paper, then each is given a chance to respond to the other's paper, then they each write a conclusion.
   
   Blank begins the debate, her paper focuses on the role of government in correcting or eliminating markets which do not promote the Christian virtue of brotherly love or respect and caring for one's neighbors. She does not believe that government is all powerful, or that it should try to control markets completely, as she does recognize the tremendous power and huge benefits of a market economy, but she does believe that the way in which religion is most effectively applied to the market is through participation in the democratic process.
   
   McGurn, on the other hand, sees the forces of the market as far too powerful to be controlled or dictated by legislation. Instead he believes that the way to make the market economy more Christian is through the "virtues-self-restraint, honesty, courage, diligence, the willingness to defer gratification-that it cannot itself create", through culture itself. In his words he "would say that Rebecca would probably consider it naïve to think of culture as strong enough to counter powerful market forces while I deem it even more naïve to expect government, which enjoys a monopoly of force, to do it properly."
   
   My views on the matter fall far closer to those of William McGurn than they do to those of Rebecca Blank. I am deeply skeptical of the ability of government to do anything correctly if there is even the slightest controversy over the correct goal, and even when the goal is unanimous I still have grave doubts about the ability of government to fulfill the desires of the people without incurring massive unforeseen consequences. I am also much more inclined to believe McGurn and the emphasis he places on religion as the central force in determining the moral fabric of a society.
   
   While I may not always agree with the views of the various religions at work in society, I do believe that they provide the bedrock on which the moral of society rely to keep a steady foundation. However, without informed and rational discussions like this one we cannot necessarily expect any progress in the way that religion approaches economics, and vice versa. The book is not particularly expensive, and a quick read, I highly recommend this book for anyone with any interest in the interplay of markets and culture or markets and religion.

2 comments about Markets and Hierarchies : Analysis and Antitrust Implications.

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2. Markets and Hierarchies is considered a most influential contribution to the institutional economics approach in the strategy literature. Introducing a transaction-cost dimension, it bridges economics and organization theory. Hence, both economists and researchers from the fields of social sciences can find this book appealing. Williamson begins by claiming that conventional economic analysis makes unnecessary assumptions and is too abstract to capture the characteristics of economic exchange and its effect on the transaction consummation mechanism, namely the preference of intrafirm versus interfirm trade. Then he introduces concepts of bounded rationality and opportunism to expand the discussion of organizational forms. He suggests the transaction as the appropriate unit of analysis to evaluate hierarchies and markets. The main argument in the book is presented in the Organizational Failures Framework (OFF), which is designed to specify which mode will be relatively efficient in formulating and executing contracts based on a combination of environmental and human factors. The OFF offers two combinations, a derived condition and a general system effect to explain organizational failures: (1) Bounded Rationality and Uncertainty/Complexity - Faced with conditions of uncertainty and complexity, where the decision tree is not clear, bounded rationality poses information processing and communication problems. A hierarchy would be preferred to a market in this case because internal organization can economize on bounded rationality. (2) Opportunism and Small Numbers - Williamson extends the self-interest assumption in microeconomics to suggest opportunistic behavior. Under such conditions, participants in transactions are expected to reveal partial or distorted information and provide self-disbelieved promises. A small numbers situation at the outset or renewal of a contract induces the risks of opportunistic behavior, which cannot be detected ex ante. Here again, hierarchies would be preferred to markets because in internal organization it is harder to appropriate gains from opportunistic behavior, and because monitoring and conflict resolution mechanisms are more effective. (3) Information Impactedness (asymmetric information) - Under conditions of opportunism and uncertainty, one party can find it costly to achieve information equality. Hierarchies will be preferred to markets because they reduce opportunistic tendencie encourage information sharing and effective communication. (4) Atmosphere - OFF assigns value not only to the outcomes of the transaction but also to the economic exchange process. Internal organization provides more encouraging atmosphere in terms of the development of reciprocal social relationships. Williamson offers several applications to illustrate his arguments and discuss antitrust implications. The replacement of markets by nonmarket alternatives first considers cooperative peer groups. Relative to hierarchies, peer groups are vulnerable to free rider problems and have inefficient communication and decision-making mechanisms. In hierarchies, centralized decision making, auditing procedures and experience rating enable more efficient organization relative to both markets or peer groups. Another application of the transactional perspectives considers the rationale for preferring internal employment relation to markets for idiosyncratic tasks. Transactional difficulties arise in both contingent claims and sequential spot market contracting, thus suggesting an authority relation of internal labor market as a possible solution. The most interesting application of the markets and hierarchies approach refers to vertical integration. The author tries to specify when production components will take place within the firm and when across intermediate product markets. Vertical integration, which leads to the creation of complex hierarchy is justified because: (1) successive processes are more efficient under common ownership; (2) it reduces required monitoring costs; (3) assures efficient factor combinations when one component is under monopolistic supply; (4) reduces bargaining costs to determine ownership of spillovers; and (5) economizes on the acquisition of information relevant to multiple stages. Williamson suggests three ways in which internal transactions can be organized: (1) sales contracts for component supply include contingent claims, incomplete long-term and sequential spot contracts, (2) Unified ownership of plant and equipment extends the simple hierarchy, (3) A complex hierarchy extends the employment relation to including department managers and achieves higher cooperation. An employment relation provides advantages over the other two. Williamson attempts to offer some qualifications to vertical integration. For instance, he claims that when recurrent transactions in the market are characterized by norms of trustworthy, valuable reputation and advanced evaluation mechanisms - incomplete contracts with informal enforcement may become a possible alternative to vertical integration. Furthermore, because vertical integration in highly concentrated industries can create price discrimination and barriers to entry, antitrust concerns may rise where there is a certain degree of monopoly. In addition to the antisocial consequences, vertical integration, can also result in preserved nonviable activities, cross-subsidization, distortion of procurement decisions and uneconomic reciprocity, inefficiencies due to policing costs, managerial commitment to unproductive or obsolete projects, communication distortion and other consequences of opportunism paired with small numbers and information impactedness. Hence, the size of the hierarchical organization is limited by bounded rationality, bureaucratic insularity, discouragement of innovativeness and atmospheric consequences. The reminder of the book is devoted to discussion of the multidivisional structure, conglomerates, dominant firms and oligopolies. These issues raise antitrust questions, and it seems that Williamson offers an unconventional perspective that better scrutinizes the situations that require government interference. In the discussion of market structure and organizational innovation, the author divides innovation to three stages: invention, development and final supply. Williamson suggests that the optimal path is that independent investors and small firms will engage in innovation and initial development, while successful developments will be acquired and be marketed by large M-form firms. In the last few chapters the OFF provides some insights to the evolution of monopolies. Williamson opposes governmental intervention in the case that a monopoly position results from incompetent competitors or from historic accident. Williamson also refutes the convention that oligopoly is no better than monopoly because of maximization of joint profit and collusion. In the OFF view, oligopolists will find it difficult to reach, implement and enforce agreements even when contracts are lawful. Only in highly concentrated mature industries with homogeneous products and exceptional barriers to entry, oligopolistic behavior may turn successful, but exactly in these cases it will be subject to antitrust reaction.