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Describes the impact of recent changes in US tort law and identifies four interest groups concerned: manufacturers, insurance companies, consumers and lawyers. Discusses their relative strengths, motivations and influence on judicial decisions, citing relevant liability cases for product‐related injuries due to manufacturing defects, design defects and inadequate warnings. Develops a logistic regression model to relate state adoption of strict liability standards to the relative strength of interest groups and applies it to US data. Suggests that the strength of manufacturers and, more particularly, lawyers is significant; and that liberal states are more likely to adopt strict liability for design defects. Calls for further research on the role of the legal profession in legal change.

In the discussion groups subjects will be taken up which are not dealt with in the lectures. The subjects to be taken up in the discussion groups of each week and the assignments relating thereto will be announced well in advance of the meetings.

Diversified trading networks have recently drawn a great deal of attention. In the process, the importance of diversity has perhaps been overemphasized. Using the trade in port wine from Portugal to Britain as an example, this essay attempts to show how a market once dominated by general, diversified traders was taken over by dedicated specialists whose success might almost be measured by the degree to which they rejected diversification to form a dedicated “commodity chain.” The essay suggests that this strategy was better able to handle matters of quality and the specialized knowledge that port wine required. The essay also highlights the question of power in such a chain. Endemic commodity-chain struggles are clearest in the vertical brand war that broke out in the nineteenth century, which, by concentrating power, marked the final stage in the transformation of the trade from network to vertical integration.

The instability of the relationships which Export Management Companies have with their Manufacturer‐Suppliers is, perhaps, the most pressing problem which the EMCs have in their long‐term development as viable export marketing channel entities. Three different variables were empirically tested as possibly affecting the stability of EMC/M‐S relationships: (1) the “operating arrangement” which the EMC has with the M‐S; (2) whether or not the EMC “takes title” to products which it markets abroad; and (3) the size of a given M‐S's export sales generated by the EMC. All three variables were shown to affect the stability of the EMC/M‐S dyadic relationship.

Many modern microeconomic theory textbooks similarly conclude that the bilateral monopoly equilibrium price and quantity are theoretically indeterminate given the usual assumptions of the theory of the firm; they usually state that additional assumptions about bargaining power or firm behaviour are required for a determinate solution. The past literature on bilateral monopoly generally supports the textbook position with respect to price but not with respect to quantity. For example, von Stackelberg (1952, 182–9) and Fellner (1947, 523–8) argued that quantity is determinate at the joint profit maximizing level for bilateral monopoly between profit maximizing firms which employ “all or none” offers; price, however, must still be determined by relative bargaining power which is unspecified.

This paper provides novel empirical evidence on the impact of bank internal organization structure characteristics on costs and productive efficiency. The specific internal organization characteristics examined include centralized versus decentralized 1) decision‐making, 2) service delivery systems, and 3) back‐office operations, e.g. accounting, computing, and advertising, among others. The analysis is conducted using average data drawn from a sample of 118 large US commercial banks for the years 1989 and 1990. The analysis reveals that centralized decision‐making tends to increase costs. Likewise, centralized service delivery systems either increase or have an insignificant impact on costs. In no case was it found that centralized service delivery systems reduce costs as is often envisioned by proponents of centralization. Centralized back‐office operations were found to reduce costs significantly and is consistent with the existence of scale economies in bank back‐office operations.

Industrial organization economists have generally treated the firms operating within industries as fairly homogeneous. The firms are assumed to be similar in terms of the main decision variables so that there are few differences in the price: output, and product strategies preferred by each firm. Furthermore, the firms are believed to enjoy similar market power so that market power is essentially a shared asset. Some of the recent literature rejects the shared asset view of market power. Among the more significant contributions to this literature is the concept of strategic groups. This paper focuses on the relevance of the strategic group concept for entry theory.

The traditional approach to capital expenditure analysis is based on the neoclassical economic paradigm. According to this paradigm, managers are assumed to strive for profit maximization in an effort to maximize the wealth of the firm's stockholders. In their pursuit of this objective, the “rational economic” manager is assumed to be able to gather and process all relevant information, subject to the standard notion of cost/benefit analysis. Divergence of preferences between managers and owners, and concerns related to asymmetric information, are usually ignored. The firm itself is treated as a production function geared to meeting the profit maximization objective, with the transactions of the external marketplace (through the price system) being the ultimate organizer of the firm's activities.

Interest in developing institutional explanations of political and economic behavior has blossomed among social scientists since the early 1980s. Three intellectual perspectives are now prevalent: rational choice theory, historical institutionalism and a new school of organizational analysis. This paper summarizes, compares and contrasts these views and suggests ways in which cross‐fertilization may be achieved. Particular attention is paid to how the insights of organizational analysis and historical institutionalism can be blended to provide fruitful avenues of research and theorizing, especially with regard to the production, adoption, and mobilization of ideas by decision makers.

The paper published below was prepared by Taylor Ostrander for Frank Knight’s course, Economic Theory, Economics 301, during the Fall 1933 quarter.