Monograph records
https://feeds.library.caltech.edu/people/Quirk-J-P/monograph.rss
A Caltech Library Repository Feedhttp://www.rssboard.org/rss-specificationpython-feedgenenMon, 27 Nov 2023 18:15:20 +0000Cost Escalation in Nuclear Power
https://resolver.caltech.edu/CaltechEQL:EQL-M-21
Authors: Montgomery, W. David; Quirk, James P.
Year: 2009
DOI: 10.7907/Z9WH2MXR
This report is concerned with the escalation of capital costs of nuclear central station power plants between the early 1960s and the present. The report presents an historical overview of the development of the nuclear power industry and cost escalation in the industry, using existing data on orders and capital costs. New data
are presented on regulatory delays in the licensing process, derived from a concurrent study being carried on in the Social Science group at Caltech.
The conclusions of the study are that nuclear capital costs
have escalated more rapidly than the GNP deflator or the construction industry price index. Prior to 1970, cost increases are related to bottleneck problems in the nuclear construction and supplying industries and the regulatory process; intervenors play only a minor role in cost
escalation. After 1970, generic changes introduced into the licensing process by intervenors (including environmental impact reviews, antitrust reviews, more stringent safety standards) dominate the cost escalation picture, with bottlenecks of secondary importance. Recent increases
in the time from application for a construction permit to commercial operation are related not only to intervenor actions, but also to suspensions, cancellations or postponements of construction by utilities
due to unfavorable demand or financing conditions.https://authors.library.caltech.edu/records/geptb-5qx79Water resource problems of energy projects in the Colorado River Basin
https://resolver.caltech.edu/CaltechAUTHORS:20120928-120924127
Authors: Brooks, Norman H.; Koh, Robert C. Y.; List, E. John; Quirk, James P.
Year: 2012
The successful development of western coal and oil shale deposits
is dependent, to a significant degree, on the availability of adequate
water supplies. EQL is involved in a study of the aggregate effects
of various energy activities in the upper Colorado River Basin on
downstream water quantity and quality. These activities will tend
to reduce the available water in the river, and could increase its
salinity, which is already so high as to interfere with downstream
domestic and agricultural use.https://authors.library.caltech.edu/records/b5ns3-1n245Water resource problems of energy projects in the Colorado River Basin
https://resolver.caltech.edu/CaltechAUTHORS:20120928-162004047
Authors: Brooks, Norman H.; List, E. John; Quirk, James P.
Year: 2012
The successful development of Western coal and oil shale deposits
is dependent, to a significant degree, on the availability of adequate
water supplies. EQL is involved in a study of the aggregate effects of
various energy activities in the upper Colorado River Basin on downstream
water quantity and quality. These activities will tend to reduce the
available water in the river, and could increase its salinity, which
is already so high as to interfere with downstream domestic and agricultural
use.https://authors.library.caltech.edu/records/1jyer-f8v77Colorado River Project. Phase I: Water Rights and Allocations
https://resolver.caltech.edu/CaltechAUTHORS:20151120-143153110
Authors: Burness, H. Stuart; Quirk, James P.
Year: 2015
While this section is concerned with the institutions pertaining
to the Colorado River specifically, the approach to them is tangential
so as to allow the extant institutions to be embedded in the underlying
set of alternative policies and institutions, and thus provide a deeper
appreciation of the status quo. This serves to indicate the appropriateness
(or lack thereof) of present institutions in some cases or at least
their arbitrariness. As matters of equity are difficult and often impossible
to assess, we observe only the legal and technical efficiency
of the institutions and water laws.https://authors.library.caltech.edu/records/3425x-ha291Hedging as 'Speculation on the Basis'
https://resolver.caltech.edu/CaltechAUTHORS:20170918-144245730
Authors: Quirk, James P.
Year: 2017
Holbrook Working has described hedging as "speculation on the basis" and has argued that traders engage in hedging because they believe they can do better from hedging than from not hedging, in contrast to the Keynes-Hicks-Kaldor view that hedging is an activity undertaken to shift risk to other traders.
In this paper, we derive necessary and sufficient conditions for hedging ("speculation on the basis") to be preferred by all risk averse traders to speculating on the cash market. When the futures market is in fact a forward market, then short hedging is p referred to not hedging by all risk averse traders if and only if there is a contango on the market. In the case of a "true" futures market, it is shown that short hedging is preferred to an unhedged position by all risk averse traders if and only if the "Houthakker effect" is sufficiently strong. These results are derived for the "all or nothing" case of comparisons between an unhedged and a completely hedged position.https://authors.library.caltech.edu/records/mxj4v-t7r51Asymmetric Arbitrage and the Pattern of Futures Prices
https://resolver.caltech.edu/CaltechAUTHORS:20170918-162413469
Authors: Lien, Da-Hsiang Donald; Quirk, James P.
Year: 2017
Since Keynes first argued that backwardation was the normal state of affairs on futures markets, there have been several theoretical explanations for its existence. In particular, Fort and Quirk have shown that the "Houthakker effect" can lead to a backwardation equilibrium. In this paper, we consider another argument for backwardation suggested by Houthakker, namely, asymmetric arbitrage. Our conclusions are generally negative, despite its intuitive appeal. Specifically, in a world with an equal number of short and long hedgers, with identical utility functions and densities over cash and futures prices, if the futures market is a forward market, then in a rational expectations framework, asymmetric arbitrage has no effect on the pattern of futures (or cash) prices. If we are dealing with a true futures market, under the above assumptions, arbitrage will act to encourage short hedging and to discourage long hedging only under some restrictive conditions. Moreover, further quantitative restrictions must be imposed in order to derive a backwardation equilibrium under asymmetric arbitrage.https://authors.library.caltech.edu/records/rb1ct-0g817Turbulence, Cost Escalation, and Capital Intensity Bias in Defense Contracting
https://resolver.caltech.edu/CaltechAUTHORS:20170920-153210299
Authors: Terasawa, Katsuaki; Quirk, James P.; Womar, Keith
Year: 2017
[No abstract]https://authors.library.caltech.edu/records/d6m91-dh281The Winner's Curse and Cost Estimation Bias in Pioneer Projects
https://resolver.caltech.edu/CaltechAUTHORS:20170920-144446307
Authors: Quirk, James P.; Terasawa, Katsuaki
Year: 2017
Cost overruns are almost as massive and almost as pervasive on private "first of a kind" projects as on defense contracts. This paper examines the cost overrun problem in terms of the methodology of cost estimation, abstracting from moral hazard problems. The main results of the paper are these: first, if cost estimators are an unbiased estimation methodology, then under certain monotonicity conditions, this will produce an observed cost underestimation bias, because cost estimates are used as a guide to project decision making; second, the more uncertainty there is with respect to the costs of a project, the larger will be the observed cost underestimation bias, assuming the estimator uses an unbiased estimation methodology; third, in bottoms up estimation, the most accurate of cost estimation methodologies, there is a built in cost underestimation bias because the value of information is not incorporated into the cost estimate; fourth, the size of the underestimation bias in bottoms up estimation definitely-increases with uncertainty only under rather stringent conditions on the construction production function.https://authors.library.caltech.edu/records/336bx-96046Asymmetric Arbitage and Normal Backwardation
https://resolver.caltech.edu/CaltechAUTHORS:20170922-163156200
Authors: Fort, Rodney D.; Quirk, James P.
Year: 2017
This paper provides a theoretical explanation for the existence of backwardation on the futures markets, based on Routhakker's work dealing with asymmetry of arbitrage on such markets. The central assumption of the paper is that cash and futures prices tend to be more highly correlated at low than at high cash prices. This assumption reflects the asymmetry in arbitrage opportunities in futures markets; in particular, at the maturity date of a futures contract, the futures price cannot exceed the cash price of any grade-location combination deliverable under the futures contract. The main result of the paper is a proposition that asserts that with identical long and short hedgers, with the same wheat commitments on both sides of the market, and with utility functions exhibiting constant or decreasing absolute risk aversion, if the probability density function over cash and futures prices is sufficiently concentrated at low cash prices, then the resulting market equilibrium will exhibit backwardation, that is, the current future price is a downward biased estimator of the future futures price as well as being a downward biased estimator of the future cash price.https://authors.library.caltech.edu/records/9bke9-k6462Consumer Surplus Under Uncertainty: An Application to Dam-Reservoir Projects
https://resolver.caltech.edu/CaltechAUTHORS:20170926-151703096
Authors: Quirk, James P.
Year: 2017
The use of cost-benefit analysis to evaluate the net welfare payoffs from water projects has now been an established practice for many years. One of the interesting aspects of such cost-benefit studies is that water projects involve an uncertain flow of costs and benefits, arising from the stochastic nature of streamflows. Hence a basic problem for the cost-benefit analyst is that of incorporating this uncertainty into his measures of costs and benefits. In the present paper, we examine the problem of computing an appropriate consumer surplus measure to evaluate water project benefits under uncertainty. Detailed treatment is given to the case in which a complete set of contingent claim markets exist in the economy, as well as to the case of a spot market economy.https://authors.library.caltech.edu/records/acscd-ybc35The Economics of Boxing Regulation in California
https://resolver.caltech.edu/CaltechAUTHORS:20171006-140153591
Authors: Balbien, Joel; Noll, Roger G.; Quirk, James P.
Year: 2017
Boxing was legalized in California through a statewide referendum in 1924that simultaneously set up a regulatory authority with broad powers to control the industry. This study examines the economic performance of the boxing industry, the case for regulatory intervention, and the effects of the specific kinds of regulatory rules that have been imposed. While regulation in California is widely believed to be an important factor explaining the unusually low rates of death and injury in boxing matches in the state, it is also shown to have anticompetitive effects. Several changes in regulatory procedures are proposed that would not reduce the extent to which regulation protects boxers, but would serve to enhance the competitive performance of the industry.https://authors.library.caltech.edu/records/06btm-08t15Ex Ante Optimality and Spot Market Economies
https://resolver.caltech.edu/CaltechAUTHORS:20171006-141542433
Authors: Burness, H. Stuart; Cummings, Ronald; Quirk, James P.
Year: 2017
Arrow's result linking ex ante Pareto optimality for a pure trade world to competitive equilibrium positions under a complete set of contingent claim markets is summarized, as is his reinterpretation of ex ante optimality for the case of an economy with active spot markets. Possible difficulties arising from this reinterpretation are noted. The final section of the paper examines conditions under which an economy with active spot markets will achieve an ex ante optimum in the original sense of this term and summarizes the behavior of such an economy.https://authors.library.caltech.edu/records/s59r4-mxj08Divergent Expectations, R & D Expenditures and Technical Progress
https://resolver.caltech.edu/CaltechAUTHORS:20171006-151341415
Authors: Quirk, James P.; Terasawa, Katsuaki
Year: 2017
This paper deals with the problem of whether diversity of beliefs or consensus leads to a higher level of R and D spending in an industry, or a faster rate of technical progress, or a lower price for the industry's product. The answer depends upon characteristics of the demand function for industry output as well as the density functions reflecting probability beliefs of firm managers. Sufficient conditions are given for consensus (diversity) to ''pay'' in terms of R and D spending and/or the rate of technological progress, and R and D spending under market incentives is contrasted with an "optimal" level of R and D expenditures. The analysis is illustrated in more detail for the case of exponential density functions.https://authors.library.caltech.edu/records/5mwx6-2x674Demand Uncertainty and the Regulated Firm
https://resolver.caltech.edu/CaltechAUTHORS:20171017-144203932
Authors: Braeutigam, Ronald R.; Quirk, James P.
Year: 2017
Demand uncertainty is an important element of many regulated markets. Firms often must select plant size before actual demand is observed, and with some expectation of regulatory action if the actual levels of profit or rate of return do not fall within accepted ranges.
We analyze a model of a regulated firm that faces a relatively complex regime of price regulation, reflecting to at least some extent the multiple aspects suggested by Joskow (1974). The firm behaves as though it expects the current tariff to remain in effect unless, at the actual demand observed after plant size is chosen, one of two things occurs. First, if profits are negative, the firm plans to petition for and expects to receive a new tariff yielding zero economic profits. Second, if the rate of return on capital exceeds some specified maximum, the firm expects the regulator to reduce the tariff so that the firm earns only that maximum.https://authors.library.caltech.edu/records/vh8tb-44a67Capital Gains and the Economic Theory of Corporate Finance
https://resolver.caltech.edu/CaltechAUTHORS:20171019-142846616
Authors: Burness, H. Stuart; Quirk, James P.
Year: 2017
The dependence of one agent's actions upon those of another constitutes a fundamental departure point for much of received economic theory. Apart from a deterministic setting, the presence of uncertainty implies a dependence on the probable actions of other agents; that is, the ultimate behavior of an individual is to a certain extent a consequence of his beliefs concerning the behavior of other agents. While the difficulty associated with formulating even crude conjectures of this nature is overwhelming, actual informational demands are even greater as from the dependence of agent A's actions on his beliefs concerning agent B's actions, it follows directly that agent B's actions are dependent on his beliefs concerning agent A's beliefs relative to his (agent B's) action as well, as infinitum.https://authors.library.caltech.edu/records/p9b0s-xpj14Water Rights and Optimal Reservoir Management
https://resolver.caltech.edu/CaltechAUTHORS:20171024-143650616
Authors: Burness, H. Stuart; Quirk, James P.
Year: 2017
In many areas, notably the arid portion of the western United States, economic development and increased use of both surface and ground water supplies has been accompanied by proliferation of water storage facilities. As these reservoirs are filling, rivers become more completely appropriated and ground water supplies approach depletion more rapidly. While the analysis and management of ground water and surface water supplies should be integrated, we consider surface water independently, thus following the bifurcation in the treatment of ground and surface water under existing water law. In Burness and Quirk (1977), we considered the efficiency aspects of the appropriative water rights doctrine in the static analogy of an uncontrolled river. Here we follow in the spirit of Gessford and Karlin (1965) and analyze the optimal operation of a water storage facility in the presence of downstream users. In addition, we consider alterations in diversion capacity by water users in the presence of such a facility. By explicitly considering alternative water rights doctrines we are able to comment on the efficiency and stability of prevalent patterns of ownership and operation.https://authors.library.caltech.edu/records/907yj-eyp20Appropriative Water Rights and the Efficient Allocation of Resources
https://resolver.caltech.edu/CaltechAUTHORS:20171025-153155841
Authors: Burness, H. Stuart; Quirk, James P.
Year: 2017
This paper investigates the allocative efficiency of the appropriative system of water rights, within the-context of a simplified model of a water using industry. At a long run competitive equilibrium for the industry and with a prohibition on the transfer of water rights among firms, it is shown that: (1) senior appropriators claim and use more water than junior appropriators; (2) senior appropriators bear less risk than junior appropriators; (3) the allocation of water and diversion capacitie-6among firms is inefficient, being dominated by an equal sharing among firms. The equal sharing allocation, which is Pareto optimal when diversion capacities are supplied by a competitive leasing industry, can be achieved under the appropriative system if there are competitive markets in water rights and in leases for the use of diversion capacities, an application of the Coase theorem.https://authors.library.caltech.edu/records/n8whp-5vr97Rate of Return Regulations and Factor Bias in Innovations
https://resolver.caltech.edu/CaltechAUTHORS:20171027-153646768
Authors: Montgomery, W. David; Quirk, James P.
Year: 2017
The literature on the Averch-Johnson (A-J) effect focuses on the distortion that is introduced into the capital-labor ratio employed by a regulated firm as the result of rate of return regulation. This paper considers a related question, namely that of the effect of rate of return regulation on the mix of labor and capital-augmenting innovations produced and employed by a regulated firm. The regulated firm is assumed to possess "in house" capabilities for producing such innovations, and it is the responsiveness of its innovative activities to regulation that is the central theme of this paper. But the mix of innovative activities also affects the firm's choice of a capital/labor ratio in producing its final product. This more conventional notion of factor bias is also explored in the paper.https://authors.library.caltech.edu/records/6fc85-55k87On Comparative Dynamics
https://resolver.caltech.edu/CaltechAUTHORS:20171031-142930698
Authors: El-Hodiri, Mohamed M.; Quirk, James P.
Year: 2017
Lately, there has been an increased interest in stability of growth paths, see e.g., Brock and Scheinkman [1974]. The problem has been stated in terms of properties of stationary paths. In order to appreciate the difficulty of the general stability problem, one must realize that there are two types of "time" involved in the analysis: stability "time" and path "time." Thus, the appropriate mathematical field is that of differential equations defined on a space of functions rather than a finite dimensional space. Naturally, if one restricts one's attention to stationary paths, then the usual stability analysis is appropriate. However, we would be then discussing the asymptotic behavior of the asymptotic state of the economy. This note strives to put the problem of path stability in the proper perspective by discussing the much simpler problem of comparative dynamics. Unfortunately this term has been used in the economic growth literature to discuss the basically comparative statics problem of comparing stationary growth paths. By comparative dynamics, we mean the determination of the "direction" of change in the optimal path of decision variables due to a change in the exogenous variables.
The traditional method of deriving comparative statics results has been to use second order conditions for optimality. However, if one is willing to assume concavity, these results could be derived in a more direct way by utilizing the fact that a differentiable concave function lies below its tangent plane. We shall use this concept in deriving the main inequalities of this note. By way of motivation, we first derive two inequalities of comparative statics. Then we derive the comparative dynamics results and finally we discuss some economic theoretical examples.https://authors.library.caltech.edu/records/z58m5-rn112The Market for Innovations. Factor Bias and Innovation: A Microeconomic Approach
https://resolver.caltech.edu/CaltechAUTHORS:20171101-141601636
Authors: Montgomery, W. David; Quirk, James P.
Year: 2017
THE MARKET FOR INNOVATIONS: This paper presents a brief survey of the theoretical literature dealing with innovation in a market economy. The survey is organized around the following topics: first, the theory of the production, marketing and use of innovations; second, welfare aspects of innovative activities; and third, factor augmenting bias in innovation. The survey attempts to summarize the present state of knowledge concerning these topics.
FACTOR BIAS AND INNOVATION: A MICROECONOMIC APPROACH: This paper is concerned with a classic question in the theory of innovations, namely, the question "does an increase in the wage rate lead towards an increase in the production and use of labor-augmenting innovations?" Section 2 of this paper contains a brief survey of the literature dealing with this question. Most of the existing literature takes a macroeconomic approach to the problem of factor augmentation bias and in addition directs its attention only at the use of innovations, with the menu of innovations available to the society being taken as given exogenously. Our approach in this paper is microeconomic, in order to deal explicitly with the issue of allocation of resources to the production of innovations and with the responsiveness of that production to the price signals provided by the factor markets. Because of aggregation problems the conclusions derived in this paper do not necessarily carry over in a direct fashion to macro models of the economy, but at least certain issues are raised by those conclusions that are relevant to the study of innovation in a macro context.https://authors.library.caltech.edu/records/gqcq5-s3632Tax Writeoffs and the Value of Sports Teams
https://resolver.caltech.edu/CaltechAUTHORS:20171101-145325783
Authors: Davis, Lance E.; Quirk, James P.
Year: 2017
Because of IRS treatment of player contracts, purchase of a professional sports team offers a special tax shelter to investors. The effect of the tax shelter on valuation of a team is summarized, together with an analysis of current rates of return that can be earned from investing in "average" teams in baseball, football, and basketball. This paper addresses the problems posed in evaluating a professional sports team as a potential vehicle for investment. These problems arise because of the special tax sheltering advantages of team ownership.https://authors.library.caltech.edu/records/gv8zc-aje36Stadium Capacities and Attendance in Professional Sports
https://resolver.caltech.edu/CaltechAUTHORS:20171101-150210778
Authors: Quirk, James P.
Year: 2017
Over the past fifteen years, professional team sports has become an increasingly important part of our social and economic life. While in 1959there were just forty-two major league teams in five monopolistic leagues (AL, NL; NBA; NHL; NFL), by 1974 this had grown to 117 teams in eight major leagues (AL, NL; NBA, ABA; NHL, WHA; NFL, WFL). Accompanying this growth in professional team sports has been a wave of stadium construction, with new stadiums appearing in essentially every medium to large size city in the U.S. In contrast to stadiums in use in professional sports fifteen years ago, these new stadiums have two distinguishing features--with rare exceptions, they are publicly owned and they are multiple-use facilities, designed to accommodate several sports.https://authors.library.caltech.edu/records/p1c15-q3h88Factor Bias and Innovations: A Microeconomic Approach
https://resolver.caltech.edu/CaltechAUTHORS:20171101-154515894
Authors: Montgomery, W. David; Quirk, James P.
Year: 2017
This paper contains a microeconomic analysis of the influence of change in relative prices on the direction of inventive activity. A control-theory model of a firm which produces final output and also performs research and development is developed. It is assumed that the output of R & D is factor-augmenting technical change. An innovation possibility frontier for the firm is defined and conditions are found under which it is convex. The major theorems relate the change in innovation in response to changing factor prices to the elasticity of substitution in producing final output and to the nature of the production functions for innovation. Two special cases are examined in detail. When current innovation possibilities are appropriately independent of past innovations, the rate of factor augmentation is the same for all factors where relative prices are constant at any level. Comparing time paths with different, constant relative prices gives conditions under which an increase in the price of a factor directs innovation into lines which economize on that factor. A summary of earlier results on similar subjects is included.https://authors.library.caltech.edu/records/d7tag-czd80A Class of Generalized Metzlerian Matrices
https://resolver.caltech.edu/CaltechAUTHORS:20171101-165329893
Authors: Quirk, James P.
Year: 2017
This paper returns to a problem concerning the relationship between dynamic stability and Hicksian stability raised in a paper by Lloyd Metzler over twenty-five years ago [10]. The present paper identifies-a class of matrices which has the property that dynamic stability implies Hicksian stability, as in the gross substitute or "Metzlerian" case. Further, as in the Metzlerian case, such matrices are specified in terms of their qualitative properties, i.e., their sign pattern configurations. Some links between this class of matrices and Samuelson's correspondence principle are also indicated.https://authors.library.caltech.edu/records/v1110-hs477The Ownership and Valuation of Professional Sports Franchises
https://resolver.caltech.edu/CaltechAUTHORS:20171212-150232457
Authors: Davis, Lance E.; Quirk, James P.
Year: 2017
Until the recent spate of legal and IRS trouble, professional team sports has been one of the most robust growth industries in the U. S. In 1959, there were 42 franchises in the five major sports leagues; by 1974, there were 117 franchises in eight major sports leagues. Evidence of the boom can be found in the growth in attendance and in an increase in ticket prices; in the rise in television coverage and in the dollars spent for TV rights; and in the increase in player salaries. That boom is also reflected in the prices of sports franchisesâ€”the subject of this paper.https://authors.library.caltech.edu/records/cxm41-9h940