21st Century ECONOMICS AReference Handbook 21 Century st ECONOMICS A Reference Handbook Edited by Rhona C. Free Eastern Connecticut State University Copyright©2010bySAGEPublications,Inc. All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical,includingphotocopying,recording,orbyanyinformationstorageandretrievalsystem,withoutpermissionin writingfromthepublisher. Forinformation: SAGEPublications,Inc. 2455TellerRoad ThousandOaks,California91320 E-mail:[email protected] SAGEPublicationsLtd. 1Oliver’sYard 55CityRoad LondonEC1Y1SP UnitedKingdom SAGEPublicationsIndiaPvt.Ltd. B1/I1MohanCooperativeIndustrialArea MathuraRoad,NewDelhi110044 India SAGEPublicationsAsia-PacificPte.Ltd. 33PekinStreet#02-01 FarEastSquare Singapore048763 PrintedintheUnitedStatesofAmerica LibraryofCongressCataloging-in-PublicationData 21stcenturyeconomics:areferencehandbook/editor,RhonaC.Free. v.;cm. Includesbibliographicalreferencesandindex. ISBN978-1-4129-6142-4(cloth) 1. Economics—Handbooks,manuals,etc. I. Free,RhonaC. II. Title:Twenty-firstcenturyeconomics. HB171.A192010 330—dc22 2010001776 Thisbookisprintedonacid-freepaper. 10 11 12 13 14 10 9 8 7 6 5 4 3 2 1 Publisher: RolfA.Janke AcquisitionsEditor: JimBrace-Thompson DevelopmentalEditor: SanfordRobinson ReferenceSystemsManager: LeticiaGutierrez ReferenceSystemsCoordinator: LauraNotton ProductionEditor: KateSchroeder CopyEditors: GillianDickens,MatthewSullivan,KarenWolf Typesetter: C&MDigitals(P)Ltd. Proofreaders: KristinBergstad,SallyJaskold Indexer: JoanShapiro CoverDesigner: CandiceHarman MarketingManager: AmberlynMcKay C ONTENTS Preface xi AbouttheEditor xv AbouttheContributors xvii PARTI.SCOPEANDMETHODOLOGYOFECONOMICS 1. HistoryofEconomicThought 3 PaolaTubaro,UniversityofGreenwich;CentreMauriceHalbwachs 2. EconomicHistory 13 SueHeadlee,AmericanUniversity 3. EconomicMethodology 23 TimothyA.Wunder,UniversityofTexasatArlington 4. Twentieth-CenturyEconomicMethodology 33 PeterJ.Boettke,GeorgeMasonUniversity 5. Econometrics 45 PeterKennedy,SimonFraserUniversity 6. MarxianandInstitutionalIndustrialRelationsintheUnitedStates 55 MichaelHillard,UniversityofSouthernMaine PARTII.MICROECONOMICS 7. Supply,Demand,andEquilibrium 69 KevinC.Klein,IllinoisCollege 8. ConsumerBehavior 79 FrederickG.Tiffany,WittenbergUniversity 9. DemandElasticities 89 AnnHarperFender,GettysburgCollege 10. CostsofProduction:ShortRunandLongRun 101 LaurenceMiners,FairfieldUniversity 11. ProfitMaximization 111 MichaelE.Bradley,UniversityofMaryland,BaltimoreCounty 12. ImperfectlyCompetitiveProductMarkets 125 ElizabethJ.Jensen,HamiltonCollege 13. PredatoryPricingandStrategicEntryBarriers 135 BradleyP.Kamp,UniversityofSouthFlorida 14. LaborMarkets 141 KathrynNantz,FairfieldUniversity 15. WageDetermination 153 KennethA.Couch,UniversityofConnecticut NicholasA.Jolly,CentralMichiganUniversity 16. RoleofLaborUnionsinLaborMarkets 163 PaulF.ClarkandJulieSadler,PennStateUniversity 17. GameTheory 173 IndrajitRay,UniversityofBirmingham 18. EconomicsofStrategy 185 QuanWen,VanderbiltUniversity 19. TransactionCostEconomics 193 ChristopherRossBell,UniversityofNorthCarolinaatAsheville 20. AssetPricingModels 203 PeterNyberg,HelsinkiSchoolofEconomics 21. PortfolioTheoryandInvestmentManagement 215 ThomasW.Harvey,AshlandUniversity PARTIII.PUBLICECONOMICS 22. ExternalitiesandPropertyRights 227 MahadevGanapatiBhat,FloridaInternationalUniversity 23. PublicChoice 237 PeterT.Calcagno,CollegeofCharleston 24. TaxesVersusStandards:PoliciesfortheReductionofGasolineConsumption 247 SarahE.West,MacalesterCollege 25. PublicFinance 255 NeilCanaday,WesleyanUniversity 26. RegulatoryEconomics 265 ChristopherS.Decker,UniversityofNebraskaatOmaha 27. Cost-BenefitAnalysis 275 MikaelSvensson,ÖrebroUniversity,Sweden PARTIV.MACROECONOMICS 28. EconomicMeasurementandForecasting 287 MehdiMostaghimi,SouthernConnecticutStateUniversity 29. MeasuringandEvaluatingMacroeconomicPerformance 297 DavidHudgins,UniversityofOklahoma 30. MacroeconomicModels 307 ChristopherJ.Niggle,UniversityofRedlands 31. AggregateExpendituresModelandEquilibriumOutput 319 MichaelR.Montgomery,UniversityofMaine 32. AggregateDemandandAggregateSupply 333 KenMcCormick,UniversityofNorthernIowa 33. IS-LMModel 341 FadhelKaboub,DenisonUniversity 34. EconomicInstabilityandMacroeconomicPolicy 349 JohnVahaly,UniversityofLouisville 35. FiscalPolicy 357 RosemaryThomasCunningham,AgnesScottCollege 36. GovernmentBudgets,Debt,andDeficits 369 BenjaminRusso,UniversityofNorthCarolinaatCharlotte 37. MonetaryPolicyandInflationTargeting 381 PavelS.Kapinos,CarletonCollege DavidWiczer,UniversityofMinnesota 38. DebatesinMacroeconomicPolicy 391 JohnVahaly,UniversityofLouisville 39. NewClassicalEconomics 399 BrianSnowdon,DurhamUniversity PARTV.INTERNATIONALECONOMICS 40. InternationalTrade,ComparativeandAbsoluteAdvantage,andTradeRestrictions 411 LindsayOldenski,GeorgetownUniversity 41. BalanceofTradeandPayments 419 LawrenceD.Gwinn,WittenbergUniversity 42. ExchangeRates 431 CarlosVargas-Silva,SamHoustonStateUniversity 43. ComparativeEconomicSystems 441 SatyanandaJ.Gabriel,MountHolyokeCollege 44. WorldDevelopmentinHistoricalPerspective 451 DouglasO.Walker,RegentUniversity 45. InternationalFinance 467 StevenL.Husted,UniversityofPittsburgh 46. TheEuropeanEconomicandMonetaryUnion 477 LeilaSimonaTalani,King’sCollegeLondon 47. EastAsianEconomies 485 KirilTochkov,TexasChristianUniversity 48. GlobalizationandInequality 493 RachelMcCulloch,BrandeisUniversity 49. TheEconomicsofFairTrade 503 JohnD.Messier,UniversityofMaineatFarmington PARTVI.ECONOMICANALYSESOFISSUESANDMARKETS 50. EconomicsofEducation 515 PingChingWinnieChan,StatisticsCanada 51. EconomicsandJustice 525 GeorgeF.DeMartino,UniversityofDenver 52. SportsEconomics 533 AjuFenn,ColoradoCollege 53. EarningsofProfessionalAthletes 543 LeeH.IgelandRobertA.Boland,NewYorkUniversity 54. EconomicsofGender 553 LenaNekby,StockholmUniversity PeterSkogmanThoursie,InstituteforLabourMarket PolicyEvaluation(IFAU),Uppsala 55. EconomicsandRace 563 SeanE.Mulholland,StonehillCollege 56. EconomicAnalysisoftheFamily 577 StevenHorwitz,St.LawrenceUniversity 57. EconomicsofAging 585 AgnetaKruse,LundUniversity 58. AgriculturalEconomics 597 PatriciaA.Duffy,AuburnUniversity 59. RealEstateEconomics 607 ErickEschker,HumboldtStateUniversity 60. EconomicsofWildlifeProtection 617 RebeccaP.Judge,St.OlafCollege 61. EnvironmentalEconomics 631 JenniferL.Brown,EasternConnecticutStateUniversity 62. EconomicsofEnergyMarkets 637 StephenH.Karlson,NorthernIllinoisUniversity 63. PoliticalEconomyofOil 645 YahyaM.Madra,GettysburgCollege 64. TransportationEconomics 655 AnthonyM.Rufolo,PortlandStateUniversity 65. UrbanEconomics 665 JamesD.Burnell,CollegeofWooster 66. EconomicsofGambling 677 DouglasM.Walker,CollegeofCharleston 67. EconomicsofHIVandAIDS 687 RoyLove,HealthEconomicsConsultant 68. EconomicsofMigration 697 AnitaAlvesPenaandStevenJ.Shulman,ColoradoStateUniversity 69. HealthEconomics 707 ShirleyJohnson-Lans,VassarCollege 70. EconomicsofHealthInsurance 717 AmyM.Wolaver,BucknellUniversity 71. EconomicsofInformation 729 ViktarFedaseyeu,BostonCollege 72. ForensicEconomics 739 LawrenceM.Spizman,StateUniversityofNewYorkatOswego 73. EconomicsofCrime 747 IsaacEhrlich,StateUniversityofNewYorkatBuffalo 74. EconomicsofPropertyLaw 757 RichardD.Coe,NewCollegeofFlorida 75. QueerEconomics:SexualOrientationandEconomicOutcomes 767 RichardR.Cornwall,MiddleburyCollege 76. EconomicsandReligion 777 CarmelU.Chiswick,UniversityofIllinoisatChicago 77. EconomicsandCorporateSocialResponsibility 785 MarkusKitzmueller,UniversityofMichigan 78. PoliticalEconomyofViolence 797 ShawnHumphrey,UniversityofMaryWashington 79. TheEconomicsofCivilWar 807 MartaReynal-Querol,PompeuFabraUniversity 80. EconomicAspectsofCulturalHeritage 819 LeahGredenMathews,UniversityofNorthCarolinaatAsheville 81. MediaEconomics 827 GillianDoyle,CentreforCulturalPolicyResearch,UniversityofGlasgow 82. Microfinance 837 ShannonMudd,UrsinusCollege 83. LatinAmerica’sTradePerformanceintheNewMillennium 847 MaritzaSotomayor,UtahValleyUniversity PARTVII.EMERGINGAREASINECONOMICS 84. BehavioralEconomics 861 NathanBerg,UniversityofTexas–Dallas 85. ExperimentalEconomics 873 SedaErtaç,KoçUniversity SandraMaximiano,PurdueUniversity 86. ComplexityandEconomics 883 TroyL.Tassier,FordhamUniversity 87. EthicsandEconomics 891 VictorV.Claar,HendersonStateUniversity 88. FeministEconomics 901 GillianHewitson,UniversityofSydney 89. Neuroeconomics 913 DanteMoniquePirouz,UniversityofWesternOntario 90. EvolutionaryEconomics 921 CliffordS.PoirotJr.,ShawneeStateUniversity 91. MatchingMarkets 931 ThomasGall,UniversityofBonn 92. BeyondMake-or-Buy:AdvancesinTransactionCostEconomics 941 LydaS.Bigelow,UniversityofUtah Index 951