Science in the Third Dimension of R&D

We study a Schumpeterian model of long-run growth with endogenous fertility and with three interacting dimensions of innovation. Scientific research is the fundamental dimension of innovation that creates new technological knowledge. This is allocated over new working prototypes in the horizontal dimension. New firms finance scientific research by obtaining the property rights of new working prototypes, and existing firms invest in developing the blueprint mode of working prototypes into the more productive modes of production in the vertical dimension. Balanced growth in the standards of living is fully endogenous without scale effects, and a new parameter, i.e., the elasticity of scientific knowledge with respect to existing collective scientific knowledge, nonlinearly accelerates long-run growth. With exogenous population growth, the model generates a semi-endogenous result due to the endogenously determined bound on technological opportunity.Science; Technology; Blueprints; R&D; Endogenous Fertility

A Democracy of Children’s Literature Critics? The Opportunities and Risks of Paying Attention to Open Reviews and Mass Discussion

Drawing on the outputs of a wider democracy of online reviewers presents the academic study of children’s literature with opportunities and challenges, and can enhance critical discussion. As it is now easy to locate a large number of online reviews, it is argued that children’s literature studies needs to make room for a wider range of critical voices. This article reports on the work of two cohorts of over a thousand students. Each cohort, in consecutive years, researched online reviews as part of their studies in contemporary children’s literature on a one year part-time module at a distance learning university. Despite the perceived lack of status of non-academic, non-professional critiques, students’ and tutors’ experiences of these tasks showed the value of researching online reviews. This work also allowed for alternative forms of writing and assessment alongside more conventional academic essays, and encouraged students to develop their skills of critical digital literacy. Module leaders recommended basic initial research methods for student use, but for more extensive or larger scale research it will be important to address methodological issues and understand how online reviewer communities operate. Such changes in approaches to teaching and learning also need to take into account the issues surrounding social media usage, ownership and control

Trust and the Choice Between Housing and Financial Assets: Evidence from Spanish Households

Trusting behavior has been shown to affect households' portfolio choice between risky and risk-free financial assets. We extend the analysis of the effect of trust on portfolio choice to include the dominant component of households' portfolios, real estate. In a simple model, we show how the effect of trust on expected investment returns affects portfolio composition, including the share of real estate. Using data from the European Social Survey, we estimate individual-level trust as an unobserved attitude using survey questions on personal attitudes by applying a hierarchical item response model. Combining these estimates with data on Spanish households' financial decisions from the Survey of Household Finances (EFF) conducted by the Bank of Spain, we show that households with less trust invest more in housing and less in financial assets, in particular risky ones. Trust thus may drive not only (limited) stock market participation, but financial development more generally.portfolio choice, trust, housing, item response models

Non-Exclusive Competition in the Market for Lemons

We consider an exchange economy in which a seller can trade an endowment of a divisible good whose quality she privately knows. Buyers compete in menus of non-exclusive contracts, so that the seller may choose to trade with several buyers. In this context, we show that an equilibrium always exists and that aggregate equilibrium allocations are generically unique. Although the good offered by the seller is divisible, aggregate equilibrium allocations exhibit no fractional trades. In equilibrium, goods of relatively low quality are traded at the same price, while goods of higher quality may end up not being traded at all if the adverse selection problem is severe. This provides a novel strategic foundation for Akerlof's (1970) results, which contrasts with standard competitive screening models postulating enforceability of exclusive contracts. Latent contracts that are issued but not traded in equilibrium turn out to be an essential feature of our construction.

Multiple Lending and Constrained Efficiency in the Credit Market

This paper studies the relationship between competition and incentives in an economy with financial contracts. We concentrate on non-exclusive credit relationships, those where an entrepreneur can simultaneously accept more than one contractual offer. Several homogeneous lenders compete on the contracts they offer to finance the entrepreneur's investment project. We model a common agency game with moral hazard, and we characterize its equilibria. As expected, notwithstanding the competition among the principals (lenders), non-competitive outcomes can be supported. In particular, positive profit equilibria are pervasive. We then provide a complete welfare analysis and show that all equilibrium allocations turn out to be constrained Pareto efficient.Common Agency, Financial Markets, Efficiency