A Comprehensive Evaluation of the Comparative Cost of Negotiated and Competitive Methods of Municipal Bond Issuance

Municipal Finance Journal, Winter 2008

Municipal finance relies heavily on the issuance of debt. The debt is issued by a diverse range of public entities. The issuer of the debt has a choice in how the debt is issued. The issuer may choose a negotiated method or a competitive method. Some analysts believe they have observed systematic differences in the cost to the issuer by type of issuance. These findings have, in turn, led researchers to evaluate whether--or under what conditions--one method of issuance is superior to another. The empirical findings presented in this study suggest that there is no general advantage of competitive over negotiated issuance processes. Rather, there appears to be a strong tendency for issuers  to select the method of issuance that best suits the nature of the issue at hand, such that efforts to mandate one type of issuance over the other will likely increase, rather than decrease, issuance costs.

Market Power and Cartel Formation: Theory and an Empirical Test

Journal of Law & Economics, October 2001

Antitrust enforcement makes it difficult to test theories of cartel formation because most attempts to form cartels are blocked or kept secret. However, federal laws allow U.S. produce growers to operate marketing cartels through devices called “marketing orders.” These cartels use quantity controls and quality standards to raise prices of fresh produce. Some growers have adopted marketing orders, and others have not. This paper develops and tests a positive theory of the adoption of marketing orders. The theory suggests that growers in a region are more likely to adopt a marketing order if the demand for fresh produce is inelastic, the growers’ market share in the fresh market is large, there are barriers to entry and expansion, the fraction of the output the growers ship to the fresh market is not too large or too small, growers are homogeneous, and large cooperatives exist. Probit analyses support these hypotheses.

Oregon Greenhouse Gas Reduction Policies: The Economic and Fiscal Impact Challenges

Co-authored with Randall Pozdena, Cascade Policy Institute, 2008

Policy initiatives to regulate greenhouse gas emissions are fast becoming a dominant feature of regional public policy.  The initiatives commonly involve setting goals to reduce emissions below a baseline or business-as-usual level.  The Western Climate Initiative is one such program, and has been subscribed to by Oregon and 10 other western states and provinces.  Specifically, the WCI identifies emissions reduction targets and identifies cap-and-trade mechanisms as a way to achieve emissions reduction targets. 

This paper first describes the nature of the WCI emissions goals and the cap-and-trade policy approach that is part of the Initiative.  The paper then goes on to conduct an empirical investigation of the relationships among economic output, energy use and carbon dioxide emissions, and the links to the State's economic and fiscal condition. 

Pay me what I’m worth, or else

Oregon Business

Economics tells us that sometimes it’s optimal to hold your customers hostage or to be held hostage by your employees. Unique skills benefit a business because the company’s competitors can’t duplicate the products or services it provides the market. Just as an employee with unique skills has leverage over his employer, a firm with unique products or services has leverage over the market. This leverage produces more sales or lower costs. Either way, it improves the bottom line.

Fiscal Impacts of Proposed Educational Tax Credits

Currently, Oregon parents of public school children who need extra tutoring or other assistance are not reimbursed for that expense. In addition, many low-income parents or parents with children with disabilities cannot find public education alternatives that meet their demands and cannot afford educational options available from private schools. This paper considers two tax credits to help support efforts to make educational opportunities more affordable to Oregon families.

Do we really have a health care crisis?

Oregon Business, 2008

In 1960, the Health Insurance Association declared: “One of the foremost family economic problems of the day is the cost of health care. This fact is recognized both those who pay for and those who provide health care services.”

It is easy to fall into the trap of thinking that all of today’s crises are new. In fact, the U.S. has had a health-care “crisis” since before Barack Obama was born. One part of the crisis has been the rising cost of health care and health insurance. For years, the cost of health care has outpaced inflation. In turn, the costs of health insurance have risen rapidly, taking a toll on businesses and their employees.

Reasons for the high and rising costs are employer funded third-party health insurance, state mandates on coverage, and the proliferation of expensive technology.

Many uninsured children qualify for free or subsidized health insurance but are not enrolled in the programs by the their parents.

Slow the growth the cut the carbon

Oregon Business, 2008

Few things are known for sure in the study of global warming/climate change, but one thing that is fairly well settled is the relationship between increases in carbon emissions and economic growth: Greater growth is associated with higher emissions. The relationship is virtually axiomatic: Economic growth is associated with energy use, and energy use causes carbon emissions.

The relationship between economic growth and carbon emissions makes policy analysis straightforward. If Oregon slows economic growth, carbon emissions will be reduced. Conversely, reducing carbon emissions will slow or reverse economic growth. The article describes five ways in which reducing economic output will reduce carbon emissions.

Expert Report to the International Criminal Tribunal for the former Yugoslavia, Milutinovic et al., Case No. IT-05-87 PT

Expert report submitted to the International Criminal Tribunal for the former Yugoslavia regarding the statistical reliability of estimated relationships between the deaths and migration of Kosovo Albanians and the activities of NATO and the Kosovo Liberation Army (KLA).  Evaluated statistical reliability of conclusions that Serb and Yugoslav forces were involved in a systematic campaign of murder and deportation of Kosovo Albanians.

Pay me what I'm worth or else

Oregon Business, July 2007

Economics tells us that sometimes it’s optimal to hold your customers hostage or to be held hostage by your employees. Unique skills benefit a business because the company’s competitors can’t duplicate the products or services it provides the market. Just as an employee with unique skills has leverage over his employer, a firm with unique products or services has leverage over the market. This leverage produces more sales or lower costs. Either way, it improves the bottom line.

The Impact of Minimum Wage Indexing: Employment and Wage Evidence from Oregon and Washington

Employment Policies Institute, 2009

Minimum wage increases are a hot-button issue in many states. On the one hand, the minimum wage is often cited as a textbook example of how price floors create surpluses in which too many workers chase too few jobs, especially among those applicants with the fewest skills. On the other hand, proponents of raising the minimum wage suggest that increases are virtually painless. Because minimum wage increases can be politically challenging to implement, many states have introduced minimum wage indexing. With indexing, the minimum wage increases automatically each year based on some measure of inflation.

The Ranking of Oregon State and Local Spending

Cascade Policy Institute, 2008

This study updates past research to benchmark Oregon’s spending. At $8,060 per person, Oregon is in approximately the top third of all states in per capita state and local government expenditures. Per capita measures, however, do not account for demographic differences across states. This study use linear regression analysis to evaluate the extent to which Oregon over- or underspends relative to states with similar demographics.

Total expenditures Oregon ranks seventh in total overspending relative to its demographics. State and local governments spend approximately 10.6 percent more than would be expected for a state with Oregon’s demographics. Much of the overspending is likely due to public employee retirement obligations and interest on outstanding debt.

The youngest boomers trail behind

Oregon Business, 2008

Not every baby boomer is retired. While the first boomers were basking in the Summer of Love, the last of the boomers were getting ready to enter kindergarten. When the military draft ended, the youngest boomer was 10 years old. nearly a third of Oregon’s Baby Boomers are under 50 (about 284,000 people). they are earning more than they ever earned before. Many are also earning more than they ever will. On the other hand, they have yet to send their children to college.

Natural Gas Pipelines and Residential Property Values: Evidence from Clackamas and Washington Counties

Draft Environmental Impact Statement, 2008

Little research effort has been directed toward evaluating the extent to which distance from a pipeline affects residential property values. Indeed, no published research has been directed toward the effect of natural gas pipelines. Instead, past research has focused on petroleum and petroleum products pipelines and the effects of accidents, such as ruptures and explosions, on residential properties. It is important to distinguish natural gas pipelines from petroleum pipelines. For example, spills from petroleum pipeline can cause wide ranging and long-term environmental contamination. The environmental consequences associated with natural gas leaks tend to be less severe and relatively short term.

To evaluate the potential impacts of Oregon Pipeline’s proposed pipeline on the property values of adjacent and nearby properties, this study uses the hedonic housing price approach to estimate the impacts of a similar intrastate pipeline that went into service in September 2004.

This study performs three different statistical tests to evaluate how proximity to the pipeline affects res- idential sales prices. Each of the statistical tests indicates no relationship between proximity to the pipeline and properties’ sales prices. In other words, the pipeline has no impact on property values. Previously published research has found that pipelines have no relationship—or a slightly positive relationship—with property prices (Hansen, Benson and Hagen 2006, Simons 1999, Northwest Natural Gas Co. v. Shirazi 2007).

The pixie dust of streetcars

Oregon Business

Streetcars are the newest fad in city planning. Politicians see streetcars as a form of "pixie dust" than can cause development and redevelopment projects to materialize.  In fact, streetcars cannibalize existing transit options and do not improve user benefits of transportation.

Behind Oregon's jobless rate

Oregon Business, 2009

Oregon's unemployment rate is among the highest in the country. If employment does not improve, one out of every 10 Oregonians will be looking for work by the middle of the year. In the state’s rural counties, it may get closer to one in six. To be sure, Oregon has been affected by the worldwide recession. A bad economy is sure to bump up unemployment. Business closures, layoffs and downsizing are all going to send a share of the workforce to the unemployment line.

Oregon is different, though. It’s different because it has what seems to be a permanently high unemployment rate. In more than half of the past 30 years — through good times and bad — Oregon has ranked in the top 10 states for unemployment. Even through much of the dot-com boom, Oregon’s unemployment was among the highest in the country.

Managerial ownership, compensation, and initial public offerings

Advances in Financial Economics, 1996

This paper models and tests the determinants of managerial ownership. Theoretically it extends the principal-agent literature following Jensen and Meckling (1976) and the managerial compensation literature following Holmstrom (1979). Empirically, the paper expands on the ownership structure literature following Demsetz and Lehn (1985). A firm's initial public offering (IPO) provides a unique opportunity to examine a change in a finn's managerial ownership. Expanding the theoretical model developed by Gibbons and Murphy (1992), this paper posits that managerial ownership is a decreasing function of the riskiness of the firm's operating environment and an increasing function of the IPO proceeds under management's control. Using a dataset of IPO firms, this paper empirically test" the determinants of managerial ownership. No previous research has examined discretion over IPO proceeds as a determinant of managerial ownership. The data supports the model's hypotheses that lPO proceeds under managerial control has a significant positive effect and uncertainty in firm cash flows has a significant negative effect on post-IPO managerial ownership. Managers' unexercisable options have a significant negative effect on managerial ownership, supporting
the hypothesis that these options act like ownership in their effect on managerial behavior and, therefore, act as a substitute for ownership. Salaries, bonuses, exercisable options, and antitakeover provisions have
an insignificant effect on post-IPO managerial ownership.