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Abstract:
The process of assigning property rights to land in the American Great Plains resulted in farms that were too small to be economically viable. These farms were prime contributors to the Dust Bowl of the 1930s. The path dependence resulting from the initial assignment of property rights on the Great Plains was slow to be corrected. The transactions costs of property rights reallocation from homesteads to larger farms were high, in part due to government intervention. Local politicians sought to retain the dense, Midwest-like population base that homestead settlement had fostered, and they successfully lobbied the Federal Government for subsidies to maintain small family farms. The result was a halting process of farm size adjustment between 1920 and 1982. This case illustrates the difficult economic problems that can be raised by an inappropriate assignment of property rights. It cannot be assumed that a more efficient allocation of rights with fewer negative effects will occur quickly.

Property rights, Coase, Dust Bowl

Abstract:
Most research on alliances ignores the structures of the underlying relationships as codified by contract. By overlooking these structures the complexity of the fundamental relationship is ignored. This is problematic since it is how these relationships are codified and how control rights are allocated that dictate how firms will benefit (or not) from an alliance. We present a novel method to analyze the determinants of alliance complexity in a multi-dimensional framework. We then look at the effect these same determinants have on the allocation of control rights between firms. From a transaction cost perspective we can begin to look at the cost/benefit of entering more (or less) complex agreements in terms of the allocation of rights (i.e., value appropriation). This approach provides a new framework in which to begin to think about the net effect alliance portfolios have on a firm.

Contractual complexity, Control rights, Strategic alliances, Biopharmaceutical industry, Contractual design

Abstract:
We provide a new and more complete analysis of the origins of the Dust Bowl of the 1930s, one of the most severe environmental crises in North America in the 20th Century. Severe drought and wind erosion hit the Great Plains in 1930 and lasted through 1940. There were similar droughts in the 1950s and 1970s, but no comparable level of wind erosion. We explain why. The prevalence of small farms in the 1930s limited private solutions for controlling the downwind externalities associated with wind erosion. Drifting sand from unprotected fields damaged neighboring farms. Small farmers cultivated more of their land and were less likely to invest in erosion control than were larger farmers. Soil Conservation Districts, established by government after 1937, helped coordinate erosion control. This "unitized" solution for collective action is similar to that used in other natural resource/environmental settings.

externalities, common-pool, wind erosion, unitization

Abstract:
This paper explores the origins and impact of "truth-in-advertising" regulation during the Progressive era. Was advertising regulation adopted in response to rent-seeking on the part of firms who sought to limit the availability of advertising as a competitive device? Or was advertising regulation desired because it furnished a mechanism through which firms could improve the credibility of advertising? We find the available qualitative and quantitative evidence to be more consistent with the latter hypothesis.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
An important yet under-explored question in the teamwork literature concerns how group characteristics affect productivity. Within a given teamwork setting, it is not obvious how group member diversity affects the performance of the individual and the group. The group may gain from knowledge transfer and sharing while it may be crippled by communication and coordination problems that are prevalent in heterogeneous groups. In this study, we combine class performance data from an undergraduate management class with students' personal records to explore diversity and knowledge spillover effects. A major advantage of our dataset is the exogenous assignment of groups, which rules out the troublesome yet common self-selection issue in team literature. Our results indicate that male-dominant groups performed worse both in group work and in individually taken exams than female-dominant and equally-mixed gender groups after controlling for other group characteristics. Individual members from a group with more diversity in age and gender scored higher in exams. However, we did not find any significance of a group's racial composition over group and individual performances. Another novel aspect of this natural experiment is that each group chooses their own group contract form - members of "autonomous" groups receive equal grade for their group work while those in democratic groups can adopt differentiated point allocation, thus, providing a proper mechanism to punish free riders. Our estimation results show a significant correlation between the choice of a democratic contract and the group and individual performance. To address the endogeneity problem in groups' contract choices, we use a maximum likelihood treatment effect model and found that the democratic group contract has a positive and significant effect on group performance.

Abstract:
In the late 19th and early 20th centuries, the North American agricultural frontier moved for the first time into semi-arid regions where farming was vulnerable to drought. Farmers who migrated to the region had to adapt their crops, techniques, and farm sizes to better fit the environment. But there was very incomplete information for making these adjustments, and ultimately they were insufficient: too many small, dry land wheat farms were founded, only to be abandoned in the midst of drought. In this paper, we examine why homestead failure occurred in the Great Plains, by analyzing two episodes in western Kansas in 1893-94 and in eastern Montana in 1917-21. We focus on the weather information problem facing migrants to the region. We examine the learning process by which migrants mis-interpreted new rainfall information and failed to adequately perceive drought. Homesteaders had neither an analytical framework nor sufficient data for predicting fluctuations in rainfall. Knowledge of the climate was primitive and the underlying mechanisms triggering droughts were not understood. Long-term precipitation records did not exist. Homesteaders gambled on the continuation of previous wet periods due to a possible climate change because of cultivation, and on the optimistic opinions of dryfarming experts.' Dryfarming doctrine argued that moisture could be saved in the soil, allowing small wheat farms to endure any dry period. Accordingly, homesteaders discounted new information that indicated drought. The subsequent waves of homestead busts that swept the region during severe droughts were part of the adjustment toward agricultural techniques, crops, and farm sizes more appropriate for a semi-arid region.

Abstract:
We provide a new and more complete analysis of the origins of the Dust Bowl of the 1930s, one of the most severe environmental crises in North America in the 20th Century. Severe drought and wind erosion hit the Great Plains in 1930 and lasted through 1940. There were similar droughts in the 1950s and 1970s, but no comparable level of wind erosion. We explain why. The prevalence of small farms in the 1930s limited private solutions for controlling the downwind externalities associated with wind erosion. Drifting sand from unprotected fields damaged neighboring farms. Small farmers cultivated more of their land and were less likely to invest in erosion control than were larger farmers. Soil Conservation Districts, established by government after 1937, helped coordinate erosion control. This 'unitized' solution for collective action is similar to that used in other natural resource/environmental settings.

Abstract:
This paper investigates the relationship between the characteristics of medical licensing boards and the frequency with which boards discipline physicians. Specifically, we take advantage of variation in the structure of medical licensing boards between 1993 and 2003 to determine the effect of organizational and budgetary independence, public oversight, and resource constraints on rates of physician discipline. We find that larger licensing boards, boards with more staff, and boards that are organizationally independent from state government discipline doctors more frequently. Public oversight and political control over board budgets do not appear to influence the extent to which medical licensing boards discipline doctors. These findings are broadly consistent with theories of regulatory behavior that emphasize the importance of bureaucratic autonomy for effective regulatory enforcement.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.