Notes on market failure and the Paretian (Kaldor-Hicks) relevance and irrelevance of unfavourable externalities

The following are notes that have been distributed by me over the last few years to students in Environmental Economics at The University of Queensland. They give particular attention to whether externalities are Pareto or Kaldor-Hicks relevant from a policy point of view. Externalities are Kaldor-Hicks or Pareto irrelevant if no change is possible for which gainers could compensate losers. Both absolute and marginal externalities may be Kaldor-Hicks relevant. Infra-marginal negative externalities are often, but not always, Kaldor-Hicks irrelevant. There are at least two cases where such externalities can be relevant. First, the absolute impact of the negative externality may be so great that the source of the externality should be eliminated. Secondly, if the externality arises from production, its nature may depend on the type of production technique adopted. Although for the technique adopted, an infra-marginal negative externality occurs. That is Paretian irrelevant given that choice of this technique is the only available possibility, alternative techniques may actually be available in practice. Some of these may generate even smaller total external effects and be socially preferable. Both cases are outlined and illustrated in these notes. The analysis reveals the dangers of relying on marginalism for deciding on environmental policy. Total (external) effects are often of great social and economic importance and appropriate social choices cannot be made on the basis of marginalism alone.

Testing for Market Power in Multiple-Input, Multiple-Output Industries: The Australian Grains and Oilseeds Industries

Recent empirical studies have found significant evidence of departures from competition in the input side of the Australian bread, breakfast cereal and margarine end-product markets. For example, Griffith (2000) found that firms in some parts of the processing and marketing sector exerted market power when purchasing grains and oilseeds from farmers. As noted at the time, this result accorded well with the views of previous regulatory authorities (p.358). In the mid-1990s, the Prices Surveillence Authority (PSA 1994) determined that the markets for products contained in the Breakfast Cereals and Cooking Oils and Fats indexes were "not effectively competitive" (p.14). The PSA consequently maintained price surveillence on the major firms in this product group. The Griffith result is also consistent with the large number of legal judgements against firms in this sector over the past decade for price fixing or other types of non-competitive behaviour. For example, bread manufacturer George Weston was fined twice during 2000 for non-competitive conduct and the ACCC has also recently pursued and won cases against retailer Safeway in grains and oilseeds product lines.

CDKN2A is not the principal target of deletions on the short arm of chromosome 9 in neuroendocrine (Merkel cell) carcinoma of the skin

The majority of small-cell lung cancers (SCLCs) express p16 but not pRb, Given our previous study showing loss of pRb in Merkel cell carcinoma (MCC)/neuroendocrine carcinoma of the skin and the clinicopathological similarities between SCLC acid MCC, we wished to determine if this was also the case in MCC, Twenty-nine MCC specimens from 23 patients were examined for deletions at 10 loci on 9p and I on 9p. No loss of heterozygosity (LO H) was peen in 9 patients including 2 for which tumour and cell line DNAs were examined. Four patients had LOH for all informative loci on 9p, Ten tumours showed more limited regions of loss on 9p, and from these 2 common regions of deletion were determined, Half of all informative cases had LOH at D95168, the most telomeric marker examined, and 3 specimens showed loss of only D9S168, A second region (InFNA-D9S126) showed L0H in 10(44%) cases, and case MCC26 showed LOH for only D9S126, implicating genes centromeric of the CDKN2A locus. No mutations in the coding regions of p16 were seen in 7 cell lines tested, and reactivity to anti-p16 antibody was seen in all Il tumour specimens examined and in 6 of 7 cell lines from 6 patients. Furthermore, all cell lines examined reacted with anti-p 14' antibody, These results suggest that neither transcript of the CDKN2A locus is the target of deletions on 9p in MCC and imply the existence of tumour-suppressor genes mapping both centromeric and telomeric of this locus. (C) 2001 Wiley-Liss, Inc.

Pulmonary vascular remodeling: a target for therapeutic intervention in pulmonary hypertension

Pulmonary vascular remodeling is an important pathological feature of pulmonary hypertension, leading to increased pulmonary vascular resistance and reduced compliance. It involves thickening of all three layers of the blood vessel wall (due to hypertrophy and/or hyperplasia of the predominant cell type within each layer), as well as extracellular matrix deposition. Neomuscularisation of non-muscular arteries and formation of plexiform and neointimal lesions also occur. Stimuli responsible for remodeling involve transmural pressure, stretch, shear stress, hypoxia, various mediators [angiotensin II, endothelin (ET)-1, 5-hydroxytryptamine, growth factors, and inflammatory cytokines], increased serine elastase activity, and tenascin-C. In addition, there are reductions in the endothelium-derived antimitogenic substances, nitric oxide, and prostacyclin. Intracellular signalling mechanisms involved in pulmonary vascular remodeling include elevations in intracellular Ca2+ and activation of the phosphatidylinositol pathway, protein kinase C, and mitogen-activated protein kinase. In animal models of pulmonary hypertension, various drugs have been shown to attenuate pulmonary vascular remodeling. These include angiotensin-converting enzyme inhibitors, angiotensin receptor antagonists, ET receptor antagonists, ET-converting enzyme inhibitors, nitric oxide, phosphodiesterase 5 inhibitors, prostacyclin, Ca2+-channel antagonists, heparin, and serine elastase inhibitors. Inhibition of remodeling is generally accompanied by reductions in pulmonary artery pressure. The efficacy of some of the drugs varies, depending on the animal model of the disease. In view of the complexity of the remodeling process and the diverse aetiology of pulmonary hypertension in humans, it is to be anticipated that successful anti-remodeling therapy in the clinic will require a range of different drug options. (C) 2001 Elsevier Science Inc. All rights reserved.

International market selection: Developing a model from Australian case studies

This paper develops a theory that firms seek out new country markets on the basis of expected commercial returns. These expectations depend on judgements about the attractiveness of the market and the firm's competitive position in it, which in turn are influenced by informants. It is the number and strengths of these informants that will underlie the probability of a country being identified and assessed as a new market by any firm.

Dipeptidyl peptidase IV is a target for covalent adduct formation with the acyl glucuronide metabolite of the anti-inflammatory drug zomepirac

The nonsteroidal anti-inflammatory drug zomepirac (ZP) is metabolised to a chemically reactive acyl glucuronide conjugate (ZAG) which can form covalent adducts with proteins. In vivo, such adducts could initiate immune or toxic responses. In rats given ZP, the major band detected in liver homogenates by immunoblotting with a polyclonal ZP antiserum was at 110 kDa. This adduct was identified as ZP-modified dipeptidyl peptidase IV (DPP IV) by immunoblotting using the polyclonal ZP antiserum and monoclonal DPP IV antibodies OX-61 and 236.3. In vitro, ZAG, but not ZP itself, covalently modified recombinant human and rat DPP IV. Both monoclonal antibodies recognized DPP IV in livers from ZP- and vehicle-dosed rats. Confirmation that the 110 kDa bands which were immunoreactive with the ZP and DPP IV antibodies represented the same molecule was obtained from a rat liver extract reciprocally immunodepleted of antigens reactive with these two antibodies. Furthermore, immunoprecipitations with OX-61 antibody followed by immunolotting with ZP antiserum, and the reciprocal experiment, showed that both these antibodies recognised the same 110 kDa molecule in extracts of ZP-dosed rat liver. The results verify that DPP IV is one of the protein targets for covalent modification during hepatic transport and biliary excretion of ZAG in rats. (C) 2001 Elsevier Science Inc. All rights reserved.

Inhibitors of human immunodeficiency virus type 1 reverse transcriptase target distinct phases of early reverse transcription

Early HIV-1 reverse transcription can be separated into initiation and elongation phases. Here we show, using PCR analysis of negative-strand strong-stop DNA [(-)ssDNA] synthesis in intact virus, that different reverse transcriptase (RT) inhibitors affect distinct phases of early natural endogenous reverse transcription (NERT), The effects of nevirapine on NERT were consistent with a mechanism of action including both specific and nonspecific binding events. The nonspecific component of this inhibition targeted the elongation reaction, whereas the specific effect seemed principally to be directed at very early events (initiation or the initiation-elongation switch), In contrast, foscarnet and the nucleoside analog ddATP inhibited both early and late (-)ssDNA synthesis in a similar manner. We also examined compounds that targeted other viral proteins and found that Ro24-7429 (a Tat antagonist) and rosmarinic acid (an integrase inhibitor) also directly inhibited RT, Our results indicate that NERT can be used to identify and evaluate compounds that directly target the reverse transcription complex.