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.

Effect of repeated cycles of chemical disinfection on the roughness and hardness of hard reline acrylic resins

Objective: The aim of this study was to assess the effect of repeated cycles of five chemical disinfectant solutions on the roughness and hardness of three hard chairside reliners. Methods: A total of 180 circular specimens (30 mm x 6 mm) were fabricated using three hard chairside reliners (Jet; n = 60, Kooliner; n = 60, Tokuyama Rebase II Fast; n = 60), which were immersed in deionised water (control), and five disinfectant solutions (1%, 2%, 5.25% sodium hypochlorite; 2% glutaraldehyde; 4% chlorhexidine gluconate). They were tested for Knoop hardness (KHN) and surface roughness (mu m), before and after 30 simulated disinfecting cycles. Data was analysed by the factorial scheme (6 x 2), two-way analysis of variance (anova), followed by Tukey`s test. Results: For Jet (from 18.74 to 13.86 KHN), Kooliner (from 14.09 to 8.72 KHN), Tokuyama (from 12.57 to 8.28 KHN) a significant decrease in hardness was observed irrespective of the solution used on all materials. For Jet (from 0.09 to 0.11 mu m) there was a statistically significant increase in roughness. Kooliner (from 0.36 to 0.26 mu m) presented a statistically significant decrease in roughness and Tokuyama (from 0.15 to 0.11 mu m) presented no statistically significant difference after 30 days. Conclusions: This study showed that all disinfectant solutions promoted a statistically significant decrease in hardness, whereas with roughness, the materials tested showed a statistically significant increase, except for Tokuyama. Although statistically significant values were registered, these results could not be considered clinically significant.

The Effect of Polymerization Cycles on Color Stability of Microwave-Processed Denture Base Resin

Purpose: This study evaluated the effect of different microwave polymerization cycles on the color changes of a microwave-processed denture base resin after accelerated aging and immersion in beverages. Materials and Methods: Specimens of light pink acrylic resin were divided into three groups according to polymerization cycle: (A) 500 W for 3 minutes, (B) 90 W for 13 minutes + 500 W for 90 seconds, and (C) 320 W for 3 minutes + 0 W for 4 minutes + 720 W for 3 minutes. Control groups were a heat-processed acrylic resin (T) and a chemically activated denture repair resin (Q). Eight specimens per group were aged in an artificial aging chamber and evaluated at 20, 192, and 384 hours. Another series of 40 specimens per group were immersed in water, coffee, tea, cola, or red wine and evaluated at 1, 12, and 36 days. Color was measured by a spectrophotometer before and after aging or immersion. Color changes (Delta E) were analyzed by ANOVA/Bonferroni t-test (alpha = 0.05). Results: Mean Delta E (+/- SD) after 384 hours of accelerated aging were (A) 2.51 +/- 0.50; (B) 3.16 +/- 1.09; (C) 2.89 +/- 1.06; (T) 2.64 +/- 0.34; and (Q) 9.03 +/- 0.40. Group Q had a significantly higher Delta E than the other groups. Color changes of immersed specimens were significantly influenced by solutions and time, but the five groups showed similar values. Mean Delta E at 36 days were (water) 1.4 +/- 0.8; (coffee) 1.3 +/- 0.6; (tea) 1.7 +/- 0.5; (cola) 1.4 +/- 0.7; and (red wine) 10.2 +/- 2.7. Results were similar among the five test groups. Conclusions: Color changes of the microwave-polymerized denture base resin tested were not affected by different polymerization cycles after accelerated aging or immersion in beverages. These changes were similar to the conventional heat-polymerized acrylic resin test, but lower than the repair resin after accelerated aging.

On the Oberwolfach problem with two similar length cycles

For all in greater than or equal to 3, the Oberwolfach problem is solved for the case where the 2-factors consist of two cycles of lengths in and m + 1, and for the case where the 2-factors consist of two cycles of lengths m and m + 2.

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.