Conventional wisdom

Abstract: The study reported here raises some questions about the conventional wisdom that the Internet creates a “level playing field” for large and small retailers and for retailers with and without an established reputation. In our study, consumers recognized differences in size and reputation among Internet stores, and those differences influenced their assessments of store trustworthiness and their perception of risk, as well as their willingness to patronize the store. After describing our research methods and results, we draw some implications for Internet merchants.

Abstract: Centralization of wage bargaining Lars Calmfors and John Driffill The structure of labour markets is increasingly perceived as a determinant of the macroeconomic performance of a country. This article focuses on one aspect of labour markets, the degree of centralization of wage setting. The main conclusion is that extremes work best. Either highly centralized systems with national bargaining (such as in Austria and the Nordic countries), or highly decentralized systems with wage setting at the level of individual firms (such as in Japan, Switzerland and the US) seem to perform well. The worst outcomes with respect to employment may well be found in systems with an intermediate degree of centralization (such as in Belgium and the Netherlands). This conclusion is reasonably well supported by the available empirical evidence. It is also logical. Indeed, large and all-encompassing trade unions naturally recognize their market power and take into account both the inflationary and unemployment effects of wage increases. Conversely, unions operating at the individual firm or plant level have very limited market power. In intermediate cases, unions can exert some market power but are led to ignore the macroeconomic implications of their actions. These conclusions challenge the conventional wisdom which asserts that the more ‘corporatist’ is an economy, the better is its economic performance.

Abstract: Geoffrey Garrett challenges the conventional wisdom about the domestic effects of the globalization of markets in the industrial democracies: the erosion of national autonomy and the demise of leftist alternatives to the free market. He demonstrates that globalization has strengthened the relationship between the political power of the left and organized labour and economic policies that reduce market-generated inequalities of risk and wealth. Moreover, macroeconomic outcomes in the era of global markets have been as good or better in strong left-labour regimes ('social democratic corporatism') as in other industrial countries. Pessimistic visions of the inexorable dominance of capital over labour or radical autarkic and nationalist backlashes against markets are significantly overstated. Electoral politics have not been dwarfed by market dynamics as social forces. Globalized markets have not rendered immutable the efficiency-equality trade-off.

Abstract: This survey assesses evidence on the linkage between environmental regulation and competitiveness, and finds little support for the conventional wisdom that environmental regulations have large adverse effects on competitiveness. Studies examining the effects of environmental regulations on net exports, overall trade flows, and plant-location decisions have produced estimates that are small, statistically insignificant, or not robust. We also find no systematic evidence supporting the revisionist hypothesis that environmental regulations stimulate innovation and improved competitiveness. Overall, the evidence suggests that the truth regarding the relationship between environmental protection and international competitiveness lies in between the extremes of the current debate.