%Paper: ewp-get/9607002
%From: Eric Rasmusen <erasmuse@rasmusen.bus.indiana.edu>
%Date: Mon, 22 Jul 96 13:48:19 -0600

              \documentstyle[12pt,epsf] {article}
\parskip 10pt
\reversemarginpar

  \topmargin  -.4in

 \oddsidemargin .25in


 \textheight  8.7in

\textwidth 6in 


\pagestyle{myheadings}
 \markboth{Writing}{Writing}


         \begin{document}  

   

      

   

\parindent 24pt  

  

         \titlepage  

         

	      \vspace*{12pt}
 

         \begin{center}  

\begin{large}  

         {\bf  Notes on Writing, Talking, and Listening  }\\  

  \end{large}  


        \bigskip
 July 20, 1996  \\  

        \bigskip  

     Eric Rasmusen   \\  

        \vspace{ .7in   }
        {\it Abstract}  

         \vspace{ -6pt   }       \end{center}  

      These are notes on  the mechanics of doing research in  
economics.  They are a series of short, unconnected tips that  I  
think could be widely useful both to individuals and the profession. 


    

            \vspace{ 32pt}
\begin{small}
          \noindent
   Indiana University School of Business, Rm. 456,  

  1309 E 10th Street, Bloomington, Indiana, 47405-1701.  Secretary:
812-855-9219. Direct: 812-855-3356.  Fax: 812-855-3354.  Email:
Erasmuse@indiana.edu.  Web:
http://ezinfo.ucs.indiana.edu/$\sim$erasmuse.

  \end{small}  

  


  %---------------------------------------------------------------%   

\newpage

\begin{center}
{\bf  1.   INTRODUCTION}
 \end{center}

  This is the latest version of a set of notes I have been giving my
doctoral students for the past ten years or so.  I have organized
them as follows:
 

\noindent
1. Introduction. \\
 2.  Writing.\\
 3. Speaking. \\
 4. Listening\\
  5. Latex  input and output. \\
6. References

 I  also  plan  to put an HTML version of this up on the Web at some  
point.

  You will see that the tone of these notes is informal but dogmatic.
The most important idea in communication is that the author should
make things clear to the reader and save him unnecessary work.
Bluntness often aids clarity, and I will assume throughout that the
reader knows the following things are true:

1.  Benefits are to be weighed against costs.  It is okay for a paper
to be somewhat unclear if the alternative is too costly, just as it
is sometimes okay to use dirty paper and a printer almost out of ink.
The 26 June 1996 version of these notes is still in list form, with
minimal organization, because the opportunity cost of a careful
revision would be more delay on my agency law paper and even the
unorganized list will be useful to a student I am seeing at an oral
exam this afternoon.

 2.  I  am still learning how to write.     I  have never looked over  
a paper I have written without finding ways to improve it, even  
though I am accounted a good writer and I do many drafts.      Do not  
be surprised when you look over my published papers and find  
violations of my own rules.

3.  It is okay to violate any rule if you have a good reason,
including rules of grammar and spelling.  Just be sure you do it
deliberately and not by accident.  If you know you write poorly, keep
that in mind, however.  An economist who has drunk an entire bottle
of whisky, being rational, refrains from breaking the law and driving
home at 90 miles per hour even if he feels perfectly capable of
driving. 


      Care in writing is important.   Besides helping the reader,   
clear writing fosters  clear thinking.    If you have to write an  
abstract, decide which results to call propositions, and  label all  
your tables and diagrams, you will be forced to  think about what  
your paper is all about.  So do not regard     your writing revision  
as just a bit of fringe to  decorate your great idea!


%~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
\newpage

 \begin{center}
 {\bf 2. WRITING}\footnote{Eric Rasmusen, Indiana University School
of Business, Rm. 456,
  1309 E 10th Street,
  Bloomington, Indiana, 47405-1701.
  Office: (812) 855-9219.  Fax: 812-855-3354. Email:  
Erasmuse@Indiana.edu. Web:   
http://ezinfo.ucs.indiana.edu/$\sim$erasmuse.  Revised July 2, 1996.
}

\end{center}




\begin{enumerate}

\item
 To overcome writer's block, put together an outline of the points
you want to make, in any order. Then, order them. Start writing
without worrying about style, and later revise heavily or start over.
Starting twice today is better than waiting three months and starting
once.  It is better, {\it a fortiori}, than waiting forever.

\item
  Xerox your  paper before you give it to anyone, or, better still,  
retain two copies on disk, in separate locations (for fear of fire).


\item
 Number each page of text,   so the  reader can comment on particular
pages. Number each equation in drafts on which you want comments. If  
you have appropriate software, label each line.

\item
 The title page should always have (1) the date, (2) your address,
 (3) your phone number, and (4) your e-mail address. You might as
well put your fax number down too.

 \item
  A paper  over five pages long should include  a half-page summary  
of its
main point. Depending on your audience, call this an
abstract or an executive summary. In general, write your paper so
that someone can decide within three minutes whether he wants to
read it.Usually, you do not get the benefit of the doubt.

\item
 It is often useful to divide the paper   into short sections using
boldface headings, especially if you have trouble making the  
structure
clear to the reader.       


\item
 Technical papers should present their results as Propositions
(theinteresting results, stated in words), Corollaries (subsidiary
ideas or special cases which flow directly from the propositions),
Lemmas (points which need to be proved to prove the propositions, but
usually have no instrinsic interest) and Proofs.  Lemmas and Proofs
can be purely mathematical, but Propositions and Corollaries should
be intelligible to someone who flips directly to them when he picks
up the paper.That means they must be intelligible to someone who does
not know the paper's notation. A reader must be able to decide
whether the paper is worth reading just by reading the propositions.


\item
 It is best to present the model in as short a space as possible,
before pausing to explain the assumptions.  That way, the experienced
reader can grasp what the model is all about, and all readers can
flip back and find the notation all in one place. It is okay, and
even desirable, however, to separate the model and the analysis of
the equilibrium.
  


\item
  Do not introduce new facts in your concluding section.   Instead,
 (a) summarize your findings,  or (b) suggest future
research.
     


\item
  Even a working paper should have a list of references, and these
should be at the very end, after the appendices and diagrams, so the
reader can flip to them easily. Law reviews do not publish lists of
references, but you should have one anyway for the working paper
version, including separately a list of cases and statutes cited,
with, if you want to be especially helpful, a phrase of explanation.
Example: {\it United States v. O'Brien}, 391 U.S. 367 (1968)
(upholding the conviction of a draft card burner).

\item
 Be content if your paper has one contribution to make. That is one  
more than most  published articles.   If you include too many points,   
the reader may not  be able to locate the best one.  Beware of  
listing too many results as propositions. Three propositions to an  
article  is plenty; a paper with ten propositions clearly has nothing  
to say.  But  don't   follow the example of the author who  had eight  
propositions and eight theorems so he could avoid double-digit  
numbering!

\item
 Please don't  shoot the   reader; he's  doing his best. The reader,  
like the customer, is always right.   That is not to be taken  
literally, but it is true in the sense that if the reader has  
trouble, the writer should pay attention to why, and not immediately  
blame the reader.   Copyeditors are  a different matter.   Especially  
at law reviews and  scholarly journals, they are  often pedantic  
young college grads who rely on   rules and  ignore     clarity.     
(In my experience, book copyeditors  are much better.)

\item
 In dealing with journals, remember that the editor, and even the
referee, is usually much smarter than you are.  They often get things
wrong, but that is because they are in a hurry or feel obligated to
give objective reasons for rejecting a paper when the real reason is
that it is trivial or boring. If a referee has given some thought to
the paper, he is probably correct when he suggests changes.
Suggesting changes is a sign that he has indeed given some thought to
it; referees who have just skimmed the paper usually do not suggest
any changes.

 \item
 Reading your paper out loud is the best way to catch awkward
phrasing and typos.  Have someone else proofread the final version  
for you.

\item
 It is very useful to set aside a paper for a week or a month before
going back to revise it.

\item
 Serious papers require many drafts (five to twenty-five). Coursework
does not, but you should be aware of the difference from professional
academic standards.

\item
 Look at published papers to get a guide for the accepted formats
for academic papers.


\item 

 Scholarly references to ideas can be in parenthetic form, like
(Rasmusen [1988]), instead of in footnotes.\footnote{Like this:
Rasmusen, Eric (1988) ``Stock Banks and Mutual Banks.''  {\it Journal
of Law and Economics}. October 1988, 31: 395-422.  } Footnotes are
suitable for tangential comments, citation of specific facts (e.g.,
the ratio of inventories to final sales is 2.6), or explanations of
technical terms (e.g., Dutch auction).\footnote{Like this tangential
comment. Inventory ratio: 2.62 for 1992-III, {\it Economic Report of
the President, 1993}, Washington: USGPO, 1993. In a Dutch auction,
the price begins at a high level and descends gradually until some
buyer agrees to buy. } Notes should be footnotes, not
endnotes.\footnote{If this were an endnote, I am sure you would not
read it.} Every statistic, fact, and quotation that is not common
knowledge should be somehow referenced.  In deciding whether
something is common knowledge, ask, ``Would any reader be skeptical
of this, and would he know immediately where to look to check it?''
Economists are sloppy in this respect, so do not take existing
practice as a model.

\item
   References to books should usually be specific about which part of
the book is relevant. Give the chapter or page number.\footnote{
Example: ``Adam Smith suggests that sales taxes were preferred to
income taxes for administrative convenience (Smith [1776], p. 383).''
Or, ``(Smith [1776], 5-2-4).''  If you really wish to cite the entire
book, then that is okay too.  Example: ``Smith (1776) combined many
existing ideas.''} Note that I give 1776 as the year of Smith's work,
rather than 1952, as the back of the title page of my edition says.
The year could tell the reader one of two things: 1. the year the
idea was published, or 2.  what edition you looked at when you wrote
the paper.  Usually (1) is much more interesting, but you should also
have (2) in the references at the end of the paper, so the page
numbers are meaningful. 


\item
 Long quotations should be indented and single-spaced.


\item
  Think about your mathematical notation. Use $r$ for the interest
rates, $p$ for price, and so forth. Avoid using the same letter in
both upper and lower case, because this wreaks havoc with oral
presentations (e.g., $Y$ for output and $y$ for the log of output).
Macroeconomists commonly use a symbol for the logarithm of a
variable, but I find this irritating, since it weakens intuition
considerably. I would rather see $Y = M/P$ than $Y = M - P$, where
$Y$ is the logarithm of output, $M$ is the logarithm of the money
supply, and $P$ is the logarithm of the price.

 \item
 Circle, box, boldface, or underline the important entries in tables.  
Often you will wish to present the reader with a table of 100 numbers  
and then focus on 2 of them. Help the reader find those two.


\newpage
 \begin{small}
 \begin{center}
  {\bf Table 2}\\
 { \bf Arrest Rates per 100,000 Population}\\

\begin{tabular}{l|rrr rrr rrr  |r}
  \multicolumn{11}{c}{  }   \\
\hline
\hline
 & Under 18 & 18-20 & 21-24 & 25-29 & 30-34 &35-39 &40-44 & 45-49 &   
50+ & All ages \\
  \hline
   &  \multicolumn{9}{|c|}{  } &  \\
   1961 & 1,586& 8,183 & \underline{ 8,167} & 6,859 &  
6,473&\underline{6,321} &5,921 & 5,384 &2,594 &  3,877 \\
 1966  & 2,485 & 8,614 &7,425 &6,057&5,689&5,413 &5,161 &4,850  
&2,298& 3,908\\
 1971 &3,609&11,979 &\underline{ 9,664} & 6,980&6,016  
&5,759&5,271&4,546 &2,011& 4,717 \\
 1976& 3,930&13,057 &10,446 & 7,180&5,656&5,205 &4,621 &3,824&1,515&  
4,804\\
 1981& 3,631 &15,069 & 11,949&8,663&6,163 &5,006&4,176& 3,380 &1,253&  
5,033\\
 1985& 3,335& 15,049 & 13,054 & 9,847&7,181 &\underline{5,313}&4,103&  
3,155&1,088 & 5,113 \\
 & \multicolumn{9}{|c|}{  } &  \\
 \hline
 \multicolumn{11}{l}{ \hspace*{12pt}{\it Note:} Over 50\% of arrests
are for ``public order'' offenses (e.g. drunk}\\
 \multicolumn{11}{l}{driving, prostitution), especially for older
people. The underlined entries}\\
 \multicolumn{11}{l}{are mentioned in the text.}\\
 \multicolumn{11}{l}{ \hspace*{12pt}{\it Source:} BJS (1988c), pp.
26-27.}\\
  \hline
 \hline
  \end{tabular}
 \end{center}

 \end{small}

\item
Don't go charging off  at full speed immediately, or you'll  confuse  
the sidelines with the goal lines.  Looking  where you're running   
saves time   in the end, and prevents head injuries. 



 \item
 Give useful titles to every table and every diagram. Do not say  
``Table 3''; say ``Table 3:  Growth in Output Relative to Government  
Expenditure''.

 \item
 In diagrams, use words to label the axes, not just symbols. Say:  
``$X$, the education level,'' not just ``X''.


\item
 Students generally do not take their papers seriously, which is
defeatist, though perhaps realistic. MBA and PhD students, if not
undergraduates, eventually will be trying to write important reports
or articles, and they ought to start practicing. In writing a paper,
think about whether anyone else would want to read it. Reasons people
read a paper are:

 (1) They can cite it in their own papers, or in argument, because it
pins down a certain fact or logical connection.

 (2) It is better written than other papers on the same subject, even
though it contains nothing new.

 (3) It contains an important idea that readers want to understand.


 Most of you should not count on reason (3), since it requires that
the reader already believes that the paper contains an important
idea. That is why people read Stiglitz's papers, but not why they
read most papers.  Reason (1) is more important.  Even a student can
write something citable, and however trivial the cite, that is a
useful contribution to the world.  A badly written summary of someone
else's work, on the other hand, or an original variant on an existing
model, may be completely useless. Especially, do not scorn the small
fact. The small fact is the foundation of science, and since it is
the kind of contribution anyone can make, experts are less likely to
throw away a paper by an unknown who modestly purports to establish a
small fact.


\item
   A common vice of theorists is to say things like: ``The price is
high (low) if the quantity is low (high)'' .  How quickly can you
understand that statement compared to ``The price is high if the
quantity is low. The price is low, on the other hand, if the quantity
is high.''  Writing for people is different from writing for
computers.  Redundancy helps real live people read faster.  That is
why I didn't write ``Rdnncy hlps pple rd fstr'', even though if the
reader would only use some effort my condensed sentence is clear,
unambiguous, and much shorter. 




\item
 Do not say   ``The supra-national government authority (SNGA)  
will...'' and then use SNGA throughout your paper.     Say 

 ``The supra-national government authority (``the  Authority'')  
will...''
 The use of acronyms is a horrible vice akin to requiring the reader
to learn a foreign language just to read one insignificant paper.  If
the term is so long that it looks awkward to use it throughout the
paper, the problem is in the term, not the number of letters used to
represent it.  This can be useful to the author: when he finds his
writing is awkward, that is often a sign that his thinking is muddy.



\item
    In empirical work, normalize your variables so the coefficeints
are easy to read.  For example, data like (.89, .72, .12) can be
converted to percentages: (89, 72, 12).  Data like income can be
convereted from (12000, 14000, 78100) to (12, 14, 78.1), making th
units ``thousands of dollars per year'' instead of ``dollars per
year'', and making the coefficient on that variable .54 instead of
.0054.  Use z-scores (variable minus its mean divided by standard
deviation) for unnatural numbers. 




\item
  A list of some useful references is in a later section. Start with
McCloskey's article (later made into a book) and the little book by
Strunk \& White, both of which are pleasures to read.


\item
       Email and the Net are  increasingly important.   Plain-text  
ASCII--- the letters you type in from the regular typewrite keys---   
is the only universally readable type of files.  Don't expect people  
to tussle with Wordperfect, Postscript,  or other specialized  
formats; just because everybody at Podunk University uses   
Wordperfect doesn't mean everybody in the world does.   Most people   
should rather have something readable, even if it loses all the  
equations, tables, and figures, than something which would be  
beautiful if they could read it, but they  can't. (Admittedly, some  
foolish people, and a majority of   business students,   are  
exceptions: they are happier with nothing than with  something messy.    
Only give those people hardcopy of final drafts.)   Transmitting  
non-ASCII files by email can be done, with  various coding programs,  
but  do not expect it to  work the first time with any given person.   
The same goes for posting on the Net.  Everyone can read ASCII, and  
HTML is written in ASCII so everybody can read HTML too,  even if  
they do not have a Web browser.  One approach is to post both an  
ASCII version and a Postscript or other special version, so that  
everybody can  read something and some people read everything in   
your  paper.


 \end{enumerate}

%~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
\newpage

 \begin{center}
 {\bf 3.  SPEAKING}\footnote{Eric
Rasmusen, 	  	  Indiana University
School of Business, Rm. 456,  

  1309 E 10th Street,
  Bloomington, Indiana, 47405-1701.
  Office: (812) 855-9219.  Fax: 812-855-3354. Email:
Erasmuse@Indiana.edu. Web:
http://ezinfo.ucs.indiana.edu/$\sim$erasmuse.  Revised June 26, 1996.
}

\end{center}


\begin{enumerate}

\item
 Presentations have three purposes, Peter Temin told me as a student
at MIT: (1) to tell something to the audience, (2) to get comments
from the audience, and (3) to impress the audience.  Purpose (3) is
perfectly appropriate to a job talk, but it tends to conflict with
purposes (1) and (2).




\item
 % 1.
 Invite questions along the way. If people have to wait until the end
they will be reluctant to raise questions that were relevant earlier,
and disagreements will take the form of long speeches instead of
short questions. Asking for questions is also a good way to show you
have reached the end of a section of your talk.

\item
%2.
  In your notes, mark certain paragraphs or sections to be dropped if
you run out of time.  Do not run late unless you sense that your talk
is extraordinarily interesting to the people who matter in the
audience. Running late stimulates much more hostility than saying
stupid things during your talk.  Ending early is usually quite
acceptable.

\item
%3.
  Answering questions fully is  usually more important than reaching  
the
end of your talk. If you rush the talk, few people will understand
the last part anyway. 


\item
%4.
  Use the blackboard or a transparency to outline your talk before
you start. Do not write this on the board before you start. Instead,
write a short outline as you are concluding the introduction.
Example:\\
  1. Intro\\
  2. The bargaining problem.\\
  3. Nash solution.\\
  4. Many periods.\\
  5. Incomplete info.\\
    Then check off sections as you finish them.

\item
% 5.
 Handouts are useful for tables, figures, equations, notation,
technical definitions, abstracts, and statements of propositions.
The length should be one to three pages, no more. Unless your
audience has the entire paper, you should distribute at least a one
page handout. This is particularly important in a Chicago-style
seminar, since you may not get to your main point, and it must be on
the handout for the audience to learn it. Handouts are also useful as
doodling paper.

\item
%6.
  If your paper is technical, write up the notation on a handout or
put it on the board and do not erase it. This is crucial, unless you  
have a handout with the notation.

\item
%7.
   If your paper is technical, you should keep in mind that your
propositions are probably much more important than your proofs.  
Usually,  the audience is completely uninterested in the proofs.

\item
%8.
  Put extra handouts near the door, so that latecomers can pick them
up as they come in.

\item
%9.
  Label all axes on diagrams you draw on the board.

\item
 %10.
 If you are using electrical equipment such an overhead projector,
test it before the talk starts. If you are talking as a guest of
someone else, be sure and tell them well in advance if you need a
room with a screen.

\item
 %11.
  Remember that people blank out frequently when listening. This
means the speaker ought to occasionally summarize what he has done,
and structure his talk so that if a listener misses any thirty
seconds he can catch up again later.

\item
 Sympathize with your audience. Put yourself in their place.

\item
 If the host asks if you have any closing remarks, that usually means
you should have finished five minutes ago. He does not really want
closing remarks; he wants you to stop. Your reply should be either
(1) ``No, I do not have any closing remarks. Thank you,'' or (2)
Three sentences summarizing the main results; or (3) a closing joke.

\item
 Write down all calculations in your notes. At the board it is hard
to remember even that 7(19) = 133. If you perform a series of, say,
ten arithmetic operations, a mistake is likely, and finding it can
take as long as the first try at all ten operations.

\item
  Towards the end, say things like ``My final result is...'' to give
hope to your fading audience and stimulate them to a final effort to
stay awake. Then, do not disappoint them.

 \item
  Do not be embarassed to defer a question, but make a note on the
board (the questioner's name or the topic) to come back to it, and
tell the questioner to remind you later if you forget.

\item
 Students generally are very bad at delivering papers. Even though
seminars often run an hour and a half, students are well-advised to
schedule talks for only an hour. More people will attend, and often
the comments received in the first hour make the last third of the
paper irrelevant anyway.

\item
 Very few people can carry off a two-hour seminar successfully.

\item
  Much of this advice is directed to speakers with boring topics and
poor delivery. That is because most seminars are given by speakers
with boring topics and poor delivery.

\item
  Do not rely on suspense, or delay announcing your main results
until the end. After an hour, people usually stop listening anyway,
and if your idea is worth spending time on, it is complex enough that
people will need to hear the idea at the beginning to understand it
by the end.


\end{enumerate}


%~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
\newpage

 \begin{center}
 {\bf 4.   LISTENING}\footnote{Eric
Rasmusen, 	  	  Indiana University
School of Business, Rm. 456,  

  1309 E 10th Street,
  Bloomington, Indiana, 47405-1701.
  Office: (812) 855-9219.  Fax: 812-855-3354. Email:  
Erasmuse@Indiana.edu. Web:   
http://ezinfo.ucs.indiana.edu/$\sim$erasmuse.  Revised June 26, 1996.
}

\end{center}

 This is a list of tips on listening to scholarly presentations.

\begin{enumerate}

\item
  Write  down the notation.

\item
 Do not be afraid to ask the first question. In fact, try to ask it,
so that the ice will be broken. Ask it even if it isn't such a good
question.   Hold back only if you are a guest at an unfamiliar  
workshop, where boring, questionless,  presentations may be  the   
social custom.

\item
 Discussion is usually the main point of a seminar.  Without
questions, reading the paper almost always dominates listening to an
oral presentation. If questions are not asked along the way, then (a)
the audience gets confused, (b) the speaker gets away with incorrect
or controversial assertions, (c) it is hard to make small comments of
the kind useful to the speaker, and (d) when questions are asked, at
the end, they tend to be irrelevant, and turn into general,
solipsistic, speeches. In the humanities, this is what usually
happens. 


\item
 Write notes  on the seminar paper (literally) so   you will not lose
them later, and to make filing easier.

\item
 During the seminar, write down comments to give the speaker
afterwards. This is especially useful if (a) your question would be
too distracting because it is off the current topic, (b) too many
other questions are being asked for you to get a chance to ask your
question, or (c) the custom is not to ask questions, and you are
bursting with frustration.  Speakers are very appreciative about
written comments, and you have nothing better to do.

\item
 In my opinion, doodling is perfectly appropriate, and a good use of  
your time. Knitting, whittling, etc. will be seen as eccentric, but  
they  are efficient activities. 


\item
 It is often customary to let the speaker know beforehand if you must
leave early.  This can be presumptuous.  I've sometimes thought to
myself, ``Why should I care if this person leaves early?  He's not
important enough for me to feel insulted even if I knew his motive
was boredom.''  If you think the speaker has special concern for your
opinions, though, you should certainly let him know if you must leave
early. 



\item
 Ignore spelling errors the speaker makes at the blackboard, but
instantly point out mathematical typos. You need not raise your hand
for this kind of commment.


\item
 If you realize that other people are confused and do not understand
something, ask their question for them.

\item
  Keep your questions as short as you can. Sometimes people feel
obligated to state their question three times, to show what an
important question it is. (``Could inflation be the cause? It seems
like inflation might be the cause. So do you think inflation might be
the cause? Inflation does seem important.'') Resist this. 


\item
 It is quite proper to point out that the speaker did not answer your  
question. In academic discussions, this is usually because the  
speaker did not understand your question. If he is being purposely  
evasive, fry him. This does not usually happen  in academic seminars.



\item
 I try to remember to bring a {\it Statistical Abstract} or {\it  
Economic Report of the President} to seminars.  Often a fact will be  
helpful. 


 \item
 If you have a laser pointer, bring it along.  You can use it to ask
questions, pointing to the overhead or blackboard tables and
equations. 



\item
   Pace yourself.  If you are too tired, you will get nothing out of   
sitting  through  a seminar. Don't bother to go, unless politeness  
demands it. Sleep or do mechanical  work instead.  At conferences,  
the problem is usually not sleepiness, but burnout.   Plan to skip  
some good  sessions  and rest. 


\end{enumerate}

 



%~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
 

%~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
\newpage

  \begin{center}
 {\bf 5.1.  LATEX INPUT}\footnote{Eric Rasmusen, Indiana University
School of Business, Rm. 456,
  1309 E 10th Street,
  Bloomington, Indiana, 47405-1701.
  Office: (812) 855-9219.  Fax: 812-855-3354. Email:
Erasmuse@Indiana.edu. Web:
http://ezinfo.ucs.indiana.edu/$\sim$erasmuse.  Revised June 26, 1996.
}

\end{center}


 What follows is Latex input followed by output. I give it here as  
examples of   common  Latex  commands that I use, and   my tricks of  
formatting.

 \begin{verbatim}

               \titlepage
\vspace*{-96pt}
                     \vspace*{12pt} 

                     \begin{center}
            \begin{large}
    {\bf This is an Example of a Title Page }\footnote{Copyright,
Eric Rasmusen.  I will grant a non-exclusive license to any journal
that publishes this.  } \\
             \end{large}
                   

                 March 9, 1996 \\

                    \bigskip
                    Eric Rasmusen \\
                    \vspace*{ 1in}
                    {\it Abstract} \\
 \end{center}
     When a symbol is desecrated, the desecrator obtains benefits
while those who venerate the symbol incur costs.  The approach to
policy used in this paper is to ask whether the benefits are likely
to exceed the costs.  I conclude that they usually do not.
Desecration is often motivated by a desire to reduce the utility of
others, which generally is inefficient.  Also, if desecration occurs,
people have less incentive to create and maintain symbols.  Symbols,
like other produced goods, need property-rights protection if the
outcome is to be efficient.  Laws against desecration are a good way
to provide this protection, given the likely failure of the Coase
Theorem and the possibility of efficient breaking of the laws. 

                             		
          \vspace{ 24pt} \begin{footnotesize}
          \noindent \hspace*{20pt} Indiana University School of
Business, Rm. 456, 1309 E 10th Street, Bloomington, Indiana,
47405-1701.
  Office: (812) 855-9219.  Fax: 812-855-3354. Email:
Erasmuse@indiana.edu.  Web:
http://ezinfo.ucs.indiana.edu/$\sim$erasmuse.
  \end{footnotesize}
\vspace {24pt}

 I would like to thank seminar participants at the Columbia Political
Economy workshop for their comments. 

  I would also like to thank participants in the Econlaw discussion
list for their comments in the on-line discussion of this issue in
1995 that stimulated this paper.\footnote{xxx Footnotes that, like
this one, start with xxx are notes to myself for future revisions.}


        

 \newpage

%-------------------------------------------------------


\begin{center}
 {INTRODUCTION}
 \end{center}
          ... Section 2 will set up the basic cost-benefit  
calculation, in its
simplest form, and introduce the idea of `mental externalities'.
Section 3 will discuss the special feature of what I will call
`malice'': intentional rather than accidental negative externalities.
Section 4 concerns a special feature of desecration: that it is the
harming of created symbols. As a result, it has implications for the
quantity of symbols created. ... Section 9 addresses a
number of objections to the earlier arguments: the question of
rights, metapreferences for toleration of desecration, and positive
externalities from desecration.  Section 10 concludes.

  

   % ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

  \begin{center}
 {\bf A Legal citation}
 \end{center}

  \vspace*{-12pt}

 Two tests relative to desecration are the O'Brien and the Clark
tests.  The O'Brien test is
   \begin{quotation}
 \begin{small}
   ``[A] government regulation is sufficiently justified if it is
within the constitutional power of the Government; if it furthers an
important or substantial governmental interest; if the governmental
interest is unrelated to the suppression of free expression; and if
the incidental restriction on alleged First Amendment freedoms is no
greater than is essential to the furtherance of that interest.''
({\it United States v. O'Brien}, 391 U.S. 367, 377 (1968),
 upholding the conviction of a draft card burner)
 \end{small}
 \end{quotation}


\noindent
 { Assumptions}

          We impose the following six assumptions on costs and  
demand:
 \begin{itemize}
  \item[(A1)]
  $C(q,x)$ is continuously differentiable on ${\bf
R}^2_+$.
  \item[(A2)]
   $C_q(q,x) > 0 $ for $q >0$ and $x \geq 0$; $C_x(q,x) \leq 0 $ for
all $(q,x) \in {\bf R}^2_+$ and $C_x(q,x) < 0 $ for all $(q,x) \in
(0,K] \times [0,K]$, where $K$ is defined in (A5).
   \item[(A3)]
  For any $ q > 0 $ and $x \geq 0 , C(q,x) > 0 $; Also, $C(0,0) > 0
$.
   \item[(A4)]
  $P$ is continuous and strictly decreasing; $P(Q)\rightarrow 0 $ as
$Q\rightarrow +\infty$; $P(Q)$ is integrable on any closed interval
of $ {\bf R}_+ $.
 \item[(A5)]
  [Eventual Strong Decreasing Returns] There exists $K > 0 $ such
that the following holds: if either $q_1 > K$ or $ q_2 > K$ (or
both), then there exist $\alpha$ and $\beta \in [0,1]$ such that
          $$
  \Gamma(q_1,q_2) > \Gamma(\alpha q_1,\beta q_2) + \Gamma((1-\alpha
)q_1,(1-\beta) q_2).
   $$
\item[(A6)]
  $P(0) > p_m $.

 \end{itemize}

 \baselineskip 24pt



	Assumption (A1) guarantees the continuity of the marginal
cost and marginal benefit functions.


Assumption (A2) says that the marginal cost is always positive, that
greater experience never increases the total cost, and that greater
experience strictly reduces the total cost of producing output in any
period. 


Assumption (A3) says that a firm with no experience incurs a fixed
cost of production, a cost which must be incurred even if output is
zero. 


 \baselineskip 12pt


 

\begin{center}
 {\bf   A Diagram}
 \end{center}
\vspace*{-12pt}
 

 The total production cost is nonincreasing in the amount of
accumulated experience. Figure 1 shows one cost function that
satisfies the assumptions--- the cost function which will be used in
Example 2 later in the article. Note the increasing marginal costs
for any level of learning, and the decreasing returns to learning for
any level of output.

 

 \epsfysize=4in
  

\epsffile{Learn1.eps}

\vspace*{-36pt}
      \begin{center} {\bf Figure 1: A Firm's Total Cost as a Function
of Output and Experience} \end{center}

 

 \newpage
 \begin{Large}

PROPOSITION 4.  {\it Under assumptions (A1)-(A7), the following is
true in equilibrium:
   \begin{itemize}
 \item[ (a)]
   Each of the staying firms behaves identically.
   \item[ (b)] If there is a positive measure of exiting firms, they
produce at the zero-experience minimum efficient scale, which is less
than the output produced by staying firms in period 1.
   \item[ (c)]
 There exist no late-entering firms. \footnote{The proof of
Proposition 4 is available in Petrakis, Rasmusen \& Roy (1994), from
Erasmuse@indiana.edu, or from
http://www.indiana.edu/$\sim$busecon/lrning.prf.  }
         \end{itemize}
 }%end of italics

 \end{Large}

     When the American Law Institute began to compile the influential
summaries of the common law known as the ``restatements,'' the
Restatement of Agency was important enough to be second in the series
(after contracts).  The {\it Restatement } defines agency as ``the
fiduciary relation which results from the manifestation of consent by
one person to another that the other shall act on his behalf and
subject to his control, and consent by the other so to
act.''\footnote{ American Law Institute, {\it Restatement of the Law,
Second: Agency 2d}, St. Paul, Minnesota: American Law Institute,
1958, \S 1. All references are to this second restatement, hereafter
called the {\it Restatement}.   }

 Let us begin with the care to check authority, in Illustration 6.
  \begin{small}\begin{quotation}
     {\it Illustration 6: Not Checking Authority Carefully.} ``P
tells T that A is authorized to buy sheep for him when the market
price of wool in another country has reached a certain point.  T
sells sheep to A, relying upon A's untruthful statement that the
price of wool has reached the specified point.''\footnote{{\it
Restatement}, \S 168. } Is $P$ bound by the contract? 

    \end{quotation}  \end{small}


 

 %-----------------------------%-------------------------------------- 
----


   A simple regression of illegitimacy on AFDC and a constant yields
the following relationship:
     \begin{equation} \label{e100}
  \begin{array}{lll }
  Illegitimacy &= 26.91  &{\bf -0.034* AFDC},  \\
    &  (3.05) & {\bf (0.026)  } 

      \end{array}
 \end{equation}
  (standard errors in parentheses) with $R^2=.03$.  Equation
(\ref{e100}) implies that high AFDC payments reduce the illegitimacy
rate, but this is, of course,
  misleading because the simple regression leaves out important
variables. Regression (\ref{e101}) more appropriately controls for a
variety of things which might affect the illegitimacy rate:
 \begin{equation} \label{e101}
  \begin{array}{lll ll}
  Illegitimacy &= 15.74 &+ {\bf 0.016* AFDC} & -0.00011* Income
&+0.024* Urbanization \\
  &  (3.65) & {\bf (0.021)} & (0.00042) & (0.033)\\
   & &&&\\
    & - 1.60* South & + 0.56*Black, & &\\
     & (1.71) & (0.06) & &\\
   \end{array}
 \end{equation}
  with $R^2=0.79$. Equation (\ref{e101}) would leave us with the
conclusion that AFDC payments have almost no effect on the
illegitimacy rate. Nor, surprisingly, do any of the other variables
except race have large or significant coefficients.





\newpage
 \vspace*{-1in}

 \begin{center}
{ A  Data Table}
 \end{center}
 \thispagestyle{empty}
 \begin{tiny}
 \begin{tabular}{|l|lll lll r|}
 \hline
  \hline
  State & Illegitimacy & AFDC & Income & Urban- & Black & Dukakis
&Unexplained Illeg.\\
   & & & & ization & & vote & (from (23)) \\
   & (\%) & (\$/month) & (\$/year) & (\%) & (\%) & (\%) & (\%)\\
  \hline
     Maine & 19.8 & 125 & 12,955 & 36.1 & 0.3
    &      44.7    &       2.8      \\        

    New Hampshire & 14.7 & 140 & 17,049 & 56.3 & 0.6
    &      37.6    &       2.3      \\        

    Vermont & 18.0 & 159 & 12,941 & 23.2 & 0.4 & 48.9
    &       -4.9      \\   

     Massachusetts & 20.9 & 187 & 17,456 &
    90.6 & 4.8 & 53.2 & -6.2 \\
    Rhode Island & 21.8 & 156 & 14,636 & 92.6 & 3.8 &
    55.6 & -5.2 \\
 Connecticut & 23.5 & 166 & \framebox{19,096 }
    & 92.6 & 8.2 & 48.0 & 2.3 \\
     \hline      

    New York & 29.7 & 166 & 16,036 & 91.2 & 16.1 &
    51.6    &       -3.8      \\       

   New Jersey & 23.5 & 119 & 18,615
    & \framebox{100} & 14.4 & 43.8 & 6.2 \\
    Pennsylvania & 25.3 & 111 & 14,072 & 84.8 & 9.4 &
    50.7    &       3.4      \\ 

     \hline
             Ohio & 24.9 & 102 & 13,326 &
    78.9 & 11.0 & 45.0 & 2.6 \\
    Indiana & 22.0 & 84 & 12,834 & 68.1 & 8.4 & 40.2
    & 4.9 \\
  Illinois & 28.1 & 101 & 15,150 & 82.5
    & 16.1 & 49.3 & 6.7 \\
    Michigan & 20.4 & 156 & 14,094 & 79.9 & 14.6 &
    46.4    &      \framebox{-14.0 }        \\
     Wisconsin & 20.7 & 160 & 13,296 & 66.5 & 4.8 & 51.4 & -8.5 \\
     \hline
    Minnesota & 17.1 & 171 & 14,037 & 66.6 & 1.6 &
    52.9 & \framebox{-11.0 } \\
        Iowa    &      16.2    &      124    &      12,475    &      

    43.4 & 1.9 & 54.7 & -3.5 \\
    Missouri & 23.7 & 87 & 13,340 & 66.0 & 10.8 &
    48.2 & 5.9 \\ North Dakota & 13.9 & 125 & 11,388
    & 38.4 & 0.5 & 44.0 & -7.2 \\
  South Dakota & 19.4 & 94 & 11,611 & 29.1 & 0.3 &
    47.2 & 6.2 \\
       Nebraska & 16.8 & 108 & 12,773 &
    47.6 & 3.4 & 39.8 & -0.2 \\
    Kansas & 17.2 & 110 & 13,235 & 53.4 & 5.8 & 44.2
    &       -1.2      \\   

     \hline
            Delaware & 27.7 & 99 & 14,654 & 65.9
    &      18.9    &      44.1    &       2.1      \\        

    Maryland & 31.5 & 115 & 16,397 & 92.9 & 26.1 &
    48.9 & -0.4 \\
   DC & \framebox{59.7 } & 124 & 17,464 &
   \framebox{100} & \framebox{68.6} & \framebox{82.6} & 0.5 \\
    Virginia & 22.8 & 97 & 15,050 & 72.2 & 19.0 &
    40.3 & -2.1 \\
   West Virginia & 21.1 & 80 & 10,306
    & 36.5 & 2.9 & 52.2 & 2.1 \\
    North Carolina & 24.9 & 92 & 12,259 & 55.4 & 22.1
    & 42.0 & -6.0 \\
    South Carolina & 29.0 & 66 & 11,102 & 60.5 & 30.1
    & 38.5 & -5.0 \\
    Georgia & 28.0 & 83 & 12,886 & 64.8 & 26.9 & 40.2
    & -3.5 \\ Florida & 27.5 & 84 & 14,338 & 90.8
    & 14.2 & 39.1 & 5.0 \\
     \hline       

    Kentucky & 20.7 & 72 & 11,081 & 46.1 & 7.5 &
    44.5 & 1.4 \\
   Tennessee & 26.3 & 54 & 12,212 &
    67.1 & 16.3 & 42.1 & 5.7 \\
    Alabama & 26.8 & \framebox{39} & 11,040 & 67.5 & 25.6 &
    40.8 & 0.5 \\
  Mississippi & 35.1 & \framebox{39} & \framebox{9612}
    & 30.5 & 35.6 & 40.1 & 2.4 \\
     \hline
    Arkansas & 24.6 & 63 & 10,670 & 39.7 & 15.9 &
    43.6 & 1.3 \\
  Louisiana & 31.9 & 55 & 10,890 &
    69.2 & 30.6 & 45.7 & -1.4 \\
    Oklahoma & 20.7 & 96 & 10,875 & 58.8 & 6.8 &
    42.1 & -4.8 \\ Texas & 19.0 & 56 & 12,777 &
    81.3 & 11.9 & 44.0 & 0.9 \\
     \hline
    Montana & 19.4 & 120 & 11,264 & 24.2 & \framebox{0.2} &
    47.9 & 0.5 \\
 Idaho & 13.0 & 95 & 11,190 &
    \framebox{20.0} & 0.4 & 37.9 & -0.6 \\
    Wyoming & 15.8 & 117 & 11,667 & 29.2 & 0.8 &
    39.5 & -2.3 \\
    Colorado & 18.9 & 109 & 14,110
    & 81.7 & 3.9 & 46.9 & 1.3 \\
    New Mexico & 29.6 & 82 & 10,752 & 48.9 & 1.7 &
    48.1 & \framebox{14.0} \\
 Arizona & 27.2 & 92 & 13,017 &
    76.4 & 2.7 & 40.0 & \framebox{12.0} \\
    Utah & \framebox{11.1} & 116 & 10,564 & 77.4 & 0.7 &
\framebox{33.8}
    & \framebox{-14.0} \\ Nevada & 16.4 & 86 & 14,799 & 82.6
    & 6.9 & 41.1 & 3.2 \\
     \hline
    Washington & 20.8 & 157 & 14,508 & 81.6 & 2.4 &
    50.0 & -4.8 \\
 Oregon & 22.4 & 123 & 12,776 &
    67.7 & 1.6 & 51.3 & 1.5 \\
    California & 27.2 & 191 & 16,035 & 95.7 & 8.2 &
    48.9 & -6.8 \\
 Alaska & 22.0 & \framebox{226} & 16,357 &
    41.7 & 3.4 & 40.4 & \framebox{-10.0} \\
    Hawaii & 21.3 & 134 & 14,374 & 76.3 & 1.8 & 54.3
    & 1.1 \\
             \hline
   United States & 24.5 & 124 & 14107 & 77.1 & 12.4 & 46.6 & 0\\
     \hline
      \hline
  \multicolumn{8}{c}{ }\\
   \multicolumn{8}{c}{ }\\
    \multicolumn{8}{c}{\bf Table 4: The Data and the Regression
Residuals}\\
 \multicolumn{8}{c}{(Extreme values are boxed. Sources and
definitions are in footnotes 23 and 25.)}\\
       \end{tabular}  

       \end{tiny}

%-----------------------------%--------------------------------------- 
---
 %-------------------------------------------------------------------- 
---

 \begin{center}
{\bf   References}
 \end{center}
      Ayres, Ian \& Robert Gertner (1989) ``Filling Gaps in
Incomplete Contracts: An Economic Theory of Default Rules,'' {\it
Yale Law Journal}, October 1989, 99: 87-130.


Black, Henry (1990) {\it Black's Law Dictionary}, 6th edition, St.
Paul, Minn.: West Pub. Co., 1990.

  Chu, Cyrus \& Yingyi Qian (1992) ``Vicarious Liability Under a
Negligence Rule: An Economic Analysis,'' Stanford Law School, June
1992.

 Hearings Before the Subcomm. on Civil and Constitutional Rights of
the House Comm. on the Judiciary,101st Cong., 1st Sess. (1989) [House
Hearings]

    Klein, William \& J. Mark Ramseyer (1994) {\it Teacher's Manual
for Cases and Materials on Business Associations}, Second Edition,
Westbury, NY: Foundation Press, 1994.

Madison, James (1840) {\it Notes of Debates in the Federal Convention
of 1787.} New York: Norton, 1969.


Mookherjee, D. and D. Ray (1992) ``Learning-By-Doing and Industrial
Stucture: An Overview.''  in {\it Theoretical Issues in Development
Economics}, ed. by B. Dutta, S. G., D. Mookherjee \& D. Ray, New
Delhi: Oxford University Press .

 Schumpeter, Joseph (1950) {\it Capitalism, Socialism, and
Democracy}, 3rd edition, New York: Harper. 


Viner, Jacob (1932) "Cost Curves and Supply Curves" {\it Zeitschrift
Fur National-Okonomie} 1932. 3. (reprinted in American Economic
Association {\it Readings in Price Theory.} Chicago: R.D. Irwin,
1952.)


 \begin{center} 

 {\bf Cases and Statutes }  

 \end{center}

  Keeble v. Hickeringill, 11 East 574, 103 Eng. Rep. 1127 (Queen's
Bench, 1707) (competing schools)

  McCulloch v. Maryland, 4 Wheaton 316, 431 (1819) (power to tax is
power to destroy)


{\it Halter v. Nebraska}, 205 U.S. 34 (1907) (flag on beer label)

 {\it Proceedings of the National Conference of Commissioners on
Uniform State Laws,} 323-324 (1917) (Uniform Flag Act)

  {\it Ex parte Starr}, 263 F. 145 (D. Mont.1920) (10 years hard
labor for insulting a flag)

{\it State v.  Peacock}, 138 Me. 339 (1942).  (desecration within a
home)

  10 U. S. C. @ 772 (f) (actors can wear military uniforms if they do
not discredit the military)

Section 42.09 of the Texas Penal Code (1989) (flag desecration)



  \end{verbatim}
%--------------------------------------------------------------------- 
--

\newpage

 \begin{center}
 {\bf 5.2 LATEX OUTPUT} 

 \end{center}

 %\begin{verbatim}

               \titlepage
\vspace*{-96pt}
                     \vspace*{12pt} 

                     \begin{center}
            \begin{large}
    {\bf This is an Example of a Title Page }\footnote{Copyright,
Eric Rasmusen.  I will grant a non-exclusive license to any journal
that publishes this.  } \\
             \end{large}
                   

                 March 9, 1996 \\

                    \bigskip
                    Eric Rasmusen \\
                    \vspace*{ 1in}
                    {\it Abstract} \\
 \end{center}
     When a symbol is desecrated, the desecrator obtains benefits
while those who venerate the symbol incur costs.  The approach to
policy used in this paper is to ask whether the benefits are likely
to exceed the costs.  I conclude that they usually do not.
Desecration is often motivated by a desire to reduce the utility of
others, which generally is inefficient.  Also, if desecration occurs,
people have less incentive to create and maintain symbols.  Symbols,
like other produced goods, need property-rights protection if the
outcome is to be efficient.  Laws against desecration are a good way
to provide this protection, given the likely failure of the Coase
Theorem and the possibility of efficient breaking of the laws. 

                             		
          \vspace{ 24pt} \begin{footnotesize}
          \noindent \hspace*{20pt} Indiana University School of
Business, Rm. 456, 1309 E 10th Street, Bloomington, Indiana,
47405-1701.
  Office: (812) 855-9219.  Fax: 812-855-3354. Email:
Erasmuse@indiana.edu.  Web:
http://ezinfo.ucs.indiana.edu/$\sim$erasmuse.
  \end{footnotesize}
\vspace {24pt}

 I would like to thank seminar participants at the Columbia Political
Economy workshop for their comments. 

  I would also like to thank participants in the Econlaw discussion
list for their comments in the on-line discussion of this issue in
1995 that stimulated this paper.\footnote{xxx Footnotes that, like
this one, start with xxx are notes to myself for future revisions.}


        

 \newpage

%-------------------------------------------------------


\begin{center}
 {INTRODUCTION}
 \end{center}
          ... Section 2 will set up the basic cost-benefit  
calculation, in its
simplest form, and introduce the idea of `mental externalities'.
Section 3 will discuss the special feature of what I will call
`malice'': intentional rather than accidental negative externalities.
Section 4 concerns a special feature of desecration: that it is the
harming of created symbols. As a result, it has implications for the
quantity of symbols created. ... Section 9 addresses a
number of objections to the earlier arguments: the question of
rights, metapreferences for toleration of desecration, and positive
externalities from desecration.  Section 10 concludes.

  

   % ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

  \begin{center}
 {\bf A Legal citation}
 \end{center}

  \vspace*{-12pt}

 Two tests relative to desecration are the O'Brien and the Clark
tests.  The O'Brien test is
   \begin{quotation}
 \begin{small}
   ``[A] government regulation is sufficiently justified if it is
within the constitutional power of the Government; if it furthers an
important or substantial governmental interest; if the governmental
interest is unrelated to the suppression of free expression; and if
the incidental restriction on alleged First Amendment freedoms is no
greater than is essential to the furtherance of that interest.''
({\it United States v. O'Brien}, 391 U.S. 367, 377 (1968),
 upholding the conviction of a draft card burner)
 \end{small}
 \end{quotation}


\noindent
 { Assumptions}

          We impose the following six assumptions on costs and  
demand:
 \begin{itemize}
  \item[(A1)]
  $C(q,x)$ is continuously differentiable on ${\bf
R}^2_+$.
  \item[(A2)]
   $C_q(q,x) > 0 $ for $q >0$ and $x \geq 0$; $C_x(q,x) \leq 0 $ for
all $(q,x) \in {\bf R}^2_+$ and $C_x(q,x) < 0 $ for all $(q,x) \in
(0,K] \times [0,K]$, where $K$ is defined in (A5).
   \item[(A3)]
  For any $ q > 0 $ and $x \geq 0 , C(q,x) > 0 $; Also, $C(0,0) > 0
$.
   \item[(A4)]
  $P$ is continuous and strictly decreasing; $P(Q)\rightarrow 0 $ as
$Q\rightarrow +\infty$; $P(Q)$ is integrable on any closed interval
of $ {\bf R}_+ $.
 \item[(A5)]
  [Eventual Strong Decreasing Returns] There exists $K > 0 $ such
that the following holds: if either $q_1 > K$ or $ q_2 > K$ (or
both), then there exist $\alpha$ and $\beta \in [0,1]$ such that
          $$
  \Gamma(q_1,q_2) > \Gamma(\alpha q_1,\beta q_2) + \Gamma((1-\alpha
)q_1,(1-\beta) q_2).
   $$
\item[(A6)]
  $P(0) > p_m $.

 \end{itemize}

 \baselineskip 24pt



	Assumption (A1) guarantees the continuity of the marginal
cost and marginal benefit functions.


Assumption (A2) says that the marginal cost is always positive, that
greater experience never increases the total cost, and that greater
experience strictly reduces the total cost of producing output in any
period. 


Assumption (A3) says that a firm with no experience incurs a fixed
cost of production, a cost which must be incurred even if output is
zero. 


 \baselineskip 12pt


 

\begin{center}
 {\bf   A Diagram}
 \end{center}
\vspace*{-12pt}
 

 The total production cost is nonincreasing in the amount of
accumulated experience. Figure 1 shows one cost function that
satisfies the assumptions--- the cost function which will be used in
Example 2 later in the article. Note the increasing marginal costs
for any level of learning, and the decreasing returns to learning for
any level of output.

 

 \epsfysize=4in
  

\epsffile{Learn1.eps}

\vspace*{-36pt}
      \begin{center} {\bf Figure 1: A Firm's Total Cost as a Function
of Output and Experience} \end{center}

 

 \newpage
 \begin{Large}

PROPOSITION 4.  {\it Under assumptions (A1)-(A7), the following is
true in equilibrium:
   \begin{itemize}
 \item[ (a)]
   Each of the staying firms behaves identically.
   \item[ (b)] If there is a positive measure of exiting firms, they
produce at the zero-experience minimum efficient scale, which is less
than the output produced by staying firms in period 1.
   \item[ (c)]
 There exist no late-entering firms. \footnote{The proof of
Proposition 4 is available in Petrakis, Rasmusen \& Roy (1994), from
Erasmuse@indiana.edu, or from
http://www.indiana.edu/$\sim$busecon/lrning.prf.  }
         \end{itemize}
 }%end of italics

 \end{Large}

     When the American Law Institute began to compile the influential
summaries of the common law known as the ``restatements,'' the
Restatement of Agency was important enough to be second in the series
(after contracts).  The {\it Restatement } defines agency as ``the
fiduciary relation which results from the manifestation of consent by
one person to another that the other shall act on his behalf and
subject to his control, and consent by the other so to
act.''\footnote{ American Law Institute, {\it Restatement of the Law,
Second: Agency 2d}, St. Paul, Minnesota: American Law Institute,
1958, \S 1. All references are to this second restatement, hereafter
called the {\it Restatement}.   }

 Let us begin with the care to check authority, in Illustration 6.
  \begin{small}\begin{quotation}
     {\it Illustration 6: Not Checking Authority Carefully.} ``P
tells T that A is authorized to buy sheep for him when the market
price of wool in another country has reached a certain point.  T
sells sheep to A, relying upon A's untruthful statement that the
price of wool has reached the specified point.''\footnote{{\it
Restatement}, \S 168. } Is $P$ bound by the contract? 

    \end{quotation}  \end{small}


 

 %-----------------------------%-------------------------------------- 
----


   A simple regression of illegitimacy on AFDC and a constant yields
the following relationship:
     \begin{equation} \label{e100}
  \begin{array}{lll }
  Illegitimacy &= 26.91  &{\bf -0.034* AFDC},  \\
    &  (3.05) & {\bf (0.026)  } 

      \end{array}
 \end{equation}
  (standard errors in parentheses) with $R^2=.03$.  Equation
(\ref{e100}) implies that high AFDC payments reduce the illegitimacy
rate, but this is, of course,
  misleading because the simple regression leaves out important
variables. Regression (\ref{e101}) more appropriately controls for a
variety of things which might affect the illegitimacy rate:
 \begin{equation} \label{e101}
  \begin{array}{lll ll}
  Illegitimacy &= 15.74 &+ {\bf 0.016* AFDC} & -0.00011* Income
&+0.024* Urbanization \\
  &  (3.65) & {\bf (0.021)} & (0.00042) & (0.033)\\
   & &&&\\
    & - 1.60* South & + 0.56*Black, & &\\
     & (1.71) & (0.06) & &\\
   \end{array}
 \end{equation}
  with $R^2=0.79$. Equation (\ref{e101}) would leave us with the
conclusion that AFDC payments have almost no effect on the
illegitimacy rate. Nor, surprisingly, do any of the other variables
except race have large or significant coefficients.





\newpage
 \vspace*{-1in}

 \begin{center}
{ A  Data Table}
 \end{center}
 \thispagestyle{empty}
 \begin{tiny}
 \begin{tabular}{|l|lll lll r|}
 \hline
  \hline
  State & Illegitimacy & AFDC & Income & Urban- & Black & Dukakis
&Unexplained Illeg.\\
   & & & & ization & & vote & (from (23)) \\
   & (\%) & (\$/month) & (\$/year) & (\%) & (\%) & (\%) & (\%)\\
  \hline
     Maine & 19.8 & 125 & 12,955 & 36.1 & 0.3
    &      44.7    &       2.8      \\        

    New Hampshire & 14.7 & 140 & 17,049 & 56.3 & 0.6
    &      37.6    &       2.3      \\        

    Vermont & 18.0 & 159 & 12,941 & 23.2 & 0.4 & 48.9
    &       -4.9      \\   

     Massachusetts & 20.9 & 187 & 17,456 &
    90.6 & 4.8 & 53.2 & -6.2 \\
    Rhode Island & 21.8 & 156 & 14,636 & 92.6 & 3.8 &
    55.6 & -5.2 \\
 Connecticut & 23.5 & 166 & \framebox{19,096 }
    & 92.6 & 8.2 & 48.0 & 2.3 \\
     \hline      

    New York & 29.7 & 166 & 16,036 & 91.2 & 16.1 &
    51.6    &       -3.8      \\       

   New Jersey & 23.5 & 119 & 18,615
    & \framebox{100} & 14.4 & 43.8 & 6.2 \\
    Pennsylvania & 25.3 & 111 & 14,072 & 84.8 & 9.4 &
    50.7    &       3.4      \\ 

     \hline
             Ohio & 24.9 & 102 & 13,326 &
    78.9 & 11.0 & 45.0 & 2.6 \\
    Indiana & 22.0 & 84 & 12,834 & 68.1 & 8.4 & 40.2
    & 4.9 \\
  Illinois & 28.1 & 101 & 15,150 & 82.5
    & 16.1 & 49.3 & 6.7 \\
    Michigan & 20.4 & 156 & 14,094 & 79.9 & 14.6 &
    46.4    &      \framebox{-14.0 }        \\
     Wisconsin & 20.7 & 160 & 13,296 & 66.5 & 4.8 & 51.4 & -8.5 \\
     \hline
    Minnesota & 17.1 & 171 & 14,037 & 66.6 & 1.6 &
    52.9 & \framebox{-11.0 } \\
        Iowa    &      16.2    &      124    &      12,475    &      

    43.4 & 1.9 & 54.7 & -3.5 \\
    Missouri & 23.7 & 87 & 13,340 & 66.0 & 10.8 &
    48.2 & 5.9 \\ North Dakota & 13.9 & 125 & 11,388
    & 38.4 & 0.5 & 44.0 & -7.2 \\
  South Dakota & 19.4 & 94 & 11,611 & 29.1 & 0.3 &
    47.2 & 6.2 \\
       Nebraska & 16.8 & 108 & 12,773 &
    47.6 & 3.4 & 39.8 & -0.2 \\
    Kansas & 17.2 & 110 & 13,235 & 53.4 & 5.8 & 44.2
    &       -1.2      \\   

     \hline
            Delaware & 27.7 & 99 & 14,654 & 65.9
    &      18.9    &      44.1    &       2.1      \\        

    Maryland & 31.5 & 115 & 16,397 & 92.9 & 26.1 &
    48.9 & -0.4 \\
   DC & \framebox{59.7 } & 124 & 17,464 &
   \framebox{100} & \framebox{68.6} & \framebox{82.6} & 0.5 \\
    Virginia & 22.8 & 97 & 15,050 & 72.2 & 19.0 &
    40.3 & -2.1 \\
   West Virginia & 21.1 & 80 & 10,306
    & 36.5 & 2.9 & 52.2 & 2.1 \\
    North Carolina & 24.9 & 92 & 12,259 & 55.4 & 22.1
    & 42.0 & -6.0 \\
    South Carolina & 29.0 & 66 & 11,102 & 60.5 & 30.1
    & 38.5 & -5.0 \\
    Georgia & 28.0 & 83 & 12,886 & 64.8 & 26.9 & 40.2
    & -3.5 \\ Florida & 27.5 & 84 & 14,338 & 90.8
    & 14.2 & 39.1 & 5.0 \\
     \hline       

    Kentucky & 20.7 & 72 & 11,081 & 46.1 & 7.5 &
    44.5 & 1.4 \\
   Tennessee & 26.3 & 54 & 12,212 &
    67.1 & 16.3 & 42.1 & 5.7 \\
    Alabama & 26.8 & \framebox{39} & 11,040 & 67.5 & 25.6 &
    40.8 & 0.5 \\
  Mississippi & 35.1 & \framebox{39} & \framebox{9612}
    & 30.5 & 35.6 & 40.1 & 2.4 \\
     \hline
    Arkansas & 24.6 & 63 & 10,670 & 39.7 & 15.9 &
    43.6 & 1.3 \\
  Louisiana & 31.9 & 55 & 10,890 &
    69.2 & 30.6 & 45.7 & -1.4 \\
    Oklahoma & 20.7 & 96 & 10,875 & 58.8 & 6.8 &
    42.1 & -4.8 \\ Texas & 19.0 & 56 & 12,777 &
    81.3 & 11.9 & 44.0 & 0.9 \\
     \hline
    Montana & 19.4 & 120 & 11,264 & 24.2 & \framebox{0.2} &
    47.9 & 0.5 \\
 Idaho & 13.0 & 95 & 11,190 &
    \framebox{20.0} & 0.4 & 37.9 & -0.6 \\
    Wyoming & 15.8 & 117 & 11,667 & 29.2 & 0.8 &
    39.5 & -2.3 \\
    Colorado & 18.9 & 109 & 14,110
    & 81.7 & 3.9 & 46.9 & 1.3 \\
    New Mexico & 29.6 & 82 & 10,752 & 48.9 & 1.7 &
    48.1 & \framebox{14.0} \\
 Arizona & 27.2 & 92 & 13,017 &
    76.4 & 2.7 & 40.0 & \framebox{12.0} \\
    Utah & \framebox{11.1} & 116 & 10,564 & 77.4 & 0.7 &
\framebox{33.8}
    & \framebox{-14.0} \\ Nevada & 16.4 & 86 & 14,799 & 82.6
    & 6.9 & 41.1 & 3.2 \\
     \hline
    Washington & 20.8 & 157 & 14,508 & 81.6 & 2.4 &
    50.0 & -4.8 \\
 Oregon & 22.4 & 123 & 12,776 &
    67.7 & 1.6 & 51.3 & 1.5 \\
    California & 27.2 & 191 & 16,035 & 95.7 & 8.2 &
    48.9 & -6.8 \\
 Alaska & 22.0 & \framebox{226} & 16,357 &
    41.7 & 3.4 & 40.4 & \framebox{-10.0} \\
    Hawaii & 21.3 & 134 & 14,374 & 76.3 & 1.8 & 54.3
    & 1.1 \\
             \hline
   United States & 24.5 & 124 & 14107 & 77.1 & 12.4 & 46.6 & 0\\
     \hline
      \hline
  \multicolumn{8}{c}{ }\\
   \multicolumn{8}{c}{ }\\
    \multicolumn{8}{c}{\bf Table 4: The Data and the Regression
Residuals}\\
 \multicolumn{8}{c}{(Extreme values are boxed. Sources and
definitions are in footnotes 23 and 25.)}\\
       \end{tabular}  

       \end{tiny}

%-----------------------------%--------------------------------------- 
---
 %-------------------------------------------------------------------- 
---

 \begin{center}
{\bf   References}
 \end{center}
      Ayres, Ian \& Robert Gertner (1989) ``Filling Gaps in
Incomplete Contracts: An Economic Theory of Default Rules,'' {\it
Yale Law Journal}, October 1989, 99: 87-130.


Black, Henry (1990) {\it Black's Law Dictionary}, 6th edition, St.
Paul, Minn.: West Pub. Co., 1990.

  Chu, Cyrus \& Yingyi Qian (1992) ``Vicarious Liability Under a
Negligence Rule: An Economic Analysis,'' Stanford Law School, June
1992.

 Hearings Before the Subcomm. on Civil and Constitutional Rights of
the House Comm. on the Judiciary,101st Cong., 1st Sess. (1989) [House
Hearings]

    Klein, William \& J. Mark Ramseyer (1994) {\it Teacher's Manual
for Cases and Materials on Business Associations}, Second Edition,
Westbury, NY: Foundation Press, 1994.

Madison, James (1840) {\it Notes of Debates in the Federal Convention
of 1787.} New York: Norton, 1969.


Mookherjee, D. and D. Ray (1992) ``Learning-By-Doing and Industrial
Stucture: An Overview.''  in {\it Theoretical Issues in Development
Economics}, ed. by B. Dutta, S. G., D. Mookherjee \& D. Ray, New
Delhi: Oxford University Press .

 Schumpeter, Joseph (1950) {\it Capitalism, Socialism, and
Democracy}, 3rd edition, New York: Harper. 


Viner, Jacob (1932) "Cost Curves and Supply Curves" {\it Zeitschrift
Fur National-Okonomie} 1932. 3. (reprinted in American Economic
Association {\it Readings in Price Theory.} Chicago: R.D. Irwin,
1952.)


 \begin{center} 

 {\bf Cases and Statutes }  

 \end{center}

  Keeble v. Hickeringill, 11 East 574, 103 Eng. Rep. 1127 (Queen's
Bench, 1707) (competing schools)

  McCulloch v. Maryland, 4 Wheaton 316, 431 (1819) (power to tax is
power to destroy)


{\it Halter v. Nebraska}, 205 U.S. 34 (1907) (flag on beer label)

 {\it Proceedings of the National Conference of Commissioners on
Uniform State Laws,} 323-324 (1917) (Uniform Flag Act)

  {\it Ex parte Starr}, 263 F. 145 (D. Mont.1920) (10 years hard
labor for insulting a flag)

{\it State v.  Peacock}, 138 Me. 339 (1942).  (desecration within a
home)

  10 U. S. C. @ 772 (f) (actors can wear military uniforms if they do
not discredit the military)

Section 42.09 of the Texas Penal Code (1989) (flag desecration)



 % \end{verbatim}


%~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
\newpage

 \begin{center}
 {\bf  6. REFERENCES}\footnote{Eric
Rasmusen, 	  	  Indiana University
School of Business, Rm. 456,  

  1309 E 10th Street,
  Bloomington, Indiana, 47405-1701.
  Office: (812) 855-9219.  Fax: 812-855-3354. Email:  
Erasmuse@Indiana.edu. Web:   
http://ezinfo.ucs.indiana.edu/$\sim$erasmuse.  Revised, June 26, 1996
}

\end{center}


 Basil Blackwell (1985) {\it Guide for Authors.} Oxford:
Basil Blackwell, 1985.

 Bower et al.  (1994) ``Protocol, Etiquette, and Responsibilities of  
Reviewers in Finance'' ,  {\it Financial Practice and Education},  
Fall/Winter 199418-24.


  Davis, John  (1940) ``The  the Argument of  an Appeal`` from {\it  
American Bar Association Journal},      December 1940, 26: 895-899.



 Fowler, H.  (1965) {\it A Dictionary of Modern English Usage,}
Second Edition.  New York: Oxford University Press, 1965.

 Halmos, Paul (1970) ``How to Write Mathematics''  {\it
L'Enseignement Mathematique.} May/June 1970.  16, 2: 123-152.



     Harman Eleanor (1975), ``Hints on Poofreading'' {\it Scholarly  
Publishing}, pp. 151-157 (January 1975). 



 McCloskey, Donald (1985) ``Economical Writing''  {\it
Economic Inquiry.} April 1985.  24, 2: 187-222.


    ``The University of Chicago.  Starting Research Early'' Harry  
Roberts and Roman Weil. (August 14, 1970)


    Sonnenschein, Hugo  \& Dorothy Hodges (1980) ``Manual for  
Econometrica Authors'', {\it Econometrica}  48: 1073-1081 (July  
1980).


  Stigler, George (1977) ``The Conference Handbook``, {\it Journal of  
Political Economy}, 85: 441-443.


 Strunk, William \& E. White (1959) {\it The Elements of
Style.} New York: Macmillan, 1959.

 Tufte, Edward (1983) {\it The Visual Display of Quantitative
Information}. Chesire, Conn.: Graphics Press, 1983.

 Weiner, E.  (1984) {\it The Oxford Guide to the English
Language.} Oxford: Oxford University Press, 1984.





 \end{document}


