Research for Prices and Values

The Commander, Seventh Fleet, asked CNA to assess the security environment of the Asia-Pacific Region between now and 2010. This research memorandum focuses on the most probable evolutionary trends for Korea during this period. For Korea the development of an Asian nation-state system comes at a time of historic power relative to anything of the past century. The problem for the Korean people, historically, was that Korea was a weak state surrounded by strong empires in China, Russia, and Japan. The economic development of Korea over the past 30 years is a remarkable success story, although this development took place in a peaceful stable environment. The problem facing Korea is whether it can successfully continue its economic progress in a world that is more competitive, more wary of exploitative economic practices, any more dominated by large countries who have in the past been enemies.

The results of exploratory research on models and techniques used in estimating the effects of competition as well as several other variables in weapon system production contract prices are reported. The purpose of this effort was to examine the use of pooled cross-section, time-series data in modeling the acquisition program and its environment. The approach is not tied specifically to competitive acquisitions; however, the primary aim of the research was to examine models used to estimate the effects of competition.

The rate of productivity growth in the U.S. economy and the extent and effects of government regulation have been matters of great concern in recent years. This study is an empirical investigation of the effect of regulation on productivity in the auto and steel industries during the period 1958-1980. The first step in the study was to develop numerical measures of regulation. These measures were then employed in two empirical models. In the single-equation model, the level or rate of growth of productivity was estimated as a function of output, technology, regulation, and other variables. In the multiequation model, cost and input cost shares were jointly estimated as a function of input prices, output, technology, and regulation. The estimated effect of regulation on productivity varied, depending on the model and the measure of regulation used. For example, the multiequation model indicated a positive effect of regulation on productivity in the steel industry. For the auto industry, however, it indicated that regulation generally had the expected negative effect on productivity. Over the period 1973-1980, regulation was estimated to have lowered the annual rate of productivity growth in the auto industry by 0.55 to 2.00 percentage points, depending on the measures of output and regulation. For Additional Information See 02 052701 00.

This paper provides a framework that conceives vulnerability as a function of both dependence and the risk that hurt will be imposed. Included is an approach for reducing vulnerability.