This paper illustrates that the cost of regulation can be negative when regulation-induced innovation has a stochastic element. There are two aspects to this finding. First, if the firm is risk neutral then regulation necessarily raises expected costs but costs can be lower ex post for some...

When supply and demand are recursive, with uncorrelated cross-equation errors, least-squares estimation has no simultaneous-equation bias. Supply to a daily fish market is determined by the previous night's catch; hence this would appear to be a good example of a recursive market. Despite this,...

In an earlier Foresight article, William Bassin proposed a theoretical rule of thumb to choose between including or excluding an explanatory variable in a regression model. Peter takes a critical look at that rule of thumb, and he shows that it is based on the unrealistic assumption of zero...

To compute the Blinder-Oaxaca decomposition and associated standard errors a practitioner needs to be comfortable using vector and matrix software manipulations. This paper proposes a computational trick for producing these computations by running an artificial regression.