Urban and regional economists are often asked to construct central place models which will properly describe the urban hierarchy (in terms of the service sector) of the region which they are studying. In all such studies, the chief analytical problem is basically one of correctly defining (and measuring) tertiary activity and of correctly weighting the various functions which make up the service sector.
In this paper, the authors review six alternative methods for measuring and weighting tertiary functions. The mathematical and conceptual properties of each approach are discussed and evaluated. In the second part of the article, the authors compare the actual results obtained by these alternative methods, using data on the Quebec urban system to test their results. They conclude that no one method is entirely satisfactory, each approach measuring a part of reality. But some methods do nevertheless seem to perform better than others: in this respect, the use of localization coefficient type approach seems generally to give the least biased results.
The application of the computer to the servicing of deposit accounts at banks and non-bank financial intermediaries is a fairly recent development. Most empirical studies of economies of scale in this industry date prior to this technological transition. There is one notable exception, however, and that is the study by D. L. Daniel, W. A. Longbrake and N. B. Murphy (1972), in which they reported economies of scale in the servicing of checking deposits for computerized banks, especially when the number of such accounts exceeds the 10,600 mark. The present study examines the issue for a different type of computer-using deposit institution, namely: a sample of 128 Canadian Credit Unions located in the district of Quebec and referred to as the "Caisses Populaires" (C.P.'s). These institutions were chosen for the study because they present some unique characteristics and also because they were among the first Canadian financial institutions to computerize the servicing of their deposit operations.
Following G. J. Benston (1970) and F. Bell and N. Murphy (1968), the data has been tested using two different models. The empirical results of both tests indicate that computerization did not generate any economies of scale in the checking deposit accounts. Further analysis reveals that the potential economies of scale were captured by the lessor of the equipment through a financial arrangement tying the rent to the number of cheking accounts to be serviced.
It is not easy to understand why, and how, orthodox economists who do not believe either in the labor-theory or in the cost-theory of value, continue to favor Adam Smith's Wealth of Nations, but forget such economists as Condillac, whose value theory is nearer to theirs and whose bicentenary we also commemorate.
Adam Smith, it is submitted, is still interesting but for reasons far enough from orthodox economic theory. Smith is in fact, according to some recent interpretations, more of a welfare economist, concerned with moral values, than a partial analysis economist: his theory of value derives from ethical considerations following Hume and keeps its normative flavor throughout instead of being solely a tentative explanation of prices. Some apparently contradictory assertions about value could thus be reconciled in a unifying theory, as explained by such authors as Lindgren (1973) or Rieseman (1976).
If it is possible to reconcile many apparently contradictory views in Adam Smith's works, thanks to a more holistic approach, it is suggested that a similar approach could be applied to a more controversial economist, Karl Marx, whose career may be compared to that of Smith in many respects.
The assumption of a single price at any time is very generally imposed on market theorizing. It is unrealistic, but generally accepted because of the needs of welfare theory, and of current theoretical methods. In order to evaluate the significance of the loss in realism from the use of this assumption, it seems to be worthwhile to start with the other extreme of complete ignorance in a market, and allow buyers and sellers to pair off at random, allowing a diversity of prices. It is very interesting that in such a "blind market" the quantity traded tends to be larger, by about 44 per cent.
The theory of such a market can be based on a Marshallian industry, and many different versions are suggested. The theory does seem to give useful insight into the results of imposing uniform pricing by barbers, and uniform wage rates in labour markets. The loss in trade and employment seems to be great enough that we should examine a little more carefully the arguments that have been accepted so easily that such uniformity implies greater equity.