strategic sourcing for the short lifecycle products abstract motivated by the sourcing of integrated circuits in the electronics industry we study sourcing strategies for short lifecycle products with two substitutable parts the first part referred to as the fast part is highly responsive while having negligible fixed cost but high variable cost the second part referred to as the slow part is opposite in these properties we build models starting with the fast part to target the initial market then switching to the pre ordered slow part for volume production and eventually transitioning back to the fast part until the product s end of lifecycle assuming an optional second order for the slow part we model the sourcing process by a two stage stochastic program the thresholds for the fixed costs and the optimal ordering policies for the two orders are exactly derived assuming the demand throughout the product lifecycle as a multivariate normal distribution we approximately compute the policy parameters and expected profit for the two order problem in comparison to the fast part only strategy and one order slow part strategy the second order of the slow part could be of great value if the demand correlation across time is high and or the cost difference between the two parts is large we also study the joint impact of fixed cost and leadtime as well as demand variation on the sourcing strategies

formulating research policy on expert advice abstract national research assessments represent the principal policy used by countries with public university systems to improve the quality of their universities research they typically employ expert panels of local academics to assess journal quality and use such assessments to reward publications we propose a model of how experts assess quality and test this model using data from the recent australian assessment controlling for objective quality we show that experts cognitive biases dominate their assessments consequently such assessments exaggerate the quality of the experts research and understate that of their colleagues our model can explain 95 of the variation in assessments

what are the top five journals in economics a new meta ranking abstractwe construct a meta ranking of 277 economics journals based on 22 different rankings the ranking incorporates bibliometric indicators from four different databases web of science scopus google scholar and repec we account for the different scaling of the bibliometric indicators by standardizing each ranking score we run a principal component analysis to assign weights to each ranking in our meta ranking the top five journals are given by quarterly journal of economics journal of financial economics journal of economic literature jel journal of finance and econometrica additionally leaving out the jel as a survey journal and the finance journals in our top 10 list we confirm the perceived top five journals in the economics profession

on the integration of production and financial hedging decisions in global markets we study the integrated operational and financial hedging decisions faced by a global firm who sells to both home and foreign markets production occurs either at a single facility located in one of the markets or at two facilities one in each market the company has to invest in capacity before the selling season starts when the demand in both markets and the currency exchange rate are uncertain the currency exchange rate risk can be hedged by delaying allocation of the capacity to specific markets until both the currency and demand uncertainties are resolved and or by buying financial option contracts on the currency exchange rate when capacity commitment is made a mean variance utility function is used to model the firm s risk aversion in decision making we derive the joint optimal capacity and financial option decision and analyze the impact of the delayed allocation option and the financial options on capacity commitment and the firm s performance we show that the firm s financial hedging strategy ties closely to and can have both quantitative and qualitative impact on the firm s operational strategy the use or lack of use of financial hedges can go beyond affecting the magnitude of capacity levels by altering global supply chain structural choices such as the desired location and number of production facilities to be employed to meet global demand

piketty and the growth dilemma revisited in the context of ecological economics 2017 elsevier b v piketty s capital has provoked considerable debate regarding inequality the existence of increasing inequality creates a challenge for ecological economics in this paper we set out some of the problems inherent in piketty s approach and how they are addressed from the point of view of ecological economics we use jackson and victor s response as a point of departure to make several points piketty s work involves an unreconciled inconsistency between his laws and the institutional context which becomes problematic when one starts to think about inevitability he simply assumes away ecological problems to make future forecasts for inequality as such his forecasts are undermined since ecological issues are fundamental to any viable future economy furthermore piketty effectively reproduces rather than contests the mainstream practice of delegating ecological issues to a sub discipline jackson and victor meanwhile focus on the mainstream economic aspect of piketty s work and construct a model to contest a model in so doing they provide an ideational response to what is also a problem of ideological frameworks though it can be important to contest an idea they inadvertently through family resemblance contribute to the reproduction of the problematic position of ecological concerns within dominant ways of conceiving economics

inconsistent preferences in environmental protection investment and the central government s optimal policy environmental protection plans cannot succeed without full cooperation among related units however inconsistent investment preferences toward environmental protection increase the damage to the environment this article employs the contract mechanism to analyse environmental protection effects when the central government directly subsidizes the local governments the results reveal that subsidies from the central government are not only unable to solve the problem of the inconsistent investment preferences among the central and local governments but also induce the free riding behaviour of local governments because of the free riding behaviour of the local governments there is no such equilibrium in which the central government prefers the sequential investment mode while the local governments prefer the simultaneous investment mode

forward looking contrast explanation illustrated using the great moderation in reorienting economics lawson introduces the concept of contrast explanation initially defined using the question form why x rather than y where it is a surprising or unexpected outcome that motivates the search for an explanation of the contrast in the following paper i elaborate upon the initial question form asking why the perpetuation of y rather than an alternative possible x this question focuses on relative stability but can be a sceptical or contrarian form from a realist perspective any stability expressed in events as regularity is highly conditional as such underlying the question form is an invitation to explore the instability or vulnerability of order with a view to the ways that order might break down this motivates a forward looking focus of investigation that is particularly appropriate for looking at systemic issues in economics i use the global financial crisis to illustrate the potential here copyright oxford university press

contrast explanation in economics its context meaning and potential in this article we place tony lawson s account of contrast explanation in context lawson s development of it is given meaning both by the roots of the approach in his work on social ontology and the state of economics that provides the grounds for the critique contained in that social ontology this is important because such an approach to explanation is not new most notably van fraassen and garfinkel have developed it in particular ways and for particular purposes within the philosophy of science and social theory setting out the different ways in which the contrastive approach has been developed is useful for identifying what is different about lawson s approach its potential and limits lawson s proposal is more modest and focusses on causal investigation in a manner that flows from his approach to social ontology contrast explanation provides a substitute for controlled experiments and facilitates identifying social mechanisms it also enables exploration of the manifold presuppositions of our explanatory questions we argue that this is a useful and important contribution to overcoming some of the many problems economics faces

stochastic convenience yield and the pricing of oil contingent claims this paper develops and empirically tests a two factor model for pricing financial and real assets contingent on the price of oil the factors are the spot price of oil and the instantaneous convenience yield the parameters of the model are estimated using weekly oil futures contract prices from january 1984 to november 1988 and the model s performance is assessed out of sample by valuing futures contracts over the period november 1988 to may 1989 finally the model is applied to determine the present values of one barrel of oil deliverable in one to ten years time

evaluating natural resource investments notwithstanding impressive advances in the theory of finance over the past 2 decades practical procedures for capital budgeting have evolved only slowly the standard technique which has remained unchanged in essentials since it was originally proposed see dean 1951 bierman and smidt 1960 derives from a simple adaptation of the fisher 1907 model of valuation under certainty under this technique expected cash flows from an investment project are discounted at a rate deemed appropriate to their risk and the resulting present value is compared with the cost of the project this standard textbook technique reflects modern theoretical developments only insofar as estimates of the discount rate may be obtained from crude application of single period asset pricing theory but see brennan 1973 bogue and roll 1974 turnbull 1977 constantinides 1978 the inadequacy of this approach to capital budgeting is widely acknowledged although not widely discussed its obvious deficiency is its the evaluation of mining and other natural resource projects is made particularly difficult by the high degree of uncertainty attaching to output prices it is shown that the techniques of continuous time arbitrage and stochastic control theory may be used not only to value such projects but also to determine the optimal policies for developing managing and abandoning them the approach may be adapted to a wide variety of contexts outside the natural resource sector where uncertainty about future project revenues is a paramount concern

investments holdup and the form of market contracts the authors analyze incomplete contracts to induce efficient investment with exogenous switching costs fixed price contracts are efficient generate some rigidity in prices are renegotiated intermittently by possibly small amounts and when inflation is positive generate asymmetric responses to shocks all consistent with evidence on prices and wages with two sided specific investments efficiency requires prices to have sufficient escalator clauses to avoid renegotiation as observed in many long term contracts a third case with one sided specific investments can generate take or pay contracts and explain why firms sometimes pay for specific investments that appear to benefit employees directly

macroeconomics after the crisis time to deal with the pretense of knowledge syndrome the recent financial crisis has damaged the reputation of macroeconomics largely for its inability to predict the impending financial and economic crisis to be honest this inability to predict does not concern me much it is almost tautological that severe crises are essentially unpredictable for otherwise they would not cause such a high degree of distress what does concern me about my discipline is that its current core by which i mainly mean the so called dynamic stochastic general equilibrium approach has become so mesmerized with its own internal logic that it has begun to confuse the precision it has achieved about its own world with the precision that it has about the real one this is dangerous for both methodological and policy reasons to be fair to our field an enormous amount of work at the intersection of macroeconomics and corporate finance has been chasing many of the issues that played a central role during the current crisis including liquidity evaporation collateral shortages bubbles crises panics fire sales risk shifting contagion and the like however much of this literature belongs to the periphery of macroeconomics rather than to its core i will discuss the distinction between the core and the periphery of macroeconomics as well as the futile nature of the integrationist movement that is the process of gradually bringing the insights of the periphery into the dynamic stochastic general equilibrium structure i argue that the complexity of macroeconomic interactions limits the knowledge we can ever attain and that we need to place this fact at the center of our analysis we should consider what this complexity does to the actions and reactions of the economic agent and seek analytical tools and macroeconomic policies that are robust to the enormous uncertainty to which we are confined

dispatch planning using newsvendor dual problems and occupation times application to hydropower abstract we consider price driven dispatch planning under price uncertainty a storable commodity is optimally sold and purchased over time first we consider models where the storage level is constrained in expectation the dual of the corresponding optimization problem is related to the newsvendor problem exact solutions of bang bang type are given the second methodology is for high frequency dispatch decisions in multistage stochastic programming models to overcome the curse of dimensionality prices are modeled by occupation times at price levels in a case study we consider a pumped storage hydropower plant numerical solutions are given which have similar patterns as for the first exactly solvable problems

the rationale of the mean standard deviation analysis skewness preference and the demand for money publisher summary this chapter discusses the rationale of the mean standard deviation analysis skewness preference and the demand for money in january 1969 issue of the review of economic studies karl borch and martin feldstein separately criticized the widely used mean variance analysis of portfolio selection borch contended that any system of upward sloping mean standard deviation e s indifference curves can be shown to be inconsistent with the basic axiom of choice under uncertainty he pointed out that one can always pick any two points on an upward sloping indifference curve to represent two bernoulli distributions with probability 1 p of gaining the same amount x in both the cases and probability p of gaining y1 in the case of one distribution and y2 in the case of the second distribution with y2 y1 if the second distribution represents the point to the northeast of the other point then by the dominance axiom the second distribution must be preferred to the first which contradicts the basic meaning of indifference curves feldstein by using a log utility function and a lognormal distribution for investment outcome showed that e s indifference curves for a risk averter need not be convex downwards though upward sloping they would change from convex to concave once the standard deviation of the outcome exceeds the mean multiplied by on the face of it this seems to suggest that risk aversion might decrease as risk is increased beyond a certain extent

the uk research assessment exercise and the narrowing of uk economics the aim of this paper is to delineate an empirically grounded structure causal going concern recursive model of uk economics that in the context of the rae and local department decision making explains the progressive elimination of heterodox economics the progressive homogenization of mainstream economics from 1992 to the present and the continued rise to dominance of a select group of departments and indicates whether these regularities will continue under the research excellence framework selectivity exercise in 2014

transforming traditional university structures for the knowledge economy through multidisciplinary institutes within the uk considerable policy support has been provided to create multidisciplinary institutes that encourage academics to develop new knowledge for industry and societal problems we consider four large traditional uk universities that have gained significant funding for such activities we examine the changes in institutional structures necessary to enable universities to transform from single discipline based schools to multidisciplinary institutes new incentives for working across schools the cross subsidy transfer of industry funded research and teaching income and senior role models are observed to enable the development of a multidisciplinary research capability yet this capability is not easily sustained it appears that for institutes to survive beyond the initial funding round they regress towards traditional school activities of peer reviewed research and teaching we conclude that to transform academic behaviour a fundamental shift in promotion procedures which remain heavily weighted towards peer reviewed journal publication within single disciplines is required copyright the author 2012 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

renegotiation design with unverifiable information this paper considers a buyer seller relationship with observable but unverifiable investments and or random utility parameters in such situations it is known that contract renegotiation may prevent the implementation of first best outcomes in this paper we show however that efficient investments and optimal risk sharing can typically be achieved provided the initial contract is able to monitor the ex post renegotiation process specifically we focus on the following two features of renegotiation design first default options in case renegotiation breaks down second the allocation of all bargaining power to either contracting party moreover we show that these two features can be obtained in standard rubinstein bargaining games through contractual provisions such as specific performance clauses and penalties for delay or equivalently financial hostages refundable without interest

what is this school called neoclassical economics what is this school called neoclassical economics does it exist should it where does the term neoclassical economics come from and is there any connection between any of the current interpretations of the term and its original meaning how do we make sense of competing current interpretations is there a sustainable formulation these and related questions are raised and answered in an attempt to bring clarity to ongoing economic discussion and debate thereby to under labour for a more relevant academic economics discipline

real options wage bargaining factor subsidies and employment the paper combines a translog variable cost function a bargaining model of wage determination and a real option model determining real capital using this framework the effect of factor subsidies on labour demand is estimated based on aggregate panel data for norwegian manufacturing industry in the period 1980 1988

the research assessment exercise the state and the dominance of mainstream economics in british universities in previous research on the impact of the research assessment exercise on heterodox economics and heterodox economists in the uk the author concluded that reliance on diamond list journals to rank departments would drive economic departments to discriminate positively in terms of their hiring promotion and research strategies in favour of mainstream economists and their research in order to maintain or improve their ranking as a consequence the author predicted there would be no or only a token presence of heterodox economists in an increasing number of departments whether the conclusions still hold and the predictions materialise is the subject of the paper copyright 2007 oxford university press

ranking economics journals economics departments and economists using teaching focused research productivity author affiliation melody lo college of business university of texas at san antonio san antonio tx 78249 usa melody lo utsa edumc sunny wong department of economics university of san francisco san francisco ca 94117 usa mwong11 usfca edufranklin g mixon jr department of economics auburn university auburn al 36849 usa fmixon comcast net corresponding author acknowledgment the authors thank two anonymous referees of this journal john pepper and charles sawyer for helpful comments we thank helen au yeung subhashish sengupta and augustina pesci gonzalez for collecting the data used in this study the usual caveat applies 1 introductionprevious studies have accurately asserted that rankings of economists research output and economics departments can be just as important to academic economists as the espn football poll is to college football coaches gibbons and fish 1991 mixon and upadhyaya 2001 as a result of this importance economists have produced a substantial amount of research on individual department and journal rankings over the past 30 years much of this literature stream has examined the productivity of traditional forms of economics research in order to rank economists and institutions this study constructs new rankings of economics journals economics departments and economists that are based on i a tabulation of citations to economic education articles published in the economics literature since 1991 and ii a tabulation of the number of economic education articles and pages published since 1991 1 given this methodology our ranking emphasizes teaching focused research thus our construct offers an interesting alternative to economics journal department and faculty rankings that is based on the productivity of traditional types of economics research 2 journal ranking methodology and resultsto construct our teaching focused research ranking of economics journals departments and faculty we examined published articles that list one or more of the economic education classification codes from the journal of economic literature hereafter jel a200 a290 the jel redefined its classification codes for indexing economics research in 1991 so our ranking construct includes all jel classified journal articles in economic education from 1991 through april 2005 overall there are 1535 articles within our time frame table 1 lists the top 20 economics journals with regard to the quantity of production of economic education research of course some journals specialize in this area of economics research e g journal of economic education jee while others publish only an occasional piece in the genre e g economic inquiry ei thus the ranking in table 1 reflects this element at the top of the list with 429 articles since 1991 is the jee the american economic review aer is ranked fifth 54 articles while the journal of economic perspectives jep is 13th 24 articles a few well known regional associations general journals are also in the top 20 among these are the southern economic journal sej in seventh place 34 articles and ei in 16th place 16 articles table 1 teaching focused research productivity based on numbers of articles published top 20 economics journals table omitted see article image to account for the relative importance of economics journals in the field of economic education we first tabulate the number of economic education articles that are contained in the social sciences citation index ssci for each journal a total of 831 of the 1535 articles published since 1991 that list the jel codes for economic education are contained in the ssci next we identified the importance of journals in the field of economic education by examining total citations as well as total citations per article received by a journal s economic education articles published since 1991

tantalus on the road to asymptopia my first reaction to the credibility revolution in empirical economics authored by joshua d angrist and jorn steffen pischke was wow this paper makes a stunningly good case for relying on purposefully randomized or accidentally randomized experiments to relieve the doubts that afflict inferences from nonexperimental data on further reflection i realized that i may have been overcome with irrational exuberance moreover with this great honor bestowed on my con article i couldn t easily throw this child of mine overboard as angrist and pischke persuasively argue either purposefully randomized experiments or accidentally randomized natural experiments can be extremely helpful but angrist and pischke seem to me to overstate the potential benefits of the approach i begin with some thoughts about the inevitable limits of randomization and the need for sensitivity analysis in this area as in all areas of applied empirical work i argue that the recent financial catastrophe is a powerful illustration of the fact that extrapolating from natural experiments will inevitably be hazardous i discuss how the difficulties of applied econometric work cannot be evaded with econometric innovations offering as examples some under recognized difficulties with instrumental variables and robust standard errors i conclude with comments about the shortcomings of an experimentalist paradigm as applied to macroeconomics and some warnings about the willingness of applied economists to apply push button methodologies without sufficient hard thought regarding their applicability and shortcomings

an updated ranking of academic journals in economics we conduct an update of the ranking of economic journals by kalaitzidakis mamuneas and stengos 2003 however our present study differs methodologically from that earlier study in an important dimension we use a rolling window of years between 2003 and 2008 for each year counting the number of citations of articles published in the previous ten years this allows us to obtain a smoother longer view of the evolution of rankings in the period under consideration and avoid the inherent randomness that may exist at any particular year using this framework we proceed to examine the relative ranking of the canadian journal of economics over time we find the canadian journal managed not only to maintain its relative position but to also improve it over time

timing of investments holdup and total welfare abstract we explore holdup with simultaneous and sequential investment with simultaneous investment both investors are held up with sequential investment contracting becomes possible after the project has commenced so the second investor avoids being held up if the investments are independent sequential investment increases cost of delay reduces the incentive for the first player to invest and increases the second player s incentive to invest the paper shows the timing of investment can act as an additional form of holdup if they have the option when to invest a party may choose the regime that does not maximize total welfare

the risk averse and prudent newsboy the effects of risk and risk aversion in the single period inventory newsboy problem are examined comparative static effects of changes in the various price and cost parameters are determined and related to the newsboy s risk aversion the addition of a random background wealth and of an increase in the riskiness of newspaper demand are also examined although many of the comparative effects generally are ambiguous some fairly simple restrictions on preferences and or risk increases are shown to lead to qualitatively deterministic results

capacity reservation under spot market price uncertainty abstract capacity reservation contracts and spot markets are two alternative purchasing practices we focus on the cost effective management of the combined use of these two procurement sources due to the variability of the spot market prices and demand uncertainty the flexibility of combined sourcing can be advantageous spot market purchasing is a benefit in case of low spot market prices or insufficient reserved capacity and the capacity reservation contract is an operational risk hedging for high spot market price incidents the structure of the optimal combined purchasing policy is complex in this paper we consider a simple and easy to implement capacity reservation base stock policy and compare it to single sourcing options we examine the joint effect of demand and spot market price uncertainty our analysis shows that in the case of large spot market price variability the combined sourcing is superior over spot market sourcing even in the case of low average spot price the combined sourcing is also superior over long term sourcing even in the case of high average spot price if there is large spot market price variability analytical and simulation results are presented to show the effect of the different price cost and uncertainty parameters on the optimal capacity reservation base stock policy and on the expected percentage gain over single sourcing

demand information and spot price information supply chains trading in spot markets abstract this paper investigates the effect of information updating on the members of a two stage supply chain in the presence of spot market the supplier decides the contract price new information becomes available as time progresses the manufacturer updates his belief on demand and or spot price and subsequently decides the contract quantity the demand and spot price are correlated thus the new demand information also updates the belief on the spot price and vice versa we model the problem with an information updating stackelberg game and derive unique equilibrium strategies previous studies have considered only the demand information and concluded that improved demand information always benefits the supplier by contrast we demonstrate that improved demand information benefits both the supplier and manufacturer if the correlation coefficient between the two uncertainties has a small positive value and benefits the manufacturer but hurts the supplier otherwise moreover superior spot price information benefits only the manufacturer and always hurts the supplier surprisingly superior information fails to improve the performance of the supply chain and only changes the allocation of the profits between the supplier and manufacturer our findings likewise provide insights into when the supplier intends to use the contract channel and which type of information updating facility or expertise to invest in if a choice must be made

the credibility revolution in empirical economics how better research design is taking the con out of econometrics since edward leamer s memorable 1983 paper let s take the con out of econometrics empirical microeconomics has experienced a credibility revolution while leamer s suggested remedy sensitivity analysis has played a role in this we argue that the primary engine driving improvement has been a focus on the quality of empirical research designs the advantages of a good research design are perhaps most easily apparent in research using random assignment we begin with an overview of leamer s 1983 critique and his proposed remedies we then turn to the key factors we see contributing to improved empirical work including the availability of more and better data along with advances in theoretical econometric understanding but especially the fact that research design has moved front and center in much of empirical micro we offer a brief digression into macroeconomics and industrial organization where progress by our lights is less dramatic although there is work in both fields that we find encouraging finally we discuss the view that the design pendulum has swung too far critics of design driven studies argue that in pursuit of clean and credible research designs researchers seek good answers instead of good questions we briefly respond to this concern which worries us little

determining the environmental effects of indirect subsidies integrated method and application to the netherlands the term environmentally damaging subsidies covers all sorts of direct and indirect subsidies with negative consequences for the environment this article presents a method to determine the environmental impact of these subsidies it combines a microeconomic framework with an environmental impact module the method is particularly useful for analysing indirect subsidies these are often hidden and therefore not recognized as subsidies use of the method will provide a basis for formulating corrective policy the method is applied to several important subsidies in the netherlands in agriculture energy and transport sectors the results reveal large environmental effects which deserve serious attention from policy makers to illustrate the specific features of the method its application to a particular subsidy namely the exemption of excise taxes on aviation fuels is presented in full detail

integrated demand and procurement portfolio management with spot market volatility and option contracts abstract the newsvendor problem aims to optimally choose a level of order quantity to respond to a known demand distribution with the objective of maximizing expected return in practice the decision maker is often challenged with more complex settings involving multiple decisions and uncertainties for instance firms may benefit from choosing the set of customer orders to satisfy it may also be worthwhile for many firms to select a supply portfolio instead of relying on a single procurement mode this paper provides novel optimization models and solution techniques that can help businesses to achieve the maximum performance from a given production system by optimally selecting customer demands procurement quantity spot market purchase and option contract usage we specifically focus on the special case of normally distributed random variables and provide an exact solution method when the primary procurement quantity is not a decision variable the problem becomes a version of a stochastic knapsack problem for this case we present an efficient heuristic solution algorithm based on properties of an optimal solution and empirically show that it provides high quality solutions we also provide a broad numerical study to examine the sensitivity of integrated procurement and demand selection strategies to key problem parameters

investment under alternative return assumptions comparing random walks and mean reversion abstract many recent theoretical papers have come under attack for modeling prices as geometric brownian motion this process can diverge over time implying that firms facing this price process can earn infinite profits we explore the significance of this attack and contrast investment under geometric brownian motion with investment assuming mean reversion while analytically more complex mean reversion in many cases is a more plausible assumption allowing for supply responses to increasing prices we show that cumulative investment is generally unaffected by the use of a mean reversion process rather than geometric brownian motion and provide an explanation for this result

do government policies distort relative factor prices evidence from colombia developing countries have a variety of governmental and trade policies which are intended to affect the return to capital in an estimation of the return to capital in colombia an attempt is made to account for taxes both direct and indirect governmental subsidies and trade taxes and subsidies the economic income that accrues to colombia s capital stock is estimated by estimating the growth of the capital stock and the net cash flows generated by that capital additionally the average annual effective rate of protection to the manufacturing sector is estimated then using these effective rates of protection a test is made to determine if in fact protectionism affects the return to capital results reveal that there is a significant positive relationship between trade protection and the rate of return to capital in colombia furthermore support is found for a stopler samuelson effect of higher prices in the labourintensive agricultural sector leading to decline in the return for capital therefore

the stochastic ordering of mean preserving transformations and its applications abstract the stochastic variability measures the degree of uncertainty for random demand and or price in various operations problems its ordering property under mean preserving transformation allows us to study the impact of demand price uncertainty on the optimal decisions and the associated objective values based on chebyshev s algebraic inequality we provide a general framework for stochastic variability ordering under any mean preserving transformation that can be parameterized by a single scalar and apply it to a broad class of specific transformations including the widely used mean preserving affine transformation truncation and capping the application to mean preserving affine transformation rectifies an incorrect proof of an important result in the inventory literature which has gone unnoticed for more than two decades the application to mean preserving truncation addresses inventory strategies in decentralized supply chains and the application to mean preserving capping sheds light on using option contracts for procurement risk management

applied economics contrast explanation and asymmetric information the purpose of this paper is to illustrate the workings of an explanatory method for applied economics it is a method that is rarely explicitly examined or defended in the discipline but which i believe has a lot of promise for the sorts of contexts that economists must address my strategy is to show that and how the method in question effectively underpins at least one study already widely regarded as explanatorily successful copyright the author 2008 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

multi product lot sizing with a transportation capacity reservation contract abstract although transportation costs can form more than 50 of the total logistics costs of a product they are often neglected in lot sizing research and modelling nonetheless the body of research that does take transportation costs into account is gradually growing the bulk of this type of research however assumes that freight rates decrease as shipping weights and or volumes increase inspired by the situation with a large european manufacturing company we study a multi product lot sizing model where in any period any portion of a reserved transportation capacity can be used in exchange for a guaranteed price if the capacity is insufficient then the shipper needs to contract additional transportation capacity on the spot market where the prevailing price is higher accordingly the freight rates are piece wise linearly increasing in our model we prove that the problem of determining transportation lot sizes so as to meet warehouse demand with no backlogging allowed and to minimize total costs that is the sum of inventory carrying ordering and transportation costs is np hard in the strong sense furthermore we present a lagrangean relaxation algorithm to compute lower and upper bounds of which comprehensive computational experiments show the compelling performance in terms of quality and speed

two moment decision models and expected utility maximization two moment decision models are consistent with expected utility maximization only if the choice set or the agent s preferences are restricted this paper identifies a restriction which is sufficient to ensure this consistency and confirms that it holds in many economic models the implications for economic analysis are then derived two different approaches to representing an agent s preferences over strategies yielding random payoffs are in wide use under the mean standard deviation ms approach the agent is assumed to rank the alternatives according to the value of some function defined over the first two moments of the random payoff while the expected utility eu criterion assumes that the expected value of some utility function defined over payoffs is used instead the fact that there are these two competing approaches has generated a considerable literature some authors are concerned with the advantages and disadvantages of each while others deal with conditions under which the potentially different approaches would yield the same results or at least approximately so space does not

staged financing an agency perspective this paper investigates the structure of outside investment in a profitable entrepreneurial venture though efficient financing the venture up front may be infeasible because the entrepreneur cannot commit to not renegotiate down the outside investor s claim once she s sunk her investment staging the investment over time helps to mitigate this commitment problem the early rounds of investment create collateral that support the later rounds we characterize the optimal staged investment path and show how it is affected by various features of the venture the predictions of the model are consistent with observations on staged financing in venture capital

an exact algorithm for the capacitated total quantity discount problem in this paper we analyze the procurement problem of a company that needs to purchase a number of products from a set of suppliers to satisfy demand the suppliers offer total quantity discounts and the company aims at selecting a set of suppliers so to satisfy product demand at minimum purchasing cost the problem known as total quantity discount problem tqdp is strongly np hard we study different families of valid inequalities and provide a branch and cut approach to solve the capacitated variant of the problem capacitated tqdp where the quantity available for a product from a supplier is limited a hybrid algorithm called help heuristic enhancement from lp is used to provide an initial feasible solution to the exact approach help exploits information provided by the continuous relaxation problem to construct neighborhoods optimally searched through the solution of mixed integer subproblems a streamlined version of the proposed exact method can optimally solve in a reasonable amount of time instances with up to 100 suppliers and 500 products and largely outperforms an existing approach available in the literature and cplex 12 2 that frequently runs out of memory before completing the search

researcher rank stability across alternative output measurement schemes in the context of a time limited research evaluation the new zealand case abstractthis article focuses on the stability of rankings of academics by research productivity in the context of short term decision making in particular the growing use of national research assessment exercises nrae has increased interest in identifying the contributions of individual researchers to an assessment unit s output and ranking the article concentrates on the assessment of individuals using plausible journal ranking schemes we find that despite statistical evidence of a high degree of stability across journal ranking schemes as indicated by rank correlation coefficients the particular ranking scheme used is of great importance to individual researchers this applies with particular force to academics working within a nrae environment based on individual assessment such as new zealand s pbrf

state enterprise relation local economic priority and corporate environmental responsibility this paper empirically investigates how the state enterprise relation and local government s economic priority affect corporate environmental responsibility in a sample of chinese polluting enterpr

selection of contract suppliers under price and demand uncertainty in a dynamic market in this paper we consider a supply contracting problem in which the buyer firm faces non stationary stochastic price and demand first we derive analytical results to compare two pure strategies i periodically purchasing from the spot market and ii signing a long term contract with a single supplier the results from the pure strategies show that the selection of suppliers can be complicated by many parameters and is particularly affected by price uncertainty we then develop a stochastic dynamic programming model to incorporate mixed strategies purchasing commitments and contract cancellations computational results show that increases in price demand uncertainty favor long term short term suppliers by examining the two way interactions of contract factors price demand purchasing bounds learning and technology effect salvage values and contract cancellation both intuitive and non intuitive managerial insights in outsourcing strategies are derived

the relative impacts of economics journals 1970 1990 our data collection and database assembly efforts were assisted by john p sophocleus mark gwartney michele butler and scott ralston we received extremely valuable computer programming assistance from jon brunson and edward novak constructive comments were receivedfrom two anonymous reviewers financial supportfrom the faculty development committee at salisbury state university is gratefully acknowledged

an examination of the reliability of prestigious scholarly journals evidence and implications for decision makers in universities all over the world hiring and promotion committees regularly hear the argument this is important work because it is about to appear in prestigious journal x moreover those who allocate levels of research funding such as in the multi billion pound research assessment exercise in uk universities often come under pressure to assess research quality in a mechanical way by using journal prestige ratings this paper s results suggest that such tendencies are dangerous it uses total citations over a quarter of a century as the criterion the paper finds that it is far better to publish the best article in an issue of a medium quality journal like the oxford bulletin of economics and statistics than to publish the worst article or often the worst 4 articles in an issue of a top journal like the american economic review implications are discussed

optimal procurement strategies for online spot markets abstract spot markets have emerged for a broad range of commodities and companies have started to use them in addition to their traditional long term procurement contracts forward contracts in comparison to forward contracts spot markets offer products at essentially negligible lead time but typically command a higher expected price for this added flexibility while also exhibiting substantial price uncertainty in our research we analyze the resulting procurement challenge and quantify the benefits of using spot markets from a supply chain perspective we develop and solve mathematical models that determine the optimal order quantity to purchase via forward contracts and the optimal quantity to purchase via spot markets we analyze the most general situation where commodities can be both bought and sold via a spot market and derive closed form results for this case we compare the obtained results to the reference scenario of pure contract sourcing and we include results for situations where the use of spot markets is restricted to either buying or selling only our approaches can be used by decision makers to determine optimal procurement strategies based on key parameters such as demand and spot price volatilities correlation between demand and spot prices and risk aversion the results of our analysis demonstrate that significant profit improvements can be achieved if a moderate fraction of the commodity demand is procured via spot markets the results also show that companies who use spot markets can offer a higher expected service level but that they might experience a higher variability in profits than companies who do not use spot markets we illustrate our analytical results with numerical examples throughout the paper

the great crash of 2008 and the reform of economics the 2008 economic crash led to remarkable shifts of opinion among world leaders does this crisis create favourable conditions for the reform and revitalisation of economics itself from a subject dominated by mathematical techniques to a discipline more oriented to understanding real world institutions and actors and why were warnings of financial collapse not heeded recent shortcomings are partly related to the global triumph of market individualist ideology and partly to the exaggerated roles of modelling and quantification these failures of economics are partly peculiar to the discipline and also a result of other wider institutional and cultural forces

dual sourcing using capacity reservation and spot market optimal procurement policy and heuristic parameter determination abstract this contribution focuses on the cost effective management of the combined use of two procurement options the short term option is given by a spot market with random price whereas the long term alternative is characterized by a multi period capacity reservation contract with fixed purchase price and reservation level a reservation cost proportional with the reservation level has to be paid for the option of receiving any amount per period up to the reservation level a long term decision has to be made regarding the reserved capacity level and then it has to be decided period by period which quantities to procure from the two sources considering the multi period problem with stochastic demand and spot price the structure of the optimal combined purchasing policy is derived using stochastic dynamic programming exploiting these structural properties an advanced heuristic is developed to determine the respective policy parameters this heuristic is compared with two rolling horizon approaches which use the one period and two period optimal solution a comprehensive numerical study reveals that the approaches based on one period and two period solutions have considerable drawbacks while the advanced heuristic performs very well compared to the optimal solution finally by exploiting our numerical results we give some insights into the system s behavior under problem parameter variations

optimal dynamic procurement policies for a storable commodity with levy prices and convex holding costs abstract in this paper we study a continuous time stochastic inventory model for a commodity traded in the spot market and whose supply purchase is affected by price and demand uncertainty a firm aims at meeting a random demand of the commodity at a random time by maximizing total expected profits we model the firm s optimal procurement problem as a singular stochastic control problem in which controls are nondecreasing processes and represent the cumulative investment made by the firm in the spot market a so called stochastic monotone follower problem we assume a general exponential levy process for the commodity s spot price rather than the commonly used geometric brownian motion and general convex holding costs we obtain necessary and sufficient first order conditions for optimality and we provide the optimal procurement policy in terms of a base inventory process that is a minimal time dependent desirable inventory level that the firm s manager must reach at any time in particular in the case of linear holding costs and exponentially distributed demand we are also able to obtain the explicit analytic form of the optimal policy and a probabilistic representation of the optimal revenue the paper is completed by some computer drawings of the optimal inventory when spot prices are given by a geometric brownian motion and by an exponential jump diffusion process in the first case we also make a numerical comparison between the value function and the revenue associated to the classical static newsvendor strategy

research trends in environmental and resource economics insights from four decades of jeem abstract this paper provides a contemporary analysis of how research issues have developed in the journal of environmental economics and management jeem over the four decades of its existence we have classified the articles in the journal along five dimensions content methods environmental media the regional dimension of studies and cross cutting issues while up to about 10 years ago non market valuation and cost benefit analysis natural resource economics and environmental policy instruments represented the lion s share of articles published in the journal more recently we observe a significant shift towards a more diversified array of research areas with climate change and energy issues finding their way into the journal in addition increasing methodological plurality becomes apparent reflected in a significant shift away from economic theory and towards empirical approaches we also analyze key distinctions between the major environmental economics journals finally we analyze jeem s external influence on leading general economics a journals we find that a citations are positively correlated with a focus on climate change economics market based environmental policies and policy comparisons the use of econometric and statistical methods or experimental approaches and negatively correlated with a focus on water pollution and other pollutants such as pesticides

pricing of options on commodity futures with stochastic term structures of convenience yields and interest rates we develop a model to value options on commodity futures in the presence of stochastic interest rates as well as stochastic convenience yields in the development of the model we distinguish between forward and future convenience yields a distinction that has not been recognized in the literature assuming normality of continuously compounded forward interest rates and convenience yields and log normality of the spot price of the underlying commodity we obtain closed form solutions generalizing the black scholes merton s formulas we provide numerical examples with realistic parameter values showing that both the effect of introducing stochastic convenience yields into the model and the effect of having a short time lag between the maturity of a european call option and the underlying futures contract have significant impact on the option prices

a theory of commodity price fluctuations this paper studies the price fluctuations of storable commodities that are traded in open markets and are subject to random shocks to demand or more particularly to supply it relaxes the common assumption that the shocks are identically and independently distributed in favor of temporally dependent and periodic disturbances the existence of a unique stationary rational expectations equilibrium is demonstrated for each of the models analyzed and testable implications of the models are derived an illustrative empirical investigation is then undertaken for the model with periodic disturbances using monthly time series observations for seven commodities over the period 1960 93

electric vehicles the future we made and the problem of unmaking it the uptake of battery electric vehicles bevs subject to bottlenecks seems to have reached a tipping point in the uk and this mirrors a general trend globally bevs are being positioned as one significant strand in the web of policy intended to translate the good intentions of article 2 of the conference of the parties 21 paris agreement into reality governments and municipalities are anticipating that a widespread shift to bevs will significantly reduce transport related carbon emissions and therefore augment their nationally determined contributions to emissions reduction within the paris agreement however matters are more complicated than they may appear there is a difference between thinking we can just keep relying on human ingenuity to solve problems after they emerge and engaging in fundamental social redesign to prevent the trajectories of harm bevs illustrate this the contribution to emissions reduction per vehicle unit may be less than the public initially perceive since the important issue here is the lifecycle of the bev and this is in no sense zero emission furthermore even though one can make the case that bevs are a superior alternative to the fossil fuel powered internal combustion engine the transition to bevs may actually facilitate exceeding the carbon budget on which the paris agreement ultimately rests whether in fact it does depends on the nature of the policy that shapes the transition if the transition is a form of substitution that conforms to rather than shifts against current global scales and trends in private transportation then it is highly likely that bevs will be a successful failure for this not to be the case then the transition to bevs must be coordinated with a transformation of the current scales and trends in private transportation that is a significant reduction in dependence on and individual ownership of powered vehicles a radical reimagining of the nature of private conveyance and of public transportation

the contemporary relevance of a cambridge tradition economics as political economy political economy as social theory and ethical theory in this review essay i set out key aspects of nuno martins the cambridge revival of political economy in so doing i also provide some comments on the current state of economics since these provide some context for an appreciation of what martins is trying to achieve martins is focused on making the positive case for classical political economy cpe as a form of theory that is quite different from the modern mainstream for martins that difference is based on its approach to the distribution of a surplus expressed through a social ontology that is based on historical open systems and in which the key aspect of open systems is the institutional and hence deliberative activity by which the surplus is decided which is ultimately an issue for ethics it is through a cambridge tradition focusing on sraffa keynes lawson and sen that cpe a classical social theory and ethical deliberation are brought together bringing them together is an act of synthesis and i conclude by providing a constructive critique of the terms of this synthesis

which journal rankings best explain academic salaries evidence from the university of california the ranking of an academic journal is important to authors universities journal publishers and research funders rankings are gaining prominence as countries adopt regular research assessment exercises that especially reward publication in high impact journals yet even within a rankings oriented discipline like economics there is no agreement on how aggressively lower ranked journals are down weighted and in how wide is the universe of journals considered moreover since it is typically less costly for authors to cite superfluous references whether of their own volition or prompted by editors than it is to ignore relevant ones rankings based on citations may be easily manipulated in contrast when the merits of publication in one journal or another are debated during hiring promotion and salary decisions the evaluators are choosing over actions with costly consequences we therefore look to the academic labor market using data on economists in the university of california system to relate their lifetime publications in 700 different academic journals to salary we test amongst various sets of journal rankings and publication discount rates to see which are most congruent with the returns implied by the academic labor market jel a14 i23 j44

multiechelon procurement and distribution policies for traded commodities we consider a firm that procures and distributes a commodity from spot and forward markets under randomly fluctuating prices the commodity is distributed downstream to a set of nonhomogeneous retailers to satisfy random demand we formulate a model that allows one to compute approximate but near optimal procurement and distribution policies for this system and we explore the value of the commodity s market in providing managers with a additional flexibility in procurement and b information on price dynamics generated through the trading of futures contracts our results indicate that the presence of the commodity market and the information that it conveys may lead to significant reductions in inventory related costs however to obtain these benefits both the spot procurement flexibility and the term structure of prices generated by the commodity market must be incorporated in the formulation of the operating policy managerial insights on the procurement strategy as a function of variability in prices and demand are also discussed this paper was accepted by john birge focused issue editor

the neo ricardians focuses on the neoclassical theory of economics in great britain calculation for the standard commodity assumptions of piedro sraffa on the cycle of production functions of the rate of return ebsco

competitive storage and commodity price dynamics by buying cheap and selling dear risk neutral commodity speculators can smooth commodity prices and induce serial dependence in price even when none would exist under a simple process of supply and demand commodity prices are variable and strongly positively correlated from one year to the next the variability is often explained by supply factors and the autocorrelation by the activities of speculators we show that this explanation is not consistent with the evidence speculation can substantially increase autocorrelation for prices that are weakly autocorrelated in its absence but not to the high levels that are observed in the data

the shallow or the deep ecological economics movement ecological economics and its policy recommendations have become overwhelmed by economic valuation shadow pricing sustainability measures and squeezing nature into the commodity boxes of goods services and capital in order to make it part of mainstream economic financial and banking discourses there are deeper concerns which touch upon the understanding of humanity in its various social psychological political and ethical facets the relationship with nature proposed by the ecological economics movement has the potential to be far reaching however this is not the picture portrayed by surveying the amassed body of articles from this journal or by many of those claiming affiliation a shallow movement allied to a business as usual politics and economy has become dominant and imposes its preoccupation with mainstream economic concepts and values if instead ecological economists choose a path deep into the world of interdisciplinary endeavour they will need to be prepared to transform themselves and society the implications go far beyond the pragmatic use of magic numbers to convince politicians and the public that ecology still has something relevant to say in the 21st century author s abstract

schumpeter s theory of self restoration a casualty of samuelson s whig historiography of science this article argues that samuelson s influential 1987 call for a whig history of economic science rests on a whig historiography of the natural sciences this contrasts with how science actually works samuelson neglects the critical role of controversy in the development of knowledge leading to the misleading idea that scientists pursue discovery at the expense of reflection on the foundation and history of their subject the consequence is institutional delegitimation the exclusion of legitimate contrary hypotheses when economists test their theories invalidating the test samuelson further confuses the history of ideas with the history of texts this expands the scope of institutional delegitimation to a systematic misrepresentation of the actual ideas at stake in the economic controversies erecting a permanent obstacle to the discovery of truth i illustrate this with samuelson s exclusion from consideration of two non ignorable contributions to macroeconomic theory schumpeter s business cycles which he failed to recognise as a theory of endogenous capitalist self restoration and the concept of endogenous decline excluded by his whig reinterpretation of marx s theory of value schumpeter and marx offered opposed but legitimate alternatives to the post war macroeconomic consensus of which samuelson was a major architect in particular both recognised that deep and prolonged crises were a natural product of capitalism not an inexplicable exception to respond to the 2008 downturn economics needs to reopen a wide discussion without excluding a priori any of these opposed theoretical explanations instead seeking to understand clearly what each of them actually says and testing them against the empirical evidence of history

sole versus dual sourcing in stochastic lead time s q inventory models when supply lead times are uncertain the simultaneous procurement from two sources offers savings in inventory holding and shortage costs economies are achieved if these savings outweigh the increase in ordering costs in this paper we analyze dual sourcing in the context of the reorder point order quantity inventory model with constant demand and stochastic lead times and compare it with single sourcing two cases are studied using the uniform and the exponential distributions which may be thought of as two extreme ways of representing stochastic lead times in our two vendor model the order quantity is split equally between the two vendors and the split orders are placed simultaneously when the inventory position reaches the reorder level a comparison of the total expected costs suggests that when the uncertainty in the lead times is high and the ordering costs are low dual sourcing could be cost effective

returns to articles versus pages in academic publishing do salary setters show article illusion the academic labor market rewards idea splitting where researchers publish several short articles rather than one long one there is a significant positive effect on salary from publishing more articles conditional on the total number of quality adjusted pages ever published

decision bias in the newsvendor problem with a known demand distribution experimental evidence in the newsvendor problem a decision maker orders inventory before a one period selling season with stochastic demand if too much is ordered stock is left over at the end of the period whereas if too little is ordered sales are lost the expected profit maximizing order quantity is well known but little is known about how managers actually make these decisions we describe two experiments that investigate newsvendor decisions across different profit conditions results from these studies demonstrate that choices systematically deviate from those that maximize expected profit subjects order too few of high profit products and too many of low profit products these results are not consistent with risk aversion risk seeking preferences prospect theory preferences waste aversion stockout aversion or the consequences of underestimating opportunity costs two explanations are consistent with the data one subjects behave as if their utility function incorporates a preference to reduce ex post inventory error the absolute difference between the chosen quantity and realized demand two subjects suffer from the anchoring and insufficient adjustment bias feedback and training did not mitigate inventory order errors we suggest techniques to improve decision making

optimal ordering and pricing strategies in the presence of a b2b spot market abstract in the current paper we examine the effect of a b2b spot market on the strategic behavior and the performance of a reseller who continues to use the traditional channel while participating in a b2b spot market we analyze the case in which a risk neutral reseller faces an additive or multiplicative demand function and identify sufficient conditions under which the optimal order quantity and retail price exist and are unique we then analytically examine the case in which a risk averse reseller participates in a fully liquid spot market we also study numerically how varying liquidity spot price volatility demand variability and correlation coefficient affect a firm s strategies and performance we find that demand variability significantly affects both pricing and ordering strategies whereas the spot price volatility has less influence on pricing decisions our results also show that for a risk averse reseller to charge a lower retail price when the spot market liquidity increases is desirable we further show that a b2b spot market cannot always improve a reseller s utility these findings shed light on how resellers can adjust their procurement and pricing strategies to align with the new business environment created by the emergence of b2b spot markets as well as have obvious implications for the development of a b2b spot market

hold up and sequential specific investments we explore the hold up problem when parties can make investments simultaneously or sequentially sequencing of investments can allow some projects to proceed that would not be feasible with a simultaneous regime however a cost of sequencing is that it can disadvantage some parties reducing their incentive to invest the mere possibility of sequential investment can prevent trade from occurring this can be interpreted as a new form of hold up if both parties prefer to invest second as the number of potential investment periods is increased the subgame perfect equilibrium can switch between a prisoners dilemma and a coordination game

market price uncertainty risk aversion and procurement combining contracts and open market sourcing alternatives abstract we evaluate the implications of concurrent utilization of contracts and open market arrangements by a risk averse buyer in continuous procuring of a standardized product of known demand over a specified time period the buyer being risk averse is concerned about the magnitude and uncertainty of expenses the contract price is deterministic and the market price is stochastic cases when the two price processes are exogenous and when the contract price is endogenously linked to volume of procurement and market price are examined models are developed to determine the optimal pattern of procurement from the two arrangements for specified price risk aversion and contract duration parameters the study finds that optimal procurement from market increases with contract price premium but decreases with degree of risk aversion and market price uncertainty usefulness of alternate forms of contracts when contract and market alternatives are used concurrently is discussed application of the models to hypothetical datasets compares the relative usefulness of alternate forms of integrating contract and market alternatives and of complete reliance on contract or market alternatives