liquidity constraints and housing prices theory and evidence from the va mortgage program abstract this paper employs a simple intertemporal model to show that presence of liquidity constraints can depress the price of a durable good below its net present rental value regardless of the overall supply elasticity the existence of price effects implies that the relaxation of liquidity constraints is not pareto improving and may in fact be regressive historical evidence which exploits the fact that a clearly identifiable group war veterans enjoyed the most favored access to mortgage credit after world war ii supports the model the results suggest that more recent mortgage market innovations have served primarily to increase prices rather than home ownership rates and that such innovations have the potential to exacerbate socioeconomic disparities in ownership rates

competing for endorsements endorsements are a simple language for communication between interest group leaders and group members the members who share policy concerns may not perfectly understand where their interests lie on certain issues if their leaders cannot fully explain the issues they can convey some information by endorsing a candidate or party when interest groups endorse legislative contenders the candidates may compete for backing policies may favor special interests at the expense of the general public the authors examine the conditions under which parties compete for endorsements the extent to which policy outcomes are skewed and the normative properties of the political equilibria

the econometrics of the environmental kuznets curve an illustration using australian co2 emissions four econometric issues associated with the estimation and testing of the environmental kuznets curve ekc are considered i model specification with respect to the order of the polynomial ii

the future price of houses mortgage market conditions and the returns to homeownership the purpose of this paper is to provide a simple framework in which to analyze the impact of a perfectly anticipated increase in the future selling price of houses on current house purchase decisions in the presence of capital market imperfections since implicitly it is the after tax selling price of houses that is considered this analysis is equivalent to one of a decrease in the capital gains tax on houses at retirement in this paper assumptions about homeownership mortgage markets and liquidity constraints are added to a life cycle model of asset accumulation taking the date of house purchase as exogenous it is shown that the impact of an exogenous increase in the expected future price of houses depends on current mortgage market conditions the future price of houses relative to the current price and the ratio of liquid assets to future labor income as well as preferences also a simple model of a market for houses is presented to analyze the impact of an increase in the expected future price of houses on the current market clearing price the mortgage market and the redistribution of the housing stock to consumers according to their wealth and liquidity characteristics in the life cycle model as exposited by franco modigliani and robert brumberg an increase in consumption in one period requires a decrease in consumption in another period when owner occupied housing is added to the model the tradeoff between consumption in different periods becomes more complex purchasing a larger house entails an increase in the consumption of housing services and an increase in assets held in the form of a house but a decrease in either nonhousing consumption or the holdings of an alternative asset or both the response of the consumer to price or income changes is also limited by financial market constraints capital market imperfections have been introduced into the life cycle model by a number of authors see for example lester thurow thayer watkins thomas russell clark wiseman and christopher pissarides and several authors have explicitly considered the impact of capital market imperfections on the house purchase decision see william dolde and james tobin william poole donald lessard and modigliani and dolde most similar to this study although developed independently roland artle and p varaiya s paper includes the theoretical incorporation of the house purchase decision into a life cycle model they consider the problem of choosing the date of house purchase while treating the level of consumption of housing services as exogenous in the life cycle model in this paper the consumer chooses the size of house to purchase at an exogenous date to use the life cycle model in the framework of a market of houses it is assumed that the stock of houses and the prices of all other goods including the rate of return on the alternative asset are fixed all consumers are identical except perhaps for initial wealth as noted by irving fisher p 325 in a world of perfect foresight and perfect markets the rates of return on all assets are equated in equilibrium if markets are perfect with the stock of houses and other prices fixed the present price of houses will rise by an amount equal to the present value of an exogenous increase in a future price of houses when mortgage market imperfections are introduced this relationship no longer holds and a future price increase may result in a redistribution of the current stock assistant professor of economics university of michigan this paper is an extension of a chapter of my doctoral thesis at the university of wisconsin madison the helpful comments of donald d hester charles a wilson hal varian and george borts are gratefully acknowledged

environmentalism democracy and pollution control this paper makes two empirical contributions to the literature based on predictions generated by a lobby group model first we investigate how environmental lobby groups affect the determination of environmental policy in rich and developing countries second we explore the interaction between democratic participation and political electoral competition the empirical findings suggest that environmental lobby groups tend to positively affect the stringency of environmental policy moreover political competition tends to raise policy stringency in particular where citizens participation in the democratic process is widespread

modeling purchase timing and brand switching behavior incorporating explanatory variables and unobserved heterogeneity the authors use a continuous time semi markov approach to analyze in a single framework the purchase timing and brand switching decisions of households for a frequently purchased product the analysis provides more insights into the dynamics of household purchase behavior than could be obtained from conventional discrete choice models such as logit or probit the authors find that the probability distribution of interpurchase times is not the same for various switching between brands revealing extra information about the purchase timing decisions further they find that though the marketing mix and household demographic variables explain a large part of the variation in the brand switching rates they account for only a small part of the variation in the repeat purchase rates another finding from the analysis is that the rates of switching between brands due to promotional activities such as special displays and price reductions are in reverse order to the share of purchases of the various brands

political internalization of economic externalities and environmental policy abstract this paper derives the characteristics of endogenous environmental policy in a common agency model of politics and proceeds to show that competition between lobby groups is an important source of internalization of economic externalities our analysis generalizes bhagwati s principle of targeting to the case of distorted political markets moreover we show that the politically optimal structure of environmental taxes incorporates a pigouvian adjustment however since lobby groups care about the distribution of income as well as about efficiency the equilibrium structure of taxes differs considerably from the pigouvian rule

capture and ideology in the economic theory of politics the economic theory of regulation long ago put public interest theories of politics to rest these theories have correctly been viewed as normative wishings rather than explanations of real world phenomena they have been replaced by models of political behavior that are consistent with the rest of microeconomics anthony downs 1957 james buchanan and gordon tullock 1965 george stigler 1971 sam peltzman 1976 recently however debate has arisen over whether some version of a public interest theory of regulation will have to be readmitted to our thinking about actions and results in the political arena what is at issue is the empirical importance of the altruistic publicly interested goals of rational actors in determining legislative and regulatory outcomes james kau and paul rubin 1979 kalt 1981 peltzman 1982 this study assesses the nature and significance of publicly interested objectives in a particular instance of economic policymaking u s senate voting on coal strip mining regulations the existence of such objectives is of course no contradiction of the economic view of human behavior kenneth arrow 1972 gary becker 1974 and may well be rooted in genetic biological history becker 1976 jack hirshleifer 1978 generally however individuals altruistic publicly interested goals have been given little attention this reflects the judgment that such goals are so empirically unimportant as to allow the use of occam s razor in positive models or well founded apprehensions that these goals are unusually difficult to identify measure and analyze notwithstanding the latter problem we find that approaches which confine themselves to a view of political actors as narrowly egocentric maximizers explain and predict legislative outcomes poorly the tracking and dissecting of the determinants of voting on coal strip mining policy suggest that the economic theory of politics has been prematurely closed to a broader conception of political behavior

note extending the rotterdam model to test hierarchical market structures two issues that have implications across a firm s marketing activities are the estimation of the market response functions and the determination of the structure of the market in which its products compete in a recent paper clements and selvanathan clements k w e a selvanathan 1988 the rotterdam demand model and its application to marketing marketing sci 7winter 60 75 describe how the rotterdam demand system can be used to study these two issues in a joint framework in this note we extend their model to test hierarchical market structures using data at the brand form level we also incorporate idiosyncratic response coefficients that capture the effects of advertising and or other nonprice marketing mix variables separate from the effects of a price change these extensions provide additional insights into the nature and extent of competition among brands within a product class

why do households without children support local public schools linking house price capitalization to school spending while residents receive similar benefits from many local government programs only about one third of all households have children in public schools we argue that capitalization of school spending into house prices can encourage even childless residents to support spending on schools we identify a proxy for the extent of capitalization the supply of land available for new development and show that towns in massachusetts with little undeveloped land have larger changes in house prices in response to a plausibly exogenous spending shock towns with little available land also spend more on schools we extend these results using data from school districts in 46 states showing that per pupil spending is positively related to the percentage of developed land this positive correlation persists only in districts where the median resident is a homeowner and is stronger in districts with more elderly residents who do not use school services and have a shorter expected duration in their home our findings support models in which capitalization encourages the provision of durable local public goods and provides an additional reason why some elderly support local school spending

does trade liberalization lead to environmental burden shifting in the global economy abstract does trade liberalization lead to the outsourcing of pollution from industrialized countries to developing countries according to the pollution haven hypothesis international trade is a key channel through which richer countries can geographically dissociate consumption from production of goods we examine whether and how trade liberalization via preferential trade agreements ptas facilitates the shifting of consumption based environmental burdens from developed countries via imports to poorer countries via exports based on panel data analysis of 183 countries from 1987 to 2013 we find partial evidence for trade induced environmental burden shifting while we observe an increase in footprint exports from low income countries when these countries liberalize trade this is not matched by an increase in footprint imports of high income countries our results also show that environmental clauses in ptas and participation in international environmental agreements do not influence the relationship between trade liberalization and ecological footprint movements however domestic institutions have a significant effect on the trade induced distribution of environmental burdens these findings suggest that ptas as a policy tool for trade liberalization are per se unlikely to induce exploitation of low income countries natural capital by wealthier nations however they suggest that political incentives inherent to democratic institutions encourage environmental burden shifting

credence attributes voluntary organizations and social pressure abstract credence attributes of products are unobservable through search or experience some consumers are willing to pay a premium for their provision and in addition citizens can apply social pressure on firms to supply credence attributes firms have formed voluntary organizations to assure the provision of credence attributes and the credible provision provides product differentiation this paper provides a theory of the voluntary provision of credence attributes in the presence of demand pull from consumers and social pressure from ngos where an organization chooses a credence standard and firms compete given the standard the credence standard is lower the larger the organization and social pressure results in a higher standard

stoking the fires co2 emissions and economic growth abstract we examine the relationship between economic development and carbon dioxide emissions a greenhouse gas central to global warming predictions estimates derived from global panel data suggest a diminishing marginal propensity to emit mpe carbon dioxide as gdp per capita rises despite this global carbon dioxide emissions growth will continue at 1 8 percent per annum for the foreseeable future a result that is not sensitive to average output growth instead emissions growth continues because output and population will grow most rapidly in lower income nations with high mpes this latter feature emphasizes the distributional consequences of policies to reduce emissions

tax subsidies to owner occupied housing an asset market approach inflation reduces the effective cost of homeownership and raises the tax subsidy to owner occupation this paper presents an asset market model of the housing market and estimates how changes in the expected inflation rate affect the real price of houses and the equilibrium size of the housing capital stock simulation results suggest that the accelerating inflation of the 1970s which substantially reduced homeowners user costs could have accounted for as much as a 30 percent increase in real house prices persistent high inflation rates could lead ultimately to a sizable increase in the stock of owner occupied housing

economic growth and emissions reconsidering the empirical basis of environmental kuznets curves abstract recent empirical research indicates that certain types of emissions follow an inverted u or environmental kuznets curve ekc as income grows this regularity has been interpreted as a possible de linking of economic growth and patterns of certain pollutants for developed economies in this paper the empirical basis of this result is investigated by considering some statistical particularities of the various ekc studies performed it is argued that the inverted u relationship between income and emissions estimated from panel data need not hold for specific individual countries over time based on insights from intensity of use analysis in resource economics an alternative growth model is specified and estimated for three types of emissions co2 nox and so2 in four countries netherlands uk usa and western germany it is found that the time patterns of these emissions correlate positively with economic growth and that emission reductions may have been achieved as a result of structural and technological changes in the economy sustainable growth is defined as the rate of economic growth that does not lead to growth in emissions its rate is calculated for each type of emission and country based on estimated parameter values the resulting indicators reflect a balance between the positive influence of growth and negative influence of structural change and technological progress on emission levels

the impact of heterogeneity in purchase timing and price responsiveness on estimates of sticker shock effects the notion that individuals have an internal reference price against which they compare observed prices is well supported by several psychological theories empirically several papers in the marketing literature employing scanner panel data have modeled the impact of reference prices on brand choice via the sticker shock formulation in which consumers evaluate choice alternatives using differences between shelf prices and reference prices most of the studies reported thus far have not accounted for heterogeneity in price response among consumers and have typically imputed reference prices from the shelf prices of brands that a consumer is supposed to have observed on previous purchases in the category since category marketing activity can differentially affect the purchase timing of households we argue that this measure of reference price may follow certain systematic patterns across consumers and when combined with unaccounted for price response heterogeneity may result in a spurious sticker shock effect specifically we show that estimates of sticker shock are biased upward if households that are price sensitive in the brand choice decision are also more responsive to category promotion activity in their purchase timing decision we discuss some general conditions under which the bias occurs and conduct a simulation experiment to confirm our specific hypotheses our simulation results show that changes in purchase timing are a critical determinant of the bias in the sticker shock effect we also show that unaccounted for price response heterogeneity can in itself result in a biased sticker shock parameter however this requires very large differences in price sensitivities across consumers far greater than what is normally observed we develop a hierarchical bayes version of the nested logit model which models heterogeneity via individual level parameters in a continuous random effects framework we estimate the model on scanner panel data from the yogurt and ketchup categories we find in both categories that the 95 probability interval of the posterior distribution of the mean sticker shock coefficient contains the value zero therefore at least for the data used in this study there is no evidence for the sticker shock effect at the aggregate level in contrast the corresponding coefficient from a standard model which ignores this heterogeneity is highly significant and supports the existence of a possibly spurious sticker shock effect consistent with our explanation of the underlying cause of the bias households that are more price sensitive in the choice decision are also found to be more responsive to category promotion activity in their decision to purchase in the category the results highlight the measurement problems associated with imputing reference prices from past prices since the frequency duration and price level of a retailer s promotional program depend on its size and prevalence accurate estimates of the sticker shock effect are essential for formulating optimal promotion strategies an adequate accounting of consumer heterogeneity is critical to this effort

does trade openness promote multilateral environmental cooperation this article puts forward a number of arguments why trade openness might promote multilateral environmental cooperation most of these arguments are grounded in the substantive self interest of the trading country it tests the proposition using a range of proxy variables for general trade openness as well as specific export interests the article examines whether countries open to trade are more likely to have signed three recent multilateral environmental agreements meas and are more likely to have ratified early on another three agreements with quasi universal membership after controlling for income political freedom and population size the empirical estimations find some weak evidence in favour of a possible synergy between trade openness and multilateral environmental cooperation world trade organisation membership as well as general export openness go hand in hand with greater willingness to participate in multilateral environmental cooperation in some cases however whether specific trade interests promote or hinder multilateral environmental cooperation depends on whether the relevant agreement is likely to threaten or accommodate the interests of exporting countries

inequality as a cause of environmental degradation abstract this paper advances two hypotheses first the extent of an environmentally degrading economic activity is a function of the balance of power between the winners who derive net benefits from the activity and the losers who bear net costs second greater inequalities of power and wealth lead all else equal to more environmental degradation

investment tax incentives prices and the supply of capital goods using data on the prices of capital goods this paper shows that much of the benefit of investment tax incentives does not go to investing firms but rather to capital suppliers through higher prices the reduction in the cost of capital from a 10 percent investment tax credit increases equipment prices 3 5 7 0 percent this lasts several years and is largest for assets with large order backlogs low import competition or with a large fraction of buyers able to use investment subsidies capital goods workers wages rise too instrumental variables estimates of the short run supply elasticity are around 1 and can explain the traditionally small estimates of investment demand elasticities in absolute value the demand elasticity implied here exceeds 1

investigating household purchase timing decisions a conditional hazard function approach the purchase timing decision is an important component of the dynamics of a household s purchase behavior this decision is influenced by marketing and other variables and the modeling of this dependence has recently received attention in the literature in this paper we build on previous studies and develop a comprehensive stochastic model that incorporates the major factors influencing interpurchase times specifically we use a generalized version of cox s proportional hazard model to test among competing probability distributions for the interpurchase times while incorporating effects due to marketing variables observed household characteristics and unobserved heterogeneity across households the empirical finding from analyzing the iri coffee data suggests that the interpurchase times cannot be adequately described by probability distributions such as exponential erlang 2 or weibull the effects of unobserved heterogeneity are significant and they impact the estimates of the effects of the covariates we also find that a nonparametric procedure for estimating the effects of unobserved heterogeneity provides the best overall fit to the data and yields covariate estimates that are more consistent with prior expectations our model is validated by replicating the substantive empirical findings on an additional product category

the effect of liquidity constraints on consumption a cross sectional analysis this paper examines the effect of liquidity constraints on consumption expenditures using a single year cross section data set a reduced form equation for consumption is estimated on high saving households by the tobit procedure to account for the selectivity bias since high saving households are not likely to be liquidity constrained the estimated equation is an appropriate description of how desired consumption that would be forthcoming without liquidity constraints is related to the variables available in the cross section data when the reduced form equation is used to predict desired consumption the gap between desired consumption and measured consumption is most evident for young households

housing investment in the united states a supply determined model of housing investment is estimated from quarterly data over the 1963 83 period the model is built on dynamic marginal cost pricing considerations and allows short and long run supply elasticities to differ these are estimated as 1 0 and 3 0 respectively but most of the long run response occurs within 1 year rapid adjustment speed and the sizable long run elasticity of supply are important factors in understanding the volatility of housing investment the data also suggest some anomalies in the expected present value theory of asset pricing for housing capital

political institutions and pollution control this paper models the selection of environmental policies under authoritarian and democratic regimes and tests the hypothesis that political institutions systematically affect the enactment of environmental regulations the results support the contention that political institutional arrangements rather than resource endowments largely determine policies concerning environmental regulation copyright 1992 by mit press

domestic and international influences on green taxation economists have made a strong case for the relative efficiency of market based mechanisms for environmental regulation such as cap and trade and green taxes yet the spread of these forms has been limited and traditional command and control regulation still predominates the authors explain geographical and temporal variation in green tax burdens by considering their domestic and international determinants modeling international influences using spatial lags hypotheses are tested using panel data on organisation for economic co operation and development member states from 1995 to 2004 at the domestic level the authors show that green tax burdens are influenced by the left right and environmental positions of legislative medians and the power of the energy producing sector among other factors the authors also show that ideas about policy diffuse through international networks generated by trade and environmental intergovernmental organizations but they do not find compelling evidence for intern

promise and pitfalls in the use of secondary data sets income inequality in oecd countries as a case study this paper examines the role of secondary data sets in empirical economic research taking the field of income distribution as a case study we illustrate problems faced by users of secondary statistics showing how both cross country comparisons and time series analysis can depend sensitively on the choice of data after describing the genealogy of secondary data sets on income inequality we consider the main methodological issues and discuss their implications for comparisons of income inequality across oecd countries and over time the lessons to be drawn for the construction and use of secondary data sets are summarized at the end of the paper

rent seeking incentives in share contests abstract this article investigates share contests in our framework we allow contestants to have more general preferences than have been used in the literature previous approaches have the unfortunate characteristic that contestants marginal rates of substitution between the rent share allocated by the contest and their effort is constant regardless of the size of the rent share this results in a conventional wisdom larger rents command more effort by providing a more general framework we show the reverse may also be true and we derive the conditions under which this is the case our approach then allows us to rationalize within a standard contest framework observations that rents might be more hotly contested when they become scarcer as has evidently been the case with the recent global contraction of public funds available for public policy

testing competitive market structures an accurate understanding of the structure of competition is important in the formulation of many marketing strategies for example in new product launch product reformulation or positioning decisions the strategist wants to know which of his competitors will be most affected and hence most likely to respond many marketing science models have been proposed to identify market structure in this paper we examine the managerial problem and propose a criterion by which to judge an identified market structure basically our criterion is a quantification of the intuitive managerial criterion that a submarket is a useful conceptualization if it identifies which products are most likely to be affected by our marketing strategies we formalize this criterion within the structure of classical hypothesis testing so that a marketing scientist can use statistical statements to evaluate a market structure identified by 1 behavioral hypotheses 2 managerial intuition or 3 market structure identification algorithms mathematically our criterion is based on probabilities of switching to products in the situation where an individual s most preferred product is not available submarkets are said to exist when consumers are statistically more likely to buy again in that submarket than would be predicted based on an aggregate constant ratio model for example product attributes e g brand form size use situations e g coffee in the morning versus coffee at dinner and user characteristics e g heavy versus light users are specified as hypotheses for testing alternate competitive structures measurement and estimation procedures are described and a convergent approach is illustrated an application of the methodology to the coffee market is presented and managerial implications of six other applications are described briefly

modeling purchases as repeated events we put forward a statistical model for interpurchase times that incorporates all current and past information available for all purchases as time runs along the calendar time scale it delivers forecasts for the number of purchases in the next period as well as for the timing of subsequent and consecutive purchases purchase occasions are viewed as a counting process that counts the recurrent purchases for each house hold as they evolve over time we illustrate our model for yogurt purchases and highlight its managerial implications

investigating consumers purchase incidence and brand choice decisions across multiple product categories a theoretical and empirical analysis we propose a framework to investigate consumers brand choice and purchase incidence decisions across multiple categories where both decisions are modeled as an outcome of a consumer s basket utility maximization we build the model from first principles by theoretically explicating a general model of basket utility maximization and then examining the reasonable restrictions that can be placed to make the solution tractable without sacrificing its flexibility comparing with prior models we show why prior multicategory purchase incidence models overemphasize the role of the cross effects of a market mix of brands in other categories on the purchase incidence decision of a given category additionally we show that prior single category models are a special case of the proposed model when further restrictions are placed on the basket utility structure we estimate the model on household basket data for the laundry family of categories we show i why prior single category and multicategory models would systematically bias the estimates of the own and cross price promotional purchase incidence elasticities and ii how the market mix of each brand in each category affects the purchases across all categories which can help retailers make promotional decisions across a portfolio of products

corporate social responsibility a microeconomic review of the literature this paper provides a review of the theoretical and empirical literature on corporate social responsibility csr depending on whether an individual can be considered as selfish or whether she has also social preferences motives for csr can be explained in different ways furthermore we explicitly highlight the influence of different corporate governance system on csr as well as the relationship between firms size and social commitment because it is difficult to distinguish between different theories in empirical studies we argue that an experimental approach might be suitable to test theories of csr

true and spurious duration dependence the identifiability of the proportional hazard model lancaster and nickell 1980 have argued that in the proportional hazard model the effects of time dependence true duration dependence and unobserved sample heterogeneity spurious duration dependence cannot be distinguished we show that both effects can be distinguished if the model allows for observed explanatory variables in the hazard we also discuss the application of our result to practical situations

is the environmental kuznets curve hypothesis a sound basis for environmental policy in africa achieving economic development and environmental sustainability simultaneously is one of the most important development challenges for africa today the relationship between economic growth and environmental sustainability is founded on the environmental kuznets curve ekc this paper examines the validity of the hypothesis and the driving factors of carbon dioxide co2 emission in five african countries using the stirpat empirical model panel cointegration and fully modified ordinary least squares unlike previous studies economic development is disaggregated into agriculture and industrial economic development the results show that there is no evidence of the validity of the hypothesis in africa regardless of whether economic development is driven by agriculture or industrialisation energy structure and energy intensity are the two major driving forces of co2 emissions in africa population growth and urbanisation have negative relationship with co2 emissions from our results the ekc is not a sound basis for environmental policy in africa rather environmental policy in africa specifically for co2 emissions mitigation should focus on encouraging energy efficiency enhancing the use of clean energy incorporating the impact of population growth and harnessing the positive impacts of urbanisation

the political economy of pollution taxes in a small open economy abstract this paper develops a positive theory explaining pollution tax policy outcomes in a small open economy the equilibrium tax rate depends on lobby group membership the relative importance of lobbying activities and the tax elasticity of pollution the equilibrium properties are investigated the model is extended to incorporate pollution abatement and a pollution abatement subsidy we show that total pollution may be increasing in the pollution abatement subsidy rate this effect arises because the equilibrium pollution tax rate may be decreasing in the subsidy rate due to altered political influence of the lobby groups in the political equilibrium

predicting future random events based on past performance there are many situations where one is interested in predicting the expected number of events in period 2 given that x events occurred in period 1 for example insurance companies must decide whether or not to cancel the insurance of drivers who had 3 or more accidents during the previous year in analyzing marketing research data an analyst may wish to predict the number of future purchases to be made by those customers who made x purchases in the previous 3 months the owner of a baseball team may wish to estimate the number of home runs a batter will hit this year given he hit say 40 home runs last year when the events e g accidents purchase occasions home runs can be assumed to occur randomly over time a very general result due to robbins robbins h 1977 prediction and estimation for the compound poisson distribution proc national acad sci usa74 2670 2671 is available this approach has certain advantages and disadvantages with respect to the negative binomial model that is commonly used to analyze purchasing and accident data the robbins result is particularly appropriate for predicting what the zero class in period 1 will do in period 2 the main purpose of this paper is to present the robbins result in a form that can be readily understood by applied researchers in a variety of disciplines data on consumer purchases motor vehicle violations and accidents are analyzed and applications to other areas are discussed

income inequality and pollution a reassessment of the environmental kuznets curve abstract improvements in some measures of air and water quality can accompany rising per capita income as illustrated by the so called environmental kuznets curve for pollution variables which show such a relationship we hypothesize that a more equitable distribution of power contributes to these outcomes by enhancing the influence on policy of those who bear the costs of pollution relative to the influence of those who benefit from pollution generating activities an empirical analysis of international variations in seven indicators of air and water quality supports this hypothesis literacy political rights and civil liberties are found to have particularly strong effects on environmental quality in low income countries

customer lifetime value measurement the measurement of customer lifetime value is important because it is used as a metric in evaluating decisions in the context of customer relationship management for a firm it is important to form some expectations as to the lifetime value of each customer at the time a customer starts doing business with the firm and at each purchase by the customer in this paper we use a hierarchical bayes approach to estimate the lifetime value of each customer at each purchase occasion by jointly modeling the purchase timing purchase amount and risk of defection from the firm for each customer the data come from a membership based direct marketing company where the times of each customer joining the membership and terminating it are known once these events happen in addition there is an uncertain relationship between customer lifetime and purchase behavior therefore longer customer lifetime does not necessarily imply higher customer lifetime value we compare the performance of our model with other models on a separate validation data set the models compared are the extended nbd pareto model the recency frequency and monetary value model two models nested in our proposed model and a heuristic model that takes the average customer lifetime the average interpurchase time and the average dollar purchase amount observed in our estimation sample and uses them to predict the present value of future customer revenues at each purchase occasion in our hold out sample the results show that our model performs better than all the other models compared both at predicting customer lifetime value and in targeting valuable customers the results also show that longer interpurchase times are associated with larger purchase amounts and a greater risk of leaving the firm both male and female customers seem to have similar interpurchase time intervals and risk of leaving however female customers spend less compared with male customers

does high cost of mortgage debt explain why young adults live with their parents young adults leave their parents homes at a higher rate in northern europe or in the united states than in southern europe with broad implications on labor market mobility and on fertility we assess if differences in household formation are associated to differences in access to credit by estimating the impact of the cost of a mortgage on the probability that a young adult leaves his or her parents home exogenous changes in the cost of credit are identified using the reform in 1998 and the cancellation in 2002 of credito bonificado a portuguese program that provided four different reductions of the interest rate of mortgages signed by low and medium income youth using a unique data set that links administrative records of debt with the 1998 2004 waves of the employment survey we document three findings first borrowing among young adults fell when borrowing costs increased second the elasticity of new household formation with respect to net interest rates lies between 0 8 and 3 3 third young adults responded to the increase in mortgage costs by delaying home purchases or by reducing the quality of housing services purchased but there was only a modest increase of the probability of renting a new accommodation jel d91 h24 j13

growing growing gone cascades diffusion and turning points in the product life cycle research on the product life cycle plc has focused primarily on the role of diffusion this study takes a broader theoretical perspective on the plc by incorporating informational cascades and developing and testing many new hypotheses based on this theory on average across 30 product categories the authors find that i new consumer durables have a typical pattern of rapid growth of 45 per year over 8 years ii this period of growth is followed by a slowdown when sales decline by 15 and stay below those of the previous peak for 5 years iii slowdown occurs at 34 population penetration and about 50 of ultimate market penetration iv products with large sales increases at takeoff tend to have larger sales declines at slowdown v leisure enhancing products tend to have higher growth rates and shorter growth stages than nonleisure enhancing products time saving products tend to have lower growth rates and longer growth stages than nontime saving products vi lower probability of slowdown is associated with steeper price reductions lower penetration and higher economic growth vii a hazard model can provide reasonable predictions of the slowdown as early as the takeoff the authors discuss the implications of these findings

liquidity constraints and intertemporal consumer optimization theory and evidence from durable goods this paper develops and tests the implications of optimal consumption behavior with borrowing constraints the theory shows that liquidity constraints imply a distinctive intertemporal relationship between durable and nondurable goods consumption binding liquidity constraints appear as part of an error correction term derived from the long run cointegrating relationship between durables and nondurables when liquidity constraints are binding the error correction term will have predictive power for the future change in nondurable consumption empirical tests of the implications using aggregate data support the hypothesis that liquidity constraints rather than rule of thumb behavior best explain the excess sensitivity of consumption to predictable changes in income copyright 1995 by ohio state university press

is environmental degradation an inevitable consequence of economic growth tunneling through the environmental kuznets curve abstract economywide reforms often contribute simultaneously to economic social and environmental gains however unintended adverse side effects occur in many cases when such growth inducing reforms are undertaken while neglecting other policy market or institutional imperfections the remedy does not generally require reversal of the original economywide reforms but rather the ex ante implementation of additional complementary measures that remove such imperfections the ekc approach seeks to relate the state of the environment to the stage of development developing countries could learn from the experiences of industrialized nations and restructure growth and development to tunnel through any potential ekc thereby avoiding going through the same stages of growth that involve relatively high and even irreversible levels of environmental harm an environmentally adjusted measure of national income could significantly change the shape of the development environment relationship recommendations for decision making include actively seeking win win policies that simultaneously yield both economic and environmental gains pre empting environmental harm through ex ante remedial measures and fine tuning reform policies to avoid severe environmental damage the adoption of more sustainable policies will facilitate the attainment of higher levels of development at a lower environmental cost

environmental pressure group strength and air pollution an empirical analysis there is an established theoretical and empirical case study literature arguing that environmental pressure groups have a real impact on pollution levels our original contribution to this literature is to provide the first systematic quantitative test of the strength of environmental non governmental organizations engos on air pollution levels we find that engo strength exerts a statistically significant impact on sulfur dioxide smoke and heavy particulates concentration levels in a cross country time series regression analysis this result holds true both for ordinary least squares and random effects estimation it is robust to controlling for the potential endogeneity of engo strength with the help of instrumental variables the effect is also substantively important strengthening engos represents an important strategy by which aid donors foundations international organizations and other stakeholders can try to achieve lower pollution levels around the world

a segment level hazard approach to studying household purchase timing decisions the increasing availability of customer level data and the willingness of marketers to customize the timing of their offers to consumers makes the accurate segment level description of household purchase timing decisions a compelling issue in this paper we employ a finite mixture accelerated failure time model to identify and characterize household segments in terms of their purchasing rates and their propensity to accelerate purchases due to marketing mix activities such an approach also promises to alleviate possible aggregation problems arising from the use of a common hazard rate for all households an application to household panel data suggested that infrequent buyers show higher propensity to accelerate than frequent buyers do and that positive duration effects are underestimated when not accounting for segment specific hazard rates copyright 2002 john wiley sons ltd