a review of wta wtp studies abstract willingness to accept wta is usually substantially higher than willingness to pay wtp these constructs have been studied for roughly 30 years and with a wide variety of goods this paper reviews those studies we find that the less the good is like an ordinary market good the higher is the ratio the ratio is highest for non market goods next highest for ordinary private goods and lowest for experiments involving forms of money a generalization of this pattern holds even when we account for differences in survey design ordinary goods have lower ratios than non ordinary ones we also find that ratios in real experiments are not significantly different from hypothetical experiments and that incentive compatible elicitation yields higher ratios

an experimental validation of hypothetical wtp for a recyclable product using a within subject experiment we compare hypothetical andreal willingness to pay wtp for an improvement in therecyclability of a product subjects are faced with a real paymentscenario after they have responded to a hypothetical question contrary to most of the results obtained in similar studies at apopulation level there are no significant median differencesbetween actual and hypothetical stated values of wtp however within subject comparisons between hypothetical and actual valuesindicate that subjects stating a low high hypothetical wtp tendto underestimate overestimate the value of their actualcontributions

induced value tests of the referendum voting mechanism abstract an induced value laboratory experiment is conducted testing the incentive compatibility of the referendum voting mechanism for eliciting willingness to pay for public goods although errors were observed at the individual level aggregate results suggest incentive compatibility in both hypothetical and real referenda

estimating demand for spatially differentiated firms with unobserved quantities and limited price data extending the circular city model i derive a pricing equation that identifies key structural parameters from one firm s data simulations indicate demand shifters and rotators can be distinguished cost parameters are imprecise and the likeliest specification error biases estimates toward zero

valuation of landmass degradation using fuzzy hedonic method a case study of national capital region a hedonic model to determine the revealed willingness to pay for landmass of different suitability classes based on landmass functional characteristics obtained through subjective assessments is developed for the national capital region in india the inherent non specificity involved in subjective evaluation is minimized using fuzzy logic based regression technique the proposed fuzzy regression involves regression using central values of triangular fuzzy number and minimization of non specificity using linear programming the revealed willingness to pay for landmass of different suitability classes is used for valuation of disbenefits due to urban expansion on landmass of different agricultural suitability classes in national capital territory of delhi appropriate pricing policies to prevent the future inappropriate landuse practices are developed using the landmass valuation

estimating markups and market conduct with multidimensional product attributes we demonstrate how to estimate a model of oligopoly pricing when products are multi dimensionally differentiated we provide an empirical counterpart to recent theoretical work on product differentiation using specifications informed by economic theory we estimate price cost margins for products differentiated in many dimensions

do reminders of substitutes and budget constraints influence contingent valuation estimates a test is performed of the recommendation by the noaa panel on contingent valuation that respondents be reminded about other substitute resources and their budget constraint prior to answering the willingness to pay wtp question the context for this experiment is a cvm study of the benefits from reducing fire hazards to old growth forests in oregon the test was performed using two mail surveys that were otherwise identical except for the inclusion of reminder statements prior to the wtp question the dichotomous choice logit equations were not statistically different between versions and the mean wtp results were identical

a learning design for reducing hypothetical bias in the contingent valuation method over the last few years a great deal of research has focussed on hypothetical bias in value estimates obtained with the contingent valuation cv method and on means for ameliorating if not eliminating such bias to date efforts to eliminate hypothetical bias have relied on calibration techniques or on word smithing of one kind or another to induce subjects to provide responses to hypothetical questions that mimic responses made by subjects facing actual payments in the valuation experiment this paper introduces a different approach for eliminating hypothetical bias a design for a cv survey format is presented which provides subjects with the opportunity to learn how the cv institution works sequential referenda are conducted where respondents gain experience in cv settings by participating in both hypothetical and real referenda the logic of this learning design is a straightforward application of the trials process used in experimental economics we demonstrate that the learning design is effective in eliminating hypothetical bias in surveys concerning donations to two different public goods

willingness to pay for renewable energy primary and discretionary choice of british households for micro generation technologies this paper documents the policy context of renewable energy production in the european union the research adopts a choice experiment approach to investigate households wtp for these renewable energy technologies in the uk the micro generation technologies comprise solar photovoltaic micro wind solar thermal heat pumps and biomass boilers and pellet stoves the study compares the results from conditional and mixed logit models which estimate the distribution of utility coefficients and then derives wtp values as a ratio of the attribute coefficient to the price coefficient with a model in which the wtp distribution is estimated directly from utility in the money space the results suggest that whilst renewable energy adoption is significantly valued by households this value is not sufficiently large for the vast majority of households to cover the higher capital costs of micro generation energy technologies

foreign owned banks in the united states earning market share or buying it foreign owned u s banks have been chronically unprofitable for more than a decade the authors employ a profit efficiency model introduced by allen n berger diana hancock and david b humphrey 1993 modified to be less sensitive to variations in asset size to estimate the relative profit efficiency of 62 foreign owned and 240 u s owned banks between 1985 and 1990 their results indicate that foreign owned banks were significantly less profit efficient than were u s owned banks primarily due to foreign banks reliance on expensive purchased funds for foreign owned banks the results are consistent with a strategy of sacrificing profits in exchange for fast growth and increased market share during the 1980s copyright 1996 by ohio state university press

size and performance of banking firms testing the predictions of theory abstract in recent years two important literatures on the theory of banking firms have developed one examines the economic functions of banks in environments in which agents are asymmetrically informed another considers the incentive effects moral hazard resulting from deposit insurance both theories make predictions about the relation between banking firm size and performance an empirical analysis of large bank holding companies investigates measures of market valuation and risk of failure limited support is provided for either set of theoretical predictions

spatial differentiation and price discrimination in the cement industry evidence from a structural model we estimate a structural model of the cement industry that incorporates spatial differentiation and price discrimination focusing on the us southwest over 1983 2003 we leverage the structure of the model to obtain consistent estimates of the underlying parameters using data on market outcomes that are substantially aggregated our results indicate that transportation costs around 0 46 per tonne mile rationalize the data this friction enables relatively isolated plants to obtain higher prices from nearby customers we further find that disallowing price discrimination would create 30 million in consumer surplus annually and show how the model can identify suitable divestitures in merger analysis

a study of bank efficiency taking into account risk preferences abstract i use the stochastic cost frontier approach to investigate efficiency of banks operating in the third federal reserve district accounting for the quality and riskiness of bank output in addition to the mean and mode of the conditional distribution of the one sided error term i calculate confidence intervals for the inefficiency measures based on the conditional distribution the results indicate that third district banks are operating at cost efficient output levels and product mixes but are not efficiently using their inputs the second part of the article relates the inefficiency measures to several correlates

multinationals and market structure in mexico abstract this paper examines how foreign direct investment influences market concentration in mexican manufacturing industries the results suggest that mnc presence has a positive influence on concentration independently of the industrial variables which are commonly thought to determine it several tentative explanations including the mncs market conduct are offered although no definite conclusions can be drawn other variables that are found to be significant indetermining market concentration are market size economies of scale capital intensity and advertising intensity

the impact of liberalization and foreign investment in colombia s financial sector abstract this study analyzes financial liberalization measures undertaken in 1990 of which an opening to foreign investment was a major component after a brief description of the major changes in legislation on foreign investment we compare performance of foreign owned vs domestic banks first using a descriptive approach then in a more systematic manner using econometric analysis panel data estimations reveal that financial liberalization in general had a beneficial impact on bank behavior in colombia by increasing competition lowering intermediation costs and improving loan quality although the positive contribution of foreign entry may be overstated in recent studies by not controlling for other liberalization factors foreign and domestic entry beginning in 1990 did improve bank behavior by enhancing operative efficiency and competition however the greater competition may have resulted in increased risk and a subsequent deterioration in loan quality particularly among domestic banks

renewable energy sector development in the caribbean current trends and lessons from history island regions and isolated communities represent an understudied area of not only clean energy development but also of innovation caribbean states have for some time shown interest in developing a regional sustainable energy policy and in implementing measures which could help to protect its member states from volatile oil markets while promoting reliance on local resources here we examine four case studies of renewable energy advancements being made by public utility companies and independent energy companies in the caribbean we attempt to locate renewable energy advances in a broader historical framework of energy sector development indicating a few policy lessons we find that different degrees of regulatory and legislative sophistication have evolved in different islands islands should have specialized policy focus contrasting the ad hoc nature of current regional energy policy discussion we also conduct a cost benefit analysis which shows that these early innovative alternative energy projects show themselves to be both profitable and significant sources of emissions reduction and job creation this lends support to the potential benefits of regional energy policy

international banking a survey two distinct sets of issues are involved in the analysis of international banking one set the industrial organization issues centers on the patterns of expansion of foreign branches and subsidiaries of banks headquartered in the united states great britain japan and a few other industrial countries and on the nature of the advantage that these branches and subsidiaries have in relation to their host country competitors the second set the international finance issues involves the role of banks in cross border and cross currency financial flows both from their head offices and from their foreign branches and subsidiaries despite the attention to international banking there are few uniquely international institutions rather international banks are a subset of domestic banks with significant numbers of foreign branches and subsidiaries moreover there are few uniquely international banking activities although foreign exchange trading may seem to be one in many countries most or all foreign exchange trading involves domestic banks with few if any foreign branches the growth of foreign branches and subsidiaries of major banks occurred in two waves the first occurred in the decades before world war i when the war started

the effect of ownership structure on prices in geographically differentiated industries i analyze how ownership structure and market geography jointly influence fast food prices i estimate a model of demand and supply that accounts for the market geography and run counterfactual experiments that demonstrate how mergers affect prices i find that the impact of mergers can be large that this impact decreases as the merging outlets are farther apart that mergers among market leaders generally increase prices more than mergers among weaker firms and that mergers can increase prices even if the outlets are so far apart that neither outleti s presence affects prices at the other before the merger

gender specific starting point bias in choice experiments evidence from an empirical study abstract in this paper we test whether preferences and willingness to pay estimates obtained in a choice experiment study are susceptible to starting point bias as is often the case in dichotomous choice contingent valuation studies on the basis of a multinomial probit model we find that preferences are indeed susceptible to starting point bias in a split sample design our results suggest that varying the price levels displayed in a so called instructional choice set presented prior to the actual preference eliciting choice sets significantly impacts respondents preferences and willingness to pay for protecting danish nature areas from new motorway development in particular our results show that the bias is gender specific only female respondents are significantly affected results further reveal that the impact of the starting point bias decays as respondents evaluate more and more choice sets this supports the discovered preference hypothesis and on the basis of this we suggest a number of ways to potentially mitigate the starting point bias

the economic effects of foreign bank presence evidence from the philippines abstract this study examines the economic effects of the liberalization of foreign bank entry in the philippines from 1990 to 2006 the findings provide strong evidence on the dominance of competition effects from foreign bank presence which lead to the reduction in the profitability and overhead costs of domestic commercial banks these findings which reveal that both the actual market penetration and mere presence of foreign banks seem to exert competitive pressure to domestic banks imply that foreign banks may serve as an effective competitive force reducing the excess profits earned by domestic banks and compelling domestic banks to update their production technologies and techniques to improve their cost efficiency from a policy perspective the findings on competition effects of foreign banks in the domestic banking system justify the liberalization of foreign bank entry in the philippines the main findings demonstrate that the goal of banking liberalization in transforming domestic banks to be more competitive and efficient works considerably well in the case of the philippines aside from the policy of easing the entry of foreign banks bank specific conditions can have significant impact on the performance of domestic banks therefore a sustained improvement in the efficiency of domestic commercial banks requires not only liberalizing the entry of foreign banks but also on continued strengthening of domestic prudential regulation and supervision on the commercial banking system

bank reforms foreign ownership and financial stability abstract numerous studies have focused on foreign ownership of banks but instead of linkages to financial stability they typically analyzed other issues and used country level data this article fills the gap in the literature by applying the gmm techniques on dynamic panels using bank level data for asian countries to investigate the impact of foreign ownership on financial stability as well as whether the relation between foreign ownership and stability changes under different conditions of bank reforms in the host country specifically we reach five conclusions first the existence of the home field advantage hypothesis is supported nevertheless when considering the effects of bank reforms the global advantage hypothesis holds second an inverse u shaped relation between foreign ownership and stability is supported third a higher degree of credit control liberalization mitigates the negative effect of foreign ownership on stability fourth liberalization of interest rate control and banking supervision do enhance stability fifth and finally we confirm a significantly negative relation between an explicit deposit and stability

a framework for evaluating wtp for bipv in residential housing design in developing countries a case study of north cyprus this paper explores people s preferences for a built in photovoltaic bipv renewable energy system to be integrated into housing construction a novel methodology was developed to study the case of northern cyprus for better understanding of possibilities that abound in bipv integration the methodology incorporates building information modeling bim as a real time design and economic assessment tool for bipv choices this serves to benefit both the construction companies and potential house owners in their decision making in addition it uses a contingent valuation cv method to assess the willingness to pay wtp and the willingness to accept wta compensation the results indicate that the capital cost of pv is not instrumental in choice and a lower feed in tariff could be acceptable

the context for substitutes in cvm studies some empirical observations abstract the purpose of this paper is to report results from a set of experiments that provide data to test the noaa 13 panel recommendation that subjects be reminded of budgetary substitutes when providing values the results suggest that simply reminding subjects of alternative environmental goods does not affect the distribution of values for a specific good such values are affected however whenever subjects simultaneously value alternative goods

policy measures to promote the widespread utilization of renewable energy technologies for electricity generation in the maldives abstract this study adopts a stakeholder based approach to understand the size and nature of the market and financial barriers to the widespread utilization of renewable energy technologies rets in the maldives in light of these barriers and the interests of relevant stakeholders this study evaluates different policy options in terms of their suitability to develop a domestic market for rets in the maldives evaluating the different policy instruments it was found that pricing laws that regulate market access are more suitable than quota systems provided that the current subsidies for conventional energy are removed or shifted towards rets as for the other financial incentives rebates on investments and low interest loans should be provided to ret project developers to overcome the high initial project costs in addition to these measures the limited institutional capacity suggests that policy support should also focus on enabling the steady development of regional institutions rather than on supporting individual ret projects these institutions should enable islands in each atoll to take advantage of efficient management and access to financial capital this will allow the development of sustained renewable energy projects that in turn will result in increased renewable capacity and decreased costs

learning and fatigue effects revisited investigating the effects of accounting for unobservable preference and scale heterogeneity using multiple choice tasks per respondent in discrete choice experiment studies increases the amount of available information however respondents learning and fatigue may lead to changes in observed utility function preference taste parameters as well as the variance in its error term scale they need to be controlled to avoid potential bias a sizable body of empirical research offers mixed evidence in terms of whether these ordering effects are observed we point to a significant component in explaining these differences we show how accounting for unobservable preference and scale heterogeneity can influence the magnitude of observed ordering effects

renewable energy adoption in an ageing population heterogeneity in preferences for micro generation technology adoption abstract many countries are endeavouring to supply more of their energy from renewable resources such countries are also experiencing an aging population with a greater proportion of people aged 65 years this demographic shift may reduce the uptake of renewable energy if older person households are less inclined to accept change and adopt new technologies this paper assesses whether such households have different behavioural responses to energy efficiency compared to the rest of society and investigates whether micro generation renewable energy technologies are less likely to be adopted by these households it uses conditional logit and mixed logit models to investigate the impact of age of household on primary heating adoption and also to assess the impact of older households on the installation of discretionary micro generation technologies solar thermal solar voltaic and wind power to supplement existing heating and lighting systems results indicate that primary heating choice is not affected but that older person households are less inclined to adopt micro generation technologies

using ex ante approaches to obtain credible signals for value in contingent markets evidence from the field while contingent valuation remains the only option available for measurement of total economic value of nonmarketed goods the method has been criticized due to its hypothetical nature we analyze field experimental data to evaluate two ex ante approaches to attenuating hypothetical bias directly comparing value statements across four distinct referenda hypothetical cheap talk consequential and real our empirical evidence suggests two major findings hypothetical responses are significantly different from real responses and responses in the consequential and cheap talk treatments are statistically indistinguishable from real responses we review the potential for each method to produce reliable results in the field

does realism matter in contingent valuation surveys the importance of stressing the realism or policy relevance of a contingent valuation cv survey is commonly recognized by cv researchers this paper focuses on the relationship between the probability that a subject s response will result in real consequences and the subject s accurate reporting of willingness to pay results from experiments support the argument that efforts to make contingent valuation surveys real are important however our results also suggest that the connection between the survey and the likelihood of a payment must be rather powerful before surveys generate accurate reporting of willingness to pay for a public good

the price concentration relationship in banking the commonly observed positive correlation between market concentration and profitability may be explained by noncompetitive pricing behavior as argued by the structure performance hypothesis or by the greater efficiency of firms with dominant market shares as argued by the efficient structure hypothesis by examining the price concentration relationship instead of the profit concentration relationship this paper tests the structure performance hypothesis in a manner that excludes the efficient structure hypothesis as an alternative explanation of the results the results strongly support the structure performance hypothesis and are robust with respect to model specification measurement of concentration and econometric technique copyright 1989 by mit press

what factors cause foreign banks to stay in london the banking literature focuses extensively on the phenomenon of bank entry and pays less attention to the factors driving the continuation of banking activities in foreign markets in this paper we analyze this important but overlooked issue by constructing a unique database of foreign banks that continue operating and those that have withdrawn from arguably the world s most international banking center london this new data set comprises information on 408 offices from 77 countries spanning the period from 1945 to 1999 giving us 4643 observations of which 2795 represent offices that continue operating and 1848 that withdrew from london during this period our empirical work shows that the continuation of international banking activity in london is positively related to the setup of locally integrated organizational forms at entry the experience in the local market and the size of local operations continuation of banking activities is however negatively related to the setup of organizational forms integrated into the parent bank at entry and to the geographic distance of the home country to london we also find that higher global economic activity increases the likelihood of international banking operations continuing in london however the more volatile the global economic environment the greater the prospect of a cessation of this activity