fairness in public good provision an investigation of preferences for equality and proportionality a binary public good voting mechanism is designed to test for preferences for income equality and cost benefit proportionality the voting design isolates preferences for equality from those for proportionality and controls for alternative external preferences such as altruism envy and the rawlsian difference principle individuals choose between greater income or fairness in these demand revealing votes treatments vary whether the positions of voters are earned or random whether votes are hypothetical or real and whether they are over gains or losses significant deviations from self interested voting are observed in all treatments testing for equality and in some treatments testing for proportionality

interfirm relationships and informal credit in vietnam trading relations in vietnam s emerging private sector are shaped by two market frictions the difficulty of locating trading partners and the absence of legal enforcement of contracts examining relational contracting we find that a firm trusts its customer enough to offer credit when the customer finds it hard to locate an alternative supplier a longer duration of trading relationship is associated with larger credit as is prior information gathering customers identified through business networks receive more credit these network effects are enduring suggesting that networks are used to sanction defaulting customers

is there agreement between beneficiaries on who should bear the costs of conserving farm landscapes abstract in recent years market based incentives have been regarded as a potential solution for addressing market failure related to environmental externalities determining the optimal payment schedule to facilitate such market mechanism typically involves a valuation exercise to capture the static benefits received by beneficiary groups from the public good in this study we augment the valuation estimates with a notion of fair share by assessing opinions of two beneficiary groups tourists and bed and breakfast owners regarding an acceptable division of the burden of financing the public good we find a significant difference in views tourists believe that their accommodation providers should contribute almost twice the amount that they themselves are willing to pay on the contrary a majority of bed and breakfast owners surveyed were against burdening tourists with any additional payments

sticky information phillips curves european evidence we estimate the sticky information phillips curve model of mankiw and reis 2002 using survey expectations of professional forecasters from four major european economies our estimates imply that in ation expectations in france germany and the united kingdom are updated about once a year in italy about once each six months

the determinants of trade credit use the case of the tanzanian rice market most small businesses in the developing economies suffer from a lack of access to formal external finance one important alternative source of finance for these entrepreneurs is trade credit applying a unique data set containing data on specific trade relations between rice wholesalers and rice retailers in tanzania we analyse the determinants of trade credit demand and supply in this market using a simultaneous equation modelling approach the analysis shows that while the demand for trade credit is primarily determined by the extent to which retailers need external funds supply is mainly driven by wholesalers incentives to attract and keep clients moreover wholesalers willingness to provide credit increases if they have better information about the possibility that the customer will fail to repay the credit

the impact of trade credit on customer switching behaviour evidence from the tanzanian rice market abstract we use primary survey data to analyse the relationship between trade credit and customer switching in the context of trade transactions between wholesalers and retailers in the tanzanian rice market results reveal a negative relation of trade credit and customer switching that is trade credit acts as a switching barrier retailers are reluctant to move to another supplier if they depend on trade credit as a source of external finance this interpretation fits with the underdeveloped financial markets in tanzania in which access to external finance is poor among rice retailers

does competition encourage credit provision evidence from african trade credit relationships previous work has claimed that monopoly power facilitates the provision of credit because monopolists are better able to enforce payment here we argue that if relationship specific investments are required by borrowers to establish creditworthiness monopoly power may reduce credit provision because holdup problems ex post will deter borrowers from investing in establishing creditworthiness empirically we examine the relationship between monopoly power and credit provision using data on the supply relationships of firms in five african countries consistent with the up front investment story we find that monopoly power is negatively associated with credit provision and that this correlation is stronger in older supplier relationships because the data include several observations per firm we are able to utilize firm fixed effects thus netting out unobserved firm characteristics that may have been driving results in earlier studies

estimates of the sticky information phillips curve for the united states mankiw and reis 2002 have proposed a sticky information based phillips curve sipc to address some of the concerns with the sticky price based new keynesian phillips curve in this paper we present a methodology to empirically implement the sipc and estimate its key structural parameter the degree of information stickiness for the united states using this methodology we estimate average durations of information stickiness that range from three quarters on the low side to over seven quarters on the high side

formal institutions and social capital in value chains the case of the ethiopian commodity exchange we explore whether the creation of the ethiopian commodity exchange ecx and its formal monitoring and enforcement institutions has affected social capital and trust in the ethiopian segment of the sesame value chain consistent with a simple theoretical marketing model our panel data suggest this is indeed the case trade in sesame is increasingly governed by formal rather than informal institutions and in response traders have broadened their trading network rely more frequently on traders with whom they do not have social relations and have reduced the provision of credit that cements personalized relationships they also have lower levels of trust in the intentions and capabilities of their trading partners and attach less weight to trust

optimal contracting with endogenous social norms research in sociology and ethics suggests that individuals adhere to social norms of behavior established by their peers within an agency framework we model endogenous social norms by assuming that each agent s cost of implementing an action depends on the social norm for that action defined to be the average level of that action chosen by the agent s peer group we show how endogenous social norms alter the effectiveness of monetary incentives determine whether it is optimal to group agents in a single or two separate organizations and may give rise to a costly adverse selection problem when agents sensitivities to social norms are unobservable

trade credit and credit rationing asymmetric information between banks and firms can preclude financing of valuable projects trade credit alleviates this problem by incorporating in the lending relation the private information held by suppliers about their customers incentive compatibility conditions prevent collusion between two of the agents e g the buyer and the seller against the third e g the bank consistent with the empirical findings of petersen and rajan 1995 firms without relationships with banks resort more to trade credit and sellers with greater ability to generate cash lows provide more trade credit finally small firms react to monetary contractions by using trade credit consistent with the empirical results of nilsen 1994 article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

cooperation in community interaction without information flows we study cooperative behaviour in communities where the flow of information regarding past conduct is limited or missing players are initially randomly matched with no knowledge of each other s past actions they endogenously decide whether or not to continue the repeated relationship there is incomplete information regarding player types a subset of the population is myopic while the remainder have discount factors that permit cooperation in principle we define social equilibrium in such communities such equilibria are characterized by an initial testing phase followed by cooperation if the test is successful it is precisely the presence of myopic types that permit cooperation by raising barriers to entry into new relationships we examine the implications of increased patience which takes two forms an increase in the number of non myopic types and an increase in the discount factor of non myopic types these two notions turn out to have strikingly different implications for the degree of cooperation that can be sustained

competition and inter firm credit theory and evidence from firm level data in indonesia abstract using firm level data we investigate the relationship between trade credit and suppliers market structure and find a shaped relationship between competition and trade credit with a discontinuous increase in credit provision between monopoly and duopoly this big jump arises because monopolists are more likely to not offer any trade credit than firms in competitive environments our model exploits the fundamentally different nature between cash and trade credit sales arguing that firms are unable to commit ex ante to a trade credit price we show that monopolists will often sell only on cash while credit is always provided in competitive environments

the persistence of inflation in the united states abstract has the persistence of inflation in the united states changed since 1965 we estimate the persistence of inflation over time using different measures and estimation procedures and we produce confidence intervals for our estimates as well as formal tests of unchanged persistence we find that inflation persistence has been high and approximately unchanged in the u s over our sample period we reconcile our results with other studies that reached different conclusions

ethnicity and credit in african manufacturing abstract this paper investigates whether market interaction can by itself perpetuate the lack of ethnic diversity that is observed in the business communities of many developing countries using case study data on manufacturing firms in kenya and zimbabwe we find no evidence that blacks or women are disadvantaged in the attribution of bank credit once we control for firm size and other observable characteristics in contrast an ethnic and gender bias is noticeable in the attribution of supplier credit although we cannot rule out the presence of discrimination the bulk of the evidence indicates that network effects play an important role in explaining this bias

fairness of prices user fee policy and willingness to pay among visitors to a national forest abstract imposing user fees in nature based tourism nbt contexts has been a controversial issue based on the notions of justice and fairness this study extended previous work examining the relationship between attitudes toward user fees and spending support in a proposed structural model of price fairness fee spending support and willingness to pay wtp this paper identified the antecedents of wtp user fees and empirically examined to what extent the data fit the model furthermore the moderating role of place attachment in the model was investigated by using multiple group structural equation modeling subjects n 562 were recreational tourists to a forest area in the southeast u s results revealed that spending support partially played a mediating role in the relationship between perceived price fairness and wtp user fees a multiple group invariance test also demonstrated that while the degree of place identity moderated the effect of price fairness on spending support the degree of place dependence did not influence the relationships among the antecedents of wtp

contingent valuation controversies and evidence contingent valuation cv has become one of the most widely used non market valuation techniques cv s prominence is due to its flexibility and ability to estimate total value including passive use value its use and the inclusion of passive use value in benefit cost analyses and environ mental litigation are the subject of a contentious debate this paper discusses key areas of the debate over cv and the validity of passive use value we conclude that many of the alleged problems with cv can be resolved by careful study design and implementation we further conclude that claims that empirical cv findings are theoretically inconsistent are not generally supported by the literature the debate over cv however has clarified several key issues related to nonmarket valuation and can provide useful guidance both to cv practitioners and the users of cv results

competition and relational contracts in the rwanda coffee chain how does competition affect market outcomes when formal contracts are not enforceable and parties resort to relational contracts difficulties with measuring relational contracts and dealing with the endogeneity of competition have frustrated attempts to answer this question we make progress by studying relational contracts between upstream farmers and downstream mills in rwanda s coffee industry first we identify salient dimensions of their relational contracts and measure them through an original survey of mills and farmers second we take advantage of an engineering model for the optimal placement of mills to construct an instrument that isolates geographically determined variation in competition conditional on the suitability for mills placement within the catchment area we find that mills surrounded by more suitable areas i face more competition from other mills ii use fewer relational contracts with farmers and iii exhibit worse performance an additional competing mill also iv reduces the aggregate quantity of coffee supplied to mills by farmers and v makes farmers worse off competition hampers relational contracts directly by increasing farmers temptation to default on the relational contract and indirectly by reducing mill s profits

how people respond to contingent valuation questions a verbal protocol analysis of willingness to pay for an environmental regulation abstract this paper investigates what a respondent is thinking when answering a willingness to pay question in a contingent valuation using a think aloud technique from psychology called verbal protocol analysis the willingness to pay responses we observed seem to be constructed from a variety of considerations including an obligation to pay a fair share of the cost of the solution and signaling concern for a larger set of environmental issues the finding that respondents seem to construct their values at the time they are asked rather than reporting a more well defined value is seen as consistent with over two decades of research on the psychology of decision making potential uses of verbal protocols in contingent valuation studies are also discussed

macroeconomic expectations of households and professional forecasters economists have long emphasized the importance of expectations in determining macroeconomic outcomes yet there has been almost no recent effort to model actual empirical expectations data instead m acroeconomists usually simply assume that expectations are rational this paper shows that while empirical household expectations are not rational in the usual sense expectational dynamics are well captured by a model in which households views derive from news reports of the views of professional forecasters which in turn may be rational the model s estimates imply that people only occasionally pay attention to news reports this inattention generates stickyness in aggregate expectations with important macroeconomic consequences

trade credit and supplier competition abstract this paper examines how competition among suppliers affects their willingness to provide trade credit financing trade credit extended by a supplier to a cash constrained retailer allows the latter to increase cash purchases from its other suppliers leading to a free rider problem a supplier that represents a smaller share of the retailer s purchases internalizes a smaller part of the benefit from increased spending by the retailer and as a result extends less trade credit relative to its sales in consequence retailers with dispersed suppliers obtain less trade credit than those whose suppliers are more concentrated the free rider problem is especially detrimental to a trade creditor when the free riding suppliers are its product market competitors leading to a negative relation between product substitutability among suppliers to a given retailer and trade credit that the former provide to the latter we test the model using both simulated and real data the estimated relations are consistent with the model s predictions and are statistically and economically significant

implications of rational inattention abstract a constraint that actions can depend on observations only through a communication channel with finite shannon capacity is shown to be able to play a role very similar to that of a signal extraction problem or an adjustment cost in standard control problems the resulting theory looks enough like familiar dynamic rational expectations theories to suggest that it might be useful and practical while the implications for policy are different enough to be interesting

trade credit in zimbabwean manufacturing abstract credit from suppliers is an important but often neglected source of finance for manufacturing firms zimbabwe is no exception unlike credit from financial institutions trade credit does not rely on formal collateral but on trust and reputation contract enforcement is flexible network effects and statistical discrimination affect the screening of trade credit applicants black entrepreneurs are disadvantaged by their lack of business contacts and by the difficulty of distinguishing themselves from the mass of financially insecure and short lived african owned businesses in zimbabwe a vicious circle is created between weak financial base unreliability as a debtor and inability to gain access to credit