amenities factor mobility and market prices policy usefulness of empirical studies examining market responses to amenity levels rests on how accurately willingness to pay wtp for amenities can be derived from these responses recent research into hedonic market techniques has focused on econometric questions of accuracy when estimating demand for amenities this paper contributes to the investigation of accuracy using a perspective distinct from strict issues of econometric methodology use is made of a general equilibrium approach to explore the implications of factor migration and multiple market price responses to amenity endowment change amenities are modeled as one component of a location specific factor bundle factor prices output levels and housing services prices are allowed to adjust in response to a one region amenity endowment increase emphasis throughout is on a stylized representation of a simplified regional economic structure

efficiency growth and concentration an empirical analysis of hospital markets taking an evolutionary view of markets harold demsetz hypothesized that firms differ persistently in efficiency and that industry concentration results from growth of efficient firms at the expense of inefficient ones we test the hypothesis with high quality microdata from the us hospital industry an industry of keen policy and scientific interest we measure efficiency by firm in the early 1980s and relate it to subsequent growth of efficient firms to the persistence of profit differences and to changes in the concentration of markets initial hospital efficiency and subsequent growth and profitability are significantly and positively related also greater initial variation in hospital efficiency within local markets is positively related to subsequent growth in market concentration these findings support the logic of demsetz s evolutionary efficiency hypothesis though they cannot confirm the stronger idea that variation in firm efficiency is the dominant explanation for changes in concentration

multiproduct short run hospital cost functions empirical evidence and policy implications from cross section data economists and policymakers have been interested in hospital costs and the structure of hospital technologies for several decades now early interest was focused on the possibility of scale economies which implied increased efficiency for larger hospitals 6 8 12 13 18 20 while more recent interest has been stimulated by the inflationary spiral of hospital costs 1 15 17 22 as hospital costs have risen important policy questions concerning the impact on costs of the hospitals diagnostic case mix the hospitals admitting physicians the hospitals size and the hospitals efficiency have emerged and researchers have attempted to deal with these issues within the context of increasingly complex econometric models 1 2 5 24 27 however in attempting to analyze these important policy issues researchers have been forced to make two major types of compromises on the one hand appropriate data are often not available for estimating a well specified cost function e g information on admitting physicians and diagnostic case mix are often missing so that problems of specification error often plague the econometric results conversely in using imaginative ways to deal with data problems e g weighting in patient and out patient care to form a single index of hospital services 1 27 or estimating separate cost functions for each department in the hospital 2 researchers sometimes place unrealistic and unnecessary constraints on their econometric models the purpose of this study is to analyze the impact of several of the primary hospital characteristics mentioned above on the short run costs of hospitals within a theoretically consistent framework in the following discussion we also develop the theoretical

on universal currency hedges this paper identifies five universal currency hedge ratio uhr definitions these are hedge positions in foreign bonds stated as a fraction of national or global equity portfolios that are the same for all investors regardless of nationality the first three involve the total demand for foreign bonds and depend on equities not being held for hedging purposes the last two are associated with variance minimizing regression hedges these hold in general but are designed exclusively for hedging other traded asset positions jensen s inequality makes the choice of measurement currency irrelevant and makes the hrs universal without affecting their values

scenario modelling for selective hedging strategies abstract we study currency risk management in the context of scenario analysis we develop scenario based optimization models that jointly determine the portfolio composition and the hedging strategy within each currency thus the model prescribes optimal selective hedging policies we then study empirically the performance of the models the new elements of our empirical analysis are various horizons one month and one semester various currency bases explicit incorporation of realistic transaction costs the results show that selective hedging strategies dominate the alternatives under some conditions and that transaction costs are very important in determining the profitability of various currency risk management strategies for both stocks and bonds at the one month horizon

u s reits as an asset class in international investment portfolios an examination of u s real estate investment trust reit efficiency as a portfolio component from the perspective of all g 7 countries for the period 1985 through 1994 indicates that u s reits offer both an inflation hedge and diversification nevertheless including reits in test portfolios did not yield statistically significant increases in risk adjusted return over the period as a whole subperiod analyses indicated large temporal differences in reit efficiency as a portfolio component

an economic theory of avant garde and popular art or high and low culture artists face choices between the pecuniary benefits of selling to the market and the nonpecuniary benefits of creating to please their own tastes we examine how changes in wages lumpsum income and capital labor ratios affect the artist s pursuit of self satisfaction versus market sales using our model of labor supply we consider the economic forces behind the high low culture split why some artistic media offer greater scope for the avant garde than others why so many artists dislike the market and how economic growth and taxation affect the quantity and form of different kinds of art

commodity liquidity measurement and transaction costs we examine the performance of liquidity proxies in commodities the amihud measure has the largest correlation with liquidity benchmarks amivest and effective tick measures also perform well these proxies are useful for studies of commodity liquidity over a long time period and those that lack access to high frequency data we use various aspects of transaction costs such as spread depth immediacy and resiliency to give insight into the costs of different execution approaches transaction costs increase with volatility and exhibit mean reversion splitting trades over one hour can reduce trading costs by two thirds compared to an immediate execution the author 2011 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

the role of husband s and wife s economic activity status in the demand for children abstract the existing literature on household demand for children in developing countries focuses on women s choice of different types of market activity many types of work in the informal sector are considered to be more compatible with child care because they put less demands on women s time the presence of such compatibility effects is used to explain why women s wage rates or labor force participation rates are not always negatively related to the fertility rates however households in the informal sector may own a family business which can lead them to have a greater demand for children because child labor can be more productively employed in the family enterprise consequently not only is wife s choice of market activity type important in determining fertility demand but so is husband s choice the new emphasis is on men s role micro data from the urban sector of hong kong are used to test for the presence of both the compatibility and child labor effects on fertility demand with positive results our study shows that incorporating husband s choice of market activity type can be important in the analysis of fertility demand in developing countries

school board politics school district size and the bargaining power of teachers unions this paper presents a public choice theory of the bargaining power of teachers unions the theory predicts that the power of the unions rises with the size of a district the theory is tested by examining the relationship between district size and various bargaining outcomes for a sample of 771 california school districts in 1999 2000 as hypothesized teachers salaries rise and the ratio of teachers per pupil falls with increasing district size the paper also considers several alternative explanations for these results

a hedonic prices approach to hospitalization costs the case of israel the paper suggests a hedonic prices approach to estimate the cost of hospital services it applies this approach to israeli data as a first approximation of hospitalization costs in that country in the absence of accounting data this approach enables us to estimate the relative cost of basic hospital services how hospital characteristics affect cost and how cost changes with time moreover it provides for a standardized measure to view the relative efficiency of a cross section of hospitals several findings based on israeli data demonstrate the potential of the approach and may be of general interest first controlling for department mix bigger hospitals which are usually also teaching hospitals and may have a different case mix incur higher cost per admission than smaller hospitals second by institution general sick fund hospitals are more expensive but also experience in terms of budget allocations less discrimination than government hospitals hence provision of equitable service may be less efficient than in services where there is budgetary discrimination to induce specialization etc third hospitals have been subject to inflationary pressures over and above the general inflation level in israel as may be the case in most other western countries fourth a comparison of cost per admission across hospitals and over time shows that cost has been consistently increasing in particular hospitals and falling in others beyond the average increases warranted by growth in size changes in composition and hospitalization specific inflation more research is needed in order to explain these unexplained but consistent trends

evolutionary theories in environmental and resource economics approaches and applications recent advances in evolutionary theory have important implications for environmental economics a short overview is offered of evolutionarythinking in economics subsequently major concepts and approaches inevolutionary biology and evolutionary economics are presented andcompared attention is devoted among others to darwinian selection punctuated equilibrium sorting mechanisms lamarckian evolution coevolution and self organization basic features of evolution such assustained change irreversible change unpredictability qualitativechange and disequilibrium are examined it is argued that there are anumber of fundamental differences as well as similarities betweenbiological and economic evolution next some general implications ofevolutionary thinking for environmental economics are outlined this isfollowed by a more detailed examination of potential uses ofevolutionary theories in specific areas of environmental economics including sustainability and long run development theories technologyand environment ecosystem management and resilience spatial evolutionand environmental processes and design of environmental policy

beyond implicit prices recovering theoretically consistent and transferable values for noise avoidance from a hedonic property price model using a two stage hedonic pricing methodology we estimate a system of structural demand equations for different sources of transport related noise in the first stage we identify market segments using model based clustering techniques and estimate separate hedonic price functions hpfs for each segment in so doing we show how a semiparametric spatial smoothing estimator outperforms other standard specifications of the hpf in the second stage we control for non linearity of the budget constraint and identify demand relationships using techniques that account for problems of endogeneity and censoring of the dependent variable our estimated demand functions provide welfare estimates for peace and quiet that we believe to be the first derived from property market data in a theoretically consistent manner

the structure of costs and production in new zealand public hospitals and application of the transcendental logarithmic vaiable cost funcation new zealand s public hospitals provide free secondary health care to the public through taxation funding since these hospitals vary by both size and range of services provided the possibility of more porductive resource use is of explicit interest a translog variable cost function is estimated for new zealand public hospitals using 1987 cross section data an analysis of sthe function reveals the marginal costs short run and long run economies of scale and input factor substitution possibilities results suggest that a transfer of both patients with less severe conditions and staff from teachin hospitals to say country hospitals will result in a short run decareased total cost to the system the long run economies of scale estimates suggest that efficiency gains could result from downsizing large hospitals merging smaller hospitals and increasing patient turnover partial elasticites of demand indicate the asymmetric nature of factor substitution and the effect of specific inputs such as nurses

comparative statics for utility maximization models with nonlinear budget constraints this paper investigates the properties of demand functions generated by nonlinear budget constraints and relates them to those of demand functions generated by linear budget constraints the analysis shows that the properties of nonlinear and linear demand functions in some respects are similar but in other respects differ substantially the study gives conditions under which properties of the linear demand functions carry over to the nonlinear ones the implications for the nonlinear demand functions of various separability assumptions are also studied copyright 1989 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the impacts of membership in multi hospital systems on cost productivity growth and technical change abstractwe examine whether affiliation in a multi hospital system contributes to higher rates of total factor productivity tfp growth technological progress and cost efficiency with a 1996 to 1999 panel of 248 us hospitals some are private nonprofit church related and other nonprofit and the remaining are public government nonfederal empirical results indicate that urban system member hospitals experienced higher rates of both tfp growth and technical progress than the rates of tfp growth and technical progress experienced by urban nonsystem hospitals rural system member hospitals experienced smaller rates of both tfp decline and technical regress than the rates of tfp decline and technical regress experienced by rural nonsystem hospitals

international diversification of investment portfolios u s and japanese perspectives in this paper we analyze the gains from international diversification of investment portfolios from the japanese as well as the u s perspectives the major findings of this paper include first the potential gains from international as opposed to purely domestic diversification are much greater for u s investors than for japanese investors for u s investors the gains accrue not so much in terms of lower risk as in terms of higher return and the opposite holds for japanese investors second using various ex ante international investment strategies designed to control parameter uncertainty u s investors can realize substantial gains from international diversification in out of sample periods japanese investors however can gain relatively little third hedging exchange risk generally allows the u s but not japanese investors to benefit more from international diversification for u s investors the international bond diversification with exchange risk hedging offers a superior risk return trade off than the international stock diversification with or without hedging

the estimation of a joint wage hours labor supply model in this paper the standard cross sectional static model of labor supply is modified to make the wage endogenous and a joint wage hours model is estimated the econometric technique addresses the non linearity of the budget constraint by approximating the constraint by a series of discrete points the results show that the budget constraint is indeed nonlinear that hours affect the wage quadratically that true wage elasticities are lower as a result and that the model fits the hours distribution much better than the standard tobit model

competition and the core core theory is a powerful tool to find competitive market clearing prices a familiar economic setting shows this beginning with a single commodity produced using many factors of production and ending with the general case of many outputs and inputs the analysis describes when the market has a core when it has no core there is a least upper bound on the payment each firm that does not participate in a central market must make that serves as an inducement to restore the core since each firm can avoid this penalty by trading in the central market the result is market clearing prices that can support an efficient equilibrium

conditional hedging and portfolio performance simple conditional currency hedging rules often increase risk adjusted portfolio returns and are thus of interest to investors several researchers have reported successful application of a forward hedge rule fhr in which one hedges whenever the foreign currency trades at a forward premium an alternative strategy a real interest rate hedge rule rir is based on hedging when the domestic real interest rate exceeds the foreign rate as an extension we propose a combination of these rules a real forward hedge rule rfhr we evaluate the performance of the rules for various currency stock and bond portfolios from the developed countries in tests of risk adjusted returns for 1976 1997 the rfhr significantly outperformed standard benchmarks and often beat the fhr and the rir moreover results of a simple dominance test for rolling 5 and 10 year periods suggest that the rfhr consistently improves portfolio performance for a u s investor

the impact of hospital market structure on patient volume average length of stay and the cost of care a variety of recent proposals rely heavily on market forces as a means of controlling hospital cost inflation sceptics argue however that increased competition might lead to cost increasing acquisitions of specialized clinical services and other forms of non price competition as means of attracting physicians and patients using data from hospitals in 1972 we analyzed the impact of market structure on average hospital costs measured in terms of both cost per patient and cost per patient day under the retrospective reimbursement system in place at the time hospitals in more competitive environments exhibited significantly higher costs of production than did those in less competitive environments

preference based strategic currency hedging this article considers the value to a given investor of volatility reduction through currency hedging relative to taking an unhedged position included is a decision framework to help international investors analyze how the potential risk reduction benefits of hedging interact with the investor s beliefs about the currency risk premium risk aversion and investment constraints to determine an optimal currency hedging strategy in our framework investors choose from nine hedging strategies each of which may be optimal under a specific set of assumptions the article concludes that a unitary hedge strategy is best for investors who do not forecast currency returns for those who make strategic currency return forecasts our aggregated results suggest an optimized hedge strategy using expected return inputs from an asset pricing model

nullity restrictions and comparative static analysis while homogeneity restrictions of optimal choice functions are well known in the context of neoclassical economic theory the existence and implications of homogeneity like restrictions in more general optimization models have not received much attention in the literature the authors call such restrictions nullity restrictions since they involve the null space of the matrix of slopes of choice functions the existence nature and implications of nullity restrictions are investigated in the context of a general optimization problem this contributes to closing a major gap in the analysis of the implications of optimization for economic behavior copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

exploring hospital production relationships with flexible functional forms this paper estimates a multiproduct variable cost function using data on a sample of california hospitals the results provide useful insights into the advantages and disadvantages of flexible functional forms for cost analysis the translog function appears to provide reasonable estimates of marginal costs when evaluated at or near the approximation point of the function the estimated function performs less satisfactorily however when evaluated outside this range the paper s results do not provide strong evidence of either ray scale economies or of weak cost complementarities there is some evidence however that the degree of scale economies may be underestimated

the utility maximizing self employed physician we estimate a model of utility maximizing physician behavior our model accounts for the interdependence of physician input output and work leisure choices and includes an endogenous virtual wage for physician own time in the medical practice we find that solo practitioners respond to increases in marginal hourly earnings and nonpractice income by allocating less time to medical practice activities our results also suggest that fee reductions induce the substitution of physician own time for auxiliaries and the net effect of this adjustment is reduced patient loads and a decrease in supply from the existing stock of solo practitioners

currency risk premia and uncovered interest parity in the international capm abstract zero investment uncovered interest parity uip portfolio positions provide perfect factor mimicking portfolios for currency risk in the international capm context their returns are the currency risk premia since the uip positions on average provide low returns the currency risk premia must be low so that currency risk appears not to be priced in an unconditional model however previous research has shown that uip returns are predictable and may be quite substantial conditionally we use this observation to generate a specific conditional version of the international capm a gmm approach shows that the conditional model performs well while the unconditional international capm is marginally rejected the paper thus argues that previous rejections of the international capm stem from the fact that currency risk premia are by nature low over extended periods of time and do not provide evidence against the international capm

cvar models with selective hedging for international asset allocation abstract we develop an integrated simulation and optimization framework for multicurrency asset allocation problems the simulation applies principal component analysis to generate scenarios depicting the discrete joint distributions of uncertain asset returns and exchange rates we then develop and implement models that optimize the conditional value at risk cvar metric the scenario based optimization models encompass alternative hedging strategies including selective hedging that incorporates currency hedging decisions within the portfolio selection problem thus the selective hedging model determines jointly the portfolio composition and the level of currency hedging for each market via forward exchanges we examine empirically the benefits of international diversification and the impact of hedging policies on risk return profiles of portfolios we assess the effectiveness of the scenario generation procedure and the stability of the model s results by means of out of sample simulations we also compare the performance of the cvar model against that of a model that employs the mean absolute deviation mad risk measure we investigate empirically the ex post performance of the models on international portfolios of stock and bond indices using historical market data selective hedging proves to be the superior hedging strategy that improves the risk return profile of portfolios regardless of the risk measurement metric although in static tests the mad and cvar models often select portfolios that trace practically indistinguishable ex ante risk return efficient frontiers in successive applications over several consecutive time periods the cvar model attains superior ex post results in terms of both higher returns and lower volatility

were the returns from stocks and bonds of different countries really different in the 1980 s we analyzed the total equity returns of indexes from australia canada germany japan the uk and the us and total fixed income returns of indexes from all but australia excluded due to lack of data to see if the returns of stocks and bonds were statistically different across markets during the 1980s at the end of 1989 these countries represented over 87 of the market capitalization of the morgan stanley capital international msci world equity index and over 88 of the salomon brothers world bond index this study used monthly observations from january 1980 through december 1989 and examined returns based in local currency and hedged and unhedged us dollars we found that sample mean stock and bond returns during the 1980s were statistically indistinguishable across countries however because the sample variances were so large relative to the sample means it would have been difficult to detect differences in population means by any test we found evidence of variance heterogeneity which may be

does wealth imply secularization and longevity we develop a simple life cycle model with endogenous longevity where religious firms influence religious beliefs using donations as an input the model suggests that either wealth and economic development or competition by religiousfirms can explain cross countryvariationinreligiousbeliefs buttoexplaincross countryvariationinreligiousbeliefs longevity and consumption both development and competition are required our results depend on the wealth and substitution effects that accompany economic development and religious market competition

reconsidering the economics of demand analysis with kinked budget constraints this paper has two objectives first we identify a problem with the ability of the discrete continuous choice framework and conditional demand functions to fully describe consumer preferences in the presence of kinked budget constraints second we propose and illustrate an alternative preference based method for estimating consumer responses to price changes under these conditions this framework recognizes that commitments to commodities such as pools or outdoor landscaping influence how water consumption responds to price changes as part of the long run consumption adjustments with microdata on household choices this approach could be used to design increasing block rate structures that recognize the differences in water consumption responses with these commitments

interactions between hospital admissions cost per day and average length of stay hospital cost per day cost annual admissions per capita admit and average length of stay alos are important health policy variables because each variable provides important information about hospital industry performance this study uses country level data to explore the empirical relationships between cost admit and alosin three steps ols estimation application of the wu hausman endogeneity test and re estimation with two stage least squares the major results are i admitand alosexert exogenous influences on costand ii admitand alosare endogenously related with possible one way casuality from admitto alos

multi product costs and standby capacity derived from queuing theory the case of belgian hospitals empirical hospital cost function studies can be divided into two categories studies estimating traditional multi product cost functions and studies including demand uncertainty assuming that hospitals provide standby capacity to cope with uncertain demand and stressing that the relationship between the uncertain demand excess capacity and costs should be investigated most studies include the inverse of the occupancy rate in a relatively basic cost function the first contribution of this paper is to incorporate an indicator of reserve capacity into a genuine multi product cost function the second contribution is to propose an alternative indicator to proxy the reserve margin the often used occupancy rate has an important shortcoming the same occupancy rate can hide different turnaway probabilities and waiting times obscuring the true degree of reservation quality since turnaway probabilities and waiting times are typical queuing theory indicators an indicator for average waiting time derived

analysis of hospital production an output index approach in this study a new model of hospital costs is developed and estimated utilizing an output index this theoretically appropriate output index is constructed to accurately reflect the differentiated nature of hospital care by employing both patient and diagnosis characteristics in its construction using this output index we estimate a long run translog cost function with a dataset of 321 california hospitals for the year 2003 we find evidence of economies of scope across specialties within primary care and evidence of scope diseconomies within secondary and tertiary care point estimates of scale economies using the output index indicate that minimum efficient scale is reached at a larger level than when using less refined output measurement techniques that have often been used in similar studies our estimates indicate the importance of accounting for specialty specific scope economies when analyzing the production properties of firms producing differentiated products

scale and scope efficiencies through hospital consolidations the hospital sector in the province of ontario has recently completed a large scale restructuring marked by wide ranging hospital closures mergers and program transfers given a generally inconclusive economics literature regulators used an accounting as opposed to an economic approach when predicting gains to consolidations this paper uses an economic cost function to examine economies of scale and scope in the years preceding restructuring where there was little doubt that economies were possible issues relating to output aggregation functional form and scale and scope testing are addressed and an equilibrium cost function is derived from an estimated short run function to measure the cost concepts of interest using index and direct approaches we examine a variety of potential reconfigurations and conclude that there were indeed large scale unexploited gains to strategic consolidation in the hospital sector furthermore these gains may not have been detected using standard approaches in the literature

cost efficiency of electric grid utilities in china a comparison of estimates from sfa mle sfa bayes and stoned cnls with the purpose of estimating the range of cost efficiency levels of the power grid sector in china we assembled a data set including 23 provincial power grid companies spanning from 2005 to 2009 and conducted an empirical study based on the sfa mle sfa bayes and stoned cnls methodologies empirical results show that the average values of efficiency from different models vary from 0 85 to 0 92 depending especially on the assumptions underlying inefficiency content further results demonstrate that there is exogenous technical progress during the sample period and per capita gdp of the province is negatively related to the costs of the electric grid company located in the corresponding province we hope this empirical study will contribute to the debate on an efficiency based regulation scheme which was introduced to the chinese electric grid sector on a pilot base in 2014

currency hedging for international portfolios this paper examines the benefits from currency hedging both for speculative and risk minimization motives in international bond and equity portfolios the riskreturn performances of globally diversified portfolios are compared with and without forward contracts over the period 1974 to 1990 inclusion of forward contracts results in statistically significant improvements in the performance of unconditional portfolios containing bonds conditional strategies are also implemented both in sample and out of sample and are shown to both significantly improve the risk return tradeoff of global portfolios and to outperform unconditional hedging strategies whether international portfolios should be hedged against currency risks is the subject of an active debate the theoretical side of the debate has been closely associated with two strands in the academic literature international asset pricing and optimal hedging in the futures markets in the international asset pricing model iapm of solnik 1974 optimal portfolios contain positions in forward contracts or equivalently foreign currency denominated bills these positions which can differ from the positions in foreign stocks have since been termed hedges black 1990 shows that under additional assumptions the hedge ratios should be identical for all investors regardless of their nationality universality and that investors should never fully hedge their foreign currency exposures similarly theoretical models from the futures literature produce demands for hedging instruments that contain both speculative and hedging components the empirical issue unanswered so far is whether adding forward contracts to international portfolios significantly improves the risk return profile of global investments empirical research has barely begun to respond to the challenges of theoretical models there exists little empirical evidence on either the relevance of black s universal hedge ratios or the optimality of hedge ratios less than one instead researchers have concentrated on the benefits of fully hedging exchange risk for example eun and resnick 1988 indicate that stock portfolios perform better when fully hedged but offer no statistical tests

ambiguous changes in product quality economic goods are frequently sold according to a price per unit quantity where the quantity characteristic does not measure all the economically important characteristics of the good milk is sold by the quart automobiles rented by the mile physicians services bought by the visit and tennis lessons by the hour in all cases heterogeneous units are available in the market and the price per unit quantity depends upon the amount of the unpriced characteristic contained in each unit the per quart price of milk depends upon the butterfat content the mileage costs of automobile rentals on the cars make and the price per unit time for personal services on the providers skill and training the common distinction made between these variants of the same good is that they differ in quality where quality refers to the amounts of the unpriced attributes contained in each unit of the priced attribute thus milk is packaged according to the attribute milk liquid and the quality of milk refers to the ratio of butterfat per unit of liquid 2 this paper considers some of the unique aspects of the economics of supply and demand under this situation where products contain at least two desired attributes only one of which is quantified and measured prior to purchase product quality is here defined by the ratio of the second quality attribute per unit of the measured quantity attribute 3 this simple specification of quality allows a direct link between standard economic models of related products and the economics of variable product quality previous analyses which treat quality simply as a shift parameter in the demand function are shown to obscure the actual subtleties of supply and demand with variable endogenous quality 4 the paper proceeds by first examining the efficient quality and quantity and the competitive equilibrium the market equilibrium under monopoly is then contrasted in the second section the general theme of the

the currency hedging decision a search for synthesis in asset allocation many asset allocation and liability management decisions are controversial but the decision that frequently generates the most debate is the currency hedging decision strong feelings on currency exposure policy are usually based on the conviction that currency exposures should be determined by a simple mechanical process but not everyone advocates the same process a survey of the leading proposals to simplify the currency management process suggests that a baseline currency policy may lend itself to some mechanical rules but the rules are more complex than any of the widely advocated currency hedging policies suggest equity and fixed income managers as well as asset allocators will find currency issues easier to understand if they view currencies as they would view any other financial instrument the importance of currency management is clearer if a manager and client start from a 50 50 hedged unhedged currency benchmark and if currency and money market returns are combined the combination of currency and money market returns strips primary currency movements from stock and bond returns clarifying intermarket correlations and creating synthetic stock and bond futures portfolios no one can harbor illusions that this study or any similar effort can completely eliminate currency hedging controversies the argument has gone on too long and too many positions are ossified nonetheless most practitioners can understand the strengths and weaknesses of the various currency hedging viewpoints and the assumptions behind them can be evaluated dispassionately this dispassionate evaluation leads to a baseline currency policy but not to a rigid prescription for currency hedging designed to satisfy the demand for a simple rule the policy suggests an approach that can help a manager measure the cost or risk of a specific currency com

behavioural differences among hospitals it is ownership or location by about 1988 the consensus among leading health economists was that no meaningful differences existed among hospitals of differences owernership form and this position was embraced by the antitrust division of the us department of justice but behavioural differences among hospitals of different among hospitals of different owernership has continued to be a matter of both academic and judicial interest recent empirical studies have concluded that real differences do exist while many earlier studies reached the opposite conclusion this contradiction in finding over time as competition intensified is exactly opposite to what expense preference theory would predict we examine this apparent paradox using a very general test of behavioural differences by hospital ownership we find that the omission of location specific variables can lead to biased estimates of ownership effects and that no significant behavioural differences exist among private california hospitals in 1986 90 when this source of o

the output effects of government sponsored cartels during the new deal this paper uses the national industrial recovery act of 1933 which set up industry wide cartels in the manufacturing sector of the us economy to gain empirical insight into the current debate on the output effects of cartels recent theoretical studies have demonstrated ways in which cartels could expand rather than reduce output as is traditionally thought the new deal cartel experiment does not support this efficient cartel view on the contrary the legislation brought about a reduction in manufacturing output as traditional cartel theory would predict

flight to quality and correlation between currency and stock returns abstract we document that capital flows in and out of emerging or developed markets are sensitive to global equity market conditions capital tends to move out of emerging into developed countries in global down markets leading to depreciation appreciation of emerging developed currencies this generates a positive negative correlation between currency and equity in emerging developed markets which is amplified by the magnitude of the capital movement we also verify that hedging currency risks may undo the natural hedge and increase the total return volatility under negative correlation

selective hedging strategies for oil stockpiling abstract as a feasible option for improving the economics and operational efficiency of stockpiling by public agency this study suggests simple selective hedging strategies using forward contracts the main advantage of these selective hedging strategies over the previous ones is not to predict future spot prices but to utilize the sign and magnitude of basis easily available to the public using the weekly spot and forward prices of west texas intermediate for the period of october 1997 august 2002 this study adopts an ex ante out of sample analysis to examine selective hedging performances compared to no hedge and minimum variance routine hedging strategies to some extent selective hedging strategies dominate the traditional routine hedging strategy but do not improve upon the expected returns of no hedge case which is mainly due to the data characteristics of out of sample period used in this analysis

shapley value based pricing for auctions and exchanges abstract this paper explores how the shapley value can be used as the basis of a payment rule for auctions and exchanges the standard shapley value is modified so that losing bidders do not make or receive any payments the new rule called the balanced winner contribution bwc rule satisfies a variation of myerson s balanced contribution property the payment rule is fair in the sense that with respect to reported values the members of every pair of traders make equal contributions to each other s share of the gains from trade bwc payments can be used in single item auctions and more complex auctions and exchanges with multiple items and package bidding a series of examples is presented to illustrate how the bwc rule works and how the payments compare to those based on competitive prices the core and the vickrey clarke groves mechanism

consumer surplus enhancing collusion and trade that collusion among sellers hurts buyers is a central tenet in economics we provide an oligopoly model in which collusion can raise consumer surplus a differentiated product duopoly operates in two geographically separated markets each market is home to a single firm but can import at a cost from the foreign firm under some circumstances a perfect cartel relative to duopolistic competition raises the price of the imported good and lowers the price of the home good this raises welfare for most consumers and increases aggregate consumer surplus a similar possibility result applies to autarky our analysis applies beyond the spatial setting

applying regret theory to investment choices currency hedging decisions we apply regret theory an axiomatic behavioral theory to derive closed form solutions to optimal currency hedging choices investors experience regret of not having chosen the ex post optimal hedging decision hence investors anticipate their future experience of regret and incorporate it in their objective function we derive a model of financial decision making with two components of risk traditional risk volatility and regret risk we find results that are in sharp contrast with traditional expected utility loss aversion or disappointment aversion theories we discuss the empirical implications of our model and its ability to explain observed hedging behavior

the economics of polygyny in sub saharan africa female productivity and the demand for wives in cote d ivoire polygyny is still practiced throughout much of sub saharan africa with important social consequences this paper makes the first attempt to link african polygyny directly to the productivity of women in agriculture using micro data i develop a structural model of the demand for wives that disentangles wealth and substitution effects using a large household survey from cote d ivoire i find that marked geographic diversity in cropping patterns leads to regional variation in female labor productivity i also find that conditional on wealth men do have more wives when women are more productive that is cheaper this substitution effect may explain why polygyny declined in rural areas of cote d ivoire during agricultural development

does energy efficiency matter to home buyers an investigation of epc ratings and transaction prices in england abstract this paper investigates whether energy performance ratings as measured by mandatory energy performance certificates epcs are reflected in the sale prices of residential properties this is the first large scale empirical study of this topic in england involving 333 095 dwellings sold at least twice in the period from 1995 to 2012 applying hedonic regression and an augmented repeat sales regression we find a positive relationship between the energy efficiency rating of a dwelling and the transaction price per square metre the price effects of superior energy performance tend to be higher for terraced dwellings and flats compared to detached and semi detached dwellings the evidence is less clear cut for rates of house price growth but remains supportive of a positive association overall the results of this study suggest that energy efficiency labels have a measurable and significant impact on house prices in england

a multiple output multiple input model of the hospital industry in north carolina 1983 a multiple output multiple input model of the hospital industry in north carolina applied economics vol 15 no 3 pp 341 352

frontier estimation how useful a tool for health economics the journal is pleased to publish in this issue three papers that apply frontier estimation techniques to hospitals and nursing homes together with an exchange over the usefulness of those techniques in the health care context the papers represent the current state of the art with respect to applications of frontier estimation in health care because of the growing popularity of the technique no doubt in part from its availability in standard software packages it seems useful to take this opportunity to appraise its usefulness one might begin by asking usefulness for what assuming one could define a frontier with certainty how would one use such knowledge a straightforward application in health care appears to be to reimbursement because both data envelopment analysis dea and stochastic frontier estimation specify the least cost mix of inputs for a given output both methods can in principle be used to determine whether a given firm hospital or nursing home is efficient and if the answer to that question is no the magnitude of any inefficiency it is not a large step from that information to the notion that a regulator should reduce the firm s budget by the amount of the measured inefficiency indeed vitaliano and toren mention the boren amendment s requirement that the medicaid program reimburse hospitals and nursing homes at the cost incurred by an efficiently operated

the specification of a hospital cost function a comment on the recent literature in the empirical estimation of hospital cost functions two radically different types of specifications have been chosen to date ad hoc forms and flexible functional forms based on neoclassical production theory this paper discusses the respective strengths and weaknesses of both approaches and emphasizes the apparently unreconcilable conflict between the goals of maintaining functional flexibility and keeping the number of variables manageable if at the same time patient heterogeneity is to be adequately reflected in the case mix variables a new specification is proposed which strikes a compromise between these goals and the underlying assumptions are discussed critically

integrated dynamic models for hedging international portfolio risks abstract we develop scenario based stochastic programming models for hedging the risks of international portfolios using options the models provide increasing level of integration in managing market and foreign exchange fx risks we start with a single stage model with currency options for selective hedging of fx risks while market risk is addressed through diversification we add stock options to hedge market risks and add quantos and currency options to develop an integrated model using an innovative method to price quantos on the scenario tree underpinning the stochastic program the models are extended to multi stage settings backtesting on market data over a 14 year period that includes the global financial crisis of 2008 we demonstrate the effectiveness of taking increasingly integrated views of risk management simultaneous hedging of market and fx risks using stock and currency options has the best ex post performance the differences are economically significant and statistical significance is established through rigorous hypothesis testing the models are particularly effective during the crisis test results show that two stage models outperform their single stage counterparts regardless of the hedging strategy

simple analytics of productive consumption productive consumption adds to utility and income at the same time the shadow price of a productive good is equal to its money price less its marginal product as more of the good is consumed its shadow price rises because of diminishing productivity and the consumer s full income also rises because the marginal product is positive this paper uses a simple method to derive the comparative statics of the demand system when shadow prices and full income are endogenous the direction of the overall bias induced by endogenous prices and income is found to be determinate we demonstrate that the demand for productive goods tends to be relatively unresponsive to exogenous changes in prices and income we also show that labor supply will be relatively unresponsive to wage and unearned income if market work causes fatigue

international diversification with securitized real estate and the veiling glare from currency risk this paper analyzes diversification benefits from international securitized real estate in a mixed asset context we apply regression based mean variance efficiency tests conditional on currency unhedged and fully hedged portfolios to account for foreign exchange risk exposure from the perspective of a us investor it is shown that first international diversification is superior to a us mixed asset portfolio second adding international real estate to an already internationally diversified stock and bond portfolio results in a further significant improvement of the risk return trade off and third considering unhedged international assets could lead to biased asset allocation decisions not realizing the true diversification benefits from international assets our in sample results are quite robust in out of sample analysis and when investment frictions like short selling constraints are introduced