corporate philanthropy ownership type and financial transparency drawing on stakeholder theory and the concept of enlightened self interest we argue that firms that actively engage in corporate philanthropic giving also tend to demonstrate greater concern for investors interests by providing more transparent financial information and avoiding corporate misconduct moreover the relationships between corporate giving financial information transparency and corporate misconduct vary significantly according to the firm s ownership type which affects the fundamental motivations for corporate philanthropy in a sample of chinese publicly listed firms from the 2003 2009 period we find a positive relationship between corporate giving and financial transparency and note that the relationship is stronger for non state owned enterprises non soes we also find a significantly negative association between corporate giving and corporate misconduct for non soes but not for soes taken together these findings suggest that responsibility to both stakeholders and shareholders is a vital part of building trust and reputations in china s non soe sector

the corporation tax elasticity of charitable donations abstract with the continued downward pressure on corporation tax rates this paper analyses the corporation tax elasticity of donations there is strong evidence of an inverted u shape relationship between corporation tax rates and donations donations are initially increasing at a decreasing rate as a function of the corporation tax rate and are maximised at a rate of 27 percent between 2014 and 2018 the uk corporation tax rate decreased from 21 percent to 19 percent our results indicate that ceteris paribus this equates to a 34 percent decrease in an average uk firm s donations as corporation tax rates continue to decline the potential revenue implications for charities are increasing in importance the evidence also supports the theory of management utility maximisation as a determinant of corporate giving

corporate social responsibility of the most highly reputed european and north american firms the objective of this article is double first to analyze using a descriptive analysis the main differences in the level and components of social behaviour between european and north american firms and second to contrast empirically using a multiple linear regression model whether the motives behind corporate social behaviour are different depending on the region or country of the firm with this aim an indicator of social behaviour termed effort in sustainability has been constructed by aggregating the firm s social effort with customers employees community and environment for a sample of the 40 european and north american companies most highly reputed in the years 2003 and 2004 the results obtained indicate that the region or country of the firm influences the level components and motivation of its social behaviour

money back warranties vs replacement warranties a simple comparaison product warranties are one of the most common time honored and visible contractual relationships entered into by consumers moreover under the uniform commercial code consumers are covered by an implied warranty of merchantability even without a written warranty in this paper we compare the outcomes of two contrasting types of consumer product warranties money back warranties and replacement warranties both these types of warranties are ubiquitous in fact a best and a r andreasen 1977 find that returning an item is the most common action taken by dissatisfied consumers c l kendall and f a russ 1975 in a study of the consumer packaged goods industry find that money back and new merchandise are the two most common responses made by firms to consumer complaints yet as our analysis shows there are significant differences in the incentives they provide firms and in their welfare properties in particular we find that the comparison depends crucially on the observability of quality and on the cost of servicing warranties although there are certainly more complicated explanations for warranties we rely on a simple model of imperfect consumer information in which to embed our comparison of the relative performance of these two forms of warranty consumers are confronted by seller moral hazard that is either they are unable to discern the quality of a product before purchase or alternatively this information is extremely costly for consumers to obtain or for firms to publicly demonstrate we abstract from issues such as differing degrees of risk aversion consumer moral hazard and screening each of which is frequently the rationale behind warranty provision our model is perhaps closest to the model presented in michael spence s 1977 article in which he analyzes the provision of warranties in an environment with biased consumer information

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

simplicity scientific inference and econometric modelling two issues are discussed in this paper the first is whether a formal definition and justification of simplicity parsimony in scientific inference can be found and whether an optimal level of simplicity is obtainable a definition of simplicity is possible as are the optimum conditions for the desired degree of simplicity the model of inference used here relates bayesian inference to algorithmic information theory simplicity is examined in the light of induction the duhem quine thesis and bounded rationality the second issue relates to the role that simplicity might play in econometric modeling this is elucidated with some remarks on the general to specific approach to modeling and discussions on the purpose of a model copyright 1995 by royal economic society

marketing margins and price uncertainty the case of the u s wheat market this paper seeks to determine the effect of changes in output price risk on marketing margins a theoretical model of price determination in a marketing channel with risk averse firms is developed this model shows that if marketing firms are competitive and decreasingly absolute risk averse then an increase in output price risk should result in higher expected marketing margins empirical evidence from the wheat marketing channel supports the theoretical model increased price variability significantly increases wheat marketing margins for both the farm mill margin and the mill retail margin these results suggest a potential benefit from price stabilization programs

bivariate garch estimation of the optimal commodity futures hedge six different commodities are examined using daily data over two futures contract periods cash and futures prices for all six commodities are found to be well described as martingales with near integrated garch innovations bivariate garch models of cash and futures prices are estimated for the same six commodities the optimal hedge ratio ohr is then calculated as a ratio of the conditional covariance between cash and futures to the conditional variance of futures the estimated ohrs reveal that the standard assumption of a time invariant ohr is inappropriate for each commodity the estimated ohr path appears non stationary which has important implications for hedging strategies

a century of research on agricultural markets this article provides a perspective on major innovations in research on agricultural markets over the past century we review research on market structure and performance vertical coordination arrangements and institutions for producer collective action contributions to empirical modeling of agricultural price determination and marketing margins are also evaluated as are innovations in research on spatial market relationships and the role of storage finally we discuss contributions to understanding market information systems and the functioning of market based mechanisms for agri

endogenous risk in a portfolio balance rational expectations model of the deutschemark dollar rate abstract a portfolio balance model of the dm s rate under rational expectations is specified in which systematic risk induced deviations from uncovered interest parity are allowed this leads to a reduced from containing a potentially time varying risk premium which we approximate and estimate using an arch in mean approach the maximum likelihood estimator and a lagrande multiplier test for arch in mean are developed the estimation results indicate a small but non negligible time varying risk premium

the volatility of australian traded goods prices it is generally accepted that the australian economy is continually subject to unanticipated shocks particularly unexpected swings in the prices of australia s internationally traded goods this article empirically investigates the nature and extent of volatility in import and export prices faced by the australian production sector it estimates multivariate garch models of the stochastic processes generating the prices of imports and exports and of important components of exports and imports this article proposes an index of volatility which is used to provide a summary measure of the extent of volatility in a multivariate context the overall conclusion is that the price growth rates for australia s traded goods exhibit considerable time variation in volatility and that these price growth rates are highly and positively correlated with each other

high and declining prices signal product quality high and declining prices signal a high quality product high prices are the efficient means of signaling because the consequent loss of sales volume is most damaging for lower cost lower quality products as time passes and the number of informed consumers increases the signaling distortion lessens resulting in a declining price profile the prediction of high and declining prices is robust across a variety of dynamic models and is consistent with recent empirical findings copyright 1991 by american economic association

risk response in the beef marketing channel a multivariate generalized arch m approach a model of the farm retail price spread for beef is specified under rational expectations in which systematic risk response on the part of marketing intermediaries is allowed the three equation structural model contains potentially time varying risk terms in margin and supply equations which i approximate and estimate using a multivariate garch in mean approach the estimated model is used to infer relative risk premia in beef margins and to simulate short run equilibrium risk effects results indicate that price risk has at times had substantial impacts on farm and retail beef prices and production

corporate philanthropic giving advertising intensity and industry competition level this article examines whether the likelihood and amount of firm charitable giving in response to catastrophic events are related to firm advertising intensity and whether industry competition level moderates this relationship using data on chinese firms philanthropic response to the 2008 sichuan earthquake we find that firm advertising intensity is positively associated with both the probability and the amount of corporate giving the results also indicate that this positive advertising intensity philanthropic giving relationship is stronger in competitive industries and firms in competitive industries are more likely to donate this study thus provides evidence suggesting that even in the wake of catastrophic events corporate philanthropic giving is strategic

risk behavior and rational expectations in the u s broiler market this study examines the empirical implications of extending the rational expectations hypothesis reh to include price uncertainty a general estimation framework that incorporates both the restrictions on structural parameters and the variance covariance terms is developed garch time series processes are used to generate time varying expectations of both the means and the variances of exogenous variables the empirical application is with a quarterly model of the u s broiler industry the results indicate that the rational expectation of price variance is an important determinant of broiler supply a formal test indicates that the restrictions implied by the reh cannot be rejected

toward an economic theory of fashion strong as is the desire for variety it is weak compared with the desire for distinction a feeling which if we consider its universality and its constancy that it affects all men at all times that it comes with us from the cradle and never leaves us until we go to the grave may be pronounced to be the most powerful of human passions nassau senior 1 with the greater part of rich people the chief enjoyment of riches consists in the parade of riches which in their eyes is never so complete as when they appear to possess those decisive marks of opulence which nobody can possess but themselves adam smith 2 i introduction positively sloped demand curves are used in marketing textbooks to explain the pricing of fashion merchandise 3 snob or prestige effects are alluded to in support of the claim that price increases can lead to an increase in the quantity demanded in the tenth edition of their text e jerome mccarthy and william d perreault 1990 offer a demand curve with a positively sloped segment they explain prestige pricing is setting a rather high price to suggest high quality or high status some target customers want the best so they will buy at a high price but if the price seems cheap they worry about quality and don t buy p 506 footnote omitted emphasis in the original in another text ralph m gaedeke and dennis tootelian 1983 also discuss a positively sloped demand curve some products do not have the traditional downward sloping demand curve previously described but a more curved slope illustrated in exhibit 13 6 demand curve with upward sloping portion not shown this reflects the real impact of price as a part of the product s value quite obviously as a product s price rises above p sub 0 demand will begin to drop as some consumers will simply be unable to afford the product however that decline is rather slow until very high prices are reached but demand also begins to drop at prices below p sub 0 showing that part of the reason for owning the product lies in its high price it has prestige value economists react by asserting that marketing explanations are ad hoc devoid of economic content conversely marketers say that economic models are naive and incapable of explaining the marketing of fashion goods as economists we have a bias towards economic explanations but these explanations are incomplete and not highly valued by the market in stark contrast the advice of professional marketers that economists contend is muddled or worse is amply rewarded in consulting work is there a market failure in the consulting market or does marketing provide an insight that economics lacks we start with the premise that the intuition behind marketing explanations that people desire prestige has validity this notion can be incorporated into economic theory using kelvin lancaster s 1971 notion that when a purchase is made what is bought is a bundle of services or characteristics the salient feature of a fashion good is its ability to confer prestige or status 4 the argument is straightforward there is a sociobiological basis for status seeking behavior status seeking is an evolved trait that is innate to humans as well as to many other animals given the pervasiveness of status seeking human cultures have developed effective signals of status fashion being just one we incorporate the status yielding nature of fashion goods into a standard demand model by assuming that the value consumers attach to a fashion good depends on the stock held by other consumers this interdependency among consumers allows us to explain the upward sloping constructs labeled demand curves that populate marketing texts our model has downward sloping demand curves throughout but because of the interdependencies generates cyclical price behavior that can be misconstrued as aberrant positively sloped demand functions

effects of forward sales on spot markets pre commitment sales and prices for fresh strawberries increasingly agricultural markets are vertically coordinated often a thinning spot market coexists with coordinated transactions raising the question of how private coordination affects the market as a whole one of the greatest challenges when analyzing such market level effects is obtaining information on private transactions we utilize publicly available data to evaluate how informal contracts in the fresh strawberry market affect spot market prices using a generalized autoregressive conditional heteroskedastic in mean garch m model we find that these informal contracts increased spot prices as argued by some industry members while the effect on spot price volatility varied by production region

market transparency and market structure the livestock mandatory reporting act of 1999 the premise of the livestock mandatory reporting act of 1999 is that enhanced transparency promotes competition this article provides a theoretical study of the consequences of such transparency for the structure conduct and performance of the livestock industry i conclude that the usefulness of the act to the livestock industry may not be in the value of reported information to feeders as the supporters of the act claim rather by forcing packers to pool information at negligible marginal cost the act may foster more competitive conduct in the procurement of livestock copyright 2003 oxford university press

what is product differentiation really empirical research on industrial organization has failed to identify the empirical bases of product differentiation that is each seller facing an individual downward sloping demand curve two sets of conditions are theoretically sufficient one resting on complex attribute structures coupled with fixed costs the other on costs of information to guide buyers choices among brands factor analysis of observable decision variables and market patterns appears to reveal and confirm these underlying causes the estimated factors perform successfully to test hypotheses about the effects of product differentiation on the mutual sensitivity of prices of australian domestic manufactures and competing imports product differentiation is a well defined theoretical concept resting on

alternative estimates of fed beef supply response to risk supply response models for fed beef incorporating risk by including both the mean and variance of output price are developed estimated and compared six different estimates of the mean and variance are obtained from futures prices arima processes and naive adaptive and rational expectations models empirical estimates are compared using nonnested testing procedures and indicate that the choice of the expectations model significantly influences elasticity estimates and whether supply response is positive or negative empirical evidence does not support any one model in particular suggesting that expectations are heterogenous rather than homogenous most agricultural production is characterized by a lag between the time input decisions are made and the time output actually reaches the market as a result supply response functions are based on the hypothesis that quantity produced depends on known input prices and producers expectations of output price expectations frequently have been modeled based solely on past prices examples include naive expectations adaptive expectations extensively reviewed by askari and cummings and autoregressive integrated moving average arima schemes gardner as well as others have used futures prices to estimate producers expected prices although chavas pope and kao found that futures prices are not good proxies for producers expectations

design innovation and fashion cycles a model of fashion cycles is developed in which designs are used as a signaling device in a dating game a monopolist periodically creates a new design over time the price of the design falls as it spreads across the population once sufficiently many consumers own the design it is profitable to create a new design and thereby render the old design obsolete this paper gives conditions under which all consumers would be better off by banning the use of fashion competition among designers may lead to less frequent changes in fashion and to higher prices than monopoly copyright 1995 by american economic association

corporate reputation and philanthropy an empirical analysis this paper analyzes the determinants of corporate reputation within a sample of large uk companies drawn from a diverse range of industries we pay particular attention to the role that philanthropic expenditures and policies may play in shaping the perceptions of companies among their stakeholders our findings highlight that companies which make higher levels of philanthropic expenditures have better reputations and that this effect varies significantly across industries given that reputational indices tend to reflect the financial performance of organizations above other factors fryxell g e and j wang 1994 journal of management 20 1 14 and that elements of the literature emphasise that discretionary aspects of social responsibility including corporate donations may not be in the financial interests of organizations e g friedman m 1970 the social responsibility of business is to increase its profits new york times magazine september 13 this is a significant finding it suggests that philanthropic expenditures may play a significant role in stakeholder management and may in particular lead to stakeholders holding more positive impressions of philanthropic corporations

a market equilibrium analysis of the impact of risk on the u s rice industry an economic model of supply demand for u s rice suggests that increases in risk result in decreased acreage and increased marketing margins in a market equilibrium context the empirical results also suggest rice production and rice prices are more responsive to changes in risk faced by marketing firms than changes in risk faced by producing firms

analysis of a supply control program under uncertainty and imperfect competition chinese cabbage in taiwan researchers have often attributed the farm wholesale price spread after adjusting for marketing costs as compensation for marketing firms risk bearing however price spreads in excess of marketing costs can also be due to marketing firms exercise of market power in settings where both imperfect competition and marketer risk aversion are plausible a modeling framework must be sufficiently general to accommodate both types of behavior this article develops and estimates such a model in the context of fresh produce marketing and develops the implications for analysis of supply control programs the model is applied to the production and marketing of chinese cabbage in taiwan and specifically to the analysis of supply control programs implemented in this industry by the taiwanese government the empirical results provide little support for the hypothesis that marketing firms exhibit risk averse behavior but they do show that marketing firms exercise oligopsony power in procurement of the product from farmers and that this power is positively related to the quantity supplied in each market period this provides a heretofore unexplored impetus for supply controls intended to raise producer incomes however such controls are also rendered less effective by imperfect competition because marketing firms capture part of the benefits from supply reduction

promotions and product pricing parsimony versus veblenesque demand the veracity of the parsimonious law of demand has long been challenged by analyses of the veblen effect and prestige pricing backward bending demand curves often attend discussions of conspicuous consumption probing the sociological and psychological intricacies of potential consumer interdependencies scholars in economics and marketing have overlooked mundane product promotions for a monopolistic firm we formalize the relationship between the optimal price quantity combination and the thoroughness of product promotions iterating toward the profit maximizing thoroughness of product promotion gives rise to a backward bending price quantity locus challenges to the law of demand that ignore product promotions are thereby undercut

the market value of rarity abstract most theories of demand assume that consumers value the characteristics of products but are unconcerned with how many other consumers also consume the product however several theories of demand argue that consumers can value the exclusivity of possessing a rare object we test this implication on a particular collectible rare coins our paper examines the case of coins of a given type and identical quality that have mintages in different quantities this allows us to exclude the common case in which rarity or price itself is an indicator of quality for our sample rarer coins command higher prices rarity in the form of original mintage more strongly influences the market price than does collectibility as represented by the rarest coins of each mint mark or year we also point out that here may be other goods such as automobiles for which rarity may influence market demand

the econometric analysis of models with risk terms summary in this paper we have attempted to provide an integrated approach to the estimation of models with risk terms it was argued that there exist orthogonality conditions between variables in the information set and higher order moments of the unanticipated variable density these could be exploited to provide consistent estimators of the parameters associated with the risk term specifically it was recommended that an iv estimator should be applied with instruments constructed from the information set four existing methods commonly used to estimate models with risk terms are examined and applications of the techniques are made to the estimation of the risk term in the us c exchange market and the effects of price uncertainty upon production

market and welfare effects of the u s livestock mandatory reporting act author affiliation kenneth njoroge department of accounting the fuqua school of business duke university box 90120 durham nc 27708 0120 usa kn14 duke eduamalia yiannaka department of agricultural economics 314d filley hall university of nebraska lincoln lincoln ne 68583 0922 usa yiannaka unl edukonstantinos giannakas department of agricultural economics 216 filley hall university of nebraska lincoln lincoln ne 68583 0922 usa kgiannakas unl eduazzeddine m azzam department of agricultural economics 103b filley hall university of nebraska lincoln lincoln ne 68583 0922 usa aazzam1 unl edu corresponding author acknowledgment senior authorship is shared authors names appear in reverse seniority order 1 introductionthe livestock mandatory reporting act the act was enacted in 2001 to provide market participants with information on all cash and noncash transactions reported by packers to the agricultural marketing service ams on a daily basis the information is aggregated under specific confidentiality guidelines1 to preserve the anonymity of the source2 and published in the mandatory livestock and meat market news reports reports 3 ams is responsible for setting the confidentiality guidelines as well as for enforcing the act as stated in the act federal register 2000 the reports intend to provide information that can be readily understood by producers packers and other market participants improve the price and supply reporting services of the department of agriculture and encourage competition in the marketplace for livestock and livestock products the rationale is that as more animals have been purchased under marketing arrangements neither the arrangements nor the final purchase prices are publicly disclosed 4about two years after the act went into effect schroeder grunwald and ward 2002 reviewed the early literature on livestock mandatory reporting lmr a consensus appeared to be forming that while lmr could be beneficial by reducing uncertainty and increasing competition in cattle markets revealing too much information about rival pricing could facilitate collusion and reduce competition among packers schroeder grunwald and ward 2002 p 11 the uncertainty reducing effect of lmr was deduced from two experimental studies by anderson et al 1998 and bastian koontz and menkhaus 2001 in the first experiment price and quantity information in the fed cattle market simulated through the fed cattle market simulator fcms 5 was varied and market outcomes were observed uncertainty measured by price dispersion was found to increase with the amount and type of information withheld in the second experiment also using the fcms market participants were provided with price and quantity information on cattle sold through the spot markets as well as through forward contracts the authors observed a substantial reduction in the variance of forward contract prices the effect of the forward market information on the variance of spot prices was negative but not statistically significant maintaining the hypothesis that mandatory reporting reduces uncertainty through the provision of more information azzam 2003 studied the effects of the reduction in uncertainty on the structure conduct and performance of livestock markets azzam s theoretical findings suggest that in a setting where cattle feeders and packers are risk averse and packers hold consistent conjectures increased transparency due to mandatory reporting promotes competition and results in higher livestock prices however since increased transparency can make it easier for packers to collude wachenheim and devuyst 2001 azzam s assumption of consistent conjectures is restrictive because it rules out the possibility of collusion njoroge 2003 provides a formal model of collusion that is in line with the arguments in wachenheim and devuyst 2001

on the limitation of warranty duration this paper analyzes the frequently observed phenomenon that firms offer product warranties that are of much shorter duration than the life expectancy of these products it is shown that competitive equilibria may entail limitation of warranty duration if firms face adverse selection problems with respect to different consumers copyright 1989 by blackwell publishing ltd

liberalization and food price distributions arch m evidence from madagascar abstract there is no well articulated theory of how stochastic food prices respond to economic liberalization measures a surprising oversight in the vast literature on market oriented reforms this paper presents reduced form estimates of the effects of liberalization measures on food commodity prices in madagascar using autoregressive conditional heteroskedastic in mean arch m methods the data indicate that the short term effects of liberalization on the mean and variance of food prices vary substantially by commodity region and season in the long term liberalization increases both the mean and the variance of food prices the abandonment of a quantity rationed state marketing system with administrative pricing also leads to smaller inter regional and interseasonal differences in mean food prices and a sharp increase in price autocorrelation real exchange rates have pronounced positive effects on mean food prices but these effects emerge indirectly rather than directly through induced changes to border parity prices

price and advertising signals of product quality we present a signaling model based on ideas of phillip nelson in which both the introductory price and the level of directly uninformative advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good repeat purchases play a crucial role in our model a second focus of the paper is on illustrating an approach to refining the set of equilibria in signalling games with multiple potential signals

warranties durability and maintenance two sided moral hazard in a continuous time model double moral hazard in continuous time generates the familiar warranty pattern with full coverage for an initial block of time the more complete the warranty the better the producer s durability incentives and the worse the consumer s maintenance incentives using continuous time highlights the need for some warranty bound to avoid reaching the first best as an unreasonable limit early in the paper an exogenous bound is used while later the bound arises endogenously from the possibility of abuse and repair a quadratic example shows that the warranty s duration depends on the relative severity of the two moral hazard problems

product warranties and double moral hazard this article explores a model of warranties in which moral hazard problems play a key role the goal is to understand the important characteristics of warranties including their provision of incomplete insurance and the relationship between product quality and coverage we analyze a model in which buyers and sellers take actions that affect a product s performance since these actions are not cooperatively determined an incentives problem arises we characterize the optimal warranty contract and undertake comparative statics to determine the predicted correlation of warranty coverage and product quality

principal principal conflicts and corporate philanthropy evidence from chinese private firms the principal principal perspective suggests that controlling shareholders have excessive influence on corporate philanthropy and may direct corporate funds to charitable causes to support their personal interests analysis of a sample of chinese private firms listed on the shenzhen or shanghai stock exchange between 2004 and 2011 shows that 1 there is a significant and negative relationship between corporate giving and the share held by the largest shareholders suggesting that controlling shareholders are opportunistic in directing corporate charitable contributions 2 there is a significant and positive relationship between corporate giving and the political connections of the largest shareholders and their agents suggesting compatibility between corporate contributions and the personal interests of the controlling shareholders 3 there is a stronger negative relationship between corporate giving and the share of the company held by the largest shareholders in politically connected firms suggesting that political connections contribute to increased opportunistic corporate giving overall our study provides important evidence for the one dominant controlling shareholder phenomenon yigududa by testing and extending the principal principal framework and showing that the largest shareholders of chinese firms appear to donate to charitable causes that ultimately serve their personal interests at the expense of minority shareholders

warranties as signals under consumer moral hazard this article examines the use of prices and warranties as signals of product quality to consumers who choose how to maintain their purchases the seller s incentives are strongly affected by the interaction of quality and maintenance in determining product reliability two different assumptions about this interaction are made a separating equilibrium in which high quality is signalled with a low warranty and low price is shown to be possible in both cases

managerial contracting and corporate social responsibility abstract this paper presents a theory of corporate social responsibility in the form of the private provision of public goods and private redistribution by a firm these social expenditures are determined by a manager operating under a compensation contract chosen by shareholders in a capital market that prices social expenditures the theory incorporates three explanations for compensation systems that encompass social performance first consumers may reward the firm for its social expenditures second managers may have personal preferences for contributing to social causes and third the shareholder clientele a firm attracts may prefer social expenditures social incentives are higher powered the more consumers reward the firm and the stronger are shareholders warm glow preferences for social expenditures profit incentives are higher powered the more consumers reward the firm but are independent of shareholder preferences when consumers reward the firm for its social expenditures firms with higher ability managers have both higher operating profits and higher social expenditures when times are good so a positive correlation is predicted in bad times however the correlation is negative except for firms with very low ability managers in very bad times where the correlation is zero

corporate political donations influences from directors networks motivated by contemporary debates concerning whether directors inappropriately deploy corporate funds for corporate political donations and the limited research into managerial influence on corporate political donations we examine the impact of director influences from a network perspective using a sample of large listed australian corporations and their political party donation activity during 2000 2007 we find that both the professional and non professional networks of directors influence corporate political donations we observe these influences in relation to donations at the federal and state levels and with respect to the choice of recipient political parties

social responsiveness profitability and catastrophic events evidence on the corporate philanthropic response to 9 11 in this study we seek to determine whether catastrophic events lead to corporate charitable giving unrelated to levels of firm profitability we examine the issue relative to the corporate philanthropic response to the 9 11 terrorist attacks of 2001 based on a sample of 489 fortune 500 companies we find that differences in the extent of corporate contributions following 9 11 are positively and significantly associated with differences in firms profitability further while the degree of connection to the catastrophic event led to higher levels of giving in comparison to the contributions of less connected firms differences in the extent of philanthropy are still related to short term profitability for the more connected firms the study thus provides evidence suggesting that even in the wake of catastrophic events corporate philanthropic giving is constrained by economic concerns

market reforms and commodity price volatility the case of east african coffee market the goal of this paper is to examine the impact of commodity market reforms on producer price volatility using evidence from the east african coffee market the results based on time varying volatility models and key summary statistics show that coffee market reforms in the east african community eac are associated with changes in producer price volatility and volatility persistence at both country and regional levels however reforms were not the only cause of changes in price volatility the study further shows that reforms had different effects on prices volatilities of arabica and robusta varieties of coffee grown in individual eac countries these findings have wider implication for commodity market reforms and producer price stabilisation policies in the eac and coffee producing countries in sub sahara africa

marketing margins market power and price uncertainty this paper provides a conceptual and empirical framework for analyzing marketing margins in a noncompetitive food processing industry facing output price uncertainty the framework allows the decomposition of observed margins into components reflecting the marginal cost of the processing industry oligopoly oligopsony price distortions and an output price risk component the empirical procedure is applied to a time series of spreads between wholesale pork prices and farm prices of market hogs the principal finding is that while farm wholesale margins are more consistent with competitive performance now than they were fifteen years ago the output price risk component persisted throughout the sample period

veblen effects in a theory of conspicuous consumption the authors examine conditions under which veblen effects arise from the desire to achieve social status by signaling wealth through conspicuous consumption while veblen effects cannot ordinarily arise when preferences satisfy a single crossing property they may emerge when this property fails in that case budget brands are priced at marginal cost while luxury brands though not intrinsically superior are sold at higher prices to consumers seeking to advertise wealth luxury brands earn strictly positive profits under conditions that would with standard formulations of preferences yield marginal cost pricing the authors explore factors that induce veblen effects and they investigate policy implications copyright 1996 by american economic association

why do corporations give to charity this paper explores whether corporate contributions should be tax dedu ctible within the more general context of an examination of the profi t and utility maximization motives driving contributions the theoret ical section develops a formal structural model of the contributions process illustrates comparative statics and derives a set of empiri cally testable hypotheses using a new source of firm data the empir ical results indicate that profit maximization is an important motive driving contributions this finding supports the current tax deducti ble status of contributions up to a seldom encoun tered ceiling and favors a reform that allows firms to treat contributions as ordinary business expenses copyright 1988 by the university of chicago

the effect of barge and ocean freight price volatility in international grain markets this paper looks at the potential role of time varying volatility of mississippi river barge and ocean freight prices on commodity prices in illinois at the us gulf and in rotterdam using a vector error correction garch in mean model the model is used to infer the extent to which transportation price risk affects price dynamics in international grain markets results from a simulation exercise indicate that both barge and ocean price volatility influence grain prices but barge price volatility tends to have a greater impact on grain prices and marketing margins than that arising from ocean price volatility consistent with most studies that evaluate the role of risk in marketing channels results here suggest that a reduction in barge rate risk would reduce marketing margins between illinois and the us gulf and between the us gulf and rotterdam the existence of an ocean freight futures contract coupled with the lack of a futures contract for barge rates may be partially responsible for the finding that barge rates have a significant influence on grain prices and contribute most to wide marketing margins found throughout the international grain marketing system

a bandwagon effect in personalized license plates a bandwagon effect in personalized license plates the bandwagon effect is a consumption externality that exists when an individual s demand for a good is increased by his observation of other consumers using that good this paper models a product demand curve with a bandwagon effect and using data on sales of personalized license plates estimates such a demand curve certain more conventional models of product demand including information diffusion and habit formation models are observationally similar to the bandwagon model despite being conceptually different from it i attempt to use the license plate data to discriminate between the bandwagon model and these other models in 1950 harvey leibenstein described the impact on product demand curves of what he called a bandwagon effect the bandwagon effect was said to exist if peoples valuations of a good and thus demand for that good increased when they observed others consuming the good no one to my knowledge has attempted to empirically verify the existence of or estimate the magnitude of a bandwagon effect in any product market in this paper i attempt to do both by looking at the demand for personalized license plates a good that could plausibly be subject to a bandwagon effect in the first section of the paper i develop a simple model of product demand in the presence of a bandwagon effect the model is based on leibenstein s treatment but is modified to fit the case of personalized license plates in the second section data on the sales of personalized plates are described and used to estimate a demand function the results of this estimation are consistent with the theoretical model of the bandwagon effect the search for the bandwagon effect cannot end there however the bandwagon model in which consumers are moved by considerations of fashion and status emulation is observationally similar to other well known but conceptually quite different models of product demand in which consumers are more sober and level headed in particular models of information diffusion or habit formation imply patterns in the data very much like those that follow from the bandwagon model section iii discusses this matter in more detail and presents statistical tests designed to differentiate between the bandwagon model and alternative models of product demand in the final section i draw some conclusions from the empirical evidence i the bandwagon effect consider a product that lasts for a single period of well defined length each period a consumer may purchase at most one of the product the personalized license plate is a product of this sort as are subscriptions to a particular magazine hairstyles club memberships vacations to chic resorts etc assume first that there is no bandwagon effect and let 1 v sub it x sub it z sub t represent the value of the product to individual i in period t where x sub it is a vector of individual characteristics such as age or income and z sub t is a vector of product characteristics in period t the function v sub it is a random variable defined over the population of potential buyers let f sub t v prob v sub it adding a bandwagon effect to this model involves allowing individuals preferences to depend on aggregate behavior liebenstein assumed that in the presence of a bandwagon effect the quantity of a product demanded by each consumer at a given price depended on market level demand at that price this creates a problem when moving from individual to market level demand functions for the market level demand curve is no longer a lateral summation of individual demand curves

modeling beef supply response and price volatility under cap reforms the case of greece abstract this study examines the supply response of the greek beef market and the possible effect of the european union s common agricultural policy cap on the greek beef sector during the period 1993 2005 a generalized autoregressive conditional heteroskedasticity garch process is used to estimate expected price and price volatility while several different symmetric asymmetric and non linear garch models are estimated the empirical results show that price volatility and feed price are important risk factors in the supply response function while the negative asymmetric price volatility that was detected implies that producers have a weak market position furthermore the empirical findings confirm that the annual premium paid by the eu to beef producers had a positive impact on the production level and also the change of the eu price support regime after 2006 is having negative effects on beef production level in greece

sufficient decisions in multi sided and multiproduct markets we show that in many models where firms make multiple decisions analysis can be made more tractable by re formulating the model into one in which each firm makes a single choice which we call a sufficient decision the transformation allows application of standard techniques in these settings including pass through for tax incidence and upward pricing pressure for merger analysis the transformation works because the assumption of profit maximization links the firms decisions together examples include models of monopoly and oligopoly in two sided markets where a natural sufficient decision may be the number of transactions that the firm facilitates and multiproduct markets

time varying risk premium further evidence in agricultural futures markets research has provided mixed results regarding the presence of a time varying risk premium in agricultural futures markets in this article we test for the presence of a time varying risk premium focusing on the properties of the underlying data our results show that accounting for the structural break in the 1970s plays a key role in the findings in contrast to recent research we find only limited evidence of time varying risk premium for a two month horizon the corn soybean meal and hog markets show no signs of a risk premium while very weak support for a time varying premium emerges in live cattle for the four month horizon no evidence of a time varying risk premium appears for any of the markets