role of parental income in educational attainment during the post world war ii era u s governmental policy has often been based on the idea that in the absence of government action access to college and to a lesser extent high school education may be limited because of liquidity constraints the federal and state and local governments have instituted a number of policies to overcome these constraints these policies include the basic opportunity grants loan programs that have been issued at or below market interest rates the expansion of state supported colleges that charge below market tuitions rates and the inception and expansion of local community or county colleges that also charge below market tuition rates while there may be noneconomic reasons that explain these changes or their magnitude economic reasons that rely on differences between private and social costs and benefits can also be advanced these include a wiser societal choices made by a more educated society b recoupment of social costs from higher tax revenues c the reduction of private risks from lending arising from the pooling of risks thereby making the social supply of funds curve available to all individuals at the social discount rate and d state and local economic development reason c implies that in the absence of governmental initiative some children would be restricted from achieving their socially optimal amount of education because parents income and wealth limit their children s choices gary becker 1975 arthur okun 1975 and jere behrman and myself 1985 argue that governmental policy to reduce private borrowing costs to the level of social costs reduces inefficiency while increasing equity a rare result in the realm of economics in this paper i consider why parental income might influence offspring s educational attainment and the policy implications of such an influence

vertical integration market foreclosure and consumer welfare in the cable television industry i examine the effects of vertical integration between programming and distribution in the cable television industry i assess the effects of ownership structure on program offerings prices and subscriptions and i compare consumer welfare across integrated and unintegrated markets the results of this analysis suggest two general conclusions first integrated operators tend to exclude rival program services suggesting that certain program services cannot gain access to the distribution networks of vertically integrated cable system operators second vertical integration does not harm and may actually benefit consumers because of the associated efficiency gains

a new index of vertical integration some estimates for uk manufacturing abstract this paper proposes a new method for measuring the degree of vertical integration within a firm or industry it is based on the magnitude of intra firm flows of output across industries relative to the magnitude of market transactions while data on intra firm flows are often sketchy or non existent we show how they may be imputed indirectly from standard input output tables and information on market shares of firms across industries estimates are reported and analysed for uk manufacturing in 1986 for 79 industries and their leading firms thereby providing the first known comprehensive picture of vertical integration in the united kingdom

vertical organization of production and firm growth this paper empirically explores if different vertical organizational forms i e vertical integration versus dis integration give rise to unlike growth behaviors within the same industry an econometric analysis is conducted in a sample of around 500 italian machine tool mt builders for the period 1998 2007 implementing instrumental variables to control for the endogeneity of the organizational form in the relation ceteris paribus vertically integrated firms result to be characterized by a less dispersed distribution of growth rates than their dis integrated counterparts several concurring factors such as adjustment costs organizational slacks and a better management of fluctuations in the markets of intermediate and final products may explain the more a stablea growth profile of vertically integrated firms by means of analyzing how different organizational forms map into the distribution of output growth rates this work provides insight into the firm dynamics in a mature industry in which both vertically integrated and dis integrated firms coexist

displaced diffusion option pricing this paper develops a new option pricing formula that pushes the underlying source of risk back to the risk of individual assets of the firm the formula simultaneously encompasses differential riskiness of the assets of the firm their relative weights in determining the value of the firm the effects of firm debt and the effects of a dividend policy with both constant and random components although this setting considerably generalizes the black scholes 1 analysis it nonetheless produces a formula via riskless arbitrage arguments that given estimated inputs is as easy to use as the black scholes formula

technical efficiency unions and decentralized labor contracts abstract this paper explores the link between the presence of unions in the workplace the adoption of decentralized labor agreements and technical efficiency using a large sample of italian manufacturing firms we apply the data envelopment analysis and its robust version based on bootstrap theory to get reliable estimates of technical efficiency at the firm level in a standard first stage we devote particular attention to the specific technology adopted by distinguishing 20 different sector frontiers as well as to the presence of outliers the obtained efficiency scores are analyzed in a second stage applying a truncated regression model estimated via maximum likelihood following the simar and wilson 2007 2011 methodology our results highlight that the presence of workplace unionization decreases the level of technical efficiency while aspects limiting the unions power such as a strong exposure to international markets high debt levels or the prevalence of flexible assets partially reduce the negative effect however when firms adopt decentralized labor contracts agreements the effect on efficiency is positive and partially compensates the negative unions effect

vertical integration and firm boundaries the evidence since ronald h coase s 1937 seminal paper a rich set of theories has been developed that deal with firm boundaries in vertical or input output structures in the last twenty five years empirical evidence that can shed light on those theories also has been accumulating we review the findings of empirical studies that have addressed two main interrelated questions first what types of transactions are best brought within the firm and second what are the consequences of vertical integration decisions for economic outcomes such as prices quantities investment and profits throughout we highlight areas of potential cross fertilization and promising areas for future work

efficiency and vertical integration the case of mine mouth electric generating plants this paper tests four propositions regarding the efficiency of vertical arrangements 1 vertically integrated and nonintegrated firms allocate inputs with efficiency and 2 achieve equal technical efficiency 3 upstream transaction specific investments provide monopsony power and 4 monopsony behavior does not differ by vertical arrangement a behavioral cost function for mine mouth generating plants is estimated the findings include significant differences in the allocative efficiency of integrated versus nonintegrated plants and increased technical efficiency for vertically integrated plants transaction specific investments in mines provide monopsony power nonintegrated plants exercise this power while integrated plants do not copyright 1991 by blackwell publishing ltd

the weekend effect on the distribution of stock prices abstract evidence of weekend effects on the distribution of security returns suggests that returns are generated by a process operating closer to trading time rather than calendar time in contrast accumulation of interest over the weekend follows a calendar time process since both the variance of returns and the interest rate are important parameters of the black scholes option pricing model this paper suggests that the model be stated to account for this by utilizing a trading time variance and a calendar time interest rate empirical evidence indicates that this allows the model to better explain market option prices

the measurement of option mispricing abstract different studies have examined the ability of the black scholes option pricing model to estimate accurately market prices of publicly traded options and reached conflicting results this study examines commonly used ex ante measures of option mispricing finds that they can produce differing conclusions about option prices and develops an alternative measure for gauging option mispricing empirical analysis of returns to options selected using the various mispricing measures indicates that this new measure is more likely to detect mispricing and identify options that yield excess returns before commissions

vertical integration and efficiency an application to the italian machine tool industry this paper analyzes the relationship between firm efficiency and vertical integration in the italian machine tool mt industry the link may really be the result of a two way causality the effect may run from productive efficiency to the type of vertical organization i e vertical integration or outsourcing as a self selection mechanism or an effect from the organizational mode to the firm s performance may also be at work this relationship is empirically investigated in a novel panel dataset comprising about 500 italian mt builders implementing two equations and instrumental variables for the two directions of causality the evidence clearly indicates the self selection mechanism of the most efficient firms in vertically integrated structures while an effect from the organizational mode to the firm s efficiency is not supported

technical efficiency in the italian performing arts companies this paper evaluates the determinants of firms technical efficiency in the italian performing arts pa sector by estimating a stochastic production frontier for an unbalanced panel of 107 firms over the period 2005 2012 the panel data setting allows us to control for both unobserved and observed heterogeneity of pa firms reaching several interesting and robust findings firstly it finds that the italian pa firms are scale inefficient as they generally operate in either an increasing or decreasing returns to scale landscape this result is reinforced by the fact that the smaller firms 10 49 employees are the most technically efficient firm size class secondly this research proves that the efficiency score is on average 66 demonstrating that pa firms output could be substantially increased without the use of new inputs thirdly it confirms that the quality matters and competences increase the efficiency in the sector finally the environmental factors especially the quality of institutions have a strong impact on technical efficiency of pa firms supporting that regional differences also exist in this sector

vertical integration and dis integration of computer firms a history friendly model of the co evolution of the computer and semiconductor industries in this article we present a history friendly model of the changing vertical scope of computer firms during the evolution of the computer and semiconductor industries the model is history friendly in that it attempts at replicating some basic stylized qualitative features of the evolution of vertical integration on the basis of the causal mechanisms and processes which we believe can explain the history these factors are identified in the coevolution of capabilities the size of markets and the structure of industries in particular the basic assumption is that the principal force behind the patterns of vertical integration and disintegration of computer firms was the differential development of capabilities for designing and producing semiconductors among firms on this basis the changing boundaries of firms are analyzed in the context of dynamic and uncertain technological and market environments characterized by periods of technological revolutions punctuating periods of relative technological stability and smooth technical progress the model illustrates how the patterns of vertical integration and specialization in the computer industry change as a function of the evolving levels and distribution of firms capabilities over time and how they depend on the coevolution of the upstream and downstream sectors specific conditions in each of these markets the size of the external market the magnitude of the technological discontinuities the lock in effects in demand exert critical effects and feedbacks on market structure and on the vertical scope of firms as time goes by copyright 2008 oxford university press

risk financial markets and human capital in a developing country this paper explores the link between financial market incompleteness and human capital accumulation we examine how child school attendance responds to seasonal fluctuations in the income of agrarian households using panel data from rural india to pinpoint market imperfections we study responses to aggregate and idiosyncratic as well as to anticipated and unanticipated income shocks our main finding is that seasonal fluctuations in school attendance are a form of self insurance but one which does not result in a substantial loss of human capital on average

on the valuation of american call options on stocks with known dividends both the roll and the geske equations for the valuation of the american call option on a stock with known dividends are incorrectly specified this note presents the corrected valuation formula explains the misspecifications and provides a numerical example

unbiased estimation of the black scholes formula abstract the black scholes model gives the price of an option as a function of the true variance rate of the underlying stock and other parameters because the true variance rate is unobservable an estimate of the variance rate is used in empirical tests but because the black scholes formula is non linear in the variance option price estimates using an estimated variance are biased even if the variance estimate itself is unbiased this paper develops an unbiased estimator of the black scholes formula from a taylor series expansion of the formula and the properties of the pdf of the estimated variance

anticipation of quarterly earnings announcements a test of option market efficiency abstract this study tests chicago board options exchange efficiency by examining option price behavior in the weeks surrounding a firm s quarterly earnings announcement the evidence presented here suggests that a first order autoregressive seasonal process describes quarterly earnings behavior and demonstrates that the information content of an earnings announcement is fully incorporated in option prices by the end of the announcement week

specific investment economies of scale and the make or buy decision a test of transaction cost theory this paper develops empirical tests of three hypotheses arising from transaction cost theory as developed by oliver williamson evidence is provided from a new dataset on 178 inputs gathered from uk engineering firms the probability of buying in specialised inputs is higher if the production technology is non specific but only if there are economies of scale or scope furthermore the economies of scale scope effect is much reduced in the presence of specific assets this interactive hypothesis has not been formally tested before we also believe this to be the first cross section empirical test of transaction cost make or buy theory using european data

the components of the return from hedging options against stocks in a previous paper galai 1977 i estimated the profits that could have been made by following a hedging strategy which consisted of a position in an option traded on the chicago board options exchange cboe and an offsetting position in a fraction of a share of the underlying stock the paper concluded that 1 the trading strategies based on the black scholes model black and scholes 1973 perform well in tests of the ex post hedge return 2 the market did not seem perfectly efficient to market makers the ex ante returns while usually statistically significant show a strong tendency to be positive p 195 in this article the profits from the hedging i strategies with options are further analyzed the returns are decomposed to a few components in order to achieve a better understanding and additional insight into their character two main factors will be shown to combine to give the hedge return the profits or losses from discrete ad

nonparametric tests of alternative option pricing models using all reported trades and quotes on the 30 most active cboe option classes from august 23 1976 through august 31 1978

determinants of vertical integration an empirical test this paper tests models of vertical integration with emphasis on incentives that arise from transactions costs and demand variability the tests are based on a logit analysis of firms backward integration choices in a sample of thirty four chemical products the results are consistent with recent transactions cost theories and the demand variability model proposed by carlton 1979 copyright 1991 by blackwell publishing ltd

valuation of american call options on dividend paying stocks empirical tests abstract this paper examines the pricing performance of the valuation equation for american call options on stocks with known dividends and compares it with two suggested approximation methods the approximation obtained by substituting the stock price net of the present value of the escrowed dividends into the black scholes model is shown to induce spurious correlation between prediction error and 1 the standard deviation of stock return 2 the degree to which the option is in the money or out of the money 3 the probability of early exercise 4 the time to expiration of the option and 5 the dividend yield of the stock a new method of examining option market efficiency is developed and tested

a simple formula for the expected rate of return of an option over a finite holding period under conditions consistent with the black scholes formula a simple formula is developed for the expected rate of return of an option over a finite holding period possibly less than the time to expiration of the option under these conditions surprisingly the expected future value of a european option even prior to expiration is shown equal to the current black scholes value of the option except that the expected future value of the stock at the end of the holding period replaces the current stock price in the black scholes formula and the future value of a riskless invesment of the striking price replaces the striking price an extension of this result is used to approximate moments of the distribution of returns from an option portfolio