the cost of contract renegotiation evidence from the local public sector the renegotiation of regulatory contracts is known to prevent regulators from achieving the full commitment efficient outcome in dynamic contexts however assessing the cost of such renegotiation remains an open issue from an empirical viewpoint to address this question we fit a structural principal agent model with renegotiation on a set of urban transport service contracts the model captures two important features of the industry first only two types of contracts are used in practice fixed price and cost plus second subsidies increase over time we compare a scenario with renegotiation and a hypothetical situation with full commitment we conclude that the welfare gains from improving commitment would be significant but would accrue mostly to operators

standard essential patents a major policy issue in standard setting is that patents that are ex ante not that important by being included into a standard may become standard essential patents in an attempt to curb the monopoly power that they create most standard setting organizations require the owners of patents covered by the standard to make a loose commitment to grant licenses on reasonable terms such commitments unsurprisingly are conducive to litigation this paper builds a framework for the analysis of these patents identifies several types of inefficiencies attached to the lack of price commitments and shows how structured price commitments restore competition and why such commitments may not arise spontaneously in the marketplace

optimal contracts under adverse selection and moral hazard a continuous time approach this article presents a continuous time agency model in the presence of adverse selection and moral hazard with a risk averse agent and a risk neutral principal under the model setup we show that the optimal controls are constant over time and thus the optimal menu consists of contracts that are linear in the final outcome we also show that when a moral hazard problem adds to an adverse selection problem the monotonicity condition well known in the pure adverse selection literature needs to be modified to ensure the incentive compatibility for information revelation the model is applied to a few managerial compensation problems involving managerial project selection and capital budgeting decisions we argue that in the third best world the relationship between the volatility of the outcome and the sensitivity of the contract depends on interactions between the managerial cost and the firm s production functions contrary to conventional wisdom sometimes the higher the volatility the higher the sensitivity of the contract the firm receiving good news sometimes chooses safer projects or invests less than it does with bad news we also examine the effects of the observability of the volatility on corporate investment decisions copyright 2005 oxford university press

agricultural policy and development in cuba abstract this essay provides an overview of cuba s socialist agricultural transformation since 1959 and its effect on the peasantry first pre 1959 agrarian structures and ownership patterns and their relation to the cuban economy are discussed second early agricultural policies and their impact on land tenure as well as economic performance are treated third agricultural development since the mid 1960s is analyzed with emphasis on performance and social conditions of the peasantry shifting and flexible policies along with heterogeneous structures have characterized the evolution of cuban agriculture and have contributed to its growing success

risk sharing in procurement abstract we introduce bilateral risk aversion into the mixed adverse selection moral hazard model of laffont and tirole 1986 the presence of exogenous risk interacts with the adverse selection problem in interesting ways in particular we show that it is never optimal to present the firm with a fixed price contract that the efficient firm typically bears more risk than the inefficient firm and that an increase in exogenous risk may bring about a decrease in expected cost of the project as a by product we also establish that the famous no distortion on the top result in adverse selection models relies on risk neutrality of the agent

waiting for change adjustment and reform in cuba abstract buffeted by the collapse of trading relations with the former socialist bloc and the continuing us embargo cuba has attempted to adjust to external crisis via tighter rationing to curtail demand and traditional planning and sectoral strategies to expand the supply of tradables this overall program has failed and cuba has recently begun timid steps toward a more market oriented approach we argue that the centerpiece of a new strategy should be a rapid privatization which can be designed to absorb the monetary overhang widely distribute assets and control and protect the social safety net that has characterized the cuban economy

managerial turnover in a changing world we develop a dynamic theory of managerial turnover in a world in which the quality of the match between a firm and its managers changes stochastically over time shocks to managerial productivity are anticipated at the time of contracting but privately observed by the managers our key positive result shows that the firm s optimal retention decisions become more permissive with time our key normative result shows that compared to what is efficient the firm s contract induces either excessive retention at all tenure levels or excessive firing at the early stages of the relationship followed by excessive retention after sufficiently long tenure

the political viability of free market experimentation in cuba evidence from los mercados agropecuarios abstract this paper examines the origins effectiveness and especially the likely future of cuba s contemporary experiment with free farmers markets emphasis is on comparing this experiment with the earlier failed experiment the problems created by the earlier effort which led to their abrupt closure inequality the inability to eliminate the black market and the illegal diversion of state resources are also present in the contemporary scene also as with the first key elements in the cuban leadership especially castro are openly suspicious and hostile toward it three alternative scenarios about the future are evaluated

regulation of a risk averse firm abstract we extend the laffont tirole regulation model to the case of risk averse firms our main results are the impact of risk aversion is to shift the optimal contract toward a cost plus contract as compared with the risk neutral case distortions are greater and informational rents are smaller for high levels of risk aversion the optimal contract involves cost ceilings and the less efficient firms are bunched together journal of economic literature classification numbers d8 l5

optimal student loans and graduate tax under moral hazard and adverse selection we characterize the set of second best optimal menus of student loan contracts in a simple economy with risky labour market outcomes adverse selection moral hazard and risk aversion the model combines student loans with an elementary optimal income tax problem the second best optima provide incomplete insurance because of moral hazard they typically involve cross subsidies between students generically optimal loan repayments cannot be decomposed as the sum of an income tax depending only on earnings and a loan repayment depending only on education therefore optimal loan repayments must be income contingent or the income tax must comprise a graduate tax the interaction of adverse selection and moral hazard i e self selection

money planning and rural transformation in mozambique this article argues that the transformation of the rural economy should proceed on a broad front which links the development of the state sector with the need to transform family agriculture through co operatisation in actual fact planning became concentrated on the state sector which received the bulk of the investible resources disequilibria between the planned needs of resources and their real availability destabilised the exchange between the state sector and peasant production and consequently blocked the possibilities of transforming family agriculture this contradition expresses itself in the form of monetary disequilibrium but it cannot be solved by monetary policy only rather it requires rethinking the nature of planning itself

optimal nonlinear pricing by a monopolist with information ambiguity we consider the optimal nonlinear pricing by an ambiguity averse monopolist the monopolist s subjective belief about the distribution of buyers is described by contamination of an additive probability we find that under a maxmin utility decision rule and with a continuum of buyers ambiguity aversion leads to bunching at the bottom in the optimal contract and the distortion at the bottom is reduced other high valuation buyers are offered the same quantity as in the case without ambiguity but they get a greater discount

the welfare performance of sequential pricing mechanisms consumers are commonly required to subscribe to particular tariff options before uncertainty regarding their future purchases gets resolved since the general comparison of welfare performance of different pricing mechanisms is ambiguous this article empirically evaluates the expected welfare associated with standard nonlinear pricing and optional tariffs by using information directly linked to the type of individual consumers results show that tariffs composed of nonlinear options do not necessarily outperform simpler pricing strategies in terms of expected profits furthermore evidence suggests that a menu of optional two part tariffs dominates any other pricing strategy from an expected welfare perspective

motivating with simple contracts abstract in practice incentive schemes are rarely tailored to the specific characteristics of contracting parties however according to economic theory optimal contracts should be highly dependent on individual conditions we reconcile these observations in the context of a principal agent model with both moral hazard and adverse selection motivating an agent could be increasingly costly to the principal because a more productive agent could also be more able to manipulate the terms of the contract as a result the principal may optimally pool some types by offering a contract with constant transfer and bonus we also explore parameterizations where the optimal contract is fully separating but simple contracts attain a significant portion of the optimal welfare

noisy observation in adverse selection models we consider a principal agent contracting problem under incomplete information where some of the agent s actions are imperfectly observable contracts take the form of reward schedules based on the noisy observation of the agent s action we first review situations where the principal can reach the same utility as in the absence of noise then we focus on the use of linear reward schedules which allow universal implementation i e implementation of a given mechanism for any unbiased noise of observation and on quadratic reward schedules which only require the knowledge of the variance of the noise we exhibit sufficient conditions under which linear reward schedules implement a given mechanism finally we characterize necessary conditions for a mechanism to be implementable under noisy observation by a linear schedule and by quadratic schedules we give the geometric intuition behind all results

characteristics of west german demand for international tourism in the northern mediterranean region the purpose of this paper is to establish the economic determinants of west germany s demand for international tourism in six northern mediterranean nations the methodology makes use of the translog utility function homotheticity and additivity restrictions of the utility theory are tested as hypotheses expenditure income own and cross price elasticities are claculated for each of the twenty years from 1966 to 1985

guilty until proven innocent regulation with costly and limited enforcement abstract we consider optimal regulations for a polluting firm when regulators cannot observe emission control costs and can only observe emissions via costly monitoring fines or subsidies for enforcing compliance are also limited the optimal regulations resemble a deposit refund system the firm reports its emissions and pays an initial tax based on this report if the firm is monitored it receives a rebate when actual and reported emissions coincide the enforcement constraints and the firm s rights determine whether the incentives to reduce emissions are optimally provided by varying the rebate for compliance the monitoring probability or the initial tax

the regulation of multiproduct firms part i theory abstract this paper develops a normative model of the regulation of a multiproduct firm with private information about its technology and cost reducing activity it first characterizes the optimal regulatory scheme and illustrates it through examples it then derives necessary and sufficient conditions for the pricing incentive dichotomy to hold i e conditions under which the cost reimbursement rule but not pricing is used to provide incentives last the paper studies the regulation of the multiproduct firm in a general equilibrium framework both to assess the validity of the partial equilibrium approach and to formalize the notion of taxation by regulation

state accumulation and market equilibria an application of kalecki kornai analysis to planned economies in the third world this article contains an analysis of macroeconomics and inter sectoral disequilibria in peripheral socialist economies based on an adaptation of the theories of kornai and kalecki to the planned primary export economy with a large peasant i artisan sector the origins of excess state accumulation in such economies is identified and consequences of system reforms for economic management discussed it is argued that macroeconomic policy should take into account heterogeneous production forms severe external resource constraints and social pressure for basic needs satisfaction

primary accumulation in the soviet transition the soviet background to the idea of primary socialist accumulation is presented the mobilisations of labour power and of products into public sector investment from outside are shown to have been the two original forms of the concept in soviet primary accumulation the mobilisation of labour power was apparently more decisive than the mobilisation of products the primary accumulation process had both intended and unintended results intended results included bringing most of the economy into the public sector and industrialisation of the economy as a whole unintended results included substantial economic losses and the proliferation of coercive institutions damaging to attainment of the ultimate goal the building of a communist society

procurement policy and contracting efficiency the contracting literature has emphasized the optimality of using certain contracting instruments such as multiple cost observations full commitment self selection and competition a two period procurement model is constructed incorporating all of the instruments and optimal contracts are characterized numerical examples suggest that the marginal benefits of full commitment self selection and multiple cost observations are small while the benefits of competition are larger to obtain some evidence on contracting costs defense contracting is reviewed it indicates that using these instruments is very costly thus calling into question the optimality of using all of the procurement instruments copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

costly distortion of information in agency problems anecdotal evidence suggests that agents often spend resources distorting information transmitted to principals we present a model where costly information distortion emerges as equilibrium behavior the information structure we focus on is intermediate between and encompasses the cases of private information and public information the agent can falsify the privately observed state at some cost although the principal can design contracts that induce no falsification these may involve excessive iinformation rents falsification can be beneficial in spite of the waste of resources involved because it helps reduce information rents we examine how optimal contract and equilibrium payoffs change as the information structure ranges from private to public information

a reduced form optimal nonlinear income tax problem abstract for a finite population with quasilinear preferences it is shown how mirrlees optimal nonlinear income tax problem can be simplified to a reduced form problem involving only the allocation of the consumption good this result is a finite version of a proposition established in the continuum by s lollivier and j c rochet

the importance of ordering in sequential auctions to date the largest part of literature on multi unit auctions has assumed that there arek homogeneous objects being auctioned where each bidder wishes to win exactly one or all ofk units these modeling assumptions have made the examination of ordering in sequential auctions inconsequential the aim of this paper is to introduce and highlight the critical influence that ordering can have on the efficiency of an auction we study a buyer who outsources via sequential 2nd price auctions two heterogeneous jobs and faces a diverse set of suppliers with capacity constraints

the demand for international tourism in the mediterranean region the paper studies the demand for international tourism in the mediterranean region first a review of the most important attempts to model econometrically the demand for international tourism in the past is given followed by a formal presentation of the proposed theoretical model in particular a version of the almost ideal demand system aids is adopted and a description of the variables involved and their sources together with the estimation procedure are provided the diagrammatic analysis performed contributes to a better understanding of the evolution of the dependent variable over time the results with respect to the expenditure as well as to the own and cross price elasticities may be regarded as econometrically satisfactory and a reasonable economic explanation is given

optimal border policies for invasive species under asymmetric information this paper analyzes the problem faced by a border protection agency if endogenous exporter abatement activities affect invasive species risk allowing for unobservable differences in abatement cost we show how the optimal inspection penalty regime differs from the symmetric information case departing from previous literature we allow for technical assistance a policy instrument specifically permitted and commonly employed under article 9 of the world trade organization sanitary and phytosanitary agreement we find the information asymmetry can make it optimal for the importing country to provide technical assistance grants for exporter risk abatement even if it would otherwise be inefficient further we show that fungibility of technical assistance with inputs in other sectors of the exporting economy affects the qualitative nature of optimal policy if technical assistance has no outside value in the exporter s country optimal policy is characterized by a menu of contracts balancing higher tariffs with lower penalties for being caught with an invasive if technical assistance can be used in other sectors of the exporter s economy it can introduce countervailing incentives making a uniform tariff penalty combination optimal

evaluation of credit risk based on firm performance abstract this paper investigates whether productive inefficiency measured as the distance from the industry s best practice frontier is an important ex ante predictor of business failure we use samples of french textiles wood and paper products computers and r d companies to obtain efficiency estimates for individual firms in each industry these efficiency measures are derived from a directional technology distance function constructed empirically using non parametric data envelopment analysis dea methods estimating binary and ordered logit regression models we find that productive efficiency has significant explanatory power in predicting the likelihood of default over and above the effect of standard financial indicators

on the implementability of contracts without quasilinear utility abstract implementability conditions in rochet 1987 are extended to utility functions not necessarily quasilinear in the transfer or linear in the type for the case where agents information is one dimensional but actions become multidimensional the results obtained are relevant for the characterization of optimal mechanisms in adverse selection and moral hazard problems

a reexamination of the optimal nonlinear income tax abstract this paper investigates mirrlees model of optimal income taxation it provides a concrete example of utility and density functions for which the solution to the usual first order model is not implementable i e and example where the first order approach does not work adding second order conditions leads to an extended model and to implementable solutions if these conditions are binding one gets a kink in the optimal net income schedule and bunching of individuals occurs the properties of an optimal nonlinear income tax are reexamined within the extended model

contracting with private knowledge of signal quality we characterize the optimal procurement contract in a setting where a supplier has privileged knowledge of the quality of a public signal about his production costs the optimal contract exhibits important differences with standard contracts in adverse selection settings for instance the contract induces output both above and below first best levels furthermore the induced output may not vary with the realized public signal unless the signal quality is sufficiently pronounced in addition output may increase as expected costs increase

departmentalization and stochastic dissimilarity abstract when activities within the organization are confronted with different types of stochastic environments the owner of the firm has to evaluate the benefits and the costs involved in establishing multiple specialized divisions the benefit from departmentalization is the ability to better match incentives to the extent of uncertainty confronting different activities the cost of departmentalization is the increase in the number of required managerial positions which implies that the owner has to deal with a bigger number of individuals that can assume only limited risk only when the extent of stochastic dissimilarity among activities is significant can the benefit more than outweigh the cost

on the design of incentive schemes under moral hazard and adverse selection abstract this paper characterizes a class of optimal incentive schemes in a simple principal agent model which allows for moral hazard and adverse selection we show that incentive compatible allocation can always be approximately implemented through a menu of quadratic incentive schemes it is also proved that the set of incentive compatible allocations is independent of the distribution of the additive uncertainty which affects the outcome informational requirements and economic interpretation of quadratic and linear schemes are discussed

an analysis of consumption behaviour of foreign tourists in ireland the objective of this article is to analyse the consumption behaviour of foreign tourists in ireland based on the almost ideal demand system five demand systems are estimated four representing the major source markets of tourists to ireland namely from britain north america mainland europe and rest of the world and one aggregate model based on a pooled sample each system included six commodity aggregates representing the major consumables of tourists estimated models were statistically significant and the derived elasticities are theoretically consistent and empirically plausible while there are some variations in the consumption patterns of tourists from different source markets reflecting differences in consumer preferences and consumption habits in general tourist demand for the various irish tourism goods and services is found to be price inelastic this finding is consistent with a priori expectations as tourists are obliged to consume whatever is available at the destination they visit

penalizing success in dynamic incentive contracts no good deed goes unpunished we examine optimal dynamic incentive contracts when adverse selection and moral hazard problems are present we find that early success is optimally penalized in the sense that the agent who succeeds early subsequently faces a lower powered incentive contract penalizing success in this manner serves to limit the agent s initial incentive to understate his ability

economics of tourist s consumption behaviour some evidence from australia abstract this study analyses the consumption behaviour of international tourists from australia s four major source markets new zealand uk usa and japan a preliminary analysis of their consumption expenditures reveals intriguing similarities as well as diversities in consumption patterns these are sought to understand in terms of the utility maximising framework in which observed differences in prices and incomes play a key role based on the neoclassical economic theory of consumer behaviour models incorporating five major components of tourist consumption accommodation food transport shopping and entertainment are estimated overall the level of tourist consumption is found to be highly sensitive to incomes but less sensitive to prices the low price sensitivity suggests tourists perceive the commodities as necessities and may also reflect their captivity at the destination masking the underlying true price sensitivities an important dimension underlying these findings is the possible lack of information about the destination leading to sub optimal consumption choices

agricultural planning pricing policy and co operatives in vietnam abstract in the competition between national government and local co operatives a central contradiction in socialist rural development the price system market control and terms of trade are crucially related to the relative power and capacity of the central government to control ratios of accumulation and consumption in vietnam there is a dynamic interaction between government and agricultural producers over pricing policy and paradoxically it is the co operative primarily viewed by the state as a means of providing cheap food which has strengthened the collective bargaining position of agricultural producers the government has had to introduce material incentives to expand agricultural production beyond subsistence levels and bow to pressure to alter the previous accumulation consumption ratios in favour of consumption

a complete solution to a class of principal agent problems with an application to the control of a self managed firm this paper considers a class of principal agent problems which have the following features 1 there is adverse selection because the principal ignores the value of one parameter of the agent s true characteristics 2 leaving aside the information parameter the principal s welfare as well as the agent s welfare depend on two types of variables observable to both of them the first ones possibly multidimensional are called action variable s and the second one which is one dimensional has in general the meaning of a money transfer 3 the principal is a stackelberg leader of the two person game he can commit himself to decision rules which are admissible on informational grounds he optimizes within the adequate class taking into account besides the agent s reaction one constraint which has generally the meaning of an individual rationality constraint and sometimes of a feasibility constraint the optimization is limited to the class of non stochastic mechanisms 4 the problem can also receive an alternative interpretation the principal faces a continuum of agents of unknown characteristics the distribution being known however stylized principal agent problems of this type have often been considered in the economic literature in particular the reader will later be able to recognize that the standard income tax model a la mirrlees 1971 the quality or quantity choice model of the monopolist a la mussa and rosen 1978 or maskin and riley 1982 and the model of government regulation of the private monopolist of baron and myerson 1982 all belong to

using cost observation to regulate firms the paper emphasizes the use of accounting data in regulatory or procurement contracts when the supplier 1 has superior information about the cost of the project and 2 invests in cost reduction the main result states that under risk neutrality the supplier announces an expected cost and is given an incentive contract linear in cost overruns this optimal contract moves toward a fixed price contract as the announced cost decreases an investment choice is then introduced and the use of a rate of return regulation is studied

state intervention in cuban agriculture impact on organization and performance abstract as the state intervention decreases over cuba s agricultural production units the quantity and quality of output seem to increase despite a decreasing access to factors of production and other resources the degree of perishability of the commodity the need for immediate refrigerated storage or further processing work against on assumed scale of preferences for farmers and appear to be responsible for some discrepancies found in statistics concerning productivity in the state and nonstate sectors the recent creation of basic units of cooperative production on former state farms is an implicit recognition of the failure of this type of agricultural organization the next step ought to be a liberalization policy concerning markets and prices that could solve cuba s agricultural production crisis

asymmetric causality between australian inbound and outbound tourism flows abstractwe employ the asymmetric version of the granger causality test to assess how australian inbound and outbound tourism flows across 49 markets countries are driven by the sign dependent variations in departure series or vice versa a multivariate generalized autoregressive conditional heteroscedasticity mgarch model is also estimated to study the time varying co volatility between inbound and outbound tourism growth rates we find that rising co volatility spillovers between inbound and outbound tourism are statistically significant for a number of markets the six markets that are most susceptible to global shocks are china hong kong papua new guinea singapore south africa and the united kingdom china is by far the largest of these markets and except for the united kingdom both arrivals and departures for each of these countries represent growing markets for australia we present recommendations for policymakers and destination management organizations dmos to assist in developing cust

a system of equations model of uk tourism demand in neighbouring countries this paper uses a system of equations model to examine tourism demand during periods of destination country transition and integration into the wider international community the almost ideal demand system model is applied to the uk demand for tourism in the neighbouring destinations france spain and portugal spain and portugal are interesting cases as during the period under consideration they experienced a process of transition from economies with characteristics typical of developing countries only entering the world bank s industrialized countries classification in the 1980s the paper examines the evolution of tourism demand during these countries transition from developing to developed status consideration of france as a neighbouring destination also allows the behaviour of tourism demand to be compared between relatively rich and poor countries the results show the extent to which the cross country behaviour of demand becomes more or less similar over time with respect to changes in ex

the structure of firms abstract this paper studies different organizational forms within a single framework the u form is modelled as a two round communication game between a principal and agents with unobservable efforts and adverse selection problems the m form is modelled by considering a one round communication game with pure adverse selection feasible and optimal mechanisms are characterized the profit functions are derived and an extension of hotelling s lemma proved in the absence of the control loss problems flowing form the unobservability of agent effort levels the u form will be superior to the m form both forms will be superior to the corrupted m form

regulating nitrogen pollution with risk averse farmers under hidden information and moral hazard we consider a model of pollution regulation for a risk averse farmer involving hidden information moral hazard and risk sharing the representative farmer faces a production risk originating from nitrogen leaching and privately observes the soil capacity in retaining nitrogen only after the regulation contract is signed the latter specifies a transfer and a nitrogen quota whose decomposition by the farmer among different production stages is unknown to the regulator we first characterize the optimal solution to the regulator s problem the sequential decision model is estimated on french crop production data and the results are used to calibrate and simulate the optimal contract

a comparison study of travel expenditure and consumption choices between first time and repeat visitors abstract this study examines the differences in expenditures and consumers product consumption choices between first time and repeat visitors we applied the data collected from the 2009 annual survey report on visitor expenditure and trends in taiwan to estimate visitors demand of five major travel products accommodation food transportation entertainment and shopping the almost ideal demand system analysis results suggested the consumption of most products followed the law of demand the resulting income elasticity also indicated these products were normal goods in addition we found that previous travel experience does not generate significant differences in preference and consumption patterns

project evaluation and control in decentralized firms is capital rationing always optimal when capital investments are made in an agency setting we show that even without risk considerations capital rationing need not be the only rational outcome we analyze a principal agent model with risk neutrality and with two productive inputs the agent s efforts and capital investment the two inputs can be either economic complements or substitutes the agent has pre contract private information about his own type the output is measured with an additive noise we show that when the two inputs are substitutes the optimal solution entails a marginal capital rationing but when the two inputs are complements then either a marginal capital rationing or a marginal leniency could be the optimal response our results therefore provide an explanation for why firms may employ a capital rationing for a project that may increase manufacturing complexity and hence may reduce managerial labor productivity yet employ a less strict criterion for evaluating a productivity enhancing project this result contrasts with earlier results where only a capital rationing is shown to be optimal

the problem of balance in the peripheral socialist economy a conceptual note abstract the structure of the peripheral socialist economy is fundamentally distinct from the classical socialist economy upon which the planning literature has been based essentially this derives from the fact that the constraint on growth is foreign exchange and not the supply of labour or wage goods as such in consequence the possibilities for accumulation depend on international rent and depression of popular consumption does not in fact contribute much to the rate of growth three different sectors of the peripheral socialist economy can be identified and related to problems of accumulation and planning

micro economic determinants of tourist expenditure a quantile regression approach abstract we assess the effect of the main determinants of tourist expenditure by applying both linear and quantile regression models to individual micro data collected by a survey addressed to non resident tourists who spent their holidays in sardinia during the period april october 2012 we find that in addition to income and foreign nationality tourist expenditure is crucially driven by trip related party size stay length accommodation sea and sun typology and transport modality and psychographic characteristics repeated visits and holiday motivations moreover our results indicate that the effects vary with respect to the expenditure component and the level of spending thus confirming the high complexity of the tourism product higher positive effects were found for heavy spenders in the case of foreign nationality previous visits and notoriety motivated holidays while party size and the number of visited sites contribute to reducing the level of expenditure for light spending tourists

aggregation and linearity in the provision of intertemporal incentives we consider the problem of providing incentives over time for an agent with constant absolute risk aversion the optimal compensation scheme is found to be a linear function of a vector of n accounts which count the number of times that each of the n kinds of observable events occurs the number n is independent of the number of time periods so the accounts may entail substantial aggregation in a continuous time version of the problem the agent controls the drift rate of a vector of accounts that is subject to frequent small random fluctuations the solution is as if the problem were the static one in which the agent controls only the mean of a multivariate normal distribution and the principal is constrained to use a linear compensation rule if the principal can observe only coarser linear aggregates such as revenues costs or profits the optimal compensation scheme is then a linear function of those aggregates the combination of exponential utility normal distributions and linear compensation schemes makes computations and comparative statics easy to do as we illustrate we interpret our linearity results as deriving in part from the richness of the agent s strategy space which makes it possible for the agent to undermine and exploit complicated nonlinear functions of the accounting aggregates

markets markets everywhere understanding the cuban anomaly abstract cuba has made exceptionally little use of markets compared with other centrally planned economies only in the 1970s did the cubans begin to experiment with a state controlled parallel market and in 1980 with a free peasant market six years into the experiment this market was closed as it produced tensions common to other socialist experiences with market mechanisms high prices growing income and consumption inequality and the illegal redirection of resources from the planned to market sphere the free market was replaced with a more limited market mechanism an expanded parallel market in both agricultural procurement and food distribution considered more compatible with the cuban commitment to egalitarianism

contract design and bargaining power abstract it is a common assumption in contract theory that the uninformed side makes a take it or leave it proposal in contrast this paper explores a model which allows a shift in bargaining power continuously between the two parties endowing the informed side with more bargaining power gradually reduces distortions

an econometric study of tourism demand the aids model of us and european tourism in mediterranean countries the almost ideal demand system aids model was used to estimate tourism expenditure allocation by us and west european countries among a range of mediterranean destinations the approach has the advantage of an explicit basis in consumer expenditure theory and by modelling the changes in the budget shares of expenditure among destinations provides new information relative to that provided by the traditional single equation approach the estimated model was econometrically satisfactory although symmetry and homogeneity were rejected in line with the findings of past studies of consumer demand the expenditure elasticities demonstrated considerable differences in tourism demand preferences between origin countries and between traditional and newly developing destinations the own and cross price elasticities indicated the importance of effective prices in determining the allocation of expenditure among destinations

hungarian agriculture a model for the socialist world abstract hungary s status as a model in agriculture is examined in terms of its economic social and political performance its planning and organizational components and the contextual factors affecting its transferability in economic and social performance the hungarian strategy compares favourably with the rest of eastern europe and the ussr planning and institutional factors contributing to this performance include the new economic mechanism planning approach autonomous agricultural producers co operatives new structures for diffusion of technology and integration of household producers into the commodity system while the transferability of the model remains doubtful due to factors such as size technical base and political choices increased participation in the world economy may force the ussr and the rest of eastern europe into reforms bearing some resemblance to those in hungary

regulating a monopolist with unknown costs we consider the problem of how to regulate a monopolistic firm whose costs are unknown to the regulator the regulator s objective is to maximize a linear social welfare function of the consumers surplus and the firm s profit in the optimal regulatory policy prices and subsidies are designed as functions of the firm s cost report so that expected social welfare is maximized subject to the constraints that the firm has nonnegative profit and has no incentive to misrepresent its costs we explicitly derive the optimal policy and analyze its properties in their classic papers dupuit 2 and hotelling 5 considered pricing policies for a bridge that had a fixed cost of construction and zero marginal cost they demonstrated that the pricing policy that maximizes consumer well being is to set price equal to marginal cost and to provide a subsidy to the supplier equal to the fixed cost so that a firm would be willing to provide the bridge this first best solution is based on a number of informational assumptions first the demand function is assumed to be known to both the regulator and to the firm while the assumption of complete information may be too strong the assumption that information about demand is as available to the regulator as it is to the firm does not seem unnatural a second informational assumption is that the regulator has complete information about the cost of the firm or at least has the same information about cost as does the firm this assumption is unlikely to be met in reality since the firm would be expected to have better information about costs than would the regulator as weitzman has stated an essential feature of the regulatory environment i am trying to describe is uncertainty about the exact specification of each firm s cost function in most cases even the managers and engineers most closely associated with production will be unable to precisely specify beforehand the cheapest way to generate various hypothetical output levels because they are yet removed from the production process the regulators are likely to be vaguer still about a firm s cost function 12 p 684 as this observation suggests it is natural to expect that a firm would have better information regarding its costs than would a regulator the purpose of this paper is to develop an optimal regulatory policy for the case in which the regulator does not know the costs of the firm one strategy that a regulator could use in the absence of full information about costs is to give the firm the title to the total social surplus and to delegate the pricing decision to the firm in pursuing its own interests which would then be to maximize the total social surplus the firm would adopt the same marginal cost pricing strategy that the regulator would have imposed if the regulator had

multi task incentive contract and performance measurement with multidimensional types abstract this paper provides a new explanation for the dominance of the low powered incentive contract over the high powered incentive contract using a hybrid model of moral hazard and adverse selection we first show that unobservable risk aversion or cost leads to low powered incentives we then consider the case where both risk aversion and cost of the agent are unobservable to the principal this multidimensional mechanism design problem is solved under two assumptions with regard to the structures of performance measurement system and wage contract it is shown that if the deterministic and stochastic components of performance measures vary proportionally the principal is inclined to provide a low powered incentive contract moreover it is shown that if the base wage depends on a quadratic function rather than the direction of the performance wage vector no incentive is provided for most of the performance measures in an orthogonal performance measurement system