factors influencing differences between survey and market based environmental value measures a unique us database combining survey and housing data is used to obtain household level stated and market based willingness to pay wtp measures to avoid living near landfills systematic differe

finance and growth in a bank based economy is it quantity or quality that matters abstract most finance growth studies approximate the size of financial systems rather than the quality of intermediation to explain economic growth differentials furthermore the neglect of systematic differences in cross country studies could drive the result that finance matters we suggest a measure of bank s intermediation quality using bank specific efficiency estimates and focus on the regions of one economy only germany this quality measure has a significantly positive effect on growth this result is robust to the exclusion of banks operating in multiple regions controlling for the proximity of financial markets when distinguishing different banking sectors active in germany and when excluding the structurally weaker east from the sample

on the equilibrium properties of locational sorting models abstract important to many models of location choice is the role of local interactions or spillovers whereby the payoffs from choosing a location depend in part on the number or attributes of other individuals or firms that choose the same or nearby locations in equilibrium this paper develops the equilibrium properties of a broadly applicable and readily estimable class of sorting models that allow location decisions to depend on both fixed local attributes including unobserved attributes and local interactions describes the conditions under which equilibria exist and are unique and provides a test for uniqueness in empirical analyses of sorting equilibrium

can megamergers improve bank efficiency abstract this paper uses a fitted multiproduct translog cost function to simulate mergers between pairs of us commercial banks with assets exceeding 1 billion and studies the predicted impact of such mergers on total costs thick frontier analysis reveals that variations in x efficiency dominate scale product mix and branching efficiencies ex ante financial data imply that costs could potentially be reduced in nearly half of the possible mergers except those between banks each larger than 10 billion most cost efficient mergers are across state lines apparently a result of variations in product mix

discrete choice with social interactions and endogenous memberships this paper develops a theory of sorting and behavior when the latter is subject to social influences i extend the choice model with social interactions developed by brock and durlauf 2001a 2003 to allow for equilibrium group formation individuals choose a group and a behavior subject to an endogenous social effect the latter turns out to be a segregating force and stable equilibria are stratified the sorting process may induce inefficiently multiple behavioral equilibria such a theory serves as a means to solve identification and selection problems that may undermine the empirical detection of social effects on individual behavior i exploit the theoretical structure to build a nonlinear in the social effect selection correction term such a term allows identification and solves the selection problem that arises when individuals can choose the group whose effect the researcher is trying to disentangle

estimating ethnic preferences using ethnic housing quotas in singapore there are many policies around the world aimed at integrating groups gender ethnic national in education employment immigration and housing in the case of housing since prices may not internalize externalities in residential location choices we need to know preferences for welfare analysis this paper estimates people s taste for living with own ethnic groups ethnic preferences using unique policy variation from the ethnic housing quotas in singapore my approach combines policy induced variation commonly used in reduced form settings with a non parametric identi cation strategy in a structural demand estimation framework a la berry levinsohn and pakes 1995 i nd that all groups have strong preferences to live with at least some other

driving to opportunity local rents wages commuting costs and sub metropolitan quality of life we examine variation in local rents wage levels commuting costs household characteristics and amenities within metropolitan areas for 2071 areas covering the united states by density and central city status we demonstrate the sensibility of estimating wage levels by workplace not residence and recover decentralized rent gradients that fall with commuting costs we construct and map a willingness to pay index which indicates the quality of life typical households receive from local amenities when households are similar mobile and informed this index varies considerably within metros and is typically high in areas that are dense suburban sunny mild safe entertaining and have elevated school funding

estimating the general equilibrium benefits of large changes in spatially delineated public goods the purpose of this article is to report a new approach for measuring the general equilibrium willingness to pay for large changes in spatially delineated public goods such as air quality we estimate the parameters of a locational equilibrium model and compute equilibria for alternative scenarios characterizing the availability of public goods within a system of communities welfare measures take into consideration the adjustments of households in equilibrium to nonmarginal changes in public goods the framework is used to analyze willingness to pay for reductions in ozone concentrations in southern california between 1990 and 1995

the dominance of inefficiencies over scale and product mix economies in banking abstract this study measures and analyzes inefficiencies for all u s banks in 1984 inefficiencies are measured relative to a thick frontier cost function and are found to dominate measured scale and product mix economies most inefficiencies are operational in nature involving the overuse of physical inputs rather than financial involving overpayment of interest also technical inefficiencies proportionate overuse of all inputs dominate allocative inefficiencies improper mix of inputs these results suggest that competitive pressures in banking from deregulation will be focused primarily on banks that do not control costs rather than on those of a particular size or product mix

group cost of living indexes when households have different consumption patterns whose cost of living should an actual price index represent this issue was first raised by j l nicholson and s j prais in the 1950 s both made essentially the same point official price indexes give each household s consumption pattern an implicit weight proportional to its total expenditures see nicholson p 540 prais calls such an index plutocratic and both nicholson and prais suggest an alternative democratic price index which gives all households equal weight a group cost of living index is an index that measures the impact of price changes on the welfare of a group or population of households to define such an index requires an explicit or implicit concept of the welfare of a group and hence requires interpersonal comparison and distributional judgments since group indexes such as the consumer price index play an important role in our perception of inflation and the formation of macro economic policy and are used to escalate wages and social security benefits they have significant effects on government decisions and economic welfare despite their intellectual interest and practical importance however until recently they have been virtually ignored by index number theorists the theory of the cost of living index cli provides a generally accepted framework for measuring the impact of price changes on the welfare of a particular household this paper extends the cli concept to groups and discusses which questions require group indexes and which do not i begin by introducing some notation and terminology in the context of household clis a household s cli is the ratio of the expenditures required to attain a particular base indifference curve in two price situations suppose there are n goods and s households and denote the preference ordering of the rth household by r r the base indifference curve can be identified by a goods collection xro which lies on it the expenditure function er p xr rr shows the minimum expenditure required to attain the base indifference curve at prices p the cli of the rth household ir pa pb xrorr is the ratio of the minimum expenditure required to attain the base indifference curve at prices pa comparison prices to that required at prices pb reference prices except in very special cases the value of the cli depends on the base indifference curve at which it is evaluated as successively higher base indifference curves are specified one would expect the prices of luxuries to become more important relative to the prices of necessities hence it is convenient to regard the cli as a function of the base indifference curve rather than as a single number corresponding to a particular base thus instead of offering guidance in choosing an appropriate base indifference curve theory suggests that there is no need to choose to construct the exact cli an investigator needs to know the household s preferences lacking this knowledge he rnust fall back on indexes which require less information and which are upper bounds on the exact index the laspeyres index jr papbxrb is the ratio of the cost of purchasing the reference period consumption basket at comparison prices to its cost

households willingness to pay for public housing in the presence of price controls nonmarket housing allocation mechanisms such as queueing prevent households from revealing their marginal willingness to pay for housing through market prices we derive the households marginal willingness to pay using the intuitive idea that the length of the queue for a specific house reflects the households willingness to pay for housing characteristics we apply our methodology to public housing in the amsterdam metropolitan area and show that on average the households marginal willingness to pay for a unit of public housing is close to its marginal costs this suggests that the welfare loss of public housing through distortions in housing supply is rather limited and is mainly through distortions in housing demand we provide indirect evidence of the latter by showing that queueing induces inefficient matching of households and housing

the social cost of living index abstract household cost of living indexes reflect household preferences analogous indexes for groups of households require a corresponding concept of group preferences in this paper i investigate the social cost of living index a group index based on the bergson samuelson social welfare function i first define the index and examine its properties under the assumption that the investigator constructing it expresses his distributional judgments in an explicit bergson samuelson social welfare function i then examine the maximizing society and the independent society two cases in which the index can be constructed from the information contained in the market demand functions in these two cases a laspeyres index i e the fixed weight index based on the reference consumption pattern is an upper bound on the exact social cost of living index in general however the assumptions required to place bounds on the social cost of living index are much more likely to be satisfied than those required to place analogous bounds on a household s cost of living index

non price equilibria for non marketed goods abstract as part of the resources for the future frontiers of environmental economics collection of papers we consider the problem of general equilibrium feedback effects in non price space as they relate to non market valuation our overall objective is to examine the extent to which non price equilibria arising from both simple and complex sorting behavior can be empirically modeled and the resulting differences in partial and general equilibrium welfare measures quantified after motivating the problem in general we consider the specific context of congestion in recreation demand applications which we classify as the outcome of a simple sorting equilibrium using both econometric and computable general equilibrium cge models we examine the conceptual and computational challenges associated with this class of problems and present findings on promising solution avenues we demonstrate the relevance of accounting for congestion effects in recreation demand with an application to lake visits in iowa our econometric and cge results confirm that for some plausible counterfactual scenarios substantial differences exist between partial and general equilibrium welfare estimates we conclude the paper by describing tasks that are needed to move forward research in this area

mergers among german cooperative banks a panel based stochastic frontier analysis based on an unbalanced panel of all bavarian cooperative banks for the years of 1989 97 which includes information on 283 mergers we analyze motives and cost effects of small scale mergers in german banking estimating a frontier cost function with a time variable stochastic efficiency term we show that positive scale and scope effects from a merger arise only if the merged unit closes part of the former branch network when we compare actual mergers to a simulation of hypothetical mergers size effects of observed mergers turn out to be slightly more favorable than for all possible mergers banks taken over by others are less efficient than the average bank in the same size class but exhibit on average the same efficiency as the acquiring firms for the post merger phase our empirical results provide no evidence for efficiency gains from merging but point instead to a leveling off of differences among the merging units

looking at the cost side of monopoly welfare loss under oligopoly is defined as that part of consumer surplus which is lost and not regained by higher profits in a model with asymmetric firms this implies that the total welfare loss consists of the deadweight loss triangle plus a cost side inefficiency effect due to the fact that in imperfect markets not all firms utilize the lowest cost technique using a flexible cv model we calculate these effects empirically for two relatively homogeneous industries pulp paper and cement the deadweight loss triangles are shown to be smaller than the cost difference effect the staircase for these industries

on the choice of funtional form for hedonic price functions this study examines how errors in measuring marginal attribute pric es vary with the form of the hedonic price function in simulations consumers with known utility functions bid for houses with given attributes various forms of the hedonic function are estimated using equilibrium housing prices errors in estimating marginal attribute prices are calculated by comparing each consumer s equilibrium marginal bid vector with the gradient of the hedonic function when all attributes are observed linear and quadratic box cox forms produce lowest mean percentage errors however when some attributes are unobserved or are replaced by proxies linear and linear box cox functions perform best copyright 1988 by mit press

the price elasticity of selective demand a meta analysis of econometric models of sales the author describes a meta analysis of econometric studies that estimated the elasticity of selective sales or market share to price the literature review yielded 367 suitable price elasticities

crime and social interactions the high variance of crime rates across time and space is one of the oldest puzzles in the social sciences this variance appears too high to be explained by changes in the exogenous costs and benefits of crime we present a model where social interactions create enough covariance across individuals to explain the high cross city variance of crime rates this model provides an index of social interactions which suggests that the amount of social interactions is highest in petty crimes moderate in more serious crimes and almost negligible in murder and rape

scanner data and the measurement of inflation this paper outlines the potential use of bar code scanner data from retailers for the measurement of inflation the source benefits from its extensive coverage in providing data on prices quantities and values of transactions of each model of a good sold relative weights can thus be ascribed to price changes in both base and current months at a highly detailed level which allows us to estimate substitution bias methods of adjusting for quality changes can be considered the dummy variable hedonic approach is compared with a superlative exact hedonic approach and a matching technique akin to that used by statistical offices

discrete choice with social interactions this paper provides an analysis of aggregate behavioural outcomes when individual utility exhibits social interaction effects we study generalized logistic models of individual choice which incorporate terms reflecting the desire of individuals to conform to the behaviour of others in an environment of noncooperative decisionmaking laws of large numbers are generated in such environments multiplicity of equilibria in these models which are equivalent to the existence of multiple self consistent means for average choice behaviour will exist when the social interactions exceed a particular threshold local stability of these multiple equilibria is also studied the properties of the noncooperative economy are contrasted with the properties of an economy in which a social planner determines the set of individual choices finally a likelihood function based on the theoretical model is given and conditions for the econometric identifiability of the model are established

consumer prices the consumer price index and the cost of living after presenting major findings and recommendations the cpi commission reiterates the estimate of a 1 1 percentage point per annum upward bias it rejects the contention that the bls already makes substantial corrections for quality change that quality improvements and new products accrue only to the rich and that procedures to make more extensive quality adjustments valuations of new products and adjustments for commodity and outlet substitution are impractical the bias in the cpi can be sharply reduced as the authors detail in this paper coauthors are ellen r dulberger robert j gordon zvi griliches and dale w jorgenson

estimating consumer preferences using market data an application to us automobile demand this paper explores the possibility of using market data to identify consumer preferences a utility function composed of homogeneous characteristics and goods specific effects is used as a basic link between the goods space and the characteristics space the functional form for the hedonic price equation the data requirements and issues of measurement errors for estimating demand and supply of characteristics are discussed we illustrate the methodology by considering the us automobile demand using 1969 86 data compiled from consumer reports and ward s automotiveyearbook

network effects and welfare cultures we empirically examine the role of social networks in welfare participation using data on language spoken at home to better infer networks within an area our empirical strategy asks whether being surrounded by others who speak the same language increases welfare use more for those from high welfare using language groups this methodology allows us to include local area and language group fixed effects and to control for the direct effect of being surrounded by one s language group these controls eliminate many of the problems in previous studies the results strongly confirm the importance of networks in welfare participation

should the cost of living index provide the conceptual framework for a consumer price index in some countries the cost of living col index serves as the conceptual framework for the cpi but it has been rejected in others this paper reviews issues that have arisen in the statistical agency debate and in the economics literature on the col index including rhetorical matters which have influenced the debate i contend that col theoiy is useful as a decision making framework in estimating components of the cpi and that col index theory provides appropriate guidance for measuring consumer inflation contrary to the view that has been adopted for the european hicp and expressed by an advisory committee for the rpi in several countries the united states netherlands sweden the theory of the cost of living col index provides the conceptual framework for the country s consumer price index cpi see united states department of labor 1997 balk 1994 and dalen 1999 others reject the cost of living index framework an example is the australian bureau of statistics 1997 rejection of the col index is also explicit in an rpi advisory committee recommendation in the united kingdom in still other countries canada being an example official documents for the cpi are ambiguous about the role of the col index statistics canada 1995 the international guideline for consumer price indexes the ilo manual turvey 1989 does not even mention the col index the question has taken on heightened interest recently part of the stimulus comes from the european union s relatively new harmonised indexes of consumer prices hicp for the hicps eurostat has rejected the col

effects of heterogeneity on bank efficiency scores bank efficiency estimates often serve as a proxy of managerial skill since they quantify sub optimal production choices but such deviations can also be due to omitted systematic differences among banks in this study we examine the effects of heterogeneity on bank efficiency scores we compare different specifications of a stochastic cost and alternative profit frontier model with a baseline specification after conducting a specification test we discuss heterogeneity effects on efficiency levels ranks and the tails of the efficiency distribution we find that heterogeneity controls influence both banks optimal costs and profits and their ability to be efficient differences in efficiency scores are important for more than only methodological reasons first different ways of accounting for heterogeneity result in estimates of foregone profits and additional costs that are significantly different from what we infer from our general specification second banks are significantly re ranked when their efficiency is estimated with a specification other than the preferred general specification third the general specification gives the most reliable estimates of the probability of distress although differences to the other specifications are low

valuing open space in a residential sorting model of the twin cities abstract we present an analysis of how open space amenities affect residential location choices using a horizontal sorting model to estimate household preferences for open space to parameterize the model a new and rich dataset spanning 17 years of home sales in the seven county twin cities area of minnesota was assembled heterogeneity across types of open space and across households is shown to be a critical determinant of the welfare impacts of open space conservation our general equilibrium simulations allow housing prices to re equilibrate in response to policy induced demand shifts demonstrating that as the scale of intervention becomes larger general equilibrium and partial equilibrium welfare measures increasingly diverge finally we find that the spatial structure of policy is an important component of policy design suggesting open space policy should be place specific in its design and implementation

games of social interactions with local and global externalities abstract in this paper we present a result on the existence of pure strategies nash equilibrium which covers a large class of games with local and global social interactions the result highlights common features of well known games analyzed in the literature

mergers and technical efficiency in spanish savings banks a stochastic distance function approach abstract the aim of this paper is to test the temporal variation of technical efficiency of spanish savings banks during the period 1985 1998 furthermore we test whether merged and non merged firms have different levels and temporal patterns of technical efficiency a stochastic output distance function r w shephard theory of cost and production functions princeton university press princeton nj is employed to accommodate multiple output technology the distance function provides the advantage that it does not need information about prices so it can accommodate the multi product nature of the financial sector only using the quantities as data an important point when the assumptions about perfectly competitive markets are unlikely to be met the temporal variation of efficiency is modeled extending the battese and coelli journal of productivity analysis 3 1992 153 169 approach in two ways relaxing the monotonicity of the temporal variation pattern of the efficiency term and allowing for different patterns of efficiency change between merged and non merged firms

price elasticity dynamics over the adoption life cycle little empirical research has been conducted to test the dynamic behavior of elasticities over the product life cycle competing specifications of price elasticity dynamics are examined to test the

efficiency and technical progress in banking empirical results for a panel of german cooperative banks abstract using 1989 1992 individual data of 757 german cooperative banks and applying the intermediation approach we specify a multi product translog cost function for this part of the german banking industry for all size classes moderate economies of scale can be identified there is also evidence of economies of scope which supports the notion of universal banking as for cost efficiency we find that the average banks in all size classes deviate considerably from the best practice cost frontier all banks enjoy growth of total factor productivity which is higher for the smaller banks in the sample

preference heterogeneity in the structural estimation of efficient pigovian incentives for insecticide spraying to reduce malaria this paper bridges the theoretical and empirical literatures on the role of preference heterogeneity in characterizing externalities related to disease transmission we use a theoretical structure similar to locational sorting models which characterize equilibria in terms of marginal individuals who are indifferent between locations in our case the locations are binary consisting of whether or not to take a discrete preventative action individual heterogeneity arises in this structure due to variation in the costs and disutility associated with prevention we demonstrate application of this approach in the context of participation in insecticide based indoor residual spraying programs for malaria control in northern uganda we identify the parameters of our theoretical model using a stated preference choice experiment combined with estimates from published epidemiological studies the model implies that pigovian subsidies for participation in this context should decrease household malaria risk by 19 25 our approach can be applied to other bioeconomic externalities with spillovers from discrete preventative actions including agricultural pest management and the control of pest infestations and invasive species

on calculating cost of living index numbers for arbitrary income levels we present a method for calculating cost of living index numbers for arbitrary base period income levels without using heavy econometric estimation methods the second order approximation formulas contain parameters which can easily be estimated by a differential demand system using a suitable specification it is possible to work at a low level of commodity aggregation the method is demonstrated on netherlands data for the period 1952 1981 cost of living index numbers for individual households can be expected to differ substantially there are various reasons for this expectation prices paid for the same commodity can vary between households in principle each household has its own preference structure implying its own substitution behavior in the presence of changing prices income differences between households imply dif ferences in consumption patterns which in the presence of changing relative prices imply diverging cost of living index numbers especially the variation of cost of living index numbers with the reference income levels attracts a lot of attention in the public discussion there is some empirical evidence about the magnitude of this variation because most statistical offices publish more than one consumer price index the netherlands cbs for instance has three cpi s namely for all households for households of wage earners with an income below a certain limit and for households of wage earners above that limit more detailed are the results of michael 1979 hagemann 1982 and balk 1984 using consumption patterns of individual households obtained from a consumer expenditure survey they compiled price index numbers for individual households and studied the differ ences under various viewpoints the drawback of these studies is that they are based on laspeyres type price index numbers thus what in essence is compared are upper limits of household specific cost of living index numbers the substitu tion behavior is ignored this is acceptable only for relatively short periods or more generally for periods with relatively small price changes a useful feature of working with laspeyres type index numbers is that one can use highly 1 the views expressed in this paper are those of the author and do not necessarily reflect the policies of the netherlands central bureau of statistics the author gratefully acknowledges the computational assistance of h a van der grient and a j hundepool mike baye is thanked for his comments on a previous version a previous version entitled a simple method for calculating

school segregation and the identification of tipping behavior we develop a method to empirically implement the schelling model of segregation and use it to study racial segregation in los angeles schools from 1995 to 2012 our two step method combines the estimation of parents preferences for their children s peers with a counterfactual simulation analysis we find substantial heterogeneity in the existence and locations of tipping points and stable equilibria schools are observed on equilibrium trajectories but many remained out of equilibrium by 2012 we also introduce novel instrumental variables to identify preferences for endogenous peer groups that require no additional data and can be used in other educational settings

efficiency effects of horizontal in market bank mergers abstract this study conducts tests to determine whether banks involved in horizontal mergers achieve efficiency improvements relative to other firms the analysis covers 898 bank mergers from 1981 to 1986 efficiency is measured by various expense ratios the results based on ols and logit analysis are robust they indicate that during 1981 1986 horizontal bank mergers did not yield efficiency gains notably the findings are based on the mergers believed to be most likely to result in efficiency gains i e they are horizontal mergers the firms exhibit considerable deposit overlap and the acquiring firms are on average more efficient than the acquired

estimation of an equilibrium model with externalities post disaster neighborhood rebuilding we study the optimal design of subsidies in an equilibrium setting where the decisions of individual recipients impose externalities on one another we apply the model to the case of post katrina rebuilding in new orleans under the louisiana road home rebuilding grant program rh we estimate the structural model via indirect inference exploiting a discontinuity in the formula for determining the size of grants which helps isolate the causal effect of neighbors rebuilding on one s own rebuilding choices we find that the additional rebuilding induced by rh generated positive externalities equivalent to 4950 to each inframarginal household whose rebuilding choice was not affected by the program counterfactual policy experiments find that optimal subsidy policies bias grant offers against relocation with an inverse u shaped relationship between the degree of bias and the severity of damages from the disaster

microeconomic estimates of housing depreciation measuring economic depreciation in residential real estate is important for deepening our understanding of housing market behavior and for assessing a variety of public policies independent estimates of depreciation rates for many metropolitan areas provide a rich data base for analyzing the interaction between structure depreciation and for example suburbanization also public policies such as rent control and tax incentives for construction could be better evaluated and designed with improved estimates of depreciation for example in an attempt to stimulate construction in 1981 congress cut allowable depreciation for tax purposes from something like 30 years to 15 years then in 1986 in response to apparent over building congress raised the depreciation rate back to 27 5 years better estimates of depreciation rates could have contributed to better targeting of incentives a literature survey indicates significant variation in estimates of depreciation rates for residential real estate the variation in reported results seems to be due to differences in the definition of depreciation employed in the models and data used to estimate depreciation rates and in some cases the condition of the real estate market examined at the time of the study a primary objective of this paper is to establish that rates of economic depreciation vary spatially by using the same hedonic model and representative data from each of 59 metropolitan areas we are able to eliminate differences in models and data as the only source of variation in estimated depreciation rates and attribute some of the observed variation to differences in housing markets this paper reports estimates of metropolitan area specific rates of economic depreciation for residential real estate obtained using the hedonic pricing methodology separate h donic equations were estimated for owneroc upied and renter occupied properties for each of 59 metropolitan areas with the exception of variables that identified particular locations within the urban area the same hedonic equation was used to estimate tenure spec f c depreciation rates that is the same hedonic specification was used for each of the 59 metropolitan areas to estimate depreciation rates for owner occupied and for renteroccupied housing we define economic depreciation to be the decline in asset price or shadow price due to aging hulten and wykoff 1981 85 our hedonic equation for renter occupied housing therefore examines how the current market price of the flow of rental housing services varies with dwelling age rents might be expected to change as the flow of housing services decreases as the unit deteriorates the market value of owner occupied residential real estate on the other hand reflects the present value of future housing services as well as current services hence changes in any of the determinants of present value will have a significant impact on the current market value of owner occupied housing

estimating equilibrium models of sorting across locations while there is growing interest in measuring the size and scope of local spillovers it is well understood that such spillovers cannot be distinguished from unobservable local attributes using solely the observed location decisions of individuals or firms we propose an empirical strategy for recovering estimates of spillovers in the presence of unobserved local attributes for a broadly applicable class of equilibrium sorting models our approach relies on an iv strategy derived from the internal logic of the sorting model itself we show practically how the strategy is implemented provide intuition for our instruments discuss the role of effective choice set variation in identifying the model and carry out a series of monte carlo simulations to demonstrate performance in small samples

empirical studies of depreciation this paper surveys empirical research on depreciation based on an econometric model of asset prices introduced by hall in 1971 and shows how hall s model provides a vehicle for unifying research on constant quality price indices and depreciation an additional objective of the paper is to illustrate the use of this research in constructing an integrated system of income product and wealth accounts a system of vintage accounts like that originated by christensen and jorgenson in 1973 is the key to successful integration

estimation of a hedonic price equation for bordeaux wine does quality matter in this paper the hedonic price technique is applied to bordeaux wine in the hedonic price function we include not only the objective characteristics appearing on the label of the bottle but also the sensory characteristics of the wine our data come from an experimental study in which juries have evaluated and graded a sample of bordeaux wines the estimation of the hedonic price equation shows that the market price is essentially determined by the objective characteristics the estimation of a jury grade equation shows that quality unlike the market price is essentially determined by the sensory characteristics

getting prices right what should be done much of the profession accepts that the cpi likely overstates the rate of increase of the cost of living it is less clear that there are sound and feasible steps that the bls can adopt to improve matters in the short run there are unresolved conceptual and identification problems in the measurement of quality superlative price indexes are not feasible and feasible approximations are not superlative and may not even be better the need for a single index that aggregates over heterogeneous consumers with different incomes tastes and needs casts serious doubt on the cost of living approach

a revealed preference approach to the measurement of congestion in travel cost models abstract travel cost models are regularly used to determine the value of recreational sites or particular site characteristics yet congestion a key site attribute is often excluded from such analyses one reason for this omission is that congestion is determined in equilibrium by the process of individuals sorting across sites and thus presents significant endogeneity problems this paper illustrates this source of endogeneity describes how previous research has dealt with it using stated preference techniques and describes an instrumental variables approach to address it in a revealed preference context we demonstrate that failing to address the endogeneity of congestion leads one to dramatically understate its costs we apply our technique to the valuation of a large recreational fishing site in wisconsin lake winnebago which if eliminated would induce significant re sorting of anglers amongst remaining sites ignoring congestion leads to an understatement of the lake s value by more than 50

systems competition and network effects this paper discusses firm behavior market performance and the public and private institutions that arise in systems markets i e markets where consumers use compatible components together to generate benefits in such markets which include communications networks and hardware software networks popular products are inherently more valuable these network effects can drive corporate strategies and are critical in understanding innovation in many high technology markets the discussion here emphasizes the dynamics of consumer adoption decisions in the presence of network effects competition between incompatible systems and how suppliers choose which components are compatible and which are not

hedonic prices and implicit markets estimating demand and supply functions for differentiated products in choosing the level of quality to purchase the buyer of a differentiated product also chooses a point on the marginal price schedule for that product hence in general the demand functions for product characteristics cannot be consistently estimated by ordinary least squares market equilibrium results in a matching of characteristics of demanders and suppliers this matching restricts the use of buyer and seller characteristics as instruments when estimating demand and supply functions for product characteristics the paper develops these issues a stochastic structure for hedonic equilibrium models is then proposed identification results are presented and estimation procedures are outlined

a new approach to computing hedonic equilibria and investigating the properties of locational sorting models abstract this paper outlines a new way to solve the traditional housing market assignment problem and uses it to investigate the properties of hedonic equilibria our approach to computing equilibria is based on rosen s 1974 bid function it has four desirable features i convergence implies a hedonic equilibrium ii convergence is guaranteed if a hedonic equilibrium exists iii it can solve for a new equilibrium following a shock to the market and iv if multiple equilibria exist it can identify them the algorithm is applied to micro data from san joaquin county california where the choice of a home provides access to public schools in particular school districts first we calibrate the algorithm to approximately reproduce actual housing prices in san joaquin county as a hedonic equilibrium then we introduce a policy that improves school quality in selected school districts we find that there are several possibilities for the new equilibrium for each of these potential equilibria we compare the marginal willingness to pay for school quality with the rate at which the improvement is capitalized into property values the resulting capitalization rates differ substantially from marginal willingness to pay

international business and trade in the next decade report from a delphi study the globalization of business causes major changes in the business environment and in business practices forecasting such changes is crucial for the preparation of responses to them this article reports on a delphi study conducted with a global set of experts drawn from the policy business and academic communities over three rounds of mailings these experts analyzed and debated the likelihood of changes in the international business environment over the next decade and the impact of these changes on corporate practices the findings identify key geographic areas of business growth major sectoral transformations shifts in the trade framework and its institution and strategies for corporate adjustment

working to improve the consumer price index he recent report of the advisory commission appointed by the u s senatefinance committee begins with one overarching recommendation thebls should establish a cost of living index coli as its objective in mea suring consumer prices u s senate 1996 p 2 this seems basically right to us indeed the bls has long said that the cost of living framework guides operationaldecisions about the construction of the index gillingham 1974 u s bureau oflabor statistics 1984 1988 1992 1997a putting things slightly differently if thebls staff or other technical experts knew how to produce a true cost of living indexon a monthly production schedule that would be what we would produce althoughwe have no fundamental disagreement with the commission about what the objec tive of the cpi program ought to be we may disagree to some extent about theapproaches and methods that are appropriate and feasible in working toward thatobjective this is a point to which we will return below our rst purpose in the present paper is to comment on the advisory com mission s report and the recommendations it contains