a theory of retail pricing until recently the retail enterprise the shop has been comparatively neglected by economic theorists partly because they assigned little role to retailing the growth of interest in the problem in recent years reflects the development of models of imperfect information and the revival of interest in location theory pricing theory for the retail enterprise however remains a neglected area after surveying existing models of retailing the paper concentrates on the idea that the shop saves its customers costs by assembling goods in one place this introduces an essential non convexity and importantly affects the conditions under which shops compete with each other and the constraints on their price setting under the admittedly unrealistic assumption of full buyer information a theory of retail pricing is developed retail prices are frequently regarded as exceptions both to the law of costs and generally to every rational process of price formation which is all the more remarkable since these prices are the only ones which are of direct interest to the consumer and which are directly influenced by consumption knut wickselt

determinants of the equilibrium real exchange rate n b professor neary was based at university college dublin and queen s university ontario canada when this article was first published the full text of this article is not available in ora at this time citation neary j p 1988 determinants of the equilibrium real exchange rate american economic review 78 1 210 215

the costs and benefits of foreign borrowing a survey of multi period models this article surveys the literature on multi period models of foreign borrowing to shed light on the issue of how much a country should borrow and under what circumstances there is a role for public intervention it identifies the essential structural elements of multi period models and draws out the ramifications of the alternative specifications adopted it discusses the insights and shortcomings of three classes of models non optimising optimising borrower and jointly optimising borrower and lender

the penn balassa samuelson effect through the lens of the dependent economy model abstract the positive correlation between per capita income and cross country price levels is called the penn balassa samuelson effect the most influential explanation of this effect centers around sectoral output productivities as the determinant of the relative price of nontraded goods the interaction between the change in relative prices and the change in per capita income the dynamic pbs effect is less well known this paper extends the turnovsky and sen 1995 model of a small open economy by adding external economies into the production function the model s dynamics accord well with several features of the empirical data on the dynamic pbs effect

panel estimates of a two tiered earnings frontier this paper uses panel data to estimate a two tiered instead of a one tiered frontier model the innovation is to develop a two step maximum likelihood procedure yielding consistent estimates of inefficiency while at the same time accounting for heterogeneity the model is applied by estimating a two tiered earnings function to obtain indices of worker and firm incomplete labour market wage information using panel data from the panel study of income dynamics 1969 84 the estimation preserves the traditional quadratic age earnings profile but measures the extent to which employers often pay more than necessary to hire a worker incomplete employer information while at the same time employees often accept wages less than they could otherwise command incomplete employee information the results indicate that employees acquire less information than employers 1996 john wiley sons ltd

compensation and productive efficiency in partnerships evidence from medical groups practice relatively little is known about the behavior and performance of firms organized as partnerships in this paper we attempt to fill that gap by developing and testing a model of the effect of alternative compensation arrangements on productive efficiency in medical group practices the technique employed is maximum likelihood production frontier estimation we provide a simple behavioral model of the determination of productive efficiency and a new interpretation of the economic measure of technical efficiency we derive a behavioral production function that relates production to individual responses to incentives and we indicate the impossibility of recovering the parameters of the production technology from observed behavior overall the empirical results indicate that incentives do affect productivity a larger number of members in a group decreases productivity while greater average experience leads to greater productivity

efficiency heterogeneity and cost function analysis empirical evidence from pathology services in the national health service in england pathology services are increasingly recognized as key to effective healthcare delivery underpinning diagnosis long term disease management and research to the extent that pathology services affect a patient s treatment pathway significant healthcare costs are influenced directly by the performance of these services given pressures on the uk department of health to make efficiency savings and that little is known about the efficiency of pathology laboratories this area offers unlocked potential for efficiency gains we adopt a time varying inefficiency model with laboratory specific time paths for inefficiency to identify potential savings in pathology services based on a panel of 57 english laboratories over a 5 year period we apply a range of approaches to account for observable and unobservable heterogeneity between laboratories we find potential efficiency savings of 13 in pathology services in this sample which implies the potential for an annual saving of 390m in pathology across the nh

comparing regional technical efficiency in uk manufacturing plants the case of northern ireland 1974 1995 this paper uses estimates based on the stochastic frontier production function approach applied to more than 200 four digit uk manufacturing industries covering the period 1974 95 it is shown that manufacturing plants in northern ireland on average operated at lower levels of technical efficiency when compared to their counterparts in other regions of the uk and especially plants located in south east england this lower level of efficiency in the province is analysed both at the aggregate level and the industry level at the industry level the province has fewer plants exhibiting the highest levels of efficiency within most industries and too few plants open and close to cleanse manufacturing of the worst plants and those plants that do open and close often do not have efficiency levels such as to bring about improvements to the aggregate efficiency level the major conclusion is that northern ireland needs to reduce the long tail of weaker plants that tend to drag down average efficiency one w

price discrimination and retail configuration the hypothesis that price discrimination based on willingness to pay for quality can occur in multifirm markets is confirmed using microdata on gasoline retailing a test that discriminates between price structures associated with discrimination and with cost driven competitive differentials is developed and implemented with controls for variation in outlet and market characteristics a second test based on profitability variation rejects a competitive peak load pricing explanation for the observed price dispersion the data suggest that price discrimination at the retail level adds at least 9 a gallon to the average price of full service gasoline

effects of farm size education and off farm income on productive efficiency of dairy farmers in utah a stochasitc frontier approach this study is primarily concerned with investigating the technical allocative and scale inefficiency of owner operators of dairy farms in utah a stochastic production frontier has been applied to analyze these inefficiencies the results indicate that there is positive association between years of education and productivity of labor and capital productivity is also found to be negatively related to off farm income regarding the effects of farm size on efficiency it is found that large farms are the most efficient of all sizes considered separate estimates of technical allocative and scale inefficiencies indicate that large and medium sized farms are technically more efficient than small farms large farms on average are found to be performing much better than medium sized and small farms so far as allocative and scale inefficiency are concerned copyright 1989 by mit press

price discrimination in free entry markets using a spatial model of monopolistic competition we investigate price discrimination in free entry zero profit markets we show that when brands are heterogeneous competition does not prevent discrimination the power to earn economic profits is not necessary for a firm to maintain discriminatory prices our model treats formally the fact that consumers difer not only in the utility they derive from a good but also in how strongly they prefer one brand over all others in markets where firms are very competitive sorting consumers on the strength on brand preference produces larger price differentials between groups than sorting on the basis of consumers reservation prices for the good when firms sort customers on the basis of strength of brand preference however we find that the output and welfare effects are generally less favorable than when sorting is more closely related to consumers reservation prices

estimation of technical inefficiency in panel data models with firm and time specific effects abstract this paper uses a panel data model and develops methods to estimate production function parameters and technical inefficiency the model distinguishes technical inefficiency from firm and time specific effects determinants of technical inefficiency is introduced by allowing its mean to be a function of exogenous variables both random and fixed effects treatment of firm and time specific effects are considered in estimation

devaluation fiscal deficits and the real exchange rate this article examines the use of fiscal policies to sustain the effects of a nominal devaluation on the real exchange rate it is shown that the magnitude of the change in the real exchange rate depends not only on the size of the devaluation and the degree of fiscal adjustment but also on the means by which the fiscal deficit is reduced the change in the nominal exchange rate necessary to maintain the depreciation of the real exchange rate will depend on whether the fiscal deficit is eliminated by increasing taxes or by reducing government expenditures on traded and nontraded goods the required depreciation of the domestic currency will be larger if the fiscal deficit is reduced by increasing taxes than it will be if the deficit is cut by lowering government expenditures further the depreciation would be smaller if the cuts in expenditure fell on traded rather than nontraded goods this result implies that the authorities must ensure consistency between exchange rate action and policies to reduce fiscal imbalances in order to achieve a desired level of the real exchange rate necessary to attain balance of payments equilibrium the real exchange rate represents a key relative price in the economy and policies to change it are often the centerpiece of adjustment programs designed to improve international competitiveness and shift resources toward the production of tradable goods consequently it is critical for policymakers to have some idea of the magnitude and time path of the likely response of the real exchange rate to nominal exchange rate action it is a well accepted proposition however that a nominal devaluation will only have a transitory effect on the real exchange rate in the long run domestic wages and prices will rise by the full amount of the devaluation and the real exchange rate will return to its original level to alter the real exchange rate on a permanent basis therefore devaluation has to be supplemented by policies that restrain the increase in domestic factor costs that results from a devaluation generally speaking the effects of a devaluation on the real exchange rate can

the quality and quantity of bank intermediation and economic growth evidence from asia pacific we investigate the impact of the quantity and quality of bank intermediation on economic growth across 14 asia pacific economies over 2003 2015 measures of bank shareholder value efficiency as wel

sectorial wages and the real exchange rate abstract this paper considers a multi sector economy subject to exogenous demand shocks that alter the equilibrium structure of relative prices and relative wages contracts set nominal wages in advance of the realization of stochastic shocks formulae for optimal sectorial wages indexation rules are provided these optimal rules alter the absolute and the relative structure of sectorial nominal wages the rules depend on the heterogeneity of the skill distribution the effects of shocks on the real exchange rate and on real wages are determined and the limited role of second best nominal exchange rate policy is analyzed

frontier production functions and technical efficiency measures the concept of technical efficiency is central to measuring the firm performance the measurement of technical efficiency has proved difficult and complex and the literature provides a range of methodologies this paper reviews the various methodologies for measuring technical efficiency and offers a comparison between established methods of measurements the discussion is literary with less mathematical jargons and equations the objective of this paper is not to be exhaustive but to be up to date and to provide a significant discussion on some of the core methods of measuring technical efficiency

foreign direct investment spillovers and technical efficiency in the indonesian pharmaceutical sector firm level evidence the spillovers of foreign direct investment fdi on domestic firms performances have been highly debated for many years this article contributes to this debate by analysing spillovers effects on technical efficiency of indonesian pharmaceutical sector using a unique unbalanced panel of highly disaggregated at five digit international standard industrial classification isic 210 firms over the period 1990 1995 1001 observations the stochastic production frontier spf and the data envelopment analysis dea based on malmquist productivity indices mpi have been used to test the spillovers effects of fdi on technical efficiency the empirical results from the spf show that foreign firms are more efficient than domestic competitors and the presence of the former increases the inefficiency of the latter similarly the results from the mpi demonstrate that fdi has a negative and significant impact on technical efficiency changes in domestic competitors but generate positive spillovers to domestic s

the outputs of retail activities concepts measurement and evidence from u s census data the authors develop a new economic framework for the empirical analysis of retail margins this framework formalizes the role of distribution services as outputs of retail activities their main results are the following the measures of outputs of retail activities identified in the data perform as important and robust determinants of retail margins variables that purport to capture oligopolistic features of market structure play a limited or no role in determining retail margins quantity setting and price setting under the assumptions of profit maximization and monopolistic competition are categorically rejected by the data the data base is information on 49 retail sectors from the 1982 u s census of retail trades copyright 1993 by mit press

estimation of technical inefficiency in manufacturing industry an extension of the method of estimation of technical ineficiency is presented based on the stochastic production frontier approach a derivation of the estimation procedure is given and the technique applied at the industry level the choice of production function is considered and empirical results pertaining to australia and the uk are presented

decomposition of total factor productivity in world health production a stochastic frontier approach while countries around the globe have increased spending on health care economists and policy makers have raised concerns over the productivity and efficiency of health care this article applies a stochastic frontier approach to address this issue using data from 141 countries for the period 1993 to 1997 from the perspective of productivity change our results suggest that gains in population health will be greater provided that more resources are allocated to investment in human capital we also show that the scale component accounts for 65 70 of the productivity change that is omitting the scale component in our case will result in a significant underestimation of the decline in the productivity of world health production we do not find evidence supporting the hypothesis that production frontiers differ between organization for economic cooperation and development oecd and non oecd countries however the change in productivity and scale elasticity do vary significantly between these countries

selling costs and switching costs explaining retail gasoline margins recent theoretical work has shown that price discrimination can take place in imperfectly competitive as well as monopoly markets the persistence of higher retail margins on unleaded than on leaded gasoline during the 1980s suggests that discrimination may occur even in very competitive markets this article studies a number of cost based explanations for such gasoline pricing as well as the possibility of price discrimination the analysis indicates that gas stations discriminate against groups of customers who are less likely to switch to another station the conclusions highlight the influence of shopping or search costs on pricing decisions even in markets thought to be quite competitive

estimating efficiency in the hospital sector a comparison of three statistical cost frontier models this paper reports the results of an empirical comparison of three statistical cost frontier models using data from 49 spanish public hospitals the models estimated include the deterministic cost frontier a cross section stochastic cost frontier scf in which inefficiency is assumed to follow a half normal distribution and a panel data scf in which inefficiency is assumed to remain constant over time a non frontier model is also estimated the paper compares the estimates of average inefficiency obtained from the frontier models and the implied rankings of hospitals in terms of their costliness actual cost as a proportion of expected cost

price floors and technical inefficiency in india s sugar processing industry in india cane is processed into sugar by cooperatives public enterprises and private for profit firms the indian government sets a unique floor price for each processor that is increasing in the firm s effectiveness in converting cane into sugar the floor price binds for public and private firms but not for cooperatives which rebate profits to members we argue that this price floor policy creates a disincentive for private and public firms to be technically efficient in converting cane to sugar in support of this hypothesis an analysis of 593 indian sugar factories from 1992 to 2007 reveals statistically significant differences in technical efficiency with cooperatives being the most efficient and public firms least efficient we estimate welfare losses due to the technical inefficiency attributable to the price floor policy and argue that it can be eliminated by enacting policy to base price floors upon quality of the cane input received by a factory

scope economies and technical efficiency of cocoa agroforesty systems in ghana a number of studies have addressed issues relating to the physiological environmental and economic values of trees in cocoa farming systems however to date little has been done to quantitatively examine the effect of crop diversity on cocoa farming efficiency this study therefore sets out to first investigate whether and to what extent crop diversity defined as the mixing of cocoa with other crop species on farmers plots affects productivity on cocoa farms secondly it sought to establish whether there are economies of scope i e cost complementarities from the sharing of farm inputs by crops on the same plots our results indicate that diversified i e multi crop cocoa farms are more efficient than single i e mono crop farms furthermore our estimate for the economies of scope parameter indicates possibilities for cost complementarities between production of cocoa and other crops on the same plot we advocate further investigation on the issue of scope economies to determine which crop combinations offer better cost complementarities and also meet biodiversity conservation objectives

firm specific knowledge and technical efficiency of watch and clock manufacturing firms in china abstract this paper tests whether firm specific knowledge in terms of capital intensity product differentiation and research and development contribute to an improvement in firm efficiency based on a representative dataset from the watch and clock industry in southern china the technical efficiency is estimated using a non parametric data envelopment analysis approach through a tobit model we investigate whether a firm s specific knowledge influences its efficiency the results suggest that capital intensity and research and development have a positive effect on the efficiency of the sample firms and identify their roles of firm specific knowledge in explaining inter firm variation in efficiency however sample firms with high level of product differentiation were found to have no obvious advantages in efficiency performance

government spending and the real exchange rate i study the effect of government spending on the real exchange rate in an open economy version of the sidrauski model with a time varying rate of time preference that introduces complementarity between consumption at different points in time i show that a balanced budget fiscal expansion causes a real depreciation and a current account surplus if the expansion falls on traded goods if the increase falls instead on nontraded goods both the stylized results of a real appreciation and a current account deficit and the perverse result of an appreciation and a surplus can occur

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

intertemporal optimizing models of trade and current account balance a survey abstract this study surveys the intertemporal optimizing models of trade and current account balance that were developed calibrated and empirically tested since they came into vogue in the 1980s the implications of these models often differ from those of static and dynamic conventional non optimizing models the literature on optimizing models has not only grown reasonably fast but has also witnessed significant advances in methodology and these models have culminated into a distinct strand of new open economy macroeconomics the studies conducted until the late 1980s have used deterministic perfect foresight models while several studies conducted since the 1990s relax the perfect foresight and certainty equivalence assumptions and develop stochastic dynamic general equilibrium models to account for uncertainty confronting the optimizing agents the future research needs to explore the possibility of tracing any preferred specification of household preferences model the effect of time varying discount factor on household utility function and intertemporal budget constraint examine the role of costs in international trade place a parallel emphasis on the empirical verifications of theoretical propositions examine the relative performance of optimizing vis a vis non optimizing models and rationalize the extreme propositions of perfect and imperfect capital mobility in the wake of moderately open capital accounts

resource rent taxation and benchmarking a new perspective for the swiss hydropower sector the electricity generation in switzerland is mainly based on hydropower 55 of total production the exploitation of water in the hydropower sector can generate significant so called resource rents these are defined by the surplus return above the value of capital labor materials and energy used to exploit hydropower in switzerland hydropower producers pay to the state a fixed fee per kw gross capacity with this system the substantial differences in costs revenues and in the production characteristics of the hydropower plants are not taken into account in this context the following paper has two main goals 1 to discuss the introduction in the swiss hydropower sector of a new payment system based on a resource rent tax 2 to propose a combination of a rrt system with a benchmarking analysis of the production cost obtained through the estimation of a stochastic frontier variable cost function we estimate a true random effects stochastic frontier variable cost function using panel data in order to overcome the asymmetric information problem in addition using the information on cost efficiency of the single companies we show how to introduce in the rrt scheme a benchmark system which gives incentives to minimize the production costs

efficiency in new zealand sheep and beef farming the impacts of regulatory reform in this study we consider the impacts of dramatic regulatory reform during the 1980s on the efficiency of farms in new zealand using unbalanced panel data a translog distance function representing the multiple output and input technology and incorporating nonneutral regulatory impacts is used for the analysis determinants of technical inefficiency including a regulatory variable a time term and a debt equity ratio are also incorporated in a one step model estimated by maximum likelihood stochastic production frontier methods we find evidence of regulatory induced changes in output composition toward beef and deer and away from wool and especially lamb but little associated technical inefficiency these patterns motivated investment in complementary capital land and beef deer livestock inputs firms that were more flexible in their adaptation toward these new mixes adjusted to regulatory changes with less upheaval so any existing inefficiency appears linked to debt equity levels

the capital inflows problem revisited a stylized model of southern cone disinflation in the late 1970s countries in latin america s southern cone initiated attempts to lower domestic inflation rates through the progressive reduction of a preannounced rate of exchange rate devaluation the stabilization programs gave rise to massive capital inflows real exchange rate appreciation and current account deficits this paper develops a stylized intertemporal framework in which the effects of a credible preannounced disinflation scheme can be studied it is shown that even when agents have perfect foresight and markets clear continuously the capital inflows phenomenon and the associated real appreciation may result while unanticipated permanent inflation changes are neutral in the paper anticipated inflation is neutral only in exceptional circumstances a preannounced disinflation operates by altering the path of an expenditure based real domestic interest rate that depends on expected changes in the prices of liquidity services and nontradable consumption goods

traded and non traded goods an empirical test with nigerian data abstract an income expenditure model is used to describe the relationship between the balance of payments and price inflation of non traded goods real and monetary approaches to the balance of payments suggest different relationships among these variables and compatible elements of the monetary approach are incorporated into the income expenditure model the model is then tested with nigerian data for the period 1960 1979 the pattern of economic growth and conduct of monetary policy make the nigerian economy a convenient test of the empirical significance of these macroeconomic relationships

productivity growth in pre 1990 mongolian agriculture spiralling disaster or emerging success the reasons for the spectacular collapse of so many centrally planned economies are a source of ongoing debate in this paper we use detailed farm level data to measure total factor productivity tfp changes in mongolian grain and potato farming during the 14 year period immediately preceding the 1990 economic reforms we measure tfp growth using stochastic frontier analysis sfa and data envelopment analysis dea methods our results indicate quite poor overall performance with an average annual tfp change of 1 7 in grain and 0 8 in potatoes over the 14 year period however the pattern of tfp growth changed substantially during this period with tfp growth exceeding 7 per year in the latter half of this period this suggests that the new policies of improved education greater management autonomy and improved incentives which were introduced in final two planning periods in the 1980s were beginning to have a significant influence upon the performance of mongolian crop farming crown copyright c 2002 published by elsevier science b v all rights reserved

privatization technical efficiency and welfare consequences the case of the cote d ivoire electricity company cie abstract in 1990 cote d ivoire privatized the management of its electric power company lease contracting in this paper we are interested in identifying the economic effect of this institutional change by estimating a stochastic production frontier we have found that productive efficiency improved after privatization thanks to organizational innovations total factor productivity gains have been closely associated with a cost reduction strategy the way these gains have been distributed in a monopoly context suggests that consumers have been the main beneficiaries through a significant decrease of the relative price of electricity

the domestic demand compensated effects of changes in the exchange rate foreign prices tariffs and foreign demand macroeconomic models for open economies are often quite similar in terms of the supply side of the economy but specification of the demand side varies substantially in this paper aggregate domestic demand is assumed to be exogenous the choice of how to specify what determines aggregate domestic demand is thus avoided the simple treatment of the demand side of the economy makes it possible to render other parts of the model more general than usual in particular our model has several goods which may be divided into tradeables with exogenous prices tradeables with endogenous prices and nontradeables with endogenous prices intermediate inputs of imported and domestically produced goods are allowed for changes in exogenous variables such as the exchange rate tariff rates foreign prices government consumption and foreign demand are analyzed

a general equilibrium analysis of foreign exchange shortages in a developing economy an acute shortage of foreign exchange has been a recurring problem for many developing economies this paper reexamines the foreign exchange gap issue and the debate between structuralists and neoclassicists by providing a quantitative assessment of the role of different assumptions about the values of key trade elasticities it also seeks to complement the existing descriptive analysis of the consequences of alternative adjustment mechanisms with a quantitative analysis that indicates the relative importance of different behavioural assumptions and policy regimes the empirical analysis is based on a computable general equilibrium model which is walrasian in spirit and captures price mechanisms market interactions and structural interdependence in a non linear multisector framework the analysis lends support to the structuralist view that it is not sufficient to look at problems of adjustment only at the macroeconomic level

analysis of the technical efficiency of state rubber farms in vietnam this study entails an analysis of the technical efficiency of natural rubber production by state farms in vietnam a time varying stochastic frontier production function model for unbalanced data is estimated for 33 farms individual farm technical efficiencies are reported and discussed one of the main results concerns the bimodal distribution of technical efficiency indices a few farms operate near the production frontier while the bulk operate well away from the frontier some implications are drawn from the results as a guide to future policy research work in the rubber industry in light of recent moves by the vietnamese government towards economic reform

the impact of ownership on the cost of bus service provision an example from italy this article examines the potential impact of ownership on the cost of bus service provision for a sample of 65 private and 12 public companies providing local public transit lpt in piedmont italy from 1998 to 2002 a translog cost frontier is estimated using the model in battese and coelli 1995 where inefficiency scores are allowed to vary across firms and over time a public ownership dummy is included in the inefficiency model and it is always positive and significant density and scale economies and cost inefficiencies are then computed private companies seem to experience higher density and scale economies than public ones cost inefficiencies appear higher in the public sample

a comparative study on the production efficiencies of china s oil companies a true fixed effect model considering the unobserved heterogeneity abstract with the promotion of one belt one road obor initiative china s oil companies have speeded up the pace of going global strategy to expand their business internationally the efficiency problems of china national petroleum corporation cnpc and sinopec group which determine the international competitiveness have drawn ever increasing attention from both the general public and from decision makers the wide variation in cultural economic and institutional characteristics of different international oil companies may result in a large amount of unobserved heterogeneity distinguishing the time invariant unobserved heterogeneity from time variant inefficiency could avoid heterogeneity bias and thus ensure consistent efficiency estimates considering that the production efficiencies of the sample oil companies are influenced by various heterogeneous factors this paper evaluates the production efficiencies of the world s 10 biggest oil companies during 2003 2013 based on the stochastic frontier analysis sfa method and the true fixed effect tfe model results suggest that 1 estimation techniques that do not account for unobserved heterogeneity would produce biased efficiency estimates 2 compared with other oil companies the production efficiencies of cnpc and sinopec group were relatively improved after the global financial crisis 3 china s state owned oil companies should be further enhanced with the ability of internationalization management

productivity shocks non traded goods and optimal capital accumulation this paper considers the interaction of saving and investment in determining the current account for a small open economy subjected to productivity shocks by emphasizing the distinction between traded and non traded goods the analysis highlights the crucial role of the real exchange rate in macroeconomic adjustment our results demonstrate the importance of intertemporal substitution for determining the response of investment to anticipated productivity disturbances we also show how the correlation of movements in saving and investment following an anticipated disturbance depends critically on relative sectoral factor intensities

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

a generalized measure of technical efficiency with the growing interest in the theory of the frontier production function the central analysis is the measurement of technical efficiency however the methodology has not been tested vigorously as has that of the conventional production function with few exceptions studies to date have used cross section data to measure mean technical efficiency of sample firms through the frontier production function this study uses panel data to measure not only the mean technical efficiency but also the individual firm specific technical efficiencies of sample indian farms relative to the frontier production function further it identifies the factors causing variations in individual technical efficiencies

price competition in multimarket duopolies in this article we analyze the pricing strategies offirms that compete for the demand of an assortment of goods in a complete information static framework in particular we model the competition between two symmetric firms in a market that consists of two types of consumers each of which may buy one unit of both goods sold by the two firms we show that all nash equilibria are such that neither firm charges the same price for both goods interestingly under certain conditions thefirms jointly price discriminate between the two types of consumers and may even achieve the same level of profits as if they maximized joint profits for another set of conditions the unique equilibrium is such that the price for one of the goods and the price for the bundle are the same as the price of the good in a standard hotelling model with one good finally we show that if these equilibria exist both firms prefer to sell both goods rather than specialize in either one of them these results are a direct consequence of the interplay between the multimarket rivalry and the existence of more than one market segment as modelled in this article

price discrimination in grocery trade evidence from italy this paper investigates the determinants of price dispersion between staple and non staple goods in grocery retailing as the result of pricing decisions by multiproduct firms theoretical predictions about the nature of supermarkets pricing behaviour are compared and tested empirically using disaggregated data from the italian grocery trade over the period 1990 1992 the empirical results provide evidence for the existence in all types of retail organization of the form of price discrimination suggested by bliss particularly for specialist shops the results are consistent with discrimination due to the exploitation of consumers switching costs

technical efficiency market share and profitability of manufacturing firms in cote d ivoire the technology trap this paper investigates the sources of inefficiency of firms in cote d ivoire and exam ines to what extent these effects translate into poor performance a large majority of firms is technically inefficient producing far below the maximum attainable output level major cost savings can also be realised through enlarging the scale of activities of firms efficiency gains and scale advantages translate into a better competitive position and via their impact on market share into higher profitability however severe growth barriers and imperfect markets keep firms from realising these gains and prevent firms from catching up in technology with respect to their larger older and often foreign owned competitors

a generalized production frontier approach for estimating determinants of inefficiency in u s dairy farms this article investigates farm level efficiency of u s dairy farmers by estimating their technical and allocative efficiency technical inefficiency is assumed to be composed of a deterministic component that is a function of some farm specific characteristics and a random component by doing this we extend the stochastic frontier methodology in which determinants of technicial inefficiency are explicitly introduced in the model given the inputs variations in efficiency of farms are then explained by both deterministic and random components of technical inefficiency the empirical results indicate that a levels of education of the farmer are important factors determining technical inefficiency and b large farms are more efficient technically than small and medium sized farms both technical and allocative inefficiency are found to decrease with increase in the level of education of the farmer

technical efficiency of finnish brewing plants a production frontier approach in recent years there has been a substantial change in the common approach to estimating production functions this is primarily the result of the stochastic frontier production model developed by aigner et al 1977 and meeusen and van den broeck 1977 their approach accords with the textbook definition of the production function which is a locus of maximum output levels from given input sets thus a one sided error term is introduced into the frontier production model since all the firms in an industry are not able to produce the frontier output this one sided error is interpreted as technical inefficiency which represents the amount by which a firm s output falls short of the maximum possible output earlier studies that applied this new approach involved estimation of the mean level of efficiency for the industry the subsequent literature has developed techniques to estimate technical inefficiency for each firm in the industry for example jondrow et al 1982 developed techniques to estimate technical inefficiency for each production unit when technical inefficiency is distributed as either half normal or exponential and is independent of the inputs used this last assumption is relaxed in kumbhakar 1987a and the estimation technique is extended to cover panel data the primary motivation for applications of frontier estimation techniques is the measurement of inefficiency this exercise thus has some direct policy relevance see schmidt 1985 86 in this paper we estimate the technical efficiency of 17 finnish brewing plants using panel data 1955 84 the distinguishing features of this study are that the data is of high quality and the observation period is long

wage flexibility and openness this paper analyzes the degree of short run real wage flexibility in a two sector economy under floating rates this is done by deriving optimal wage indexation in a contracting framework we find that the more closed the economy the lower the degree of wage indexation as a result output will fluctuate less around its desired level in a more closed economy these findings further imply that a given unexpected monetary shock will cause as maller output shock in a more open economy whereas a given real shock will induce a smaller output shock in a more closed economy this abstract was borrowed from another version of this item

investigating and comparing the dynamic patterns of the business value of information technology over time abstract the long debated issue of the business value of information technology it to the firm country has received a great deal of attention in the literature but the studies have rarely examined the dynamic patterns of the it value as measured by the firm s productive efficiency over time the objective of this paper is to apply the three factor constant elasticity of substitution ces time varying stochastic production frontier models and use the same data set as used in several previous studies to investigate the dynamic patterns of it value over time in connection with the issues of inputs substitution and complement and the productivity paradox this paper adopts two analytical skills collective and individual to analyze the empirical results collectively we find that the dynamic patterns of it value are closely related to the substitution and complement of three inputs and the it productivity paradox individually we identify five common dynamic patterns of the it value measured by productive efficiency and interpret their implications for the productivity paradox as summarized in a two by two matrix of practical applications and strategies this matrix accounts for four different scenarios of the relationship between the average productive efficiency and the it productivity paradox illustrates some practical applications by the analytical results and provides some business insights and managerial strategies for it decision makers and po is managers this represents a new contribution to the understanding of the dynamic influence of it investments upon the value of it over time

smallholder technical efficiency controlling for environmental production conditions abstract smallholder agricultural production depends heavily on environmental production conditions that are largely exogenously determined yet few data sets collect necessary detailed information on environmental production conditions this oversight raises the spectre of likely omitted variables bias because farmers input choices typically respond in part to environmental conditions moreover because environmental production conditions are rarely symmetrically distributed the omission also generally leads to upward bias in estimated technical inefficiency and to biased estimates of the correlates of estimated technical inefficiency as well using panel data from 464 traditional rice plots in cote d ivoire we show that controlling for heterogeneous environmental production conditions significantly changes inferences perhaps especially with respect to smallholder rice farmers estimated technical inefficiency

did the technical efficiency of state enterprises improve with the same speed in all provinces in china the objectives of this study are to examine whether technical efficiency of china s state enterprises improved over time due to the impact of economic reforms and to examine whether the response rates varied significantly across provinces the results carry strong policy implications for future reforms the empirical results show that technical efficiency improved significantly due to economic reforms from 1986 to 1989 shanghai appears to have responded more quickly and consistently to economic reforms than other provinces over the period

economic performance of us class 1 railroads a stochastic frontier approach in this paper we estimate technical and allocative inefficiency and cost thereof of 13 us class 1 railroads using stochastic frontier production methodology in a panel data framework in addition to passenger and freight services we included quality of these services in our analysis empirical results show that the cost of technical inefficiency varies quite substantially among the roads the most inefficient road is 29 91 above the cost frontier while technical inefficiency on an average increased cost by 16 23 on the contrary allocative inefficiency does not differ much among the roads increase in cost due to allocative inefficiency is in between 4 and 9 with a mean of around 7 thus while the roads are quite competitive and efficient in allocating their inputs there is substantial scope for some of them to improve their technical efficiency

estimation of cost effectiveness of the finnish electricity distribution utilities abstract this paper examines the cost effectiveness of finnish electricity distribution utilities we estimate several panel data stochastic frontier specifications using both cobb douglas and translog model specifications the conventional models are extended in order to model observed heterogeneity explicitly in the cost frontier models the true fixed effects model has been used as a representative of the models which account for unobserved heterogeneity and extended conventional random effect models have been used in analysing the impact of observed heterogeneity a comparison between the conventional random effects model and models where heterogeneity component is entered either into the mean or into the variance of the inefficiency term shows that relative efficiency scores diminish when heterogeneity is added to the analysis the true fixed effects model on the other hand gives clearly smaller inefficiency scores than random effects models in the paper we also show that the relative inefficiency scores and rankings are not sensitive to the cost function specification our analysis points out the importance of the efficient use of the existing distribution network the economies of scale results suggest that firms could reduce their operating costs by using networks more efficiently according to our results average size firms which have high load factors are the most efficient ones all firms have unused capacities so that they can improve cost effectiveness rather by increasing the average distributed volumes than by mergers

effects of technological change and institutional reform on production growth in chinese agriculture recent rapid agricultural production growth in chinese agriculture could be attributed to an increase in inputs technological change and institutional reform an accounting approach was used to separate the relative contribution of these three factors institutional change like the introduction of the household production responsibility system has contributed to past growth in production however technological change is crucial to furthering production growth because of the limited potential for significant increase in the use of conventional inputs in particular land continued institutional change must accompany corresponding technological changes

traded goods competitiveness and aggregate fluctuations in the united kingdom this paper presents an investigation of the relations between wage adjustment competitiveness and aggregate fluctuations in the united kingdom it uses a real business cycle model based on the distinction between internationally traded and nontraded goods the traded goods sector is assumed a price taker and the focus is on the supply side the model can account quite well for fluctuations in competitiveness output wages and the terms of trade the results suggest output flexibility and wage price rigidity a combination that produces interesting patterns of macroeconomic adjustment which parallel the predictions of more traditional keynesian models copyright 1990 by royal economic society

productivity and efficiency analysis software an exploratory bibliographical survey of the options the software available to implement and carry out efficiency analysis is crucial for the diffusion of efficiency frontier techniques among applied researchers and policy makers the implementation of up to date productivity and efficiency analysis is indeed important to advance our knowledge in many fields ranging from the public and regulated sectors to the private ones this contribution fills a gap in the existing literature and surveys the currently available options to estimate a variety of frontier methodologies using either general or dedicated programs we outline directions for future research

frontier production functions and technical efficiency a survey of empirical applications in agricultural economics abstract the modelling and estimation of frontier production functions has been an important area of econometric research during the last two decades forsund lovell and schmidt 1980 and schmidt 1986 present reviews of the concepts and models involved and cite some of the empirical applications which had appeared to their respective times of publication this paper seeks to update the econometric modelling of frontier production functions associated with the estimation of technical efficiency of individual firms a survey of empirical applications in agricultural economics is an important part of the paper

evaluating tradable property rights for natural resources the role of strategic entry and exit this paper presents an econometric approach to the evaluation of environmental regulation using tradable property rights existing empirical research on this issue which compares overall industry efficiency before and after the introduction of new regulations conflates two distinct phenomena efficiency changes due to exit of excess capital and changes in the efficiency of individual firms because the regulatory process induces firms of different types to enter and exit the industry at different rates the true efficiency and equity effects of tradable property rights cannot be assessed without correcting for these changes in sample composition this paper examines the impact of regulatory change in the mid atlantic surf clam fishery using an econometric model that separates its effects on industry structure and vessel efficiency the analysis finds that contrary to widely held belief tradable property rights did not disproportionately benefit either large fishing firms or highly integrated firms

the effects of third degree price discrimination in oligopoly retail firms and restaurants commonly offer senior citizen discounts i suspect this practice is not motivated by altruism rather the behavior can be better explained as profit maximizing price discrimination these firms are setting a low price in a market which probably has high elasticity of demand but why should the demand of senior citizens be more elastic than average one possibility is that elderly people have below average income and they would not eat out if restaurant prices were high perhaps a more plausible explanation is that retired people simply have more time on their hands to spend commuting across town to take advantage of discounts the purpose of these discounts may then be to lure senior citizens away from other restaurants rather than to get them out of the house the analysis of third degree price discrimination has a long history a c pigou 1920 joan robinson 1933 and two articles on the subject have recently appeared in this review richard schmalensee 1981 hal varian 1985 the industry structure in these analyses is monopoly but an explicit model of some form of competition is obviously needed to study discriminatory discounts meant to attract customers from rival firms and even discounts meant to get people out of the house may have an oligopoly analysis which is qualitatively different from their monopoly anlysis in this paper i present a simple duopoly model of a differentiated products industry i show that a firm s price elasticity of demand in a market can be expressed as the sum of two parts the industry demand elasticity and the cross price elasticity the first measures the tendency of consumers in a market to stay home when the price goes up the second the tendency to switch suppliers in the monopoly case in which the crossprice elasticity is zero and the collusive case in which the cross price elasticity is irrelevant discrimination between markets is due to differences in industry demand elasticity in the noncooperative oligopoly case equilibrium price differentials can be accounted for both by differences in cross price elasticity as well as differences in industry demand elasticity total industry output when the firms can discriminate between two markets is compared to what it would be if discrimination were impossible which regime has larger output depends on the sum of the adjustedconcavity condition and the elasticity ratio condition the first predominates when the rival products are poor substitutes and the firms have approximate monopoly power while the second predominates at the other extreme where the products are close substitutes and the firms have almost no market power the adjusted concavity condition compares the relative curvature of demands in the two markets and was originally discovered by robinson 1933 in her analysis of monopoly price discrimination the elasticity ratio condition compares the relative difference in industry demand elasticity between the two markets with the relative difference in cross price elasticity according to the elasticity ratio condition a discriminatory discount due to high industry elasticity of demand would be more likely to increase total output than one due to high cross price elasticity the effect of discrimination on profit is also discussed the distinction made here department of economics university of wisconsin madison madison wi 53706 this paper is a revision of part of my doctoral dissertation i am grateful to steve matthews ken judd and john panzar for guidance in this research i also thank seminar participants at wisconsin the justice department and the 1986 econometric society meetings in new orleans and the discussant martin perry the excellent comments of the referees improved the exposition of the paper

real interest rates home goods and optimal external borrowing the paper investigates the optimal time path of consumption and external borrowing in the dependent economy model the small country faces given world prices and a given world real interest rate the presence of a home goods sector implies that the relevant real interest rate appropriate to consumption decisions depends on the rate of change of the real price of home goods the paper shows how transitory disturbances in output or in the world real interest rate affect the time profile of consumption and the trade balance in particular it is shown that the presence of a home goods sector dampens the consumption effects of changes in the world interest rate

the determinants of the cost efficiency of electric generating plants a stochastic frontier approach this article provides a detailed analysis of generation plant operating cost efficiency over the period 1988 1997 i estimate a stochastic frontier cost function together with a model of plant inefficiencies to measure the operating efficiencies of individual plants and identify factors that are associated with variations in plant efficiencies i find evidence that plant efficiencies are associated with capacity utilization of the plant the number of plants under utility management and ownership form i also find that regulatory restructuring activity in certain states is associated with improvements in plant operating performance the purpose of this article is to provide a detailed analysis of the operating cost efficiencies of electricity generating plants over the period 1988 1997 i estimate the operating efficiencies of fossil fueled steam generating plants and examine factors that influence plant operating performance i use the estimation procedure of battese and coelli 1995 to simultaneously estimate a stochastic frontier cost function and a function relating plant efficiency levels to plant specific factors and other explanatory variables a comprehensive data set allows me to investigate the influence of capacity utilization ownership form and utility experience on plant efficiency levels since significant regulatory change in the electricity industry had begun during this time period i also investigate the impact of state level regulatory change on plant operating efficiency a number of authors have analyzed the efficiencies of electricity generating plants relative to a best practice frontier including kopp and smith 1980 schmidt and lovell 1979 stevenson 1980 cote 1989 reifschneider and stevenson 1991 hammond 1992 pollitt 1995 and fire grosskopf and logan 1983 1985 these studies find considerable evidence of inefficiency in electricity generation during the 1960s and 1970s the present study provides more recent information regarding generating plant efficiencies during a period of significant regulatory and structural change studies investigating the determinants of power plant departures from the frontier have focused primarily on the effects of ownership mode pollitt 1995 provides a comprehensive review of these studies reifschneider and stevenson 1991 examine the impact on cost efficiency of a number of variables including the capacity utilization of the firm s generating facilities more recently knittel 2001 examines the impact of incentive regulation on plant efficiency levels steiner

international competitiveness the demand for exports and real effective exchange rates in developing countries abstract most measures of the real effective exchange rate reer do not capture the complex ways in which the structure and direction of trade adapt to changes in exchange rates conventional measures of the reer are based on the stringent assumptions that cross price elasticities with respect to exports of third party competitors are all zero and with respect to trading partners they are all equal this paper develops an alternative index of competitiveness that captures the effects of a whole set of bilateral price changes by estimating an import demand system a reer for the philippines is computed and compared to a conventional reer

the measurement and sources of technical inefficiency in the indonesian weaving industry production function models are estimated with a time series of cross section data on indonesian weaving establishments the sources of technical inefficiency are investigated three firm attributes are identified as being potentially related to firm efhciency tbey are firm ownership age and size the importance of these attributes as sources of inefficiency in the indonesian weaving industry is investigated and the implications of the find ings discussed

continuous cross subsidies and quantity restrictions this article provides a model of loss leader pricing and quantity restrictions for a competitive multiproduct industry when individual consumers have continuous and independent demands for the set of available goods utilizing a generalization of the model proposed by bliss 1988 we demonstrate the importance of consumer heterogeneity for the existence of cross subsidies when there is complete information and individual consumers have smooth downward sloping demands continuous cross subsidies arising from consumer heterogeneity are also shown to exist in hotelling models our use of continuous rather than unit demands allows us to analyze issues related to welfare which in turn exposes a strong incentive for the firm to place binding quantity restrictions on consumers we also show how the presence of quantity restrictions can be used to distinguish between continuous cross subsidies arising from heterogeneous consumers versus those arising from classic demand complementarity with homogeneous agents

economic efficiency and frontier techniques abstract most of the literature related to the measurement of economic efficiency has based its analysis either on parametric or on non parametric frontier methods the choice of estimation method has been an issue of debate with some researchers preferring the parametric and others the non parametric approach the aim of this paper is to provide a critical and detailed review of both core frontier methods in our opinion no approach is strictly preferable to any other moreover a careful consideration of their main advantages and disadvantages of the data set utilized and of the intrinsic characteristics of the framework under analysis will help us in the correct implementation of these techniques recent developments in frontier techniques and economic efficiency measurement such as bayesian techniques bootstrapping duality theory and the analysis of sampling asymptotic properties are also considered in this paper

elasticity of substitution and technical efficiency evidence from the us electricity generation abstractthe implications of national or regional energy policies for technical efficiency and environmental outcomes in electricity generation depend on fossil fuel input substitution this study u