measuring excess capital capacity in agricultural production we introduce the concept excess capital capacity and employ a stochastic input requirement frontier to measure excess capital capacity in agricultural production we also propose a two step estimation method that allows endogenous regressors in stochastic frontier models the first step uses generalized method of moments to get consistent estimates of the frontier parameters in the presence of endogenous regressors the second step uses maximum likelihood to measure excess capital capacity and evaluate the factors that influence it the empirical application to dutch cash crop farms found varying degrees of excess capital capacity the policy implications of excess capital capacity are discussed

intergenerational equity and sustainability abstract this paper explores the limitations of conventional economic analysis of intergenerational problems and examines some of the alternatives suggested in the literature it is argued that proper consideration of future generations has at least three requirements first when future costs and benefits are considered it should be taken into account that they are to be enjoyed by different generations second the sustainability requirement should be adopted this represents an equity commitment to the future and implies the recognition that future generations have the right to nondeteriorated ecological and economic capacity the paper studies the ways in which the recognition of these rights might be incorporated into economic evaluation and management third an appropriate institutional network to enforce the recognition of these rights in decision making processes should be constituted its design and necessary functions are also analyzed

battese coelli estimator with endogenous regressors abstract we provide a framework for dealing with the endogeneity problem in the battese coelli estimator for productive efficiency measurement

economic viability and small scale fisheries a review abstract globally over 90 of all fishing vessels and about 22 million fishers are considered small scale despite their high numbers small scale fisheries are often understudied they are usually economically and politically marginalized and therefore vulnerable to large scale threats e g globalized markets to support this sector and contribute to its sustainability we argue that it is fundamental to understand how economically viable small scale fisheries are hence the main objective of this article is to critically review and describe the current discourse on the economic viability of small scale fisheries we find that currently economic viability is mainly equated with financial viability where profitability is the goal in consideration of socio economic aspects the maintenance of nonnegative net benefits to society is often not considered in current notions of economic viability while these shortcomings have been acknowledged in some of the existing literature our review shows that they have not yet been addressed comprehensively we therefore conclude that it is necessary to develop or expand current methods to better take into account social aspects when assessing the economic viability of small scale fisheries this would help find solutions to make these fisheries less vulnerable and better equipped to face large scale processes of change

making future generations count comment on remembering the future abstract prager and shertzer prager m h and shertzer k w 2006 this volume remembering the future a commentary on intergenerational discounting a new intuitive approach ecological economics made three points on our intergenerational discounting approach presented in sumaila and walters sumaila u r and walters c 2005 intergenerational discounting a new intuitive approach ecological economics 52 135 142 we comment on each of these in this short response to their comments

understanding the penalties associated with corporate misconduct an empirical examination of earnings and risk we examine the relationship between allegations of corporate misconduct and changes in profitability and risk of the alleged offender profitability is measured as reported earnings and analysts earnings forecasts risk is measured as stock return volatility and concordance among analysts forecasts decreases in earnings and increases in risk are found to accompany allegations of misconduct and although the results are somewhat sensitive to the earnings and risk metrics used the changes are found to be consistently greater for related party offenses the importance of reputational penalties is underscored by analysis of the association between allegation related changes in firm value and changes in earnings and risk

altruism and the demand for environmental quality this paper asks whether individuals consider the value that future generations will receive from environmental quality when deciding what level of environmental protection to provide using data on life expectancy i develop two tests for altruism towards future generations one a test for strong altruism asks whether individual motives are purely altruistic when deciding to provide environmental quality the second a test for weak altruism combines an individual s concern for both self interest and the interest of future generations using data from a washington post survey on environmental attitudes to implement the test i find evidence of weak altruism

reconciling sustainability and discounting in cost benefit analysis a methodological proposal abstract the incorporation of the intergenerational equity objective has rendered the traditional cost benefit analysis cba approach obsolete for the evaluation of projects presenting an important number of environmental externalities and for those whose impacts extend throughout a long period of time based on the assumption that applying a discount rate rewards current consumption and therefore that it is only possible to introduce a certain intergenerational equity in a cost benefit analysis in this work we propose an approach to discounting based on a different rationale for tangible and intangible effects we designed two indicators of environmental profitability a the intergenerational transfer amount ita which quantifies in monetary units what the current generation is willing to pass on future generations when an environmental restoration project is carried out and b the critical environmental rate cer measures the implicit environmental profitability these concepts were tested through an empirical case study pertaining to the assessment of an erosion control project in the southeast of spain the results yield traditional profitability indicators that are higher and probably closer to the real values set by the contemporary society the information provided by the environmental profitability indicators proposed renders more transparency to the quantification of the levels of intergenerational equity applied thereby facilitating the difficult reconciliation of the cba technique with the objective of sustainability

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

operational and reputational risk in the european banking industry the market reaction to operational risk events abstract in this paper i study the stock market reaction to the announcement of operational losses in european financial companies accounting for the effect of the nominal loss amount allows for an examination of the reputational damage caused by operational loss events the analysis is based on a sample of 136 operational losses stemming from a database of the association of german public sector banks bundesverband offentlicher banken vob all operational loss events affect european financial institutions with settlements reported by the press between january 2000 and december 2009 in line with previous literature i find a significant negative stock price reaction to the first press announcement of operational losses results show that the stock market also reacts negatively to the settlement announcement as losses are confirmed and the loss amount is known even after accounting for the nominal loss amount cumulative abnormal returns are negative following the date of the initial news article and the settlement date indicating damages to the reputation of the firm suffering the operational loss multivariate regression results suggest that reputational damages are rather influenced by firm characteristics than characteristics of the operational loss event companies with a high ratio of liabilities to total assets suffer more severe damages to reputation from operational losses than companies with more equity

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

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

endogeneity in panel stochastic frontier models an application to the japanese cotton spinning industry abstractwe present a panel stochastic frontier model that handles the endogeneity problem this model can treat the endogeneity of both frontier and inefficiency variables we apply our method to examine the technical efficiency of japanese cotton spinning industry our results indicate that market concentration is endogenous and when its endogeneity is properly handled it has a larger negative impact on the technical efficiency of cotton spinning plants we find that the exogenous model substantially overestimates efficiency in concentrated markets

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

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

time preference in global warming calculations a proposal for a unified index abstract many aspects of the calculation of the impacts of greenhouse gas ghg emissions and the costs and benefits of possible response options are highly sensitive to the way in which time preference is incorporated into the computations the intergovernmental panel on climate change ipcc used global warming potentials gwps to standardize inputs of different gases with differing radiative forcings and atmospheric lifetimes in the results emphasized by the ipcc s second assessment report a 100 year time horizon and no discounting is used and this has been adopted by the kyoto protocol for use in the first commitment period 2008 2012 here an alternative unified index is proposed that assigns explicit weights to the interests of different generations in contrast to discounting including the zero discount rate used by the ipcc the generationally weighted index forces policy makers to face the moral assumptions that underlie their choices related to global warming

on the estimation of zero inefficiency stochastic frontier models with endogenous regressors in this paper we investigate endogeneity issues in the zero inefficiency stochastic frontier zisf models by mean of simultaneous equation setting specifically we allow for one or more regressors to be correlated with the statistical noise a modified limited information maximum likelihood liml approach is used to estimate the parameters of the model moreover the firm specific inefficiency score is also provided limited monte carlo simulations show that the proposed estimators perform well in finite sample

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

intergenerational discounting a new intuitive approach abstract this paper proposes a new intergenerational discounting approach for computing net benefits from the use of environmental resources the approach explicitly incorporates the perspectives of both the current and future generations as argued for by pigou pigou a c 1920 the economics of welfare 1952 4th edition london macmillan and ramsey ramsey f p 1928 a mathematical theory of saving econ j 38 543 559 and required by most national and international laws related to the use of these resources an equation for use in the calculation of net discounted benefits is developed which provides a middle position whereby both the reality of personal discounting and that of social discounting are included in a social welfare function

reconciling sustainability systems theory and discounting abstract most definitions of sustainability imply that a system is to be maintained at a certain level held within certain limits into the indefinite future sustainability denies run away growth but it also avoids any decline or destruction this sustainability path is hard to reconcile with the renewal cycle that can be observed in many natural systems developing according to their intrinsic mechanisms and in social systems responding to internal and external pressures systems are parts of hierarchies where systems of higher levels are made up of subsystems from lower levels renewal in components is an important factor of adaptation and evolution if a system is sustained for too long it borrows from the sustainability of a supersystem and rests upon lack of sustainability in subsystems therefore by sustaining certain systems beyond their renewal cycle we decrease the sustainability of larger higher level systems for example schumpeter s theory of creative destruction posits that in a capitalist economy the collapse and renewal of firms and industries is necessary to sustain the vitality of the larger economic system however if the capitalist economic system relies on endless growth then sustaining it for too long will inevitably borrow from the sustainability of the global ecosystem this could prove catastrophic for humans and other species to reconcile sustainability with hierarchy theory we must decide which hierarchical level in a system we want to sustain indefinitely and accept that lower level subsystems must have shorter life spans in economic analysis inter temporal discount rates essentially tell us how long we should care about sustaining any given system economists distinguish between discount rates for individuals based on personal time preference lower discount rates for firms based on the opportunity cost of capital and even lower discount rates for society for issues affecting even higher level systems such as global climate change many economists question the suitability of discounting future values at all we argue that to reconcile sustainability with inter temporal discounting discount rates should be determined by the hierarchical level of the system being analyzed

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

discounting of long term costs what would future generations prefer us to do decisions with intergenerational consequences may leave future generations worse off i e not be pareto optimal if costs and benefits are not discounted correctly we point out that this happens if the conventional social discount rate is applied to intergenerational costs with that rate the justification of intergenerational costs benefits of a project are invested and the proceeds can cover future costs leads to an inconsistency over the long term eventually the supposed benefits of any project become larger than the entire gnp the conventional approach commits an error by treating the time preference component of the discount rate as if it represented creation of wealth while it really involves only redistribution the time horizon of the redistribution is limited by the duration of market transactions especially loans thus we recommend a two step discounting procedure with the conventional social discount rate for the short term about 30 years and the growth rate of the economy for the long term data for gnp per capita growth in the us the uk france germany japan and the soviet union since the industrial revolution combined with data for net economic welfare per capita suggest an intergenerational discount rate in the range of 1 to 2 for practical application the rate at which costs and benefits will grow over time is just as important as the discount rate only the difference between these two rates matters for many environmental costs these rates may be close to each other during the next few generations this implies that some of the uncertainty in the prediction of rates cancels and one can treat the problem as if the effective rate were close to zero the consequence for costs such as global warming or nuclear power can be very significant the valuation can increase by more than an order of magnitude compared to values based on conventional discounting

gmm estimation of stochastic frontier model with endogenous regressors a convenient and simple gmm procedure for estimating stochastic frontier models in the presence of endogenous regressors is proposed monte carlo simulations show that the proposed estimator works very well in finite samples we apply the proposed method to panel data of norwegian dairy farms to illustrate the usefulness of the proposed approach

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

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

risk aversion uncertain information and market efficiency abstract this paper develops and tests the uncertain information hypothesis as a means of explaining the response of rational risk averse investors to the arrival of unanticipated information the theory predicts that following news of a dramatic financial event both the risk and expected return of the affected companies increase systematically and that prices react more strongly to bad news than good an empirical investigation of over 9000 marketwide and firm specific events produces results consistent with these predictions we conclude that the market reacts to uncertain information in an efficient if not instantaneous manner

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

ethics economics and environmental management individuals derive utility from their access to resources provided by the biosphere through the satisfaction of a number of needs and necessities these needs however cannot often be met simultaneously since they compete with each other this conflict is not just relevant at an individual or even intragenerational level indeed it implies a number of uncertainties and irreversibilities into the future which should not be left to oblivion from an extended anthropocentric ethical position in which only human beings have immanent value and are therefore subjects of moral consideration the identification of economic values can be of great use to allocate resources and make decisions on the environment economic analysis provides a number of decision tools than can be used to optimise efficiency and equity the purpose of this paper is to reflect on some of the ethical constraints to the ability of conventional economic valuation techniques to inform decision making processes affecting the environment it will be argued that depending on the stage of development some environmental and natural assets might well be seen as a common heritage either from a natural or a cultural viewpoint rather than just a pool of economic resources that could be used to satisfy basic needs and depleted or transformed accordingly whether directly or indirectly furthermore this boundary is not static the same environmental asset will be demanded as a resource at lower stages of development both individual and socially and as a part of the common heritage at a later stage again individual and socially in the former the use of conventional methods to value environmental goods and services will be warranted whereas this would not be the case in the latter we will also stress upon the fact that this is something quite different from the approach taken in social project appraisal where the introduction of efficiency prices and distributive factors also provides a move from individual to social welfare maximization but without breaking away from the market logic

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

intertemporal preferences and intergenerational equity considerations in optimal resource harvesting abstract optimal resource harvesting decisions are reexamined in light of a distinction between personal discount rates reflecting individuals rate of time preference and generational discount rates reflecting considerations of equity for future generations the discount rates have partially counteracting effects upon the optimal harvesting decisions and upon the optimal distribution of benefits in any one period for instance it is the generational discount rate that determines the potential for economically optimal extinction of a renewable resource by distinguishing the two discount rates it is possible to give each generation equal consideration while still allowing for individual impatience

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

time perspective and climate change policy the tendency to foreshorten time units as we peer further into the future provides an explanation for hyperbolic discounting at an inter generational time scale we study implications of hyperbolic discounting for climate change policy when the probability of a climate induced catastrophe depends on the stock of greenhouse gasses we characterize the set of markov perfect equilibria mpe of the inter generational game amongst a succession of policymakers each policymaker reflects her generation s preferences including its hyperbolic discounting for a binary action game we compare the mpe set to a restricted commitment benchmark we compare the associated constant equivalent discount rates and the willingness to pay to control climate change with assumptions and recommendations in the stern review on climate change ymy picture of the world is drawn in perspectivey i apply my perspective not merely to space but also to time ramsey

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

operational risk and its impact on north american and british banks abstractthis study examines the financial impact of operational risk and its loss announcements on the value of publicly traded banks in united states uk and canada there are three main findings 1 on average the market reacts more negatively to a loss s initial announcement than its settlement news 2 operational loss events cause strong reputational damage to the announcing banks and 3 the market is particularly sensitive to the announcement of losses caused by internal fraud of a large magnitude resulted in the order of restitution and that are the rulings of a regulatory investigation

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

time discounting and the overexploitation of coral reefs the incentive to overexploit a fishery resource is thought to exist if the resource owner s discount rate is sufficiently higher than the biological productivity of the targeted fish stock coral reef fisheries are extensively overexploited worldwide but the discount rates of reef fishers are largely unknown and there is little information about how discount rates relate to the exploitation status of fisheries we address these two research gaps for 48 small scale reef fisheries around the world we use a life history based method to derive fishery level intrinsic growth rates and then apply fisheries economics theory to investigate the compatibility of 2 different discount rates official and private with the exploitation status of reef fisheries we find that official discount rates that are normally used for policy making appear to be too low to fully reflect the short term outlook of reef fishers instead our inferred annual average private discount rate of 107 for fishers may better reflect the general overexploited state of reef fisheries our results indicate that in order to improve the chances of success fisheries policies which affect local fishers may need to be evaluated using private discount rates rather than the currently used official discount rates

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

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

low discount rates and insignificant environmental values abstract difference between the discount rate on consumption and the rate of return on investment is often taken to prevent the former s being used as a social discount rate yet techniques have long been known for incorporating both these rates in a shadow price of investment funds assumptions about the proportion of investment revenues saved and reinvested are crucial in determining whether a low discount rate favours or discriminates against long term environmental values even a moderate saving rate may make the shadow price of funds indefinitely large the conceptually correct discount rate then becomes the growth rate of investment funds and the relative value of environmental effects becomes zero stochastic variation in rate of return makes this result more likely such an outcome may be avoided by setting reinvestment to zero or assuming convergence of rates of return and discount but no firm justification exists for these stratagems however various reasonable assumptions about environmental costs especially that they embody an investment element or require adequate compensation to be paid may make such costs indefinite also and therefore capable of standing against indefinite values of investible funds

a monte carlo investigation of the accuracy of multivariate capm tests abstract in a multivariate regression model relating individual returns to the market return capm implies non linear restrictions on the parameters several asymptotically valid tests of these restrictions have been suggested the existing monte carlo evidence shows that some of these tests are unreliable for reasonable sample sizes but does not indicate well which tests are reliable this paper reports the results of an extensive monte carlo experiment shanken s csr test and jobson and korkie s corrected likelihood ratio test are quite accurate in all cases we consider

climate change and the planetary trust abstract three models for thinking about our responsibilities with respect to climate change are compared and evaluated one is concerned with maximizing the present discounted value of consumption the second views climate change through the lens of the tragedy of the commons both of these approaches are found to rest on implausible assumptions a third model based on the conception of a fiduciary trust is found to be more credible and not to require overly burdensome policies

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

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

a distribution free stochastic frontier model with endogenous regressors abstract we provide a guideline for estimating a distribution free panel data stochastic frontier model in the presence of endogenous variables in particular we consider variations of the within estimator of cornwell et al 1990 to allow endogenous regressors

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

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

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

remembering the future a commentary on intergenerational discounting a new intuitive approach sumaila and walters 2005 described a new approach to valuing benefit streams in resource economics in contrast to conventional methods their intergenerational discounting recognizes two categories of benefits those accruing to present stakeholders and those accruing to future generations the new method has clear application whenever alternative management strategies for natural resources are compared in the metric of net present value npv the intergenerational approach provides a sensible way to integrate economics into policy considerations to us it seems far more reasonable than the conventional discounting approach in which future benefits become of negligible value after a few generations that aspect of conventional discounting is troublesome tomany resource biologists policy analysts andeconomists to carry theargument further if onebelieves that amajor goal of economics is to quantify human preferences and the corresponding goal of resource economics is to quantify societal preferences it can be demonstrated by syllogism that the use of conventional discounting is logically inconsistent

intergenerational equity discounting and the role of cost benefit analysis in evaluating global climate policy when public policies with impacts far into the future are being debated the question inevitably is raised whether cost benefit analysis which discounts future costs and benefits is not biased against future generations and whether if such discounting is appropriate at all a lower rate should be used to avoid such bias the debate on global climate change is no exception this paper sketches and analyses the welfare foundations of cost benefit analysis and from this perspective analyses the role of cost benefit analysis in the climate policy debate particularly with reference to intergenerational effects the paper concludes that the cost benefit criterion cannot provide a definitive basis for deciding whether we should commit to a longer term programme to moderate climate change the issues of intergenerational equity are not that global climate change will significantly lower the gnp of future generations but relate to the possibility of science fiction like changes in the planet that will produce catastrophic effects in the future and the typical way in which the cost benefit problem is posed obscures the basic choices that we should be evaluating

fisheries instrument choice under uncertainty this paper uses data from an actual fishery to construct a tractable dynamic model to compare expected profit and its variance optimal stock size optimal harvest rate and optimal fishing effort under different management regimes under uncertainty the results provide a comparison of instrument choice between a total harvest control and a total effort control under uncertainty an original method to evaluate the tradeoffs between profits and other criteria in a dynamic context and insights regarding the relative merits of catch and effort controls in fisheries management

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

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

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

event studies in economics and finance the event study is an important research tool in economics and finance the goal of an event study is to measure the effects of an economic event on the value of firms event study methods exploit the fact that given rationality in the marketplace the effects of an event will be reflected immediately in security prices thus the impact can be measured by examining security prices surrounding the event in this paper event study methods are described including some of the potential complications an example is included to illustrate the approach

cultural bequest values for ecosystem service flows among indigenous fishers a discrete choice experiment validated with mixed methods perhaps the most understudied ecosystem services are related to socio cultural values tied to non material benefits arising from human ecosystem relationships bequest values linked to natural ecosystems can be particularly significant for indigenous communities whose livelihoods and cultures are tied to ecosystems here we apply a discrete choice experiment dce to determine indigenous fishers preferences and willingness to pay for bequest gains from management actions in a locally managed marine area in madagascar and use our results to estimate an implicit discount rate we validate our results using a unique rating and ranking game and other mixed methods we find that bequest is highly valued and important respondents were willing to pay a substantial portion of their income to protect ecosystems for future generations through all of our inquiries bequest emerged as the highest priority even when respondents were forced to make trade offs among other livelihood supporting ecosystem services this study is among a relative few to quantify bequest values and apply a dce to model trade offs value ecosystem service flows and estimate discount rates in a developing country our results directly inform coastal management in madagascar and elsewhere by providing information on the socio cultural value of bequest in comparison to other ecosystem service benefits

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

endogeneity in stochastic frontier models copula approach without external instruments this papers considers an alternative estimation procedures for estimating stochastic frontier models with endogenous regressors when no external instruments are available the approach we propose is based on copula function to directly model the correlation between the endogenous regressors and the composed errors estimation of model parameters is done using maximum likelihood monte carlo simulations are used to assess and compare the finite sample performances of the proposed estimation procedures

increasing marginal returns and the danger of collapse of commercially valuable fish stocks abstract on the basis of data from the north sea herring fishery we discuss the consequences of increasing marginal returns on the exploitation of renewable resources we show that high but still reasonable discount rates can cause extinction to be optimal even in the ideal case of a sole owner and a resource with a high growth rate in the case of lower discount rates optimal cyclical policies can periodically drive the resource to levels approaching safe minimum standards we discuss the sustainability intergenerational equity social risk aversion and theoretical issues raised by increasing marginal returns