the joint economic lot sizing problem review and extensions with the growing focus on supply chain management firms realize that inventories across the entire supply chain can be more efficiently managed through greater cooperation and better coordination this paper presents a comprehensive and up to date review of the joint economic lot sizing problem jelp and also provides some extensions of this important problem in particular a detailed mathematical description of and a unified framework for the main jelp models are given additionally a comparative empirical study of the main policies proposed for jelp is conducted the focus of this study is on assessing the deviation of these policies from the optimal solution studying the performance of different models provides additional insights that will help in justifying their use in more complex supply chain models that involve more stages or other practical considerations of interest

dynamic political choice in macroeconomics we analyze positive theories of redistribution social insurance and public good provision in a dynamic macroeconomic framework political outcomes are determined via repeated voting and driven by a conflict of interests between agents voters and politicians rationally forecast the impact of current political choices on future political and economic outcomes the theory is consistent with large differences in the size of governments across societies these need not rely on intrinsic differences in preferences or technology but may be driven by self fulfilling

accounting rates of return many economic studies provide empirical evidence regarding cross sectional differences in firm profitability in most of these studies firm profitability is measured by an accounting rate of return net income dividend by the book value of assets hereafter arr rather than an economic rate of profit franklin fisher and john mcgowan define the firm s economic rate of profit irr as that interest rate which equates the present value of its net revenue stream to its initial outlay 1983 p 82 fisher and mcgowan examine the analytic relation between a firm s arr and its irr in a series of examples and conclude that the arr is such a bad surrogate for the irr that the results of arr based empirical studies are likely to be totally misleading p 91 william long and david ravenscraft 1984 have criticized the theoretical work of fisher and mcgowan because the nature of the analytic relationship between the arr and the irr in the context of highly simplified hypothetical examples may not be indicative of the nature of the relationship in empirical settings their criticism adopts the utilitarian view that the arr has to be treated as a suitable surrogate for the irr as long as no preferable alternative measure of profitability is available for empirical work this view has merit as long as the measurement error which is contained in the arr is random rather than systematic unfortunately the nature and extent of the measurement error which is contained in the arr in a particular empirical setting can only be determined unequivocally if the irr is unequivocally known in such a case of course there would be no need to rely on the arr at all due to this unhappy circle empirical research on firm profitability has continued to rely on the arr despite the fact that many persons reasonably believe that the results of such research may be totally misleading fisher and mcgowan g c harcourt 1965 while others reasonably believe that the results are reliable enough to form a basis for policy decisions long and ravenscraft recent work by y ijiri 1978 1979 1980 and by myself 1982 has shown that conditional irr estimates can be obtained from data in firms financial statements while these irr estimates are conditional they do abstract from certain extraneous factors that influence arrs and that differ across firms consequently the conditional irr estimates are free from some of the sources of measurement error which are known to contaminate the arr thus the conditional irr estimates can be used to provide evidence on whether these sources of measurement error have or have not affected the outcome of prior studies in which profitability was measured by the arr such evidence can help to objectively resolve the conflict between the opposing views on the reliability of arr based profitability research this paper uses conditional irr estimates to examine the properties of the measurement error in the arr in a study of the relationship between firm profitability and firm size the remainder of the paper is organized as follows in section i the theoretical work of fisher and mcgowan is used professor of accounting university of iowa iowa city ia 52242 i gratefully acknowledge the comments of william albrecht dan dhaliwal gary fethke franklin fisher scott linn william r kinney jr and the participants of a workshop at the university of florida on earlier versions of this paper 1 some authors for example william long and david ravenscraft 1984 have used the sales margin ratio earnings sales as a measure of profitability however if one views profitability as return per unit of sacrifice the sales margin ratio is not a profitability measure since it ignores the sacrifice or investment required to generate a dollar of sales consequently this paper does not attempt to shed any insight into prior studies that have relied on the sales margin ratio as a measure of profitability

does privatization remove restrictive working practices evidence from uk establishments this study investigates the links between privatization and changes in working practices using data from the uk 1990 workplace employees relations survey privatization raises the probability of an establishment of experiencing reduced job demarcation and or increased flexibility in the use of the workforce by managers after exploration no clear association is found between ownership and the level of restrictive working practices

the estimated cost impact of privatizing student transportation in minnesota school districts student transportation makes up a substantial portion of a typical school district s operating budget and sub contracting bus service to private firms has been advanced by some as a way to reduce transportation costs previous studies have found conflicting evidence regarding the cost impact of privatization this paper seeks to improve on previous studies by estimating cost equations using data that spans six school years the primary result is that privatization acts to substantially increase transportation costs estimates using a pooled cross section predicted that going from fully outsourced to fully in house reduced costs by approximately 15 8 while the analogous estimate using a first differenced equation was a savings of 20 7

tax smoothing and the cross country pattern of privatization summary privatization generally enhances firm level efficiency the impact of privatization on fiscal efficiency has however been overlooked using the tax smoothing ideas articulated by r barro 1979 on the determination of the public debt journal of political economy 87 940 971 and by h bohn 1990 tax smoothing with financial instruments american economic review 80 1217 1230 we argue that privatization may have an important impact on the welfare losses associated with tax collection this impact can either enhance or erode the efficiency of taxation we hypothesize that countries that benefit in terms of fiscal efficiency will privatize aggressively while countries that enjoy fiscal benefits as a result of state ownership will show little interest in privatization statistical tests are conducted that provide considerable support for the hypothesis

optimal ordering for a probabilistic one time discount abstract we develop a model for a one time special purchasing opportunity where there is uncertainty with respect to the materialization of the discounted purchasing offer our model captures the phenomenon of an anticipated future event that may or may not lead to a discounted offer we analyze the model and show that the optimal solution results from a tradeoff between preparing for the special offer and staying with the regular ordering policy we quantify the tradeoff and find that the optimal solution is one of four intuitive policies we present numerical illustrations that provide additional insights on the relationship between the different ordering policies

hospital ownership and performance this study compares the performance of three ownership forms of hospitals for profit private nonprofit and public further classified according to whether or not the hospital is run by a hospital chain data come from a 1979 national survey of u s hospitals the authors find that hospital cost is quite similar among alternative ownership forms as is profitability the results do not provide much empirical support for standard property rights theory several reasons are suggested why this may be so

how efficient is the voting market it is by now well established that good macroeconomic conditions benefit the incumbent president and his congressional party confreres at the polls this result is not unanimous see for example stigler or arcelus and meltzer2 and may not be universal 3 however the basic results in kramer 4 the progenitor of the modern literature on the effect of economic conditions on elections seem to have stood the test of time the broad consensus of this literature is that voters in presidential and congressional elections 1 reward income growth and punish unemployment and inflation 2 probably give greater weight to income growth than to unemployment and inflation and 3 myopically ignore any information beyond the recent past say prior to the election year 5 so far however the data have outrun interpretation while economic conditions seem to matter we do not know why they matter or how plausibly to characterize the process by which voters translate information about economic conditions into voting decisions this article tries to fill that gap though it extends the empirical literature to gubernatorial elections its main con

toward a public choice theory of monopoly regulation its many dimensions from the perspective of market economics this new thrust was consolidated in 1976 by s peltzman who developed a formal market model in which regulations were viewed as commodities brokered via political markets in response to bids and counter bids by those who stood to gain or to lose from specific regulation outcomes the subsequent contribution by becker 1983 added insights and institutional flesh to the stigler peltzman embryo confirming regulation as an integral component of mainstream market economics an important implication of such contributions especially those from the chicago perspective is that regulation for the most part confirms resource efficiency within market process that political markets in the absence of entry barriers are just as effective as are competitive commodity markets in achieving economic efficiency defined within a comparative institutions framework nowhere is this complacency more apparent than in the conclusion drawn by becker 1983 from a detailed formal analysis of competition among pressure groups for political influence

management ownership and market valuation an empirical analysis we investigate the relationship between management ownership and market valuation of the firm as measured by tobin s q in a 1980 cross section of 371 fortune 500 firms we find evidence of a significant nonmonotonic relationship tobin s q first increases then declines and finally rises slightly as ownership by the board of directors rises for older firms there is evidence that q is lower when the firm is run by a member of the founding family than when it is run by an officer unrelated to the founder

some models for estimating technical and scale inefficiencies in data envelopment analysis in management contexts mathematical programming is usually used to evaluate a collection of possible alternative courses of action en route to selecting one which is best in this capacity mathematical programming serves as a planning aid to management data envelopment analysis reverses this role and employs mathematical programming to obtain ex post facto evaluations of the relative efficiency of management accomplishments however they may have been planned or executed mathematical programming is thereby extended for use as a tool for control and evaluation of past accomplishments as well as a tool to aid in planning future activities the ccr ratio form introduced by charnes cooper and rhodes as part of their data envelopment analysis approach comprehends both technical and scale inefficiencies via the optimal value of the ratio form as obtained directly from the data without requiring a priori specification of weights and or explicit delineation of assumed functional forms of relations between inputs and outputs a separation into technical and scale efficiencies is accomplished by the methods developed in this paper without altering the latter conditions for use of dea directly on observational data technical inefficiencies are identified with failures to achieve best possible output levels and or usage of excessive amounts of inputs methods for identifying and correcting the magnitudes of these inefficiencies as supplied in prior work are illustrated in the present paper a new separate variable is introduced which makes it possible to determine whether operations were conducted in regions of increasing constant or decreasing returns to scale in multiple input and multiple output situations the results are discussed and related not only to classical single output economics but also to more modern versions of economics which are identified with contestable market theories

the efficiency of state owned and privatized firms does ownership make a difference abstract this paper compares the pre and post privatization efficiency of a sample of state owned enterprises privatized in spain with the efficiency of their closest private competitors we perform a two stage double bootstrap data envelopment analysis model in the first stage the efficiency is estimated through a bootstrapped data envelopment analysis and then followed in the second stage by a bootstrapped truncated regression our results provide evidence that i there were no significant differences in efficiency between the state owned enterprises and their private counterparts before privatization and ii the efficiency of newly privatized firms significantly increased after their privatization while private competitors showed no significant improvement during the same post privatization period

bureau competition and inefficiency abstract this paper evaluates the claim that an increase in bureau competition will improve efficiency in the public supply of services it gives explicit consideration to the property rights characteristics of a public sector market and to the role of legislators as active demanders of bureau output rather than as passive monitors of bureau production the analysis demonstrates that bureau managers prefer nonprice competition to price competition a major prediction of the paper is that greater bureau competition may increase bureau output costs and budgets

joint economic lot sizing problem for a three layer supply chain with stochastic demand abstract this paper considers the joint economic lot sizing problem jelp for multi layer supply chain with multi retailers and single manufacturer and supplier the paper extends the work of ben daya et al 2013 and relaxes the assumption of deterministic demand and constant holding and ordering costs the paper proposes modifying four computational intelligent algorithms to solve mixed integer problems and compares their performance for solving the problem at hand the paper further compares between adopting a centralized safety stock policy versus a decentralized policy results showed cuckoo search to outperform other tested algorithms and also favored adopting a centralized policy

returns to damage under undesirable congestion and damages to return under desirable congestion measured by dea environmental assessment with multiplier restriction economic and energy planning for social sustainability in china this study discusses the concept of natural and managerial disposability from their economic and methodological implications on social sustainability development then it explores their analytical linkages to a concept on congestion the concept is classified into undesirable congestion uc under natural disposability and desirable congestion dc under managerial disposability considering the two disposability concepts this study compares between returns to damage rtd under uc and damages to return dtr under dc conceptually uc and dc are conceptually different from rtd and dtr although they are closely related to each other group an occurrence of the former measures is identified by a single negative multiplier i e dual variable in contrast the latter measures are associated with multiple negative multipliers and an intercept of a supporting hyperplane on a production and pollution possibility set thus an occurrence of uc and dc is a necessary condition but not a sufficient condition on rtd and dtr respectively in terms of the number of negative multipliers on production factors to document the practicality of the proposed approach this study applies it to chinese economic and environmental assessment for its economic and energy planning for social sustainability development this study identifies four important findings first the chinese government has historically paid attention to the economic prosperity but not paying serious attention on the environmental pollution e g air pollution second there was an increasing trend in improving the two components i e economic and environmental performance measures regarding social sustainability third china s economic and energy policy concerns have been focused upon well developed municipalities e g beijing and shanghai and large provinces therefore it is an important strategy for the government to allocate economic and energy resources to other provinces so that china can reduce the industrial and regional imbalances as a result china can enhance the level of social sustainability finally the municipalities need strict regulation on traffic control in these metropolitan areas and a fuel mix shift from coal combustion to natural gas and renewable energies e g solar water and nuclear generations the fuel mix strategy along with the structure change e g from manufacturing to service and from public to private energy firms will be a major industrial policy issue for china in near future

a quantitative theory of social security without commitment abstract this paper investigates the determination of social security within a general equilibrium overlapping generations model where agents live for many periods and replacement rates are determined through voting in each period by forward looking agents the distinctive feature is the study of markov equilibrium policy outcomes which do not rest on a commitment mechanism versions of the model are calibrated to the us economic policy and demographic conditions even in the absence of commitment the policy preferences of tax paying working age voters sustain a positive level of retirement benefits this follows because the current choices about social security will have at the time when the current voters will retire a positive impact on the political support for social security and on the returns to savings on the other hand the projected decline in the u s population growth rate causes the replacement rate and the tax rate to decline this quantitative response without commitment differs from that in the case when policies are committed at time zero

managerialism ownerism and risk abstract this paper proposes that managers having the value of their human capital dependent on the performance of the firm they manage and being unable to diversify away this risk are expected to attempt to reduce their employment risk internally by project selection or by income smoothing intended to stabilize the firm s income stream an empirical investigation shows that manager controlled firms exercise income smoothing to a greater extent than owner controlled firms have relatively lower unsystematic risk and perhaps lower systematic risk

markets versus planning an assessment of the swedish housing model in the post war period the purpose of this study is to present a comparative economic systems evaluation of the swedish housing model the evaluation examines success in achieving equity as well as efficiency goals and incorporates key comparisons with the market oriented us housing model from the late 1940s up to the major housing reforms of the early 1990s a form of strong economic planning characterised the swedish housing sector by the early 1970s the housing standard for all income groups had been raised markedly and urban slums eliminated yet sweden s success came at huge resource cost while at the same time important equity goals were compromised for example swedish building costs are among the highest in the world while in sweden s major cities socioeconomic segregation is more pronounced than ever before in the post war period

tariff structure of japanese electric power companies an empirical analysis using dea this research explores a marginal cost mc based pricing system using data envelopment analysis dea this dea technique is widely applied for performance analysis and efficiency measurement in public and private sectors this article does not follow such a previous research direction rather directing itself towards the new measurement of mc and ramsey prices of multiple electric power services as an important case study this research applies the proposed dea approach to examine how much the current tariffs of japanese electric power services deviate from these mc and ramsey prices this type of research has never been explored in japan even though such a research effort is needed by many policy makers and consumers it is hoped that our empirical findings can serve as a policy making basis for guiding the japanese electric power industry this study believes that this japanese experience is useful for other nations such as asia pacific countries where many public industries are regulated by their governments

comparing public and private schools the puzzling role of selectivity bias recent articles using the same data and variants of the same estimation technique report conflicting estimates of the relative quality of education provided by public and catholic schools this article explains the reasons for the conflict in so doing the article clarifies the assumptions underlying the increasingly popular two step methods for controlling selectivity bias and highlights the hazards of using these methods when the assumptions are not satisfied the article also illustrates an alternative method for detecting the presence of selectivity bias

leviathan resists the endogenous relationship between privatization and firm performance using a panel dataset of privatized cement firms in turkey this paper models and finds support for the simultaneous relationship between privatization and firm performance it is found that favorable short run performance weak market potential higher employment lower socio economic development concentrated voter preferences and weaker representation of right wing parties in the firms locality delay the timing of privatization the paper also finds that privatization increases output in the medium term by reducing the labor stock and promoting the adoption of more advanced technology such that production shifts from constant to decreasing returns to scale

unequal societies income distribution and the social contract this paper develops a theory of inequality and the social contract aiming to explain how countries with similar economic and political fundamentals can sustain such different systems of social insurance fiscal redistribution and education finance as those of the united states and western europe with imperfect credit and insurance markets some redistributive policies can improve ex ante welfare and this implies that their political support tends to decrease with inequality conversely with credit constraints lower redistribution translates into more persistent inequality hence the potential for multiple steady states with mutually reinforcing high inequality and low redistribution or vice versa

effects of public ownership over firms size and overstaffing problems a model is presented to analyse the impact ofownership over the problem of excess of employmentgenerally found in public firms a government has toprovide a service or build an infrastructure underuncertainty about the valuation of the project byconsumers three possible ownership schemes areconsidered for the provision of this service astate owned firm a private firm with a completecontingent contract or a private firm with anincomplete contract in all three schemes the agentthat chooses the size of the project is always thegovernment without any asymmetries of information even though multiple solutions are feasible and nodefinitive conclusion is found to be valid for allstates of nature an evaluation of outcomes shows thata private firm tends to underprovide infrastructure orservices more often while under public ownership thefirm is typically larger if incomplete contracting isadded to the private firm case the model exhibitssolutions in which outcomes could be socially worsethan those obtained by a public firm only changes inthe voting behaviour of workers and contracting costsare required in this model to derive these results thus the paper provides an example that ownershipper se may have an effect on the size andefficiency of firms even under symmetric informationconditions an extreme that has been generally deniedin the literature on public firms and privatisation

the determinants of the choice between public and private production of a publicly funded service the public choice literature contains little formal analysis of the bureaucratic choice of production modes public or private of publicly funded services an important question to be addressed is why some governmental bodies choose to provide a publicly funded service with publicly owned and operated production units whereas other governmental bodies contract with private firms to provide the same publicly funded service this paper is the first formal attempt to remedy this gap in the literature we develop a theoretical explanation of the government decision maker s choice between public and private production modes based on utility maximizing behavior we then examine empirically this choice employing logit analysis the empirical results which include several tests for robustness confirm our theoretical explanation the results are significant and suggest that non monetary constraints are an important factor affecting this choice of production modes and that monetary constraints are less influential

the impact of hospital market structure on patient volume average length of stay and the cost of care a variety of recent proposals rely heavily on market forces as a means of controlling hospital cost inflation sceptics argue however that increased competition might lead to cost increasing acquisitions of specialized clinical services and other forms of non price competition as means of attracting physicians and patients using data from hospitals in 1972 we analyzed the impact of market structure on average hospital costs measured in terms of both cost per patient and cost per patient day under the retrospective reimbursement system in place at the time hospitals in more competitive environments exhibited significantly higher costs of production than did those in less competitive environments

income distribution and macroeconomics this paper analyzes the role of wealth distribution in macroeconomics through investment in human capital it is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital the initial distribution of wealth affects aggregate output and investment both in the short and in the long run as there are multiple steady states this paper therefore provides an additional explanation for the persistent differences in per capita output across countries furthermore the paper shows that cross country differences in macroeconomic adjustment to aggregate shocks can be attributed among other factors to differences in wealth and income distribution across countries

optimal ordering policies in response to a discount offer abstract sometimes supplier offers a temporary price discount to increase cash flow or decrease the inventory level of certain items thus the manufacturer may be able to improve the effectiveness of his inventory system by ordering a special quantity at this sale period in this paper economic order quantity eoq models with a discounted price are developed to obtain the optimal ordering policy during the sale period for five different cases a coincidence of sale period with replenishment time b non coincidence of sale period with replenishment time c sale period is longer than a cycle d discounted price as a function of the special ordering quantity and e incremental discount each case has its own characteristics of the sale period and the discounted price the objective is to take the maximum possible advantage from the discounted price by ordering a special quantity during the sale period the optimal ordering policy is obtained by maximizing the difference between the two costs regular eoq cost and special quantity cost during the sale period moreover a comparison of different discount scenarios is developed to sense the effect of different parameters on the ordering policies the annual gain obtained is linearly related to the discount and the on hand remnant inventory numerical analyses are provided to illustrate and testify the values of the optimal special quantity the analysis showed an impressive improvement in the effectiveness of the inventory system when a special order is placed during the sale period the optimal special quantity is driven for each case to visualize real life problems sensitivity analysis is also initiated to study the change in the total savings with respect to the variation of the special optimal quantity

on improving the single vendor single buyer integrated production inventory model with a generalized policy abstract in this note a simple procedure is suggested for modifying shipment size as obtained on applying the procedure given by hill european journal of operational research 97 1997 493 499

privatization technology choice and aggregate outcomes abstract we analyze the macroeconomic consequences of privatization policies in transition economies due to the particular market structure in those economies strategic completnentarities in restructuring of privatized firms occur giving rise to multiple macroeconomic equilibria restructuring and the resulting macroeconomic outcomes crucially depend on how property rights are distributed and which method of privatization is chesen firm sales to single or core investors may easily lead to bad equilibria without restructuring if employees are given profit claims this is so even if the workers give up parts of their wages as a compensation for stocks wage equity swaps contrary to conventional wisdom mass privatization can have favourable influence on micro economic efficiency and may therefore lead to a good aggregate outcome as an additional feature favouring mass privatization we argue that a big bang approach to privatization might lead to a favourable equilibrium

models of joint economic lot sizing problem with time based temporary price discounts abstract in this research we develop mathematical models of joint economic lot sizing problem jelp in a situation when a supplier offers time based temporary price discounts to a buyer during a sale period to respond this the buyer places a special order with higher quantity in literature it has been assumed that the buyer tends to place the special order at the end of the sale period we relax this assumption by considering the time when the buyer places the special order during the sale period i e the sooner the special order took place the higher discount received in our proposed models called joint economic lot sizing problem with time based temporary price discounts jelptpd we devide the sale period into k phases the buyer must place the special order in one of these phases the highest discount will be given when the special order is placed at the first phase while the lowest one will be given when it is placed at the k th phase there are two cases discussed the first case is when the sale period is uniformly divided while the second case is when the sale period is proportionally divided following some rules our numerical experiments showed the behavior of the buyer to respond the temporary price discount offers in major experiments the buyer shifted the decision on placing the special order in the earlier phases instead of the end of the sale period

divestiture of nippon telegraph and telephone this article discusses whether the japanese government should break up ntt nippon telegraph telephone in 1995 as the u s federal government compelled at t american telephone telegram to break itself into toll and local telephone companies in 1984 the divestiture of ntt has long been a major industrial policy issue in japan since the common carrier was privatized in 1985 the governmental decision to divest it may influence not only the japanese telecommunications infrastructure but also the global telecommunications and information industries in the world where many common carriers are now facing an environmental change from regulation to competition a unique feature of this study is that it employs eight different estimation techniques to obtain a cost function of ntt so that this research avoids a methodological bias occurring in many empirical studies this study confirms that ntt has maintained cost subadditivity but it has failed to establish the status of a natural monopoly in the observed time period however it also finds that the ntt divestiture will not produce a price reducing benefit to japanese telecommunications consumers this research result will serve as empirical evidence for guiding the governmental review of this large scale industrial policy issue in japan

on the misuse of the profits sales ratio to infer monopoly power the common use of the profits sales ratio as a measure of the lerner index of monopoly power is flawed even with the assumption of constant returns because of problems connected with the valuation of capital the size of the error is related to the cost of capital the growth rate of the firm the depreciation method used and most important the shape of the stream of benefits resulting from an investment examples show that the error can be quite large further the error is likely to be systematically related to the variables used in regression studies

behavior of the firm under regulatory constraint a recent article by akira takayama discusses an earlier paper by harvey averch and leland l johnson on fair rate of return regulation of public utilities although takayama p 255 agrees with averch and johnson s general conclusions that a firm will tend to increase its investment with the introduction of an active constraint on its rate of return he criticizes the a j argument as being confusing ambiguous and in error takayama then attempts a clarification and presents a new formulation which leads to the a j result quoted above this comment will discuss several of takayama s criticisms in addition to showing that the so called a j effect cannot be derived from the basic assumptions made by both averch and johnson and takayama 1 we will show that the very assumptions used to prove the a j effect by defining the region of x require an assumption that the a j effect exists in the first place

the effects of competition on publicly owned firms evidence from the municipal electric industry in the u s abstract previous studies have examined the effects of competition on privately owned firms this study examines the impact of competition on a sample of publicly owned electric utilities operating in the u s during 1961 1980 estimates from a translog variable cost function indicate that competitive firms had higher generating costs than monopolists ceteris paribus in addition it appears that operating costs would fall significantly if a single monopolist were to replace two competitors in a given market

nonparametric analysis of technical and allocative efficiencies in production in this paper we extend varian s 1984 nonparametric production analysis to situations when the set of observed output input and price data is not consistent with profit maximization for at least one firm in such cases varian s results imply that no production possibility set containing all observations can rationalize the observed data we identify each firm whose performance given the prices faced by it may be found consistent with profit maximization relative to some production possibility set containing all observed output input vectors we show that the set 4 of all such firms can itself be weaklv rationalized in the sense that there exists a closed convex and monotone production possibility set that contains all the observations and relative to which the performance of all the firms in the set 8o is consistent with profit maximization given their respective prices by definition firms not included in this largest set d of efficient observations unambiguously deviate from profit maximizing behavior for any production possibility set containing all observations we follow farrell 1957 and analyze these deviations into technical and allocative efficiency measures considering as admissible all closed convex and monotone production possibility sets relative to which the performance of each firm in the set g remains consistent with profit maximization we then describe nonparametric methods for determining the tightest upper and lower bounds on the technical allocative and aggregate efficiency measures evaluated relative to all such admissible production possibility sets it is seen that the tightest upper bound on the technical efficiency measure is the same as the value computed by the nonparametric efficiency evaluation technique known as data envelopment analysis thus establishing a link between this literature in management science operations research and the nonparametric production analysis in economics

management and ownership effects evidence from five countries despite the growing recognition in the corporate governance literature that the relationship between ownership concentration and profitability is context dependent this issue has not yet been subjected to direct empirical investigation using a single cross national sample this study empirically examines the ownership concentration performance relationship across the nations of canada france germany the united kingdom and the united states essentially we argue that the correlation if any between ownership concentration and firm profitability differs across countries in a systematic way determined by the national system of corporate governance results indicate that important and statistically significant differences do in fact exist across the countries studied 1998 john wiley sons ltd

ownership versus competition efficiency in public enterprise certainly the introduction of product market competition into potentially competitive or at least contestable markets can improve performance to take just one example morrison and whinston 1986 1986 estimate that even in the imperfectly contestable u s airline industry the annual u s welfare gains from deregulation have been around 6 billion

privatization of nippon telegraph and telephone was it a good policy decision nippon telegraph and telephone ntt corporation was privatized in 1985 under the economic assertion that a public enterprise is less efficient and less profitable than a private enterprise this assertion is referred to as the property right theory in economics and it is used as a theoretical rationale for privatizing publicly owned organizations this article empirically examines the economic assertion by comparing ntt s performance before and after its privatization data envelopment analysis dea is used as the research tool in this study which confirmed the economic assertion in terms of production based efficiency measures but it cannot find any major difference in its cost reducing corporate efforts thus this study presents serious management problems occurring within the ntt s partial privatization the partial privatization is now prevailing in the telecommunications industry all over the world this article also discusses the japanese business environment which makes ntt managerially ineffective under its public private joint ownership

productivity change and its determinants among leading mobile operators in europe the european mobile telecommunications industry has seen increased competition and market saturation in recent years so improving productivity will become crucially important for mobile operators in the near future this study adopts a bootstrap malmquist index approach to estimate productivity change among a sample of 23 of europe s leading mobile operators over the 2008 to 2009 period using a second stage regression this article also analyses the determinants of productivity changes in terms of regulation competition and ownership structure the results show that mobile companies operating in countries that have recently joined the eu have a positive association with productivity change in contrast to their counterparts in south east europe concerning market competition the leading mobile operators that experience higher productivity changes operate in more concentrated markets the results also indicate that international mobile operators perform better in terms of productivity change than their

more on the choice between public and private production of a publicly funded service overall the empirical findings we reported in our 1987 article are strongly suggestive of the importance of nonmonetary considerations in the production mode choice nonetheless professor pack is quite correct to note that our conclusion 1987 225 226 overstates the evidence we presented for the primacy of nonmonetary factors in the production mode choice when her full model is considered regarding the full model despite the statistically significant findings for some demographic variables a formal theoretical model of their effects on the production mode choice is lacking notwithstanding pack s comments concerning scale economies we are persuaded that the theoretic void regarding the effects of demographic variables on the production mode choice still exists

a one vendor multi buyer integrated inventory model abstract we consider a one vendor multi buyer integrated inventory model the vendor seeks to minimize his total annual cost subject to the maximum costs which buyers are prepared to incur in order to implement this model the vendor only needs to know buyer s annual demand and previous order frequency which can be inferred from buyer s past ordering behavior we find the optimal solution for the one vendor one buyer case and present a heuristic approach for the one vendor multi buyer case

privatization and efficiency from principals and agents to political economy ad i pavia abstract we survey the theoretical literature on privatization and efficiency by tracing its evolution from the applications of agency theory to recent contributions in the field of political economy the former extend the theory of regulation with incomplete information to address privatization issues comparing state owned enterprises with private regulated firms the benefits of privatization may derive either from the constraints it places on malevolent agents or from the impossibility of commitment by a benevolent government because of incomplete contracts contributions dealing with political economy issues separate privatization from restructuring decisions they either explore bargaining between managers and politicians or analyse the impact of privatization shaped by political preferences on efficiency the theoretical results regarding the relation between privatization and efficiency do not lead to any definitive conclusion privatization may increase productive efficiency when restructuring takes place whereas its effects on allocative efficiency still remain uncertain

the survival of the welfare state this paper provides an analytical characterization of markov perfect equilibria in a model with repeated voting where agents vote over distortionary income redistribution a key result is that the future constituency for redistributive policies depends positively on current redistribution since this affects both private investments and the future distribution of voters the model features multiple equilibria in some equilibria positive redistribution persists forever in other equilibria even a majority of beneficiaries of redistribution vote strategically so as to induce the end of the welfare state next period skill biased technical change makes the survival of the welfare state less likely

optimal production and shipment models for a single vendor single buyer integrated system abstract this paper develops a more general production inventory model for a single vendor single buyer integrated system unlike the hitherto existing production inventory models for the vendor buyer system the present model neither requires the buyer s unit holding cost greater than the vendor s nor assumes the structure of shipment policy secondly the model is extended to the situation with shortages permitted based on shortages being allowed to occur only for the buyer thirdly the paper also presents a corresponding production inventory model for a deteriorating item for the integrated system the solution procedures are provided for finding the optimal production and shipment policies and illustrated with numerical examples three significant insights are shown 1 no matter whether the buyer s unit holding cost is greater than the vendor s or not the present model always performs best in reducing the average total cost as compared to the hitherto existing models 2 if the buyer s unit holding cost is less than the vendor s the optimal shipment policy for the integrated system will only comprise shipments with successive shipment sizes increasing by a fixed factor it is different from that obtained by hill hill r m 1999 the optimal production and shipment policy for the single vendor single buyer integrated production inventory problem international journal of production research 37 2463 2475 for the opposite case 3 when designing a single vendor single buyer integrated system making the buyer s unit holding cost lower than the vendor s is more beneficial to the system if shortages are not permitted to occur otherwise it just reverses

public versus private water delivery a hedonic cost approach automotive news 1967 almanac detroit slocum publishing co 1967 bucklin louis p competition and evolution in the distributive trades englewood cliffs new jersey prentice hall 1972 federal trade commission annual line of business report 1974 washington ftc 1981a processed annual line of business report 1975 washington ftc 1981b processed guth louis a robert a schwartz and david k whitcomb the use of buyer concentration ratios in tests of oligopoly models this review 58 nov 1976 488 491 jeifreys james b the distribution of consumer goods new york cambridge university press 1950 lilly digest indianapolis ely lilly and co 1976 martin stephen advertising concentration and profitability the simultaneity problem belljournal 10 autumn 1979 639 647 national petroleum news fact book 1976 new york mcgraw hill 1976 ncr expenses in retail business dayton ohio ncr undated but about 1966 and about 1976 strickland allyn d and leonard w weiss advertising concentration and price cost margins journal of political economy 84 oct 1976 1109 1123 u s department of commerce bureau of economic analysis the detailed input output structure of the u s economy 1972 volume 1 the use and make of commodities by industries washington d c government printing office 1979 u s treasury department internal revenue service statistics of income source book 1972 processed ward t s the distribution of consumer goods structure and performance new york cambridge university press 1973 weiss leonard w the geographic size of markets in manufacturing this review 54 aug 1972 245 257 case studies in american industry new york john wiley and sons 1980

privatisation and x inefficiency a bargaining approach the usual analysis of privatization and x inefficiency uses agency theory to model managerial effort the authors model worker effort as determined by a bargain between firms and workers workers dislike effort because it lowers utility firms prefer high effort because it raises productivity public sector firms are assumed to be social welfare maximizers and therefore compared to private sector firms they bargain lower effort levels since they have the interests of consumers and workers at heart the authors model predicts that under certain conditions privatization should raise effort and so lower x inefficiency and that wages may increase or decrease copyright 1995 by blackwell publishing ltd

on the size of u s government political economy in the neoclassical growth model we study a dynamic version of meltzer and richard s median voter model of the size of government taxes are proportional to total income and they are redistributed as equal lump sum transfers voting takes place periodically over time and each consumer votes for the tax rate that maximizes his equilibrium utility we calibrate the model to u s data key elements in the calibration are the income and wealth distribution and the parameters governing the leisure and consumption choices the total size of transfers predicted by our political economy model is quite close to the size of transfers in the data

slack adjusted dea for time series analysis performance measurement of japanese electric power generation industry in 1984 1993 abstract using a new slack adjusted data envelopment analysis sa dea model which explicitly incorporates an influence of slacks into its efficiency measurement this study discusses a use of various efficiencies and index measures for dea dynamic analysis an analytical formulation to determine the type of return to scale rts is proposed for the new dea model this paper mathematically discusses when multiple solutions occur on rts and how to deal with such a difficulty as an important case study this paper applies the proposed dea approach to examine the performance of japanese electric power generation companies from 1984 to 1993 two policy implications are suggested for guiding the japanese electric power industry

on the application of accounting rates of return the article presents a study on the application of some accounting concepts and functions in economic analysis according to the author his analysis will provide a basis on which accountants can discriminate between the alternative rules and standards available to them by reference to their relevance to the information required by investors or regulators the author states that current cost accounts should be used with care the appropriate method for economic interpretation of rates of return on capital deals with the application of the balance sheet conventions of current cost accounting

stochastic frontier production analysis measuring performance of public telecommunications in 24 oecd countries abstract this study presents a new use of least absolute value lav estimation for obtaining parameter estimates of a stochastic frontier production function the lav estimation is combined with data envelopment analysis dea and the resulting dea lav estimates are examined by several statistical tests as an important application this study applies dea lav stochastic frontier production analysis for measuring and predicting the performance of public telecommunications in 24 oecd organization for economic cooperation and development countries this international comparison may serve as an empirical basis for understanding the telecommunications industries whose environments are now shifting from regulation to competition

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

public versus private economic activity a new look at school bus transportation thomas borcherding 1977 in commenting on the public versus private literature offered the generalization that removal of an activity from the private to the public sector will double its unit costs of production the results of this paper obviously are not consistent with borcherding s rule of two generalization at the same time however the 12 cost per mile differential in favor of private ownership indicated by the results for the overall sample is not a trivial sum in absolute terms the cost per mile differences in favor of private buses contained in the five trip groups are not trivial either nor is the direct evidence from the 82 joint systems in attempting to assess the results much depends on the perspective against which they are judged

the dynamics of government abstract we model income redistribution with dynamic distortions as determined by rational voting without commitment among individuals of different types and income realizations we find that redistribution is too persistent relative to that chosen by a planner with commitment the difference is larger the lower is the political influence of young agents the lower is the altruistic concern for future generations and the lower is risk aversion furthermore there tends to be too much redistribution in the political equilibrium finally smooth preference aggregation as under probabilistic voting produces less persistence and does not admit multiple equilibria which occur under majority voting aggregation

managerialism revisited in the light of bargaining game theory abstract this lecture proposes to view the modern firm as a coalition of shareholders employees and business partners rather than to identify it with a single maximizer such as an entrepreneur this view may be thought of as a revival of the original thought of managerialism but tries to go further by analyzing implications of the interactions of those agents on the behavior of the firm in a bargaining game theoretic framework the lecture reviews the literature on game theoretic approaches to the theory of the firm and discusses a few important theoretical and institutional issues

when can public policy makers rely on private markets the effective provision of social services the privatisation of social services is being increasingly discussed the social services market is characterised by multiple market failures including informational asymmetries agency problems externalities and distributional concerns consumers may care as much or more about quality of services than about price if quality is readily observable the government can regulate private providers to assure standards are met but when standards are difficult to observe or when the recipient is not the agent who makes the decisions government ownership may be preferable this paper categorises the market situations in which government provision of social services is likely to be most versus least attractive

the relative efficiency of public and private firms in a regulated environment the case of u s electric utilities abstract the relative efficiency of privately owned and publicly owned electric utilities is investigated using theoretical and econometric models that allow for the effects of both ownership type and regulation the estimation results indicate that the two types of firms are equally cost inefficient in the united states the average effect of inefficiency is to increase the cost of production by 2 4 percent holding output constant inefficiency increases the average quantities demanded of capital and labor and decreases the average quantity demanded of fuel

vested interests in a positive theory of stagnation and growth we study a positive theory of stagnation and growth aimed at understanding the large variations in growth outcomes across actual economies the theory points to the fundamental role played by vested interests in determining policies which are key to the growth process some agents seek to prevent the adoption of new technologies we develop a model of technology adoption and show how technological innovation may sow the seeds of its own destruction in particular we find that the equilibrium is characterized by a long cycle of stagnation and growth over this cycle incumbents are phased out of the economy will new innovation occur in formalizing our theory we make a methodological contribution by characterizing dynamic voting equilibria when voters must forecast the effects of different current policies on future prices and policy outcomes

the comparative productivity efficiency for global telecoms abstract this paper reconciles diverse efficiency measures to characterize the productivity efficiency of 39 forbes 2000 ranked leading global telecom operators productivity efficiency ratings should be considered as a key element for achieving greater business performance and better market position this study applies the data envelopment analysis dea approach with the classical radial measure a p efficiency measure and efficiency achievement measure respectively combining multiple outputs and inputs to measure the magnitude of performance differences between leading telecom carriers empirical results indicate that top ranked forbes telecom operators are not the same as those having top ranked ccr efficiency measures the results show that about 20 5 of forbes 2000 telecom operators are operating on the best practice frontier for ccr efficiency measure while only 7 7 match the efficiency achievement measure criteria this study also shows that asia pacific telecom operators have better productivity efficiency than those in europe and america but the differences are not significant another interesting find is that the state owned telcos as a group show a relatively higher scoring than the privatized telcos as a group because they maintain full service fixed line mobile and internet operations as compared to maintaining fixed only or mobile only operations except china but the differences are not significant it has been concluded that competition in the global telecom market will continue to be tied to the enhanced productivity efficiency

a theory of trickle down growth and development this paper develops a model of growth and income inequalities in the presence of imperfect capital markets and it analyses the trickle down effect of capital accumulation moral hazard with limited wealth constraints on the part of the borrowers is the source of both capital market imperfections and the emergence of persistent income inequalities three main conclusions are obtained from this model first when the rate of capital accumulation is sufficiently high the economy converges to a unique invariant wealth distribution second even though the trickle down mechanism can lead to a unique steady state distribution under laissez faire there is room for government intervention in particular redistribution of wealth from rich lenders to poor and middle class borrowers improves the production efficiency of the economy both because it brings about greater equality of opportunity and also because it accelerates the trickle down process third the process of capital accumulation initially has the effect of widening inequalities but in later stages it reduces them in other words this model can generate a kuznets curve

decomposing capacity utilization in data envelopment analysis an application to banks in india abstract this paper briefly reviews the existing methods of capacity utilization in nonparametric framework from economic perspectives and then suggests an alternative in the light of limitations therein in the spirit of work by coelli et al coelli t j grifell tatje e perelman s 2002 capacity utilisation and profitability a decomposition of short run profit efficiency international journal of production economics 79 261 278 we propose two methods radial and non radial to decompose the input based physical technological capacity utilization into various meaningful components viz technical inefficiency ray economic capacity utilization and optimal capacity idleness a case study of indian banking industry is taken as an example to illustrate the potential application of these two methods of decomposition our two broad empirical findings are that first competition created after financial sector reforms generates high efficiency growth and reduces excess capacity second the cost gap of the short run cost from the actual cost is higher for the nationalized banks over the private banks indicating that the former banks though old do not reflect their learning experience in their cost minimizing behavior

privatization and efficiency differentiating ownership effects from political organizational and dynamic effects this paper argues that the private public ownership factor should be differentiated from other factors that also influence the effect of privatization on efficiency this is empirically confirmed in a longitudinal study of 24 spanish firms for which several political and organizational factors are found to influence the estimated effects of privatization on efficiency the analysis of the timing of the effects reveals a strong significance for post privatization years 5 6 negative and 7 8 positive this suggests that the negative effect of these factors is transitional being eventually offset by the positive effects of the change to private ownership 2000 elsevier science b v all rights reserved jel classification l33

productivity growth technical progress and efficiency change in industrialized countries this paper analyzes productivity growth in 17 oecd countries over the period 1979 1988 a nonparametric programming method activity analysis is used to compute malmquist productivity indexes these are decomposed into two component measures namely technical change and efficiency change we find that u s productivity growth is slightly higher than average all of which is due to technical change japan s productivity growth is the highest in the sample with almost half due to efficiency change jel c43 d24 in this paper we apply recently developed

the price of government ownership a study of the domtar takeover abstract this paper presents an analysis of how government ownership of an enterprise may affect its profitability in august 1981 two quebec crown corporations announced that they had gained control of domtar a private canadian corporation upon receipt of this information the stock s market value dropped significantly over six trading days domtar s shareholders suffered cumulative abnormal returns of minus 25 percent which is equivalent to a reduction in market value of approximately 150 million much of this loss can be attributed to government control and the anticipated pursuit of non profit objectives

the validity of roi as a measure of business performance business performance at the corporate level is widely assessed by the return through changes in the price of the stock and dividends to shareholders however corporate level performance analysis whether for strategic or public policy purposes is inappropriate in many instances because of the heterogeneity of the corporation s operations the strategic business units sbus comprising a corporation are often very diverse profitability analysis grouping these entities together yields few of the insights needed for strategic or public policy decision making because of this heterogeneity profitability analysis is often advocated and undertaken at the sbu level the absence of an equity market at the sbu level means that a measuring instrument other than that based on stock price must be used to assess profitability due to the lack of alternatives the performance of an sbu is almost always based on accounting data in particular the accounting measure return on investment roi is widely regarded as the most useful measure and ultimate bottom line test of business performance james reese and william cool 1978 it is used both as an objective of management and as a dependent criterion variable to evaluate the effect of various factors on performance despite its widespread use roi has been extensively criticized as being a totally inadequate indicator of economic rate of return g c harcourt 1965 ezra solomon 1971 franklin fisher and john mcgowan 1983 roi most typically defined as net income total assets 1 does not properly relate the stream of profits to the investment that produced it the earnings numerator is a consequence of investment decisions made in the past but the assets denominator can be expected to have had influence on not only past and current earnings but also to have influence on future earnings because of this failure to produce an accurate mapping roi has been criticized as being so seriously flawed that it bears little if any resemblance to the crucial concept of internal or economic rate of return the shortcomings of roi are said to be so severe that its cross sectional variations can be completely explained by the inappropriateness of the measure due to a lack of proven validity empirical investigations using roi have been labeled by fisher and mcgowan as totally misleading enterprises and by george benston 1985 as of doubtful value those making use of accounting roi argue that the noise created by the accounting distortions need not be expected to drown out the underlying signal of economic return contained in roi and therefore roi is still appropriate for use in analysis f m scherer 1979 and william long and david ravenscraft 1984 this paper examines the validity of roi as a measure of economic rate of return by ascertaining the existence and extent of the association of corporate level accounting roi with stock return a widely accepted indicator of business performance the null hypothesis for the analysis is that roi has no validity as a measure of business performance and as such will not exhibit an association with stock return while the tests provide direct evidence on the validity of corporate level roi the same underlying theorized inadequacies of accounting roi are also present at the sbu level 1 conclu

contracting out by the public sector theory evidence prospects unlike privatization contracting out or simply contracting does not generally involve the sale of publicly owned assets yet it has been widely used as a mechanism for reform of public sector service provision contracting introduces ex ante competition competition for the market through competitive tendering this article examines both the theory and evidence of contracting by the public sector it considers the theoretical conditions such as contractual incompleteness and the ownership of physical assets which may impede efficient contracting it also reviews the international evidence which suggests that savings in the order of 20 percent are achievable without sacrificing the quality of service provided in the uk savings of between 240m pounds and 280m pounds have been estimated for contracts let at the central government level substantial savings have also been generated by contracting at the local government level copyright 1997 by oxford university press

public policies pressure groups and dead weight costs abstract this paper presents a model of competition among special interest groups for political influence each active group exerts pressure to affect its taxes and subsidies where activities of different groups are related by the equality between total tax collections and total tax subsidies the dead weight costs and benefits of taxes and subsidies play a major role in our model an increase in the dead weight cost of taxation encourages pressure by taxpayers while an increase in the dead weight costs of subsidies discourages pressure by recipients various applications of the analysis are discussed