fdi in the eu periphery a multinomial logit analysis of greek firm strategies louri h papanastassiou m and lantouris j 2000 fdi in the eu periphery a multinomial logit analysis of greek firm strategies reg studies 34 419 427 outward fdi is a recent activity of greek firms it is mostly directed towards the balkan countries and forms an alternative strategy to exports an analysis of the decision making process of greek firms before undertaking any type of internationalization strategy is attempted using a multinomial logit model on firm level data borrowing capacity labour intensity sales growth rate relative firm size and acquired familiarity with foreign markets contribute to the strategic decision of investing abroad louri h papanastassiou m et lantouris j 2000 l investissement direct etranger a la peripherie de l ue une analyse du type multinomial logit des strategies des entreprises grecques reg studies 34 419 427 l investissement direct grecque a l etranger est un phenomene assez recent en regle generale de tels investissements sont orientes ver

gold and silver health plans accommodating demand heterogeneity in managed competition abstract new regulation of health insurance markets creates multiple levels of health plans with designations like gold and silver the underlying rationale for the heavy metal approach to insurance regulation is that heterogeneity in demand for health care is not only due to health status sick demand more than the healthy but also to other taste related factors rich demand more than the poor this paper models managed competition with demand heterogeneity to consider plan payment and enrollee premium policies in relation to efficiency net consumer benefit and fairness the european concept of solidarity specifically this paper studies how to implement a silver and gold health plan efficiently and fairly in a managed competition context we show that there are sharp tradeoffs between efficiency and fairness when health plans cannot or may not because of regulation base premiums on any factors affecting demand enrollees do not choose the efficient plan when taste e g income can be used as a basis of payment a simple tax can achieve both efficiency and fairness when only health status and not taste can be used as a basis of payment health status based taxes and subsidies are required and efficiency can only be achieved with a modified version of fairness we refer to as weak solidarity an overriding conclusion is that the regulation of premiums for both the basic and the higher level plans is necessary for efficiency

will aging baby boomers bust the federal budget barely ten years from now the leading edge of the baby boom generation will turn 65 ushering in a sustained aging of the u s population many are concerned that through the first half of the 21st century the federal government will stagger under the weight of these elderly baby boomers as they receive the medical retirement and disability benefits promised them the number of people over age 65 in the population is projected to increase by a factor of 2 5 by 2040 lee and tuljapurkar 1994 with the number of nursing home residents growing even more rapidly schneider and guralnick 1990 long term forecasts suggest that nearly one third of gdp will be accounted for by health care by 2030 burner waldo and mckusick 1992 warshawsky 1994 the fiscal impact of this demographic change is potentially enormous shoven topper and wise 1994 an alternative view is much more optimistic about retirement prospects for the baby boom generation this view holds that disability and morbidity will continue to become more compressed leading to healthier years later in life manton stallard and liu 1993b manton corder and stallard 1997 the average retirement age will rise productivity gains and increased tax revenue will offset the demands that aging baby boomers place on the federal budget one projection suggests the percentage of those over age 65 requiring medicaid coverage for longterm care will decline in the next century wiener illston and hanley 1994 another is that long term health care costs will decline as a fraction of median

regulatory balancing and the efficiency of green r d we identify and analyse several dynamic implications of setting environmental standards such as to balance marginal costs and benefits the adoption of such a regulatory approach is shown to effect i the speed of improvement of abatement technologies ii the direction in a sense to be defined of that improvement iii its source and the distribution of the rents from it and iv the rate of development of defensive averting technologies existing views are thoroughly synthesised in the context of a simple diagrammatic model several new results are derived and at least one conventional wisdom questioned the message of the analysis for legislators and regulators is that cost benefit balancing should be done with care

equality efficiency and market fundamentals the dynamics of international medical care reform public opinion surveys uniformly show low support for medical care systems in developed countries the longstanding conflict between equal access to care and efficient service provision partly explains this dissatisfaction but the trade off is particularly acute in medical care as new technologies developed over time have increased the cost of care and made the equity commitment even more expensive countries first dealt with rising costs by maintaining equal access and restricting total spending efficiency suffered however as a result many countries are considering a move away from spending controls and toward incentive based medical care reform

testing for efficiency and rationality in foreign exchange markets a review of the literature and research on foreign exchange market efficiency and rationality with comments abstract this paper specifies two var models for testing efficiency and expectations in foreign exchange markets the sufficient conditions for efficiency and rational expectations by imposing restrictions on the var parameters are derived based on these models issues on testing efficiency and rationality are discussed with reference to previous empirical studies in the area

the economics of invention incentives patents prizes and research contracts though public intervention in the market for research is virtually universal economists have paid surprisingly little attention to the choice of the form of research incentive in a given market structure many studies concentrate on patents but any assumption of their superiority over other incentives has been founded on intuition rather than on formal analysis in this paper i analyze the choice between three of the most common alternative means of public intervention in the research market namely patents prizes and direct contracting for research services i show why and under what conditions any one of the three may be preferred by a social welfare maximizing administrator in a competitive economy using a model that for the first time pays explicit attention to differences in the informational roles of each of these alternatives in the extensive literature on the economics of patents see arnold plant 1934 fritz machlup 1958 charles taylor and z a silberston 1973 morton kamien and nancy schwartz 1975 and f m scherer 1977 for valuable surveys formal analysis weighs the benefits of patents as a solution to the market failure associated with the inappropriability of knowledge against the welfare cost due to the restriction on the use of the knowledge generated and this tradeoff is optimized by patent life adjustment in william nordhaus 1969 scant analytical attention is paid to alternative incentive mechanisms an exception is ben yu 1981 who considers the role of prior contracting for inventions but as many writers for example dan usher 1964 yoram barzel 1968 joseph stiglitz 1969 carole kitti 1973 glenn loury 1979 partha dasgupta and stiglitz 1980a have pointed out in various contexts the incentive offered by an unlimited patent to competitive researchers may be excessive due to the common pool problem discussed further in section i below if the patent administrator and researchers share the same information as implicitly assumed in previous models then the patent life limitation can be adjusted to provide the optimal patent incentive given the common pool problem but in all such models patents would not be chosen in a fully optimized fiscal system researchers and the administrator are assumed to have identical information about the shadow price of potential inventions a patent is just a means of turning this shadow price into a monetary reward but monetary compensation can instead be offered directly to researchers by the state assuming that patent revenues incur a higher deadweight loss than an equivalent amount of public funds financed by less distortionary means for example a minimally efficient tax system appropriate prizes or government contracts are socially preferable to patents with optimal lives if the patent is ever to be the optimal incentive mechanism for research it must possess advantages not captured in existing models informal discussions of patents emphasize their informational role to include the latter as a justification for decentralized invention incentives i incorporate an ex ante imbalance of information about costs and benefits of research in the model presented in section ii but this alone is not quite enough it is further necessary to specify that the terms of the award must be fixed before department of economics economic growth center box 1987 yale station yale university new haven ct 06520 i thank with the usual caveat marguerite alejandro wright cindy arfken martin baily nuong brennan steven englander robert evenson richard levin richard nelson susan rose ackerman denis wright and two referees for assistance of various kinds

a semi parametric model for asymmetric information in health plan markets i introduction there are two potential sources of asymmetric information that induce market failure in the health plan market the first adverse selection is analyzed by rothschild and stiglitz 1976 in their study individuals are exogenously assigned one of two possible illness probabilities only the individuals know their true illness probability under these conditions low risk consumers underinsure in environments where equilibrium exists adverse selection also occurs when plans can observe characteristics that affect risk but cannot adjust premiums to reflect these risks this type of adverse selection is discussed by cutler and reeber 1998 here plan premiums are constrained to be the same across all policyholders and therefore one cannot risk adjust on observable variables such as age or previous medical history similar to the first type of adverse selection the low and high risk policyholders sort themselves into different plans or plans attempt to cream skim by adjusting reimbursements that are more favorable to the profitable low risk policyholders death spirals can occur where the low risk consumers leave the more generous plans causing premiums of these plans to grow which in turn induces more members to leave these plans as the premiums grow more individuals leave the generous plan until it is no longer viable the second source of information asymmetry comes from the individual s choice of preventive effort much recent publicity has shown how individuals can reduce their probability of illnesses or accidents choices of eating drinking exercising smoking unprotected sexual activity driving behavior recreational drug use and sunscreen use are a few items from the long lists of decisions that affect the probability of illness health insurers cannot contract policyholders to exert a certain level of preventive effort because there is no mechanism to observe these efforts auto insurers can contract indirectly for effort by accessing public driving records and charging premium surcharges for traffic violations there are no counterpart records for health plans arnott and stiglitz 1988 and pauly 1974 discuss the welfare effects when preventive effort can reduce illness probabilities but the level of these efforts cannot be monitored and therefore cannot be written into a contract when this condition occurs full insurance is no longer feasible because no effort would be exerted under full insurance because health plans are not compensating individuals for the cost savings that come from preventive effort the individual s choice of effort is usually less than optimal therefore we call this information asymmetry moral hazard this moral hazard results in underinsurance for the entire population stewart 1994 looks at an economy where both adverse selection and moral hazard are present he finds that the welfare losses coming from both sources are subadditive i e the total welfare loss is less than the sum of the losses coming from both yet when both moral hazard and adverse selection are present the economy is still worse off by having both sources of asymmetric information instead of one of them in most of his simulations the low risk types substitute preventive effort for income protection although this is not a theoretically proven result his study shows that it is difficult to derive general results on the misallocation of effort and risk sharing when both sources are present because these misallocations depend on the individual s willingness to substitute the income savings from effort for the income protection that comes from insurance setting good health care policy requires knowing about the presence of these informational asymmetries unfortunately to date there is no consensus about the presence of informational asymmetries that come from either adverse selection or preventive effort most studies have attempted to determine only if adverse selection is present while ignoring the possible existence of preventive effort

the insurance value of medical innovation abstract economists think of medical innovation as a valuable but risky good producing health benefits but increasing financial risk for consumers and healthcare payers this perspective overlooks how innovation can lower physical risks borne by healthy patients facing the prospect of future disease we present an alternative framework that accounts for all these sources of value and links them to the value of healthcare insurance we show that any innovation worth buying reduces overall risk and generates positive insurance value on its own we conduct a stylized numerical exercise to assess the potential empirical significance of our insights our calculations suggest that conventional methods meaningfully understate the value of historical health gains and disproportionately undervalue treatments for the most severe illnesses where physical risk to consumers is the costliest these calculations also suggest that the value of physical insurance from new technologies may exceed the financial spending risk that they pose

the menu setting problem and subsidized prices drug formulary illustration the menu setting problem msp determines the goods and services an institution offers and the prices charged it appears widely in health care from choosing the services an insurance arrangement offers to selecting the health plans an employer proffers the challenge arises because purchases are subsidized and consumers or their physician agents may make cost ineffective choices the intuitively comprehensible msp model readily solved by computer using actual data helps structure thinking and support decision making about such problems the analysis uses drug formularies lists of approved drugs in a plan or institution to illustrate the framework

the interaction between forms of insurance contract and types of technical change in medical care a simple three parameter description of medical technology is introduced to investigate the relationships between technical change welfare and type of insurance contract the value of a particular change in technology depends on the existing form of contract the marginal equilibrium expected utility to consumers of different types of technical change hinges on the manner in which the insurance arrangement is designed to mitigate moral hazard these results open the way for a positive model of the effects of insurance arrangements on the types of technology that are adopted and the effects of technical changes on the prevalent forms of insurance contract

medical care costs how much welfare loss hardly a week goes by without a front page newspaper article on rising health care costs and the uninsured in this article i focus mainly on costs arguing that the issue has been somewhat misconceived while the level of medical care spending in the u s is a cause for concern the welfare losses associated with rises in that level of spending may not be as large as the public rhetoric can make them seem in fact cost containment may not be as urgent as is widely supposed and some proposed cost containment policies may result in welfare losses for the insured and even increase the number of uninsured

insurance and incentives for innovation in medical care economists have frequently pointed to the distorting effects of health insurance as a major contributor to rapidly increasing health costs relatively little is known however about the influence of changing medical technology on expenditures if increases in expenditures are in part the result of development of costly but worthwhile new technologies a common view among noneconomists failure to take account of this may lead to over statement of the distortive effects of insurance on the other hand some observers have questioned whether the benefits derived from expensive medical innovations always exceed the costs 18 others have suggested that resources devoted to the development of very expensive technologies might be better used for other kinds of medical research 16 3 in light of these arguments it appears that the relationships between medical insurance and technological change may be quite important if the extent of insurance coverage influences the rate and direction of technological change in medicine then the long run welfare effects of insurance are more complex than current models 5 6 allow it is sometimes argued informally that such an influence existsthat the presence of insurance biases the system toward innovations that expand capabilities while increasing expenditures and away from those that reduce costs 15 20 such a hypothesis has however never been developed as an implication of a formal economic model even the term bias in the argument is unclear it appears to be used in a normative sense but it has not been explained clearly why such a bias if it exists leads to welfare losses even if it is true for example that the presence of insurance leads to the adoption of a more costly mix of medical innovations than would otherwise occur this is not obviously undesirable to facilitate the purchase of costly but beneficial medical care is the purpose of insurance this paper defines bias in technological change in a normative sense it employs a simple model of insurance and profit maximizing innovators and develops sufficient

reimbursing health plans and health providers efficiency in production versus selection the tradeoff between an insurer s or medical provider s incentives to select good risks and to produce efficiently is governed by the supply price analog to the demand price tradeoff between moral hazard and risk aversion under a variety of models the optimum supply price is a mixture of capitation and fee for service payments empirical literature shows that pure capitation payment leaves strong incentives for selection that are acted upon the presence of contracting costs in a rothschild stiglitz model means a limited pooling equilibrium can exist and that poor risks will not be at their preferred outcome

the location of overseas production and production for export by u s multinational firms abstract the location of overseas manufacturing production is influenced by common factors that operate in all industries notably proximity to the united states and to other markets within industries opposites attract low wage and low capital intensity parents choose high wage countries production for export is attracted by large internal markets in host countries economies of scale in production presumably make large markets economical as export bases another factor is high trade propensities of host countries u s firms tend to export from high wage countries but labor cost is not in general a major influence on the location of export production

medical insurance technological change and welfare concerns have been expressed about the welfare effects of expensive innovations in medical care financed largely through medical insurance this paper develops a model which considers such issues it is shown that even if insurance is purchased optimally subject to a plausible constraint on the form of the contract innovations may be adopted that have the effect of reducing expected welfare the question of how the benefits of medical innovations ought to be measured in the presence of insurance is also explored

health care costs on the rise again since 1999 health care costs have been growing faster than national income this rapid growth has occurred as the ability of private and public purchasers to reduce service utilization and bargain for lower prices has fallen insurers have recouped lost profits through higher premiums and new technologies have driven up costs throughout the sector private insurance market responses to these rising costs may lead to reductions in the number of people with insurance and to increased fragmentation of the insurance market over time technological change in medicine both increases costs and improves the quality of care the challenge for public policy is to maintain insurance and some degree of equity in the face of these rising costs

health insurance and the demand for medical care evidence from a randomized experiment we estimate how cost sharing the portion of the bill the patient pays affects the demand for medical services the data come from a randomized experiment a catastrophic insurance plan reduces expenditures 31 percent relative to zero out of pocket price the price elasticity is approximately 0 2 we reject the hypothesis that less favorable coverage of outpatient services increases total expenditure for example by deterring preventive care or inducing hospitalization

the physician labor market in a managed care dominated environment i introduction health maintenance organizations hmos and other managed care arrangements are rapidly growing alternatives to fee for service ffs insurance in the united states hmo enrollment has grown from under 3 million in 1970 interstudy 1986 to over 46 million by early 1995 interstudy 1995 little is known about how these changes in health care financing will ultimately affect physicians incomes but managed care is undoubtedly altering the economic environment of medical practice the shift from ffs to salaried or capitated payment reduces physicians incentives to overtreat 1 further managed care plans control physicians access to their enrollees by monitoring practice patterns and removing overly aggressive doctors from their panels hmos also employ a different physician mix with fewer specialists than the mix that characterizes the ffs environment thus a hypothesized consequence of rising hmo market share is reduced demand for specialists wennberg et al 1993 estimate potential surpluses ranging from 10 for emergency medicine to 210 in pathology surpluses of these magnitudes would be expected to reduce earnings however until recently physicians have enjoyed stable or rising incomes simon and born 1996 this may be explained by asymmetric information between patients and physicians if patients are poorly informed about the effectiveness of treatment options doctors may be able to protect their incomes from the loss of patients to managed care by prescribing more aggressive treatment to their remaining ffs patients despite mixed evidence on the extent of supplier induced demand sid e g fuchs 1978 newhouse et al 1982 dranove and wehner 1994 rizzo and blumenthal 1996 this hypothesis remains popular among policymakers the proponents of quotas for the size and mix of the health workforce argue that the supply side of the health sector is simply impervious to signals from the demand side i t is widely believed that physicians enjoy almost total discretion in dictating the volume and composition of health care they render allow ing physicians to extract very high target incomes virtually regardless of the local physician to population ratio reinhardt 1994 interest in physician incomes arises in part from the central role that incomes play in sending appropriate signals about changing supply and demand conditions if ffs physicians can maintain their incomes as the ffs patient pool shrinks decisions about specialty location and hmos staffing patterns would have little reason to change alternatively if ffs incomes are sensitive to managed care penetration we would expect doctors to increasingly practice in areas and specialties in which employment opportunities have become relatively favorable pursue nonclinical positions or retire likewise hmos would reduce substitution towards non physician providers and away from specialist physicians the consensus among health workforce experts is that the u s has too many physicians and too many specialists relative to primary care physicians and that market adjustments will be insufficient to restructure the physician supply thus many health workforce experts and medical organizations have called for centralized workforce planning e g mitka 1997 committee on the u s physician supply 1996 pew 1995 cohen and todd 1994 schroeder 1994 wennberg et al 1993 proposals include limits on the number and specialty composition of residency positions restrictions on medical school class sizes and immigration by international medical graduates and incentive payments for early retirement retraining or diversion of physicians into non clinical positions before advocating interventions in the medical labor market it is worth exploring the potential for market forces to generate the desired physician supply changes many supporters of workforce policies presume that the failures of a ffs dominated physician services market would persist even in a radically different context

symposium on health care reform the papers in this symposium focus on two major issues of health economics in the context of president clinton s health security act cost containment and labor market effects of financing insurance the act proposes to limit public and private spending a key issue is the extent to which without a limit but with a standardized basic plan supplementary insurance will exist to allow scope for individual choice the act s financing will have an ambiguous effect on labor supply but will encourage formation of small low wage firms several features including community rating and standardization of dependent coverage imply substantial redistribution

is health care really a luxury much of the work which has led to a widely held view that the income elasticity of health care spending exceeds one has been based on international cross section data or on pooled cross sections and time series in this paper we re examine this view in the context of long run equilibrium relationships between non stationary time series possibly including autonomous trends our results cast doubt upon the usefulness of pooling and upon the notion of an elasticity above one

price cap regulation and technical change abstract existing analyses of the implications of price cap regulation for the development of cost reducing technologies assume that all r d is done by the regulated industry this is unrealistic we present a simple model of non cooperative r d by a regulated firm and a single external developer under a price cap regime of the sort characterised by cabral and riordan in equilibrium the external developer exerts less r d than is socially optimal the regulated firm may exert more or less a tightening of the regulatory regime impacts the r d incentives of both players though in different ways the optimal regulatory adjustment parameter may be bigger or smaller than that suggested by existing studies despite the scope for duplication of results research by an outsider necessarily enhances welfare

optimal health insurance for multiple goods and time periods we examine the efficiency based arguments for second best optimal health insurance with multiple treatment goods and multiple time periods correlated shocks across health care goods and over time interact with complementarity and substitutability to affect optimal cost sharing health care goods that are substitutes or have positively correlated demand shocks should have lower optimal patient cost sharing positive serial correlations of demand shocks and uncompensated losses that are positively correlated with covered health services also reduce optimal cost sharing our results rationalize covering pharmaceuticals and outpatient spending more fully than is implied by static one good or one period models

on the determination of the us aggregate health care expenditure per capita real health care expenditure is examined against three major groups of explanatory variables economic demographic and health stock and it is found that the three groups of variables have an impact on real health care spending other subcategories such as real private and government health care pharmaceutical dental home nursing ambulatory personal medical consumption and in patient expenditures have also been examined and have been found to be affected by the explanatory variables for several subcomponents there is evidence of supplier inducement of the demographic group of variables the ageing population had an impact only on the per capita real overall and private health care outlay and pharmaceutical spending also cointegrating relationships were found and consistent estimators of the elasticities found

the impossibility of meaningful efficient market parameters in testing for the spot forward relationship in foreign exchange markets abstract this study demonstrates that it does not matter whether the estimated parameters have the correct or wrong signs and sizes the outcome is empirically the same moreover the commonly used hypothesis of testing for market efficiency and rationality is helpless under the real world circumstances of exchange rate data it is impossible to use this hypothesis to judge market efficiency

physician reimbursement and technology adoption this study analyses the incentives of health care providers to adopt new technologies in a world with ex post moral hazard it is shown that in a second best efficient world with respect to insurance coverage a linear remuneration scheme implements the adoption of second best efficient technologies only in special cases under a third best standard coinsurance contract the adequate reimbursement rule is characterised depending on the characteristics of the technology and on patients demand elasticities with respect to monetary and non monetary costs a shift from fee for service to capitation is likely to display undesirable incentives for very severe illnesses by inducing a reduction in the technically feasible level of healing or an increase in non monetary costs of treatment

optimal risk adjustment in markets with adverse selection an application to managed care it is well known that adverse selection causes distortions in contracts in markets with asymmetric information taxing inefficient contracts and subsidizing the efficient ones can improve market outcomes bruce c greenwald and joseph e stiglitz 1986 although regulators rarely seem to implement tax and subsidy schemes with adverse selection motives in mind contracts are often complex and incomplete and it is the inefficient elements of the contract that are difficult to verify and hence tax or subsidize this is precisely the reason that in health insurance markets rather than subsidizing contracts regulators and payers contend with adverse selection by taxing and subsidizing the price paid to insuring health plans on the basis of observable characteristics of the persons joining the plan a practice known as risk adjustment risk adjusted premiums are paid to managed care plans plans that ration care by management rather than by conventional approaches like coinsurance and deductibles and offer a bundle of characteristics quality access for many services that is fundamentally outside the scope of direct regulation selection related incentives threaten the efficiency and fairness of this organization of health insurance markets by inducing plans to distort the quality of the services they offer to discourage high cost persons from joining the plan as managed care becomes the predominant source of health care for residents of the united states and many other countries payers attempt to address this incentive by setting a risk adjusted price that pays more for more expensive enrollees as it is conventionally practiced risk adjustment sets prices for people proportional to their expected cost based on observable characteristics the federal medicare program for example has used age sex welfare status and county of residence adjusters to set prices to managed care plans to convey how what we term conventional risk adjustment works suppose age is the risk adjuster for a medicare population over 65 if it is determined that the 75to 84 year old population costs 20 percent more than the overall average in medicare the assumption in conventional risk adjustment is that the premium paid to plans for someone in this group should be 20 percent above the average we fundamentally disagree that this is the right way to think about and do risk adjustment

internalization in practice early foreign direct investments in malaysian tin mining this paper looks at the historical record of early foreign direct investment in malaysian tin mining and draws its implications for the theory of the mne

extreme support for uncovered interest parity abstract concerning uip the common conclusion is that it may be valid but undetectable for many reasons in this paper we take a complementary route in that we base our methodology on a random time effects panel model that controls for various biasing factors and which is invariant to the choice of the numeraire currency we show that the rejection of uip is not as severe as is commonly found and that it almost perfectly holds in periods where the forward premiums are large