A test for regulatory lag and the role played by periodic contract renewals in mitigating such lag in local cable franchise relationships

Summary and Conclusions This study reports two primary findings. First, the typical cable franchise relationship appears to be characterized by substantial regulatory lag. While long-term franchise contracts may involve a significant amount of day-to-day interpretation and modification, the interpretation and modification are not sufficient to ensure that the contractual terms of trade are consistently at market. In terms of pricing, channel capacity, community programming channels, and franchise fees, the terms of trade confronted by cities prior to franchise renewal are significantly less favorable than the terms of trade found in post-renewal contracts.Second, periodic franchise renewals appear to be a relatively effective means of mitigating regulatory lag and adjusting the contractual terms of trade to market. The terms of trade obtained by cities conferring renewal contracts are roughly, although not entirely, equivalent to the terms obtained by similarly situated cities concurrently issuing initial franchise awards.The conclusions to be drawn from these findings are twofold. First, the existence of regulatory lag in cable franchise relationships may be desirable. From a dynamic efficiency perspective, that is, regulatory lag may provide the regulated firm with an appropriate incentive to undertake risks, reduce costs, and/or improve productivity (Vogelsang 1988). In addition, because most of the capital assets associated with a cable system have economic lives of 10 to 15 years (Webb 1983), it may be inefficient to continually attempt to adjust the terms of trade in a franchise relationship to market (Schmalensee 1979).Second, while continuous regulatory oversight may have undesirable economic consequences, periodic contract renewals show promise as an effective means to ensure that regulatory authorities continue to promote the interests of a public utility's consumers. If designed perhaps to correspond to the points in time at which the public utility needs to rebuild or upgrade its plant, contract renewals may serve to push regulators to periodically examine whether the terms of trade offered by the public utility are at market. Without such encouragment, public utility commissioners may be content to sit back and do nothing (Joskow 1974, 298–299) so long as none of the actors in the regulatory process are complaining.     

论巨灾期权及其演进

巨灾期权是以巨灾损失指数为基础而设计的期权合同,是保险公司通过在期权市场上缴纳一定期权费以购买在未来一段时间内的一种价格选择权。本文旨在对巨灾期权及其演进进行系统考察,以期对其有更为全面的认识。本文回顾了巨灾期权的市场发展;分析了ISO,PCS,GCCI和CHI四种指数为基础的巨灾期权产品和运作原理,考察了这四种巨灾指数及其产品的演进。     

土地财政与城市扩张的相关性分析——基于新制度经济学的视角

中国的＂土地财政＂加剧了地方财政对土地出让金的依赖,也在一定程度上促进了房价的上涨。随着城市的扩张,土地财政收入呈下降趋势并最终导致地方财政支出加大。应通过设定价格上限政策、标尺竞争政策、特许投标政策、社会契约等路径选择,以走出地方财政困境。     

Analyst Behavior: The Geography of Social Interaction

In this paper, I provide empirical evidence that an analyst working in Germany is more likely to publish a high (low) price target regarding a DAX30 stock when other Germany based analysts are also optimistic (pessimistic) about the same stock. This effect of geographical proximity is not biased by the fact that DAX30 companies are headquartered in Germany. Shedding light on how influence takes place, I show that influence through communication and the exchange of opinion within small groups of analysts plays a vital role. This mainly applies during a bullish market environment. When markets are bearish, analysts' incentives induce them not to deviate too much from the overall average, such that then observational learning has a greater impact.     

On intrabrand and interbrand competition: The strategic role of fees and royalties

We examine oligopolistic markets with both intrabrand and interbrand competition. We characterize equilibrium contracts involving a royalty (or wholesale price) and a fee when each upstream firm contracts with multiple downstream firms. Royalties control competition between own downstream firms at the expense of making them passive against rivals. When the number of downstream firms is endogenous, each upstream firm chooses to have only one downstream firm. This result is in sharp contrast to previous literature where competitors benefit by having a larger number of independent downstream firms under only fixed fee payments. We discuss why allowing upstream firms to charge per-unit payments in addition to fixed fees dramatically alters their strategic incentives.     

THE MARKET FOR FRANCHISE OPPORTUNITIES*

Franchised distribution accounts for a substantial proportion of retail sales each year. This form of vertical integration is frequently found in the accompaniment of parallel distribution through company-owned establishments. Similarly, franchise contracts are characterized by mixed compensation strategies. This paper contains empirical models of the market for franchise opportunities where incentives for mixed distribution and compensation strategies are evaluated.     

Contract selection and performance in competitive bidding for electricity generation

Third parties bidding to supply utilities with electric generation facilities is a new and increasingly important practice. Six states have either establishes bidding programmes or are considering doing so. The paper uses data from Maine, the first state to use electric generation bidding, to examine which bids are awarded contracts, and which contracts fail to fulfill their provisions. Results show that bid price plays a very small role, if any, in the selection process.     

药物经济学在我国药品定价中应用的定位分析

目的为药物经济学在我国药品定价中的正确应用提供政策建议。方法通过介绍我国药品价格管制措施的局限性,探讨药物经济学在药品定价中应用的可行性及必要性,进一步分析药物经济学在药品定价中应用所需的明确定位。结果与结论在药品定价中药物经济学所评价的药物范围应为新药和专利期内的垄断药品。作为应用主体的定价部门应站在全社会角度通过制定权威的药物经济学评价指南,委托第三方专家组对制药企业提交的药物经济学评价报告进行评估,将评估结果作为药品定价部门与制药企业谈判协商价格时的科学依据,在达到对新药和专利期内垄断药品控费的同时,鼓励药品创新和研发,最终保证患者对药品持续的可及性。     

A Simple Model of Health Insurance Competition

This study investigates competition between health insurance companies under different financing regulations. We consider two alternatives advanced in recent German healthcare reform discussions: competition by contribution rates (health contributions) and by fees (health premia). We find that contribution rate competition yields lower company profits and higher consumer welfare than premia competition when switching between insurance companies is costly.     

A Welfare Analysis of Local Franchise and Other Types of Regulation: Evidence from the Cable TV Industry

By examining both price and the level of quality, this paper empirically determines the welfare implications of local franchise and other types of regulation that existed in the cable TV industry prior to federal deregulation (1987). Contrary to the popular belief that price regulation was effective but also lowered the quality of service, I find that prices were lower and the levels of service (measured by the number of imported distant channels and cable networks) were higher than the monopolistic ones. The paper also reveals some significant differences in the welfare improvements under the alternative regulatory regimes.     

Unionized oligopoly and vertical integration

Labor market structures may have important effects on imperfectly competitive rivalries between firms. This paper examines the consequences of unionization for the rivalry between duopoly firms in two types of contracts: vertical integration and vertical separation. If a franchise fee is used to extract the retailer’s profit, then it is in the individual interest of each manufacturer to choose vertical separation and charge his retailer a wholesale price in excess of the unit production cost, depending on the specific time structures. These arguments could make integration preferable for the manufacturer if the wage bargaining power of the union is relatively powerful.     

Oil price effects over individual Portuguese stock returns

During the last decades, the world energy dependence increased significantly. Understanding how companies depend on oil prices is essential, especially for countries highly dependent or importers. The work intends to investigate the relationship between oil price changes and Portuguese listed companies’ returns. Using the generalized autoregressive conditional heteroskedasticity model, we conclude that nearly 20 % of the companies are significantly affected by oil prices, finding also evidence that these effects are asymmetric, depending on the company’s current situation in the market (result attributed to the lack of liquidity and the small number of firms included within the sample). There exists some differences among economic sectors in the way they are impacted by oil price changes, although not so much significant. The results show that the bigger the company, the higher the probability of being significantly affected by oil price changes. Results suggest that lagged oil price positive shocks increase Portuguese companies’ returns, by opposition to the current oil price change. Findings highlight the key role played by aggregate demand-side oil price shocks over the financial economic activity, showing sector and individual companies’ differences, thus inducing the possibility of results being highly dependent over the economic context faced by the country under analysis, that firms are more sensitive to oil prices when the equity market is busiest and that oil price increases affect companies returns in a negative way, but price decreases cause more positive than negative effects over company returns.     

Fiscal Competition and Higher Education Spending in Germany

The present paper studies the determinants of higher education spending by the German federal states with a focus on the interplay between higher education spending of neighboring states. More specifically, the paper asks whether the German federal states free‐ride on one another's higher educational spending or whether they employ higher education spending to attract university graduates. We identify a positive relationship between the states' higher education spending and conclude that the states compete for graduates rather than free‐ride. We also consider the effect of the recent introduction of tuition fees in some, but not all German states. We do not find evidence that tuition fees led to crowding out of public higher education funds.     

The impact and politics of entry regulation on intrastate telephone rates

This paper examines the effects of regulatory barriers to the entry of the interstate long-distance carriers into the intraLATA toll service market. With these barriers, the local telephone companies can charge supracompetitive rates for intraLATA toll calls and use the excess revenues to price local exchange service below cost. We use a reduced form econometric price model to see whether these entry barriers have increased intraLATA toll rates. The results indicate that intraLATA toll rates in states that enjoin all types of long distance carriers from providing intraLATA service are about 7.5 per cent higher than in states that allow some sort of competition. In contrast, only preventing the entry of the largest facilities-based carriers does not affect intraLATA rates.     

Golden cages for showy birds: Optimal switching costs in labor contracts

Under what circumstances do workers sign contracts with high quitting penalties? Our answer points to market transparency. When the worker's performance is privately observed by the incumbent firm, alternative employers face an adverse selection problem. As a result, efficient separations can only take place through involuntary layoffs and there is no role for quitting fees. In contrast, when performance is public, quitting fees are useful devices to appropriate the surplus from workers’ reallocation. Separations are amicable and take the form of quitting after downwardly renegotiating the fees. Qualitative features of contracts are independent of the distribution of ex-post bargaining power. The impact of switching costs on total welfare and its distribution depends on the degree of market transparency and the ex-ante distribution of market power.     

Designing price caps for gas distribution systems

We examine the applicability of price-cap mechanisms to the regulation of gas distribution company rates for gas supply and transportation services. Although distribution companies will continue to be regulated for the foreseeable future, we argue that a hybrid of price and profit regulation of transportation rates will increase allocative efficiency and provide greater incentives for productive efficiency. The design of incentives for cost minimization in long-term gas supply contracts is more challenging, but an index cap, based on the cost of gas acquired by other distribution companies, merits attention.     

Estimated general equilibrium models for the evaluation of monetary policy in the US and Europe

In this paper we derive a general equilibrium model based on optimising behaviour, which also implies a data consistent framework for monetary policy analysis. Specifically, our model accounts for nominal inertia in both price and wage setting as well for habits in consumption. Using US and European data from 1970 to 1998 our parameter estimates reveal that (i) price contracts last for 8 months and 13 months in the US and Euro-area, respectively; (ii) wage contracts have a length of 7 months and 1.75 years in the US and Europe, respectively; (iii) the extent of backward-looking behaviour in price setting is statistically significant in both economies with 41% of price contracts in the US and 28% in the Euro-area set according to a simple rule-of-thumb; (iv) backward-looking wage setting is only present in Europe with 17% of contracts set in a backward-looking manner; and (v) similar habits effects are present in both European and US consumption. Finally, we simulate the effects of monetary policy by considering the impact of a 1 point increase in nominal interest rates for one quarter. Our parameter estimates imply that there is a relatively muted inflationary response to interest rate increases in Europe (price inflation falls by -0.08% in Europe and 0.11% in the US) and there is a correspondingly large output response (-0.2% in the US and -0.6% in Europe).     

BOT projects: Incentives and efficiency

In recent years, governments have been increasingly adopting Build-Operate-Transfer (BOT) contracts for large infrastructure projects. However, BOT contracts have received little attention from economists. The apparent agency problem in BOT projects has never been analyzed. In this paper, we develop a model to examine the incentives, efficiency and regulation in BOT contracts. We show that a BOT contract with a price regulation during the concession period and a license extension after the concession period is capable of achieving full efficiency. Both license extension and price control are observed in many real-world BOT projects. We also investigate the efficiency in such contracts by considering other factors, including time consistency, price ceiling, foreign ownership, and the lack of price regulation.     

卖空机制、诉讼风险与审计收费

基于我国推出融资融券业务这一“自然实验”,文章考察了卖空机制如何通过改变诉讼风险而影响公司审计收费。研究发现,卖空机制的引入增加了公司股价下跌的压力,并增强了投资者挖掘公司负面消息的动机,从而导致公司审计的诉讼风险提高,会计师事务所要求更高的审计收费。进一步的分析显示,由于国有企业的信息披露环境较差,卖空机制对国有企业审计收费的提升作用更加明显;由于“四大”具有更高的赔偿能力,卖空机制更加显著地增加了“四大”审计公司的审计收费;对于法制环境较差地区的企业,由于管理层更有动机隐藏坏消息,公司审计收费因卖空机制的存在而显著提高。     

GENERAL EQUILIBRIUM ANALYSIS OF HOLD‐UP PROBLEM AND NON‐EXCLUSIVE FRANCHISE CONTRACT

In this paper, we develop a general equilibrium model that examines the emergence of non‐exclusive franchise contracts in the presence of the franchisor hold‐up problem. Our model of an endogenous franchising network underscores the trade‐off between the cost associated with specifying and enforcing the contractual terms and the cost associated with broadening the relationships with multiple franchisors. We show that when the contracting cost relative to the relational cost is high and when the economies of specialization is low, a non‐exclusive franchise contract is an optimal contractual arrangement to mitigate franchisor opportunism.