Valuing water for Chinese industries: a marginal productivity analysis

A marginal productivity approach is developed for valuing industrial use of water and applied using data from Chinese industrial firms, where water, as well as capital, labour and raw materials, are treated as inputs to a production function. Models on price elasticity of water demand associated with the marginal productivity approach are also developed and estimated for different Chinese industrial sectors.     

Residential Water Demand in the Northwest of Spain

A panel of monthly aggregate data from the Northwest of Spain is used to estimate domestic water demand functions under linear and non-linear tariffs. Price, billing, climatic, and sociodemographic variables are used as explanatory variables. The use of intraannual data constitutes a relevant contribution in the European context. Overall marginal price elasticity estimates lie between –0.12 and –0.17. Summer-only elasticities and elasticities associated with uses beyond the effectively free allowances seem significantly higher. Climatic variables significantly affect monthly use, although probably less than in other wealthier and drier areas. Domestic water use appears to be a normal good.     

Adjustment of Profits: Evidence from Australian Manufacturing

Studies of industry profitability generally deal with long-run equilibrium models, making no allowance for slow adjustment to equilibrium. In this study, a cross-sectional analysis is carried out against a sample of Australian manufacturing industries at the Australian Standard Industrial Classification (ASIC) four-digit level between 1977–78 and 1984–85. Firstly, a profit model is estimated in equilibrium form as well as allowing for both uniform and variable adjustment rates across industries. The variable adjustment model is superior, with either model implying at least half adjustment to equilibrium within the seven-year sample period. Secondly, results are examined for the impact of firm homogeneity of firms within industries. Homogeneity of firms is found to have substantial impact,increasing both the estimated profits-concentration relationship and the estimated speed of adjustment.     

Demand for Piped and Non-piped Water Supply Services: Evidence from Southwest Sri Lanka

In many countries water supply is a service that is seriously underpriced, especially for residential consumers. This has led to a call for setting cost recovery policies to ensure that the tariffs charged for water supply cover the full cost of service provision. Identification of factors driving piped and non-piped water demand is a necessary prerequisite for predicting how consumers will react to such price increases. Using cross-sectional data of 1,800 households from Southwest Sri Lanka, we estimate water demand functions for piped and non-piped households using appropriate econometric techniques. The (marginal) price elasticity is estimated at  − 0.15 for households exclusively relying on piped water, and at  − 0.37 for households using piped water but supplementing their supply with other water sources. The time cost elasticity for households relying on non-piped water only is estimated at  − 0.06 on average, but varying across sources. For both piped and non-piped households, we find evidence of substitutability between water from different sources. We discuss the implications of these results in terms of pricing policy.     

Universal telecommunication service: A world perspective

Worldwide telecommunications demand is estimated in models for business and residential mainline telephone, and for mobile telephone service using separate models for developed and developing countries for the period 1996–2001. We test for cross-price elasticities between mainline and mobile service and find that the results are generally suggestive of current complementary relationships. We find residential monthly price elasticity to be no different than zero for a sample of developing countries, but the connection elasticity is statistically significant. Mobile monthly service elasticity is much larger than those for mainline service, suggesting that universal service in developing countries might be promoted more effectively with subsidies for mobile service. Income elasticities for the residential model are modest while the mobile service model income elasticity for developing countries is much higher. Expanding markets, income growth and enhanced education may be the ultimate universal service promoters.     

Residential water demand responds asymmetrically to rising and falling prices

This paper econometrically estimates residential water consumption in Germany between 2007 and 2013 based on a panel of almost 3000 supply areas. In particular, the analysis distinguishes periods of rising and falling water and sewage water prices. The short-run (long-run) price elasticity is estimated at around 4.2% (13%), but water demand appears to respond asymmetrically to rising and falling prices. When prices are rising, the short-run (long-run) price elasticity is around 6.5% (17%). When prices are falling, the short-run price elasticity is not statistically different from zero, and the long-run price elasticity is estimated at around 12%. Additional results illustrate that employing average prices instead of marginal prices results in substantially overestimating the price elasticity. These findings are particularly relevant for utilities and regulators planning to alter the tariff structure towards a higher fixed fee and a lower volumetric fee.     

Estimation of the effects of price on apartment water demand using cointegration and error correction techniques

Water price is a key instrument in regulating water demand in the residential sector. Many empirical studies have assessed the effects of price through quantifying the price elasticity of water demand. However, most of these studies have mainly focused on the single-family housing rather the multifamily housing. An in-depth understanding of the price elasticity of multifamily housing water demand is paramount for water planners in order to properly manage water use in the fast growing intensive housing developments in urban areas. This study investigates both the long-term and short-term price elasticities of water demand in the residential apartments in Auckland central city. Using 6 years of monthly time series data, the price elasticities were estimated through cointegration and error correction methods. The results showed that the price elasticities of water demand were ?0.14 and ?0.12 in the short term and the long term, respectively. The price is inelastic yet negative and statistically significant, thus it can play a role in demand management.     

Do Open Access Conditions Affect the Valuation of an Externality? Estimating the Welfare Effects of Mangrove-Fishery Linkages in Thailand

Mangroves are considered ecologicallyimportant due to their role as breedinggrounds and nursery habitats for off-shorefisheries. However, mangrove deforestationthrough conversion to shrimp aquaculturethreatens this valuable function. This paperdevelops a dynamic production functionapproach to analyze the influence of habitatchanges on an open access fishery that faces afinite elasticity of demand. The basic modelis applied to a case study of the impacts ofmangrove deforestation on the artisanal marinedemersal and shellfish fisheries in Thailand. By estimating parameters through pooledtime-series and cross-sectional data over the1983–1993 period for the five coastal zones ofSouthern Thailand, the welfare impacts ofmangrove deforestation are estimated underdifferent elasticity of demand assumptions. Under pure open access, the welfare lossesestimated for mangrove deforestation inThailand of 30 km² annually ranged from$12,000 to $408,000 depending on theelasticity of demand.     

Wage inequality and between-firm wage dispersion in the 1990s: A comparison of rural and urban enterprises in China

Using a worker–firm matched sample, this paper compares the changes of wage structures of urban and rural enterprises following public sector restructuring in China's manufacturing sector. While the wage responses of rural firms with respect to firm characteristics are found to have declined steadily, compensation of urban workers has become increasingly linked to their firms' ability to pay. Our analysis reveals that industrial restructuring has weakened the influence of institutional factors, such as market power, soft budget constraints, and insider influence, on the wage determination of rural firms but it has enhanced their impact on urban firms. Journal of Comparative Economics 33 (4) (2005) 664–687.     

Price adjustment in an atomistic market

This paper considers the price adjustment process in a market which retains the characteristics of a perfectly competitive market except that individual firms are price-setters. Buyers, unaware initially of what prices which firms are charging, indulge in search by contacting a sample of firms and buy (according to a demand curve) from the lowest-price firm encountered. Firms set prices to maximise profits over their perceived (or estimated) demand curve, and update their estimated demand curve in accordance with the observed change in demand between successive time periods. It is shown that the price distribution converges to a degenerate distribution centred on the monopoly price.     

R&D activity in a dynamic factor demand model

The focus of this paper is an econometric analysis of the determinants of private firms' R&D activities in the context of a general dynamic factor demand model. Besides the traditional production factors we treat technological knowledge, endogenously determined by R&D expenditures, as a further input factor. While labour and materials are assumed to be variable, capital and know-how are considered as quasi-fixed. The dynamic demand equations for labour, capital investment and R&D which are derived from an intertemporal cost minimisation are estimated for a panel data set of small and medium size German firms. The data covers the period between 1978 and 1982 and includes 408 firms. It turns out that R&D activity depends on the underlying production structure as suggested by neoclassical theory. In addition, by introducing firm specific effects, we can show that firm size and market concentration influence innovative behaviour in accordance with the Schumpeterian hypotheses.Paper presented at the Industrial Organization Conference at the Annual Meeting of the Austrian Economic Association, Vienna, June 24–26, 1992, the 7th Annual Congress of the European Economic Association, Dublin, August 29–31, 1992, and the 19th Annual Conference of the EARIE, Stuttgart, September 4–6, 1992. Helpful suggestions and comments were received from participants of these conferences as well as from seminar participants at Temple University, at the University of Augsburg, and at the fourth DFG workshop Marktstruktur und gesamtwirtschaftliche Entwicklung in Munich. We are particularly indebted to an anonymous referee for very helpful specific comments. Finally, we would like to thank Horst Albach for providing us with the panel data set. Financial support of the DFG is gratefully acknowledged.     

Competition, cooperation, and the neighboring farmer effect

In this paper we propose a model that explains how cooperation can emerge spontaneously between firms in a highly competitive market environment. The basic idea is that the more competitive is the market, the less costly it is for firms to help each other like good neighbors. Cooperation takes the form of sharing technical know-how, which speeds up the adoption of new technologies (normally developed elsewhere) that spur industrial development. The model comports with the development history of Japan's first example of successful industrial development – its cotton spinning industry – whose conditions match those of firms in small open economies today.     

Is Private R & D Spending Sensitive to Its Price? Empirical Evidence on Panel Data for Italy

In this paper empirical evidence is presented on theelasticity of private R & D spending on its price. Acensored panel-data regression model with random effectsis applied to a balanced panel of 726 Italian firms overthe 1992–1997 period. Implied estimates point out thatItalian firms' response to policy measures (including taxcredits), aimed at reducing the user cost of R & D capital,is likely to be substantial (1.50–1.77). Furthermore, wealso find that the elasticity of R & D spending is higherin recession (2.01) than in expansion (0.87).     

Determinants of residential water demand in Germany

We econometrically analyze the impact of several economic, environmental and social determinants for the per capita demand for water in about 600 water supply areas in Germany. Besides prices, income and household size, we consider the effects of population age, the share of wells, housing patterns, precipitation and temperature. We also explore why current per capita residential water consumption in the new federal states is about 30% lower than in the old federal states. Since average cost pricing may cause an endogeneity problem, we apply instrumental-variable procedures in addition to single equation ordinary least squares, but find no evidence that prices are endogenous. Our estimation results suggest that the price elasticity of water demand in Germany is around − 0.24. The income elasticity is positive, decreases with higher income levels and is at least three times higher in the new federal states than in the old federal states. Current differences in prices and income levels explain about one third of the gap in residential water use between the two regions. Household size and the share of wells have a negative impact on per capita water demand, and water use increases with age. Finally, the findings provide some evidence that rainfall patterns rather than total rainfall affect water consumption, while temperature appears to have no impact at all. All outcomes are robust to a log-log and two types of semi-log specifications for the water demand function.     

Housing investment in the Netherlands

Employing Dutch market data over the period 1977:1–1994:4, estimates of two housing equations are obtained. The first equation is based on an underlying model in which profit-maximising building firms do not face adjustment costs when altering their output schedule. The second model distinguishes between short-run and long-run elasticities of supply, where firms face adjustment costs. Although the formulation of the equations can be regarded as representing the underlying long-term relationships, employing the Johansen procedure does not produce economically meaningful results. Using instrumental variables, the first model yields a supply elasticity of the order of 1.6 and the second model produces a short-run elasticity of 2.3 and a long-run elasticity of 6. Comparison of these estimates with those obtained by Topel and Rosen (Topel, R. and Rosen, S., 1988. Housing investment in the United States J. Pol. Econ. 96 (4), 718–740) in the US shows that investment seems to be more sensitive to price changes in the Netherlands than in the US.     

The demand for traded and non-traded goods in the U.S.

Annual postwar U.S. data are used to estimate the Rotterdam demand model for traded and non-traded goods. The estimated income elasticity is 1.51 for traded and 0.64 for non-traded goods, while the own-price elasticities are both between −0.3 and −0.2.     

中国装备制造业的出口依存度及对外市场的需求弹性研究——基于行业面板数据的分析

文章利用装备制造业7个子行业2001-2009年出口交货值和产业销售值数据,对产业的对外市场需求弹性进行了动态实证研究,并在此基础上利用7个子行业的对外市场需求弹性系数作为权重,对装备制造业的对外依存度进行了新的计算。研究结果表明,装备制造业7个子行业在短期内对外市场需求缺乏弹性,而部分行业在长期内对外市场需求富有弹性;根据对外依存度的传统定义,在产业迅速发展时期,由于没有考虑到市场需求弹性因素,对产业的对外依存度存在高估。     

Residual demand analysis of the carbonated soft drink industry

In this paper, residual demand analysis is applied to test whether carbonated soft drinks is a relevant product market. The residual demand elasticity for carbonated soft drinks is estimated using weekly A.C. Nielsen Scanner price and quantity data for carbonated soft drink products purchased in supermarkets in the United States. The estimated residual demand elasticity and average contribution margin for carbonated soft drinks suggest that a market for carbonated soft drinks is too narrow for purposes of merger analysis according to the Merger Guidelines established by the United States Department of Justice and the Federal Trade Commission.Two of the authors, Kaplan and Tollison, have served as consultants to and received research support from PepsiCo, Inc. The present project, though an aoutgrowth of this earlier work, received no support from PepsiCo, Inc. or any other source. The views expressed in the article are soley those of the authors, and the authors are responsible for any errors or omissions.     

How effective are level-based R&D tax credits? Evidence from the Netherlands

This article examines the impact of the R&D fiscal incentive programme on R&D by Dutch firms. Taking a factor demand approach, we measure the elasticity of firm R&D capital accumulation to its user cost. Econometric models are estimated using a rich unbalanced panel of firm data covering the period 1996 to 2004 with firm specific R&D user costs varying with tax incentives. Using the estimated user cost elasticity, we perform a cost–benefit analysis of the R&D incentive programme. We find some evidence of additionality suggesting that the level based programme of R&D incentives in the Netherlands is effective in stimulating firms’ investment in R&D. However, the hypothesis of crowding out can be rejected only for small firms. The analysis also indicates that the level based nature of the fiscal incentive scheme leads to a substantial social deadweight loss.     

Stochastic generalizations of demand systems with an application to telecommunications

Systems of demand equations are considered for at least two reasons. First, they offer a theoretical completeness, and second, they embody a number of restrictions which lead to a more parsimonious specification concerning the number of parameters. As it turns out, the quantity and quality of the data are often such that the demand systems considered are not restrictive enough in the sense that large numbers of parameters still remain which cannot be estimated with ‘great precision’. Paradoxically, the restrictions that are considered are often rejected by the data.In this paper we propose a system of random coefficient telecommunications demand equations in a panel data framework. These equations correspond to alternative ways (which have different costs) of placing a call. The system is formulated in such a way that it incorporates the homogeneity condition, as well as stochastic versions of the symmetry and weak separability restrictions. The stochastic versions are given in terms of moments and so they do not have to hold in each individual case. Under certain conditions they reduce to their deterministic counterparts. Finally, we empirically implement the model and compare the results to what they would be in a corresponding deterministic framework.