When quality signals talk: Evidence from the Turin hotel industry

This study analyzes the relationship between quality signals and price setting through the application of hedonic price functions. The model proposals also include variables relating to land use policies and tourism development strategies. A simultaneous equation model endogenously estimates quality signals. This method is appropriate for analyzing emerging urban destinations, as characterized by the presence of an expanding hotel industry. The results are based on a dataset of 145 hotels in Turin, Italy. The empirical findings reveal that reputation-based quality signals help explain tariff levels. Price proposals also include a premium for quality assured hotels, defining some limits of the current hotel classification system. The empirical evidence has significant marketing implications for the hospitality industry’s competitiveness, since the results clarify the impact of quality signals on price level.     

Non-market valuation of forest goods and services: Good practice guidelines

The European COST Action E45 on European Forest Externalities (EUROFOREX) participants developed a set of good practice guidelines for the non-market valuation of forests, elaborating on stated and revealed preference methodologies, as well as benefit transfer and meta-analytical procedures. This article presents a summary of the guidelines.     

Numerical evaluation of the critical price and American options

An approximate solution to the American put value is proposed and implemented numerically. Relaxation techniques enable the critical price to be determined with high accuracy. The method uses a modification of the quadratic approximation of MacMillan and Barone-Adesi and Whaley which gives an expression for the critical price. Numerical experimentation and iterative methods quickly provide highly accurate solutions.     

Micro versus macro cointegration in heterogeneous panels

We consider the issue of cross-sectional aggregation in nonstationary and heterogeneous panels where each unit cointegrates. We derive asymptotic properties of the aggregate estimate, and necessary and sufficient conditions for cointegration to hold in the aggregate relationship. We then analyze the case when cointegration does not carry through the aggregation process, and we investigate whether the violation of the formal conditions for perfect aggregation can still lead to an aggregate equation that is observationally equivalent to a cointegrated relationship. We derive a measure of the degree of noncointegration of the aggregate relationship and we explore its asymptotic properties. We propose a valid bootstrap approximation of the test. A Monte Carlo exercise evaluates size and power properties of the bootstrap test.     

Farm size,land yields and the agricultural production function: An analysis for fifteen developing countries

The paper analyzes the relationship between factor inputs, land yields and labor productivity for farms of different size on the basis of FAO farm management data for 15 developing countries. For all but three countries a strong negative correlation is found between farm size on the one side, and factor inputs and yields per hectare on the other. The fitting of unconstrained production functions to the above data suggests that in only few cases the decline in yields for increasing farm size can be attributed to decreasing returns to scale. The higher yields observed in small farms are mainly to be ascribed to higher factor inputs and to a more intensive use of land. Therefore, where conspicuous labor surpluses exist, the superiority of small farming provides solid arguments in favor of land redistribution. Such an agrarian reform would determine higher output, higher labor absorption and a more equitable income distribution, thus contributing in a decisive manner to the alleviation of rural poverty. The paper also provides estimates of cross-sectional production functions for the 15 countries analyzed. Empirical relations are found between the output elasticities of land, labor and intermediate inputs and physical indicators of their scarcity. The paper concludes by proposing a simple method for deriving a long-term production function for agriculture.     

MACROECONOMIC STABILIZATION POLICIES IN THE EMU: SPILLOVERS, ASYMMETRIES AND INSTITUTIONS

This paper studies the institutional design of the coordination of macroeconomic stabilization policies within a monetary union in the framework of linear quadratic differential games. A central role in the analysis plays the partitioned game approach of the endogenous coalition formation literature. The specific policy recommendations in the European Economic and Monetary Union (EMU) context depend on the particular characteristics of the shocks and the economic structure. In the case of a common shock, fiscal coordination or full policy coordination is desirable. When anti‐symmetric shocks are considered, fiscal coordination improves the performance but full policy coordination does not produce further gains in policymakers' welfare.     

Uncertainty and the Cost of Reversal

For standard irreversibility theory the prospect of acquiring better information in the future should induce more flexible decisions: the “irreversibility effect”. This result relies on the definition of an irreversible position as one that would be technically or economically impossible to reverse. In practice, many positions can be reversed at an affordable cost. In this case an increase in informativeness alone is not enough to bias decisions in favour of more flexibility. We look for restrictions on decision sets, information structures and preferences that make possible to study the effect of information on flexibility. JEL Classification No: D81, D9     

VRP revisited: The impact of behavioural costs in balancing standardisation and variety

The objective of this paper is to bring a new element to the academic (and industrial) debate concerning the optimum level of variety in component design in mass production companies. Many authors have explored the trade-off between functional and variety costs, and this could be considered as a well-acknowledged management issue, at least from an engineering perspective. Nevertheless, while defining the theoretically optimal level of component variety, there are other elements, more related to operators’ attitude or to operative conditions, which may intervene and prevent effective exploitation of the existing variety. These elements have been given scant attention in literature, while they may play a relevant role in real organisations.In this paper, we will present a case study and an analytic model for these “behavioural costs” in manufacturing environments, so as to show how the theoretically optimal amount of variety changes if one takes into account these aspects. Researchers (and practitioners) might leverage on this contribution in order to rejuvenate the Variety Reduction paradigm, and to increase their awareness in designing and managing mass production manufacturing processes.