What goes up sometimes stays up: shocks and institutions as determinants of unemployment persistence

We analyse the determinants of unemployment persistence in four OECD countries by estimating a structural Bayesian VAR with an informative prior based on an insiders/outsiders model. We explicitly insert unemployment benefits and labour taxes so that our identification is not affected by the Faust and Leeper (1997) critique. We find widespread hysteresis: demand shocks play a dominant role in explaining unemployment also in the medium‐run. Moreover real wages have low sensitivity to cyclical fluctuations and to labour market disequilibria. Our results emphasise the real power of the unions and their interactions with structural shocks and other institutions as crucial determinants of hysteresis.     

How Long is a Piece of Cable? Equilibrium Determination of Local Telephone Areas

This paper studies the endogenous determination of telephone local calling areas. In many telephone systems, calls between users in the same calling area are local; calls to outside the calling area are long distance and priced differently. We allow the extension of this area to be treated as a strategic variable. We show the extension of the calling areas which maximizes the carrier's profit to be the same which a welfare maximizing regulator would choose. Under a price cap regime in which prices are required to meet an average price constraint, the firm manipulates strategically the extension of the local calling areas. We end the paper by considering the case of a competitive market. In this case, again, the owner of the local loop extends the local calling areas in response to decreased efficiency or increased competition of its competitors. Received April 25, 2002; revised version received September 9, 2002 Published online: April 30, 2003     

Balanced sampling of boxes from batches for assessing quality of fruits and vegetables in EU countries

Quality & Quantity - The best evaluation for the proportion of defective units in a batch of fruits and vegetables can be achieved by an exhaustive checking of all the boxes in the batch, that...     

Regulation and Access Pricing: Comparison of Regulated Regimes

The statutory duties of regulators of British utilities include both the encouragement of competition and protection of consumers (through price caps). Competition depends on the terms on which new entrants can gain access to the monopolist's network. Where the incumbent in the retail market also owns the network, the regulator may determine prices in the capped and access markets separately or may make the price cap explicitly dependent on entry in the uncapped market. Contrary to the received wisdom that access charges should be separately regulated we show that higher welfare can be obtained in some circumstances by allowing the incumbent to determine access charges. This is achieved by permitting the incumbent to choose from a menu of retail prices which the regulator makes conditional on the extent of entry in the retail market.     

Representing preferences with nontransitive indifference by a single real-valued function

Let be an interval order on a topological space (X, τ), and let x _˜^* y if and only if [y z x z], and x _˜^** y if and only if [z x z y]. Then _˜^* and _˜^** are complete preorders. In the particular case when is a semiorder, let x _˜⁰ y if and only if x _˜^* y and x _˜^** y. Then _˜⁰ is a complete preorder, too. We present sufficient conditions for the existence of continuous utility functions representing _˜^*, _˜^** and _˜⁰, by using the notion of strong separability of a preference relation, which was introduced by Chateauneuf (Journal of Mathematical Economics, 1987, 16, 139–146). Finally, we discuss the existence of a pair of continuous functions u, υ representing a strongly separable interval order on a measurable topological space (X, τ, μ, ).     

An Empirical Analysis of Competition in Brand Differentiated Oligopoly

The paper studies the behaviour of four oligopolistic firms in the Italian coffee market. We study whether their behaviour is better represented by Bertrand behaviour or by collusive pricing. We also investigate the role of advertising in product differentiation.     

Digital Machines,Space, and Time: Towards a Behavioral Perspective of Flexible Manufacturing

Recently, the diffusion of digital machines has further enhanced firms’ manufacturing flexibility, but also opened questions on potential challenges and implications in the production process. To respond to these timely issues, this study adopts a behavioral perspective and comparatively explores how four different types of digital machines—characterized by increasing degrees of manufacturing flexibility—affect the perception and use of space and time for routines within the production plant. To this end, 45 digital manufacturing machines, sampled across 14 firms in the British and Italian motorsport industry, were qualitatively observed and compared. A model emerges where four key mechanisms reshape (1) the interactive space around the machine, (2) the innovation activities performed in the machine space, (3) the time within activities involving the machine, and (4) the time perception. Such mechanisms mediate the relationship between manufacturing flexibility and firm performance. Further, data show how increasing digitalization in the manufacturing process enhances the establishment of new routines as flexible machines get introduced in the production. Finally, theoretical and practical implications related to fostering a behavioral perspective in innovation and operations management studies are discussed.     

Eco-social analysis of an East African agro-pastoral system: Management of tsetse and bovine trypanosomiasis

A key constraint for development of many East African agro-pastoral communities is African animal trypanosomiasis or nagana caused by Trypanosoma spp. and vectored by species of tsetse flies (Glossina spp.). Suppression of trypanosomiasis through trapping of tsetse fly populations was conducted from 1995 to 2005 at and near Luke, Southwest Ethiopia. Odor baited mass trapping technology was used to suppress adult fly populations to very low levels while tryponocidal drugs were used to treat trypanosome infections in cattle. Data on ecological, economic and social variables were collected and analyzed in the context of eco-social dynamics in the community.The bio-economic model of Regev et al. [Regev, U., Gutierrez, A.P., Schreiber, S.J., Zilberman, D., 1998. Biological and Economic Foundations of Renewable Resource Exploitation. Ecological Economics 26, 227-242] and Gutierrez and Regev [Gutierrez, A.P., Regev, U., 2005. The bioeconomics of tritrophic systems: applications to invasive species. Ecological Economics 52, 382-396] was used as a methodological framework for qualitative evaluation of the effects of tsetse/trypanosomiasis suppression on ecological, economic and social aspects. An objective function for single farmers was formulated to determine the optimal harvesting level of cattle, exposed to high and low levels of risk from tsetse/trypanosomiasis, as measured by the discount rate (δ) for a given base level pastoral resource (R = pasture or forage for cattle). The socially optimal objective function for resource exploitation by all farmers is that which maximizes the present value of utility of individuals expending revenues (consumption) from the revenue stream in ways that enhance the quality of life and yet assures the persistence of the resource base over an infinite time horizon (i.e., renewable resource sustainability).The bio-economic model predicts that reducing risk (δ) from tsetse and disease increased the cattle populations and their marginal value. The model also predicts that the interaction of decreased δ and increased productivity (θ) can lead to increased human and cattle populations and hence to over-exploitation of base resources (pastures) that lower environmental carrying capacity and reduced sustainability.Trap catches indicated that tsetse populations were reduced to very low levels, while the disease prevalence decreased from 29% to 10%. This led to a substantial increase in cattle including oxen populations, increased calving rates, increased milk production and increased the per-capita income. The availability of oxen allowed an increase in cultivated land from 12 ha in 1995 to 506 ha in 2005. Revenues (consumption) were invested in the purchase of more cattle and the establishment of a school for educating village children. Increases in land allocated to crops and other sources of income were also found.The bioeconomic model predicts the solution of the trypanosomiasis problems so transforms the East African agro-pastoral communities that new social structures will be required to cope with the ecological, economic and social consequences of this technological changes on sustainable development (sensu [Goodland, R., 1995. The concept of environmental sustainability. Annual Review of Ecology and Systematics 26, 1-24]). This insight should not be lost in international rural development programs.