THE PRECAUTIONARY PRINCIPLE: A HIGH‐RISK PRINCIPLE1

The precautionary principle ‐ recently added to the French constitution and part of the draft Constitution of the European Union ‐ aims to protect the public from the risks associated with scientific and technological advance by allowing governments to ban any activity deemed to involve risks, even if those risks are unproven. In reality, the precautionary principle itself poses enormous risks of losing the advantages of projects that are banned, of preventing the development of the means by which risk may be ameliorated and of threatening the private property rights that provide the most effective environmental safeguard.     

DEFAULT RISK INSURANCE AND INCOMPLETE MARKETS1

This paper uses the existence of secondary markets for debt instruments with default risk (e.g. corporate bonds) to define default insurance along the lines of financial economics. It examines whether, in the case of several risk-neutral measures, characteristics of default can be uniquely determined by the prices of contracts involving default-prone securities.     

SOCIAL EXPENDITURE: SOCIALIZATION OF EXPENDITURE? THE FRENCH EXPERIMENT WITH SATELLITE ACCOUNTS

This paper discusses the history of the French development of satellite accounts during the late 1960s and 1970s, noting the circumstances that led to the initiation of work in this area and describing the types of problem encountered. It then goes on to draw, on the basis of the French experiment, more general conclusions and to present a proposed accounting framework. The final section considers the concept of social expenditure, but concludes that, at least for the present, it is not possible to construct a useful global concept.     

Global and political strategies in deregulated industries: the asymmetric behaviors of former monopolies

In deregulated industries former monopolies often adopt asymmetric behaviors: these firms impede the entry of foreign competitors in their home market, especially using defensive political strategies, and, at the same time, aggressively develop international strategies in foreign markets. To account for this behavior, I develop a game theoretic model involving three players: the former monopoly, its home government, and the host government of the country into which the firm wants to enter. I show first that there are in fact different asymmetric strategies that former monopolies can use in such a setting, and that a global strategy cannot always be implemented by those firms because of cooperation issues between the two governments. I also study the conditions under which these issues can be solved and show that this can happen only when the firm develops a political strategy that integrates both defensive and offensive activities. Overall, this paper therefore argues that asymmetric strategies are not always adopted to maintain monopoly rents but are also dictated by the nature of the international relationships between the governments involved. Copyright © 2003 John Wiley & Sons, Ltd.     

Coping with drought with innovative pricing systems: the case of two irrigation water management companies in France

In recent years, France has been facing particularly severe drought periods especially in summer. In a country where agriculture is the largest water user, some irrigation management companies have implemented innovative pricing systems to handle this situation. The objective of this article is to analyze the impact of these new management systems on farmers’ incomes, the revenue of the management companies, and the amount of water used. To do that, we develop a methodology using a stochastic model that simulates the representative farmer's optimal behavior in a context of climatic variability. An empirical application is made with a crop growth model and data collected from the Midi‐Pyrenees region. The results show that using these specific nonlinear pricing systems allow irrigation water managers to reduce the impact of drought on production. Moreover, the type of pricing implemented depends on the characteristics and capabilities of the water company. More particularly, these pricing systems can be used to anticipate agricultural water demand in order to avoid imbalance with water availability.     

The term structure of inflation expectations

We use information in the term structure of survey-based forecasts of inflation to estimate a factor hidden in the nominal yield curve. We construct a model that accommodates forecasts over multiple horizons from multiple surveys and Treasury real and nominal yields by allowing for differences between risk-neutral, subjective, and objective probability measures. We establish that model-based inflation expectations are driven by inflation, output, and one latent factor. We find that this factor affects inflation expectations at all horizons but has almost no effect on the nominal yields; that is, the latent factor is hidden. We show that this hidden factor is not related to either current and past inflation or the standard set of macro variables studied in the literature. Consistent with the theoretical property of a hidden factor, our model outperforms a standard macro-finance model in its forecasting of inflation and yields.     

Three decades of productivity change in French beef production: a Färe‐Primont index decomposition

The Färe‐Primont index is used to evaluate total factor productivity (TFP) change and its components for a sample of French suckler cow farms in grassland areas in 1985–2014. The results reveal an increase in TFP of 6.6 per cent over the whole observation period, with technological progress being the major source of productivity growth. Meanwhile, efficiency decreased. Farms experienced great technological progress from 1991 to 2000. From a methodological point of view, the comparison with results obtained with Malmquist indexes shows similar trends but different magnitudes, with the Malmquist index overestimating the TFP and technological changes compared to the Färe‐Primont index. In addition, the use of a sequential approach that restricts technological change to being positive or null allows for the precise calculation of technology changes, disregarding the effects of external conditions that are captured in efficiency changes. Finally, the estimation of full dimensional efficient facets (FDEFs) that guarantees the positivity of all shadow prices used to assess the mix efficiency component of TFP change is promising.     

Gender and Promotions: Evidence from Academic Economists in France*

The promotion system for French academic economists provides an interesting environment to examine the promotion gap between men and women. Promotions occur through national competitions for which we have information both on candidates and on those eligible to be candidates. Thus, we can examine the two stages of the process: application and success. Women are less likely to seek promotion, and this accounts for up to 76 percent of the promotion gap. Being a woman also reduces the probability of promotion conditional on applying, although the gender difference is not statistically significant. Our results highlight the importance of the decision to apply.     

A New Strategy Against Hostile Takeovers: A Model of Defense in Participations

This article examines the efficacy of a ‘defense in participations’ policy consisting of competitors acquiring cross‐equity participations within the same industry to prevent hostile takeovers. This defense in participations strategy provides disincentive for raiders as partial ownerships increase market power of competitors and then reinforce the ‘outsider effect’. Also, we find conditions for a general result, which state that takeovers are less profitable in an industry with participations rather than in an industry without any capital links. We provide information to regulators about the positive social impact of cross participations in the context of mergers and expose an economic dilemma between a ‘laissez‐faire’ and an interventionist approach. Copyright © 2016 John Wiley & Sons, Ltd.