Evaluating transport user benefits and social surplus in a transport market—The case of the Norwegian ferries

The article first infers how consumer surplus in a market is linked to revenue under different assumptions about fare elasticity and when using different types of demand functions. This information is added to producer surplus in order to derive social surplus. The method, thus, produces a simple approach for authorities to assess social surplus in a market and its benefits to the users. A modified exponential demand function is applied to calculate consumer surplus and social surplus for 97 ferry services in Norway regulated by the state. The calculations are based on empirical data concerning ferry fare, revenue data at service level and reasonable assumptions about fare point elasticity for services covering different distances.In 2007, these services generated welfare for the users (consumer surplus) and the society (social surplus) amounting to about 5.8 billion NOK and 4.3 billion NOK, respectively. Consumer surplus and social surplus varied considerably amongst the services. Only 3 of the 97 services operate with positive profits and, hence, without subsidies. About 21 of the services contribute negatively to social surplus. Many of these unprofitable services are the only transport alternatives in rural areas and could be argued to continue operation according to politically decided regional measures. Implicitly, maintaining all these 21 services means that the welfare for the people in these areas is valued as up to four times greater than the welfare of the people in the rest of society.     

Modelling purchases as a function of advertising and promotion

This article describes the preliminary studies of the effect of advertising and promotion on purchases. The British single-source database Adlab has been the basis for this study of advertising and promotion effectiveness. The ST AS measure and logit modelling have been used to estimate the effect of advertising. The results from the two measures have been compared to determine the extent to which the two measures give occasion for the same conclusions. To indicate the accuracy of the two measures, their respective levels of significance have been studied. Two logit models have been estimated; one only includes the effect of TV exposure, while the other also includes the effect of promotions. The results from the two logit models are compared to determine which model gives the most accurate estimate of the effect of advertising. When comparing the results from the STAS measure with the parameter estimates from the second logit model, it is found that these two different measures largely lead to similar conclusions. Suggestions for further research and developments of the models are given.     

Estimating the natural rates in a simple New Keynesian framework

The time-varying natural rate of interest and output and the implied medium-term inflation target for the US economy are estimated over the period 1983–2005. The estimation is conducted within the New Keynesian framework using Bayesian and Kalman-filter estimation techniques. With the model-consistent estimate of the output gap, we get a small weight on the backward-looking component of the New Keynesian Phillips curve—similar to what is obtained in studies which use labor share of income as a driver for inflation (e.g., Galí, Eur Econ Rev 45(7):1237–1270, 2001; Eur Econ Rev 47(4):759–760, 2003). The turning points of the business cycle are nevertheless broadly consistent with those of CBO/NBER. We find considerable variation in the natural rate of interest while the inflation target has been close to 2% over the last decade.     

The International Reserves Issue in the EMU

This paper examines the effects of the Economic and Monetary Union on demand for foreign reserves. The traditional theory on demand for international reserves assigns a pivotal role to imports. However, in a currency union part of imports are settled in the common currency, leaving no incentive for keeping foreign reserves. Moreover, the pooling of the demand for reserves in the currency union and an increasing role of a currency as an international reserve currency may also influence, among other things, the union demand for reserves. Based on estimated demand functions for reserves it is shown that the Economic and Monetary Union has reduced the demand for reserves substantially. It is argued that an enlargement with new member countries of the European Union will result in further savings of reserves. A simple calculation at the end of the paper illustrates the welfare gain associated with the reduced need of reserves in the Economic and Monetary Union.     

On accounting standards and fair valuation of life insurance and pension liabilities

The actuarial profession is increasingly teaming up with financial economists for a fruitful cooperation on the proper valuation of life insurance and pension (L&P) liabilities. This has been a natural consequence of a recent sharply increased focus on market values in financial reports of L&P companies from regulators, standard setters, the financial press, stakeholders, and others with an interest in the L&P business.

This article provides a financial economist's point of view on recent developments in relation to the fair valuation of L&P liabilities. The role of accounting standards and the background for the international harmonization in this field are first discussed. We then review and explain the concept of fair value and provide a general view on appropriate techniques for estimating fair values of L&P liabilities in accordance with the definition of the concept. The paper also contains a section which briefly reviews recent and quite innovative regulatory initiatives in relation to market value reporting in the Danish market for life and pension insurance.     

Job Loss and Entrepreneurship

We examine the impact of job loss on entrepreneurship behaviour. Our identification strategy relies on the use of mass layoffs caused by bankruptcies as indicators of exogenous displacement. Building on Norwegian register data, we find that working in a company which is going to close down due to bankruptcy in the near future raises the subsequent entrepreneur propensity by 155% for men and 180% for women, compared to working in a stable firm. These estimates are much larger than previously reported in the literature. Taking into account that many workers lose their jobs in the comparison group of stable firms also, we suggest that the full effects of displacement are even larger.     

Comparison of Methods for Evaluation of the Convolution of Two Compound R 1 Distributions

In the present paper we compare four methods for evaluating the convolution of two compound R 1 distributions by counting the numbers of elementary algebraic operations required. Two of the methods are applicable in general, whereas the remaining two are restricted to the case when the two compound distributions have the same severity distribution. This case is discussed separately. We consider in particular the special case when this common severity distribution is concentrated in one, that is, evaluation of the convolution of two R 1 distributions.     

Ecotour Guide Training in Less Developed Countries: Some Preliminary Research Findings

This paper presents a critical discussion of the internationally prevailing understanding of the concept 'sustainable tourism'. It is argued that the current focus on stationary activities and local, intensive environmental issues is too limited both in relation to the concept of tourism and the concept of sustainable development. There is no tourism without travel. And, as shown in a Norwegian research study, tourist travel is a major source of serious environmental problems. The paper emphasises that sustainable tourism should be linked to a concept of sustainable mobility. However, this mobility would imply not only a change in the means of transport but also a reduced level of mobility in the rich part of the world. As this would entail new forms of tourism, other than those solely based on auto- and aeromobility, it represents a major challenge for the future development of tourism.     

The Path to Service Encounter Performance in Public and Private ‘Bureaucracies’

This article examines the evolution of building societies against a background of environmental change. By the application of specific analytical measures developed by Ansoff five distinct periods of change can be isolated. Key events in the environment have become progressively more novel, less predictable and costlier to deal with, which, in turn, has necessitated both operational and strategic redirection.