Prices of deep discount bonds and the Revenue Act of 1978: An evaluation of market response

This article explores the market response of deep discount corporate bonds to the reduction in the capital gains tax rate incorporated into the Revenue Act of 1978. Such tax change should have increased the desirability of assets acquired for capital gains potential, such as deep discount bonds. Examining a time series of prices and returns for a sample of deep discount corporate bonds and a control group of comparable duration and credit risk corporate bonds selling at or near par did indeed provide evidence of a market price reaction. Moreover, the price changes for the deep discount bonds occurred well in advance of the implementation of the tax change.     

Welfare Effects of Food Safety Recalls

Estimates of the welfare losses associated with food recalls typically assume the announcement causes demand to shift, or the willingness‐to‐pay (WTP) falls for all quantity levels. Several researchers, however, have observed evidence of a rotation as well, where WTP rises for some consumers and falls for others. Preference heterogeneity theory implies that this observation results from an increase in the dispersion of demand. We test this theory using Centers for Disease Control and Prevention announcement data and Nielsen Homescan panel data for the fresh produce category. We find that the rotation effect cannot be disregarded, but is still dominated in welfare calculations by the shift effect of a recall announcement.     

Local and Global Competition in Information Technology

We examine the implications of changing competitive dynamics in global information and communications technology (ICT) markets for government demand-steering policies whose goal is local rents. Both computing and telephony are undergoing changes in global industry structure and changes in the nature of competition. The convergence of computing and telephony and the rapid technological change (and accompanying technological uncertainty) driving this convergence reinforce trends toward vertical competition. The emergence of global ICT markets lowers entry barriers, likely encouraging government-supported local entrants into global ICT markets. There are, however, strongly offsetting disadvantages. The underlying economics of ICT markets under vertical competition will work to reinforce the dominant position of U.S.-based incumbents in many segments. The prospects for exports, command of rent-related standards, and large rents from exports are not very bright. We expect to see far more demand-steering attempts than successes. J. Japan. Int. Econ., December 1999, 13(4), pp. 336–371. Landau Economics Building, Department of Economics-6072, Stanford, California 94305-6072; and International Computer Services Research, Stanford Computer Industry Project, Landau Economics Building, SIEPR 144, Stanford, California 94305-6016. Copyright 1999 Academic Press.Journal of Economic Literature Classification Numbers: L5, F110.     

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.     

Syrian food security in the 1970s and 1980s

An analysis of changes in domestic production, foreign trade and aid in Syria from 1970 to the late 1980s reveals a marked contrast between the two decades. In the 1970s per capita incomes expanded rapidly due to the regional oil boom. Demand for food grew quickly and, despite respectable supply growth, food imports as a percentage of consumption increased. During the 1980s income per capita stagnated and demand growth slowed. At the same time a series of poor rainfall years reduced domestic supply growth and increased production variability, yet food imports showed no trend     

Determinants of Co-operative Patronage in Alberta

Co-operative managers face an increasingly heterogeneous pool of potential members. Because these members bring a variety of economic and noneconomic demands to their co-operative, managers must know how different member characteristics and performance perceptions influence their decision to patronize a co-operative. This study applies three models of co-operative patronage to survey data from rural Alberta. A Poisson regression is used to determine the factors that explain the number of co-operatives used, while an index of co-operative patronage measures the relative intensity of co-operative versus proprietary firm usage. A third model contucts a Tobit analysis of the amount of business conducted with each of several different types of co-operatives. The results show that older farmers tend to partonize more co-operatives, and larger farms do a greater share of their business with co-operatives than do smaller fiarms. Farmers who believe co-operatives offer innovative products and services are more likely to patronize them, while a belief that co-operatives should play an active role in noneconomic matters is not important.