Temporary immigration visas

This paper deals with recent proposals concerning temporary immigration visas as a means to combat the problem of illegal immigration. We set up a simple two-period model of international migration between a poor South and a rich North with temporary visas issued for one period. Because of capital market imperfections, immigrants from the South face additional capital costs when financing the visa fee. In this model, we find that temporary visas can improve welfare in the North if capital costs of the immigrants are sufficiently low. For high capital costs, however, a welfare reduction cannot be ruled out. We extend the model to the case of heterogeneous immigrants and asymmetric information. In this setting, we show that the government in the North may have an incentive to issue temporary visas for those with low capital costs and to tolerate illegal immigration of the others.     

The costs of increased localization for a multiple-product food supply chain: Dairy in the United States

There is increased interest in greater localization of food supply chains but little evidence about the effects of localization on supply-chain costs. Assessing these effects is complex in multiple-product, multi-process supply chains such as the dairy industry. In this study, we develop a spatially-disaggregated transshipment model for the US dairy sector that minimizes total supply-chain costs, including assembly, processing, interplant transportation and final product distribution. We employ the cost-minimizing solution as benchmark to compare alternative scenarios of increased supply chain localization. Our results indicate: (1) short-run limits to increased localization, (2) modest impacts on overall supply-chain costs, and (3) large cost re-allocations across supply chain segments, regions and products. We find that increased localization reduces assembly costs while increase processing and distribution costs. Cost increases are larger in regions with smaller raw milk supplies and during the season when less raw milk is produced. Minimizing distances traveled by all dairy products results in tradeoffs across products in terms of cost and distance traveled. The relationship between increased localization and costs appears to be nonlinear.     

Are 18 Holes Enough for Tiger Woods?

This article addresses the selection problem in promotion tournaments. I consider a situation with heterogeneous employees and ask whether an employer might be interested in repeating a promotion tournament. On the one hand, this yields a reduction in uncertainty over the employees’ abilities. On the other hand, there are costs if a workplace stays vacant.     

Cumulative prospect theory and the St. Petersburg paradox

Summary. We find that in cumulative prospect theory (CPT) with a concave value function in gains, a lottery with finite expected value may have infinite subjective value. This problem does not occur in expected utility theory. The paradox occurs in particular in the setting and the parameter regime studied by Tversky and Kahneman [15] and in subsequent works. We characterize situations in CPT where the problem can be resolved. In particular, we define a class of admissible probability distributions and admissible parameter regimes for the weighting- and value functions for which finiteness of the subjective value can be proved. Alternatively, we suggest a new weighting function for CPT which guarantees finite subjective value for all lotteries with finite expected value, independent of the choice of the value function. Some of these results have already been found independently by Blavatskyy [4] in the context of discrete lotteries.Received: 14 October 2004, Revised: 6 May 2005, JEL Classification Numbers: C91, D81.We thank Pavlo Blavatskyy and Thorsten Hens for their helpful remarks regarding our paper. Moreover, we thank the referee for his constructive suggestions. This research was supported by the University Research Priority Program “Finance and Financial Markets” a research instrument of the University of Zürich.     

Maryann P. Feldman,The Geography of Innovation. Economics of Science,Technology and Innovation

Small Business Economics -