The regulation of water services in the EU

The European Commission’s proposal for a Directive on the award of concession contracts has sparked vigorous public debate and intense opposition. This Directive is controversial because of the nature of the policy it proposes and because the sectors involved are highly sensitive. This Forum examines the weaknesses of the Commission’s proposal and presents an overview of the current issues in water regulation and the provision of water services. The authors analyse the regulation of natural monopolies, water efficiency and upstream competition in the water industry.     

Optimal hedge ratios and alternative hedging strategies in the presence of cointegrated time-varying risks

This paper utilizes the inter-temporal relationship between the FTSE-100 stock index and its futures price level between 1992 and 1999 to examine the characteristics of several minimum variance hedge ratios and the performances of several alternative hedging strategies for dynamic portfolio management in the presence of cointegrated time-varying risks. Earlier studies neglected the importance of cointegration between the two variables which resulted in biased estimates. These studies, in general, also assume that the hedging period is the same as the estimation time interval. This paper also looks at several key issues when the holding period is longer than the estimation period, such as the construction of optimal minimum variance hedge ratios, and the trade-off between transaction costs and risk reduction.     

The Gamification of Advertising: Analysis and Research Directions of In-Game Advertising,Advergames, and Advertising in Social Network Games

The study presents a framework for the analysis of advertising in digital games. It reviews literature on in-game advertising, advergames and advertising in social network games. The framework distinguishes between stimulus characteristics of the game as well as of the advertising that lead to psychological responses toward the game and the brand and to actual behavior toward the game and the brand. It takes into consideration individual factors of the player and social factors surrounding the player. In addition, theoretical models of advertising perception in digital games and issues regarding regulation are addressed. Directions for future research in the area of advertising in digital games are provided.     

Target costing,co-ordination and strategic cost management

During the last years issues of strategic management accounting have received widespread attention in the accounting literature. Yet the conceptual foundation of most proposals is not clear. This paper presents a theoretical analysis of one of the most prominent approaches of strategic management accounting, i.e. target costing. We analyse three distinct characteristics of this strategic management accounting tool, namely its market orientation, its use as co-ordination instrument and its interaction with other factors affecting long-term cost structure in the form of strategic learning. The analysis shows that the more ‘strategic’ dimensions are added to the problem of cost management, the less valid are ‘strategic’ management accounting proposals in terms of the usual way target costing is employed.     

Import Competition, Productivity, and Restructuring in UK Manufacturing

We discuss the literature on the importance of entry and exitfor raising productivity growth. Using micro data for the UKfor a period from 1980 to 2000, we find that the share of productivitygrowth accounted for by entry and exit has increased considerably:from around 25 per cent in the 1980s to around 50 per cent inthe 1990s. We then ask to what extent increased globalization—measuredas sectoral import penetration—might have explained thisand find effects from both globalization and information andcommunication technology.     

Portfolio efficiency of a dynamic capital asset pricing model

In the present study we show that, based on equally weighted portfolios of continuously listed Finnish and Swedish stocks, aDynamic Model of Capital Asset Pricing (DCAPM) outperforms the static Capital Asset Pricing Model (CAPM) in the Super Criterion Test. It is demonstrated that the portfolio efficiency of the dynamic model is improved, when using a properly defined transition matrix in the Kalman Filtering Algorithm.The advice and encouragement of Professor Leif Nordberg (Department of Statistics, Åbo Akademi University) is gratefully acknowledged. I thank Jaana Aaltonen for her assistance in monitoring the computer programs. I also thank an anonymous referee for his valuable comments and suggestions for improving the quality of the paper.     

Continuous-time mean-variance portfolio optimization in a jump-diffusion market

In this paper, we take up an approach of (Lindberg, in Bernoulli, 15(2):464–474, 2009) who introduced a new parameterization of the Black–Scholes model that allows for an easy solution of the continuous-time Markowitz mean-variance problem. We generalize the results of (Lindberg, in Bernoulli, 15(2):464–474, 2009) to a jump-diffusion market setting and slightly correct the proof and the assertion of the main result. Further, we demonstrate the implications of the Lindberg parameterization for the stock price drift vector in different market settings, analyse the dependence of the optimal portfolio from jump and diffusion risk and finally indicate how to use the method. We particularly also show how the optimal strategy can be obtained with the restricted use of historical data.