The Dynamics of Insurance Prices

We develop a continuous-time general-equilibrium model to rationalise the dynamics of insurance prices in a competitive insurance market with financial frictions. Insurance companies choose underwriting and financing policies to maximise shareholder value. The equilibrium price dynamics are explicit, which allows simple numerical simulations and generates testable implications. In particular, we find that the equilibrium price of insurance is (weakly) predictable and the insurance sector always realises positive expected profits. Moreover, rather than true cycles, insurance prices exhibit asymmetric reversals caused by the reflection of the aggregate capacity process at the dividend and recapitalisation boundaries.     

On the necessity of five risk measures

The banking systems that deal with risk management depend on underlying risk measures. Following the Basel II accord, there are two separate methods by which banks may determine their capital requirement. The Value at Risk measure plays an important role in computing the capital for both approaches. In this paper we analyze the errors produced by using this measure. We discuss other measures, demonstrating their strengths and shortcomings. We give examples, showing the need for the information from multiple risk measures in order to determine a bank’s loss distribution. We conclude by suggesting a regulatory requirement of multiple risk measures being reported by banks, giving specific recommendations.     

Trade effects of alternative carbon border-tax schemes

In industrial countries contemplating emissions reductions, there have been calls for additional border taxes on imports from countries with lower carbon prices. A key factor affecting the impact of any border taxes is whether they are based on the carbon content of imports or the carbon content of domestic production. Our quantitative estimates suggest that the former action when applied to all merchandise imports would address competitiveness and environmental concerns in high-income countries but with serious consequences for trading partners. For example, China’s manufacturing exports would decline by one-fifth and those of all low- and middle-income countries by 15 %; the corresponding declines in real income would be 3.7 and 2.4 %. Border tax adjustment based on the carbon content in domestic production would broadly address the competitiveness concerns of producers in high-income countries and less adversely affect developing country trade.     

Crossnational comparison of entrepreneurs perceptions of success

This article examines how entrepreneurs in the United States, Japan, France, and Canada perceive success. The research examined the perceptions of success, the basis by which success is judged, specific success criteria, major obstacles overcome along the path to success, and the attributes and eucational experiences considered most important in achieving success.     

Public Knowledge,Private Property and the Economics of High-tech Consortia

The management of knowledge in research consortia raises new appropriability issues, such as copying with the tension between individual protection and data sharing which is required in any process of collective invention. Based on case studies carried out in the field of biotechnology, the paper discusses these issues and develop some policy implications.     

Quel prix pour la sécurite alimentaire? Une évaluation contingente suite à la crise européenne de la ≪ vache folle ≫

L'hypothèse d'une éventuelle contamination humaine par la maladie de Creutzfeldt‐Jakob, par le biais du prion de I'encéphalite spongiforme bovine (ESB), faite en 1996 par le ministre de la santé anglais a étéè l'origine d'une perte de confiance des consommateurs dans la viande de b?uf. Lew comportement en France a étéétudié a partir d'une enquête menée en 1997, auprés d'un échantillon représentatif de 700 personnes résidant dans l'agglomération de Rennes en Bretagne. L'enquête présente aux personnes interrogées un scénario contingent visant èévaluer leur consentement è payer (CAP) afin de disposer d'une viande pour laquelle tout risque de contamination par l'ESB est écarté. Un processus original de révélation des CAP a été utilisé, combinant la méthode du référendum et un système d'enchères. Le CAP moyen obtenu est relativement élevé puisqu'il atteint 22 % du prix initial de la viande. Un modéle micro‐économique visant è expliquer la valeur du CAP du consommateur pour une sécurité alimentaire totale par rapport è l'ESB est alors présenté. De cette formalisation micro‐economique découle une spécification économétrique correspondant au modele multinomial logit ordonnéè seuils connus. Parmi les variables ayant un role determinant dans le choix du CAP des consommateurs figurent notamment la confiance dans les indications géographiques et les labels. After the British Minister of Health admitted a possible link between the BSE prion and the Creutzfeldt‐Jakob disease in 1996, consumers lost confidence in the beef sector. This paper analyses consumers behavior after the BSE crisis in France in 1997, based on a survey using a random sample of 700 people located in the area of Rennes (Bretagne). Particularly, a contingent scenario was proposed to the respondents to elicit their willingness to pay (WTP) to have beef which would not transmit CJD using a mix of the referendum method and the bidding process. The mean WTP reaches 22% and is consistent with results obtained in other studies. A microeconomic model is proposed and an econometric approach based on an ordered logit model is developed. Among the significant variables, it is interesting to note the role of stamps of quality to explains consumers'behavior. Such variables prove the interest of a transparency and tracability policy to restore the consumers confidence.