Scholastic just price versus current market price: is it merely a matter of labelling?

Abstract

From an analytical point of view, some aspects of Just Price theory, probably the most famous and lasting scholastic concept, remain controversial: the cost-of-production versus the subjective-utility theory of value is a main controversy as well as the question of whether the natural just price is conceptually the same as the current market price. Strictly speaking, just price isconceptually the same as the current market price. Of concern is whether the meaning behind the label is the same in both scholastic and liberal traditions. There are different interpretations among scholars. One is that the just price is merely the current market price, and common estimation plays the same role as market forces in a competitive context. Another group states that the just price is quite different from the market price; the fundamental reason is that the ethical framework of the scholastic paradigm sets a corpus of principles that greatly differs from the neoclassical homo economicus. Is it possible to speak of a collaborative market price (scholastic tradition) and competitive market price (liberal tradition)? This article tries to dig into such debate and reflects on the morality of the market price.     

Sources of Firm Performance Differences in the US Food Economy

Researchers in economics and strategy have long been interested in understanding the determinants of firm performance. We apply the relatively novel approach of hierarchical linear modelling (HLM) to a large panel of food economy firms to shed new light on the long‐standing debate about the relative importance of industry, corporate parent and business unit effects on firm profits. Our results suggest that business unit and corporate effects are more relevant than industry effects in explaining firm performance differences in the food economy. In addition, we also explore the effect of specific strategic factors on performance within each level of analysis. In particular, we find that business‐segment size, industry barriers to entry, corporate diversification, R&D intensity, capital intensity and resource availability are significant predictor variables that explain firm performance differences. Given the relatively important role of corporate effects and the positive influence of corporate strategic variables on business unit performance, our findings suggest that the environment provided by corporate parents significantly affects business unit profitability. In other words, corporate strategy does matter and thus should continue to draw attention from scholars interested in explaining profitability in the food economy.     

The time-varying independence of Italian peak judicial institutions

The paper investigates the stability of the degree of independence of the judiciary vis à vis both the classical political branches and other independent institutions, such as regulatory agencies, using evidence about the Italian Constitutional Court and the Council of State. Both peak judicial courts feature time varying factors of independence that affect their jurisprudence, especially in the case of the legitimacy review by the Constitutional Court. The less conclusive evidence found in the Council of State related to decisions of independent regulatory authorities might be due to the more complex set of interactions in which the Council operates.     

A model of the Italian cut-off system for taxing small businesses

The Studi di Settore are used by the Italian tax administration to calculate reference revenue levels for small businesses and provide a kind of cut-off level for tax audits. Recently new rules have been introduced in order to render the Studi di Settore more efficient in producing realistic estimates, with the aim of reducing the “legalized evasion” that might arise in case of a systematic downward bias. Voices of the involved categories, however, convinced the Government to partially step back. Building upon the standard firm’s tax evasion model of Cowell [Cowell, F.A., 2004. Carrots and sticks in enforcement. In: Aaron, H.J., Slemrod, J. (Eds.), The Crisis in Tax Administration. The Brookings Institution, Washington DC, pp. 230–275] and the approach of Santoro [Santoro, A.C., 2006. Evasione delle società di capitali: evidenze empiriche e proposte di policy. In: Brosio, G., Muraro, M. (Eds.), Il Finanziamento del Settore Pubblico. SIEP, Angeli, Milano, pp. 163–186] we show that, under given conditions, a stringency increase might backfire implying a larger overall tax evasion and a smaller tax revenue.     

Global slack and domestic inflation rates: A structural investigation for G-7 countries

Recent papers have argued that one implication of globalization is that domestic inflation rates may have now become more a function of “global”, rather than domestic, economic conditions, as postulated by closed-economy Phillips curves.This paper aims to assess the empirical importance of global output in determining domestic inflation rates by estimating a structural model for a sample of G-7 economies. The model can capture the potential effects of global output fluctuations on both the aggregate supply and the aggregate demand relations in the economy and it is estimated using full-information Bayesian methods.The empirical results reveal a significant effect of global output on aggregate demand in most countries. Through this channel, global economic conditions can indirectly affect inflation. The results, instead, do not seem to provide evidence in favor of altering domestic Phillips curves to include global slack as an additional driving variable for inflation.     

Heterogeneous duopoly with isoelastic demand function

In this paper we analyze a duopolistic market with heterogeneous firms when the demand function is isoelastic (Puu, T., 1991. Chaos in duopoly pricing. Chaos, Solitons and Fractals 1, 573–581.). We consider the same heterogeneous firms of Zhang et al. (Zhang, J., Da, Q., Wang, Y., 2007. Analysis of nonlinear duopoly game with heterogeneous players. Economic Modelling 24, 138–148.) introducing a nonlinearity in the demand function instead of the cost function. Stability conditions of the Nash equilibrium and complex dynamics are studied. In particular we show two different routes to complicated dynamics: a cascade of flip bifurcations leading to periodic cycles (and chaos) and the Neimark-Sacker bifurcation which originates an attractive invariant closed curve. Comparisons with respect to the Puu model and the model of Zhang et al. are performed.     

Which are the determinants of green purchase behaviour? A study of Italian consumers

Green purchase behaviour is receiving a growing attention in the academic community, as understanding it is crucial for the growing number of companies developing and marketing green products. In order to provide a broader and novel picture of the phenomenon, this study extends the widely used Theory of Planned Behaviour (TPB) model in several ways, through a large survey of Italian consumers. First, three dimensions of green purchase behaviour are considered, namely, the willingness to pay a premium price, the green purchase frequency and the green purchase satisfaction. Second, several antecedents are considered simultaneously. Third, new (consumer creativity) or so far marginally studied (materialism and green practices) antecedents are included. Fourth, the mediating roles of green purchase satisfaction and willingness to pay a premium price in the link between the considered antecedents and the frequency of green purchase are investigated. Results show that the three dimensions of green purchase behaviour have different antecedents, so highlighting that green purchase behaviour is a multi-faceted phenomenon that should not be studied as a single general concept. Personal norms and value for money emerged to be very relevant predictors. The significant effects of creativity, materialism and green practices provide evidence that extending the TPB model with these three antecedents is useful to more deeply understand green purchase behaviour. Green purchase satisfaction is the strongest predictor of purchase frequency and mediates the effects of personal norms and value for money.     

Pricing Critical Illness Insurance from Prevalence Rates: Gompertz versus Weibull

The pricing of critical illness insurance requires specific and detailed insurance data on healthy and ill lives. However, where the critical illness insurance market is small or national commercial insurance data needed for premium estimates are unavailable, national health statistics can be a viable starting point for insurance ratemaking purposes, even if such statistics cover the general population, are aggregate, and are reported at irregular intervals. To develop a critical illness insurance pricing model structured on a multiple state continuous and time-inhomogeneous Markov chain and based on national statistics, we do three things: First, assuming that the mortality intensity of healthy and ill lives is modeled by two parametrically different Weibull hazard functions, we provide closed formulas for transition probabilities involved in the multiple state model we propose. Second, we use a dataset that allows us to assess the accuracy of our multiple state model as a good estimator of incidence rates under the Weibull assumption applied to mortality rates. Third, the Weibull results are compared to corresponding results obtained by substituting two parametrically different Gompertz models for the Weibull models of mortality rates, as proposed previously. This enables us to assess which of the two parametric models is the superior tool for accurately calculating the multiple state model transition probabilities and assessing the comparative efficiency of Weibull and Gompertz as methods for pricing critical illness insurance.     

Updates management in mobile applications: iTunes versus Google Play

This paper focuses on a specific strategy that developers of mobile applications may use to stimulate demand: The release of updates. We develop a theoretical analysis that shows that developers have incentives to release updates when experiencing a drop in performance. The predictions of the model are then tested using an unbalanced panel of top 1,000 apps in iTunes and Google Play for five European countries. We estimate that while in iTunes the release of an update stimulates a 26% increase in download growth, in Google Play updates play a less significant role. This difference is partly due to systematic differences in apps and in developers operating in the two stores (“selection effect”), and partly to a lack of quality control on apps and updates in Google Play (“quality check effect”). These findings highlight the crucial importance of an appropriate management of updates as well as the relevance of institutional characteristics of the app stores.     

From central planning towards a market economy: The role of ownership and competition in Vietnamese firms’ productivity

This paper examines the role of ownership and market competition in Vietnamese firms’ total factor productivity (TFP) from 2001 to 2011. Making use of a large panel dataset of manufacturing firms, we find that, on average, both foreign-owned enterprises (FOEs) and state-owned enterprises (SOEs) have performed better than privately owned enterprises (POEs) in terms of their TFP levels. However, while FOEs’ TFP ranked the highest in the period 2001–2006, SOEs “closed the gap” in the period 2007–2011. Moreover, we find that market competition has been effective in enhancing average firm productivity and in reducing the gaps in efficiency across ownership types. SOEs’ remarkable performance may be linked to several concurrent factors experienced during the period 2001–2011, namely, the process of restructuring the state sector during the 2000s, the increased economic integration due to the country's accession to the World Trade Organization (2007) and, finally, the preferential access to financial capital and land granted to SOEs. While some evidence supports SOEs’ equitization as an explanation for their remarkable productivity performance, WTO accession and cheaper access to inputs do not fully explain it.