Technological choices and regulation: the case of the Canadian manufacturing sectors

Abstract The economic environment in which Canadian manufacturing firms operate has changed substantially over the last 40 years. Technological changes, new regulations, deregulation, and exogenous economic shocks all have been important aspects of this economic environment. In this article, we show how to include such changes in the economic environment faced by the firms in a behavioural model that includes the investment decision of the firm under uncertainty. Assumptions regarding the expectation formation process and technology are kept minimal. We estimate the effects of innovations such as the free trade agreement, the foreign investment review agency, and the federal environmental policy on the economic decisions of fifteen Canadian manufacturing sectors. JEL Classification: D24
Choix de technologies et réglementation: le cas des secteurs manufacturiers canadiens Au cours des 40 dernières années, l'environnement économique des firmes manufacturières canadiennes s'est grandement transformé. Que ce soit à cause du changement technologique, de la réglementation, de vagues de déréglementation ou de chocs économiques exogènes, les firmes ont dû s'adapter en modifiant leur technologie. Dans cet article, nous montrons comment prendre en compte les changements de l'environnement économique des firmes dans le cadre d'un modèle décisionnel de la firme en incertitude avec investissement. Les hypothèses concernant la technologie et les anticipations sont aussi générales que possible. Nous estimons l'effet qu'ont eu l'accord de libre échange, l'agence de tamisage des investissements étrangers et la politique environnementale fédérale sur les choix de technologies des firmes de quinze secteurs manufacturiers canadiens.     

Measuring Hospital Performance in the Presence of Quasi-Fixed Inputs: An Analysis of Québec Hospitals

This research proposes an approach to measure hospital performance based on a generalization of Banker and Morey (1986) and Førsund (1996). This approach considers quasi-fixed inputs explicitly, calculates their implicit cost, and quantifies returns to scale. The performance measure is decomposed into allocative and technical inefficiencies. Based on a very complete data set of Québec hospitals, we find that significant inefficiencies of up to 17% ($700 CAN million) could have been saved through improved performance. Postestimation analyses that include qualitative measures of care suggest that differences in performance are attributable to differences in management or unobservable quality of care rather than patient case mix.     

Dynamic Factor Demands and Technology Measurement under Arbitrary Expectations

We present a dynamic model of factor demands based on expected discounted costs minimization. While making only very mild assumptions on expectations and technology, we are able to establish a duality relationship between contemporary factor demands and the technology, and we provide formula for easily recovering marginal products, returns to scale, and technological change from estimated factor demands. Parametrization and implementation are illustrated in a detailed example.     

“This Marvelous Symbol of Our Identity”: The Czech Republic in American Practical Geopolitics

This paper analyses the practical geopolitical representations of the Czech Republic in American presidential materials between 1989 and 2009. Using structured discourse analysis, it highlights the impact of identity construction on policymaking and draws on critical geopolitics to highlight conceptualisations and geopolitical representations connected with the Czech Republic over four American presidential administrations. The article demonstrates the power of practical geopolitics in constructing images and cementing certain preconceived notions about a given place. Five main representations are identified, presenting the Czech Republic as: interconnected with American identity, a symbol of democracy and freedom, a victim of tyranny, a loyal ally, and as interchangeable with other countries in Central Europe. The article concludes that such multifaceted conceptualisations not only define the United States’ relationship with the Czech Republic, but also have strategic value. These conceptualisations helped to justify certain American policies and to reinforce a particular interpretation of American identity.     

On the existence of a regulated production function

This paper examines the generalization of the regulated production function. It characterizes the set of admissible regulatory constraints that are compatible with the existence of a regulated production function in a sufficiently weak framework to encompass the usual rate-of-return constraints à la Averch and Johnson and value constraints.     

A General Procedure to Recover the Marginal Products of a Cost Minimizing Firm

Inthis paper we develop a new method, based on generalized inverse,to recover the first derivatives of the production function.This allows us to retrieve returns to scale, technological progressand, in a dynamic setting, a measure of the adjustment cost.The method is general and systematic and it applies in caseswhere the traditional method does not. It is especially relevantwhen examining dynamic models or regulated firms.     

Investment and dynamic DEA

A dynamic version of data envelopment analysis (DEA) is developed in the present paper. Our model introduces investment in traditional DEA and imposes intertemporal cost minimization. Adding an intertemporal adjustment constraint into the cost minimization problem, we derive the relation between the DEA variables of the variable cost function and those of the primary production frontiers’ coefficients. The augmented DEA model can be solved using standard linear programming. This dynamic framework enables computing the production frontiers, measuring the productive efficiencies and evaluating the potential economies all in the presence of adjustment costs.

Hospital Technology in a Nonmarket Health Care System

This article presents a quantitative analysis of the production of hospital services in a nonmarket environment based on production theory and a very complete data set on the hospital industry. It provides both insights into the optimality of the hospital industry structure and a useful framework to evaluate the impact of anticipated industry structural changes. We find that the industry structure is far from optimal; it is characterized by overcapitalization and would experience difficulty responding to increased demand for some types of services.     

Cost and Production Duality: The Case of the Regulated Firm

This paper examines a generalization of cost-production duality for regulated firms. It derives an equivalency between the production function and conditional factor demands for the case where the firm's optimization problem is subject to a set of additional (regulatory) constraints. This procedure is extended to an optimization problem within a dynamic framework which leads to the recovery of the firm's technology.     

An evaluation of the efficiency of Québec's school boards using the Data Envelopment Analysis method

In this paper the efficiency of Québec's school boards during a period of severe cutbacks in their finance is examined. Using Data Envelopment Analysis, the average efficiency is found to be relatively high. In spite of this, potential savings could be achieved if school boards were fully efficient. Results were found to depend heavily on school boards’ socio- economic conditions, thus they were subjected to Tobit analysis and the boards’ corrected efficiencies recalculated. It is concluded that inefficiencies cost 800 million dollars of which 200 million dollars come from unfavourable socio-economic conditions.