Information, Knowledge and Belief

The paper models information as possibilities consistent with signals received from the environment. Knowledge is obtained by reasoning about the signals received as well as those that might have been received but were not. The term 'knowledge' is used to refer to those beliefs that are obtained by reasoning about the available information, and nothing else . That is, one ought to be able to fully justify what one knows by means of the information that is available. The term 'belief' is used to refer to those beliefs that are based on information but not necessarily only on information. The author investigates the relationship between information, knowledge and belief, as well as the issue of updating knowledge and belief in response to changes in information.     

The Law of Primogeniture and the Transition from Landed Aristocracy to Industrial Democracy

We study the connection between inheritance systems and the historical evolution of the relationship between a society’s economic structure and its political system, with a focus on Europe from feudal times. The model predicts that, in an early agrarian phase, aristocratic political systems prevail, while democracies tend to emerge with industrialization. At the same time, as indivisible landed estates are replaced by capital as the primary source of wealth, the inheritance system evolves endogenously from primogeniture to partition. The dynamics of output, distribution, class structure and political participation are in turn reinforced by the system of intergenerational wealth transmission, with primogeniture tending to concentration and partition to equalization. “But the law of inheritance was the last step to equality.” Alexis de Tocqueville, Democracy in America (1835).     

On a variational formulation used in credit risk modeling

We consider the credit risk model of Collin-Dufresne and Goldstein (2001). According to this model, the price of a defaultable bond can be efficiently computed using a variational formulation that consists of an integral relation and a Volterra integral equation. In Collin-Dufresne and Goldstein (2001) this integral equation is justified by a probabilistic intuition, but is not proven formally. In this paper we analytically derive the variational formulation used in Collin-Dufresne and Goldstein (2001). This analysis allows to give a correct characterization of the solution of the integral equation. Furthermore the approach proposed in this paper could also be employed for other models of credit risk.     

Competition Effects of Supermarket Services

This article investigates the competition effects of supermarket services using fluid milk as a case study. A simultaneous equation model for services and price competition is estimated with scanner data from fifteen supermarket chains using two alternative measures of services, namely store size and principal components of in-store services. Empirical results show that increasing services results in economies of scope, greater supermarket chain-level demand, lower price elasticity of demand, and enhanced market power, leading to higher milk prices and quantity sold. We conclude that, as result of service competition, supermarkets differentiate themselves from competitors and successfully attract less price-sensitive consumers.     

Food fraud: economic insights into the dark side of incentives

In this review, we contextualise the articles in this special issue, relating them to existing food fraud research, and identify food fraud research trends, challenges and priorities for the near term. We accomplish these aims through a comprehensive review of research by food scientists, economists, other social scientists, legal experts, government research groups and international trade organisations. Existing food fraud research is heavily weighted towards food science, packaging and labelling, and legal areas of knowledge discovery. Moving forward, research is needed pertaining to general economic welfare outcomes from food fraud incidences, economic incentives to deter frauds, economic spillovers from fraud incidences to other food products and markets (domestic and international) and further delineation of the effect of different types of food fraud on consumer and producer welfare. The articles in this special issue make significant contributions to understanding of the role of food fraud in consumer decisions, measuring consumer welfare losses from fraud, food fraud spillover effects to other markets and new frameworks for fraud analysis.     

EXPLAINING DIFFERENCES IN EFFICIENCY: A META‐STUDY ON LOCAL GOVERNMENT LITERATURE

This paper reviews the literature on local government efficiency by meta‐reviewing 360 observations retrieved from 54 papers published from 1993 to 2016. The meta‐regression is based on a random‐effects model estimated with the two‐step random‐effects maximum likelihood (REML) technique proposed by Gallet and Doucouliagos. Results indicate that the study design matters when estimating a frontier in local government. We find that studies focusing on technical efficiency provide higher efficiency scores than works evaluating cost efficiency. The same applies when using panel data instead of cross‐section data. Interestingly, studies that use the Free Disposal Hull (FDH) approach yield, on average, higher efficiency scores than papers employing the data envelopment analysis (DEA) method, thereby suggesting that in this literature the convexity hypothesis of the production set is a matter. Finally, the efficiency of local government increases with the level of development of the analysed countries and is positively related to the national integrity of the legal system. The opposite holds when considering the corruption.     

New Evidence on Export Price Elasticity from China and Six OECD Countries

This paper provides new evidence on export price elasticities by analyzing the cases of China, France, Germany, Italy, Japan, UK and the USA over the period 1990–2012. Estimates have been made using panel data techniques for non‐stationary data. After demonstrating that long‐run relationships are stable to any structural break, it is found that exports are significantly determined by foreign demand, with long‐run income elasticity significantly higher than unity for China, Japan, Germany, the UK and the USA. Conversely, exports are price inelastic for most of the countries in the sample, in both the long run and the short run. The exception is France, whose export price elasticity is lower (higher) than unity in the short run (long run).     

The enfranchisement of women and the welfare state

We offer a rationale for the decision to extend the franchise to women within a politico-economic model where men are richer than women, women display a higher preference for public goods, and women's disenfranchisement carries a societal cost. Men and women are matched within households which are the center of the decision process. We derive the optimal tax rate under two alternative regimes: a males-only enfranchisement regime and a universal enfranchisement regime. The latter is associated with a higher tax rate but, as industrialization raises the reward to intellectual labor relative to physical labor, women's relative wage increases, thus decreasing the difference between the tax rates. When the cost of disenfranchisement becomes higher than the cost of the higher tax rate which applies under universal enfranchisement, the male median voter is better off extending the franchise to women. A consequent expansion of the size of government is only to be expected in societies with a relatively high cost of disenfranchisement.We empirically test the implications of the model over the 1870–1930 period. We proxy the gender wage gap with the level of per capita income and the cost of disenfranchisement with the presence of catholicism, which is associated with a more traditional view of women's role and thus a lower cost. The gender gap in the preferences for public goods is proxied by the availability of divorce, which implies marital instability and a more vulnerable economic position for women. Consistently with the model's predictions, women's suffrage is correlated positively with per capita income and negatively with the presence of catholicism and the availability of divorce, while women's suffrage increases the size of government only in non-catholic countries.     

Marriage and other risky assets: A portfolio approach

We study the joint impact of gender and marital status on financial investments by testing the hypothesis that marriage represents – in a portfolio framework – a sort of safe asset and that this attribute may change over time. We show that married individuals have a higher propensity to invest in risky assets than single ones, that this marital status gap is stronger for women and that, for women only, it evolves and declines at the end of the sample period. Next we explore a number of possible explanations of the observed gender differences by controlling for background factors that capture the evolution of family and society. We find that both the higher female marital status gap and its time variability vanish for those women who are employed. Our empirical investigation is based on a dataset drawn from the 1993–2006 Bank of Italy Survey of Household Income and Wealth.     

Innovation in Agro-Food: A Geographical Perspective

Several studies aim to evidence the relevance of innovation in the agro-food industry. However, comparative studies between regions are almost absent. With the aim to fill this literature gap, this paper aims to present a geographical analysis of innovation in the agro-food value chain. With the goal of presenting a geographical comparative analysis of innovation in the agro-food value chain, we present results of some interviews conducted with a sample of Italian firms. We selected two case studies to evidence how institutional contest affects firms’ innovative activities.