The use–make framework and the derivation of functional forms in production theory

The use–make framework is employed to explain functional forms in production theory, including Cobb–Douglas and Leontief. Productivity and efficiency are interrelated by augmenting the framework with a linear program that determines the frontier output.     

Choice Certainty and Consistency in Repeated Choice Experiments

The main objective of this study is to examine how repeated choice affects preference learning in stated preference experiments. We test different hypotheses related to preference learning by analyzing response patterns and asking respondents in a choice experiment to report their experienced certainty when going through the choice tasks. In a split-sample test, we show that follow-up choice certainty questions are procedural invariant. The self-reported certainty results indicate that learning occurs, but econometric testing procedures do not identify any significant impact of learning effects on parameter estimates or variance across choice tasks. Additional tests of choice consistency suggest that preferences in the choice experiment are stable and coherent.     

How Do Franchisees Assess Franchisor Trustworthiness?

This study investigates the antecedents of franchisees’ assessments of franchisor trustworthiness. It combines multiple theoretical perspectives to develop a framework that is empirically tested with survey data from 128 franchisees of a Dutch franchise system. The results show that franchisees’ perceptions of a franchisor's fulfillment of its functional duties on proactive and reactive quality assurance and strategic management positively influence franchisees’ assessments of franchisor trustworthiness. Moreover, the results show that the impact of the antecedents on franchisees’ trustworthiness assessments varies across franchisees: market competition attenuates the influence of strategic management and reactive quality assurance. Unit performance does not moderate the importance of the antecedents.     

General competitive equilibrium of the spatial economy : Two Teasers

The local indivisibility of space complicates general equilibrium analysis. Mazzoleni and Montesano (1984, p. 286), suggest that the usual reasoning of the non-spatial analyses of competitive equilibrium can be performed in the context of a commodity space that contains subsets of land. This space, however, lacks a linear structure, so it resists application of the usual reasoning. Two examples will show that Mazzoleni and Montesano's existence results are flawed.     

The Effect of Risk Context on the Value of a Statistical Life: a Bayesian Meta-model

This paper presents the first value of statistical life (VSL) meta-analysis that empirically estimates correction factors for ‘out of context’ benefits transfer (BT) purposes. In the field of mortality risk reductions elicited willingness to pay values in one risk context, say road safety, are frequently applied in other risk contexts like air pollution. However, differences in risk perception and the population at risk across contexts are likely to result in diverging VSL estimates. In a meta-analysis of 26 international stated preference studies, a Bayesian model is estimated regressing contingent values for mortality risk reductions, originating from three different risk contexts, on the characteristics of the risk reduction itself and additional variables characterizing the underlying studies. A willingness to pay (WTP) premium for mortality risk reductions in the air pollution and general mortality risk context relative to improving road safety is observed. Evaluated at the mean, road safety VSL estimates should be multiplied by a factor 1.8 before being applicable in the air pollution context. Moreover, in an illustrative BT exercise we find limited overlap in the set of context specific predictive VSL distributions. Consequently, ‘out of context’ BT results in a substantial over- or underestimation of the VSL.     

Outsourcing of Services and the Productivity Recovery in U.S. Manufacturing in the 1980s and 1990s

Manufacturing productivity growth recovered during the 1980s and 1990s, while other sectors, particularly services, did not. In the same period U.S. manufacturing has engaged in the “outsourcing” or “contracting-out” of service functions. Has the recovery of manufacturing been accomplished by industrial reorganization--sloughing off sluggish services--rather than technical progress? We analyze this question by reducing service inputs to their consituent elements of material inputs. Service productivity growth is thus imputed to the goods sectors, reducing the recovery of manufacturing productivity growth in the 1980s by one fifth. The recovery lasted through the 1990s, when high productivity performers in manufacturing have been relatively successful at outsourcing sluggishservices.

     

The Location of Comparative Advantages on the Basis of Fundamentals Only

We propose a new way to locate the comparative advantages of two economies linked by international trade. We construct a competitive benchmark based only on the fundamentals of the two economies: endowments, preferences and technologies. The direction of trade is endogenously determined by a linear program with an input-output core. The factor contents of that trade are compared with factor endowments to test the Heckscher-Ohlin model in the presence of different technologies and preferences. We can also evaluate the gains of free bilateral trade. The model is applied to a customs union between Europe and Canada. The Heckscher-Ohlin factor abundance specialization hypothesis is supported by the data.     

STOCHASTIC ANALYSIS OF INPUT–OUTPUT MULTIPLIERS ON THE BASIS OF USE AND MAKE TABLES

Although technical coefficients are estimated on the basis of flow data (use and make matrices), they are rarely treated as random variables. If this is done, an error term is added to the coefficients, rather than derived from the distribution of the data. Even so, the calculation of multipliers, by means of the Leontief inverse, is difficult. Due to the nonlinearity of this operation, the multiplier estimates are biased. By going back to the flow data, this paper provides unbiased and consistent employment and output multipliers estimates for the Andalusian economy. Rectangular use and make matrices are accommodated and problems associated with the construction and estimation of technical coefficients and the Leontief inverse are circumvented.     

PRIMARY VERSUS SECONDARY PRODUCTION TECHNIQUES IN U.S. MANUFACTURING

In this paper we analyze the determinants of material inputs into individual production activities as a function of their outputs. We use observations on a large cross-section of U.S. manufacturing plants from the Census of Manufactures, including those that make goods primary to other industries, to study differences in production techniques. We find that in most cases material requirements do not depend on whether goods are made as primary products or as secondary products. We thus elucidate support for the commodity technology model as a useful working hypothesis.     

Debreu’s coefficient of resource utilization, the Solow residual, and TFP: the connection by Leontief preferences

Debreu’s coefficient of resource utilization is freed from individual data requirements. The procedure is shown to be equivalent to the imposition of Leontief preferences. The rate of growth of the modified Debreu coefficient and the Solow residual are shown to add up to TFP growth. This decomposition is the neoclassical counterpart to the frontier analytic decomposition of productivity growth into technical change and efficiency change. The terms can now be broken down by sector as well as by factor input.