Market Structures for U.S. Water Quality Trading

The use of transferable discharge permits as a water pollution control policy is rapidly increasing in the United States. Drawing on evidence from existing water quality trading programs, this paper provides a taxonomy of the forms that such markets take. Four main structures are identified: exchanges, bilateral negotiations, clearinghouses, and sole-source offsets. Each of these structures has its own strengths and weaknesses; none is optimal for all scenarios. Since market structure is largely determined by a program's rules, policy makers should be aware of the differences between these structures and the conditions under which each comes to be.     

The tactical and strategic value of hedge fund strategies: a cointegration approach

This paper analyzes long-term comovements between hedge fund strategies and traditional asset classes using multivariate cointegration methodology. Since cointegrated assets are tied together over the long run, a portfolio consisting of these assets will have lower long-term volatility. Thus, if the presence of cointegration lowers uncertainty, risk-averse investors should prefer assets that are cointegrated. Long-term (passive) investors can benefit from the knowledge of cointegrating relationships, while the built-in error correction mechanism allows active asset managers to anticipate short-run price movements. The empirical results indicate there is a long-run relationship between specific hedge fund strategies and traditional financial assets. Thus, the benefits of different hedge fund strategies are much less than suggested by correlation analysis and portfolio optimization. However, certain strategies combined with specific stock market segments offer portfolio managers adequate diversification potential, especially in the framework of tactical asset allocation.

Is self-employment really a bad experience? : The effects of previous self-employment on subsequent wage-employment wages

We use propensity score matching methods to quantify the effects of past self-employment experience on subsequent earnings in dependent employment using data on the population of Danish men observed between 1990 and 1996. Our results generally confirm existing studies in that we find that a spell of self-employment is associated with lower hourly wages compared to workers who were consecutively wage-employed. We also show, however, that this effect disappears—and even becomes positive in some settings—for formerly self-employed who find dependent employment in the same sector as their self-employment sector. Hence, the on average negative effect of self-employment is rather caused by sector switching than by the self-employment experience per se. Moreover, formerly self-employed who either enjoyed a high income or hired at least one worker during their self-employment spell receive wages in subsequent dependent employment that are at least as high as for individuals who have been consecutively wage-employed.     

Belohnen lohnt sich

Meritorisches Community Management aktiviert Online-Gemeinschaften. Virtual Communities geh?ren heute zur Beziehungswelt vieler Kunden. Sie zeichnen sich durch Authentizit?t aus und schaffen Mehrwerte, die zur Differenzierung von Unternehmen beitragen k?nnen. Wie aber lassen sich Communities aufbauen? Das Beispiel familymanager liefert hier interessante Einblicke. Mit einem meritorischen Community Management gelang es dem Familienportal, in kurzer Zeit eine gro?e und lebendige Community zu etablieren, die Werte für Kunden und Unternehmen zugleich schafft.     

Exchange rate determination: a theory of the decisive role of central bank cooperation and conflict

Economists’ faith that variable exchange rates benevolently equilibrate has been empirically disconfirmed. That faith is here tackled at its theoretical core with an exchange rate model that although ultra abstract, includes the undeniable fundamentals of market power and differential goals of central bankers and large-scale private players. It permits a game theoretic analysis under the assumption that all agents maximize their payoffs. The paper then relaxes the assumption of maximising agents, allowing for a more complex and thus realistic second version of the model that is interpretable within SKAT, the Stages of Knowledge Ahead Theory of risk and uncertainty. In an experimental setting, this second version of the model points to: a) the inability of agents in central banks, governments and the private real and financial sectors to operate in maximising ways; b) destructive central bank conflict; and c) the widely discrepant outcomes arising from the dynamics of individual personality differences. The paper’s theoretical and empirical findings thus both point to the merits of a single world currency.     

An Experimental Analysis of Modifications to the Centralized Milk Quota Exchange System in Quebec

Using experimental economics, this paper tests the potential impacts of modifying the centralized quota exchange system in Quebec with the intent of decreasing the quota price while minimizing negative impacts on auction effectiveness. Two separate treatments are applied to a uniform price auction similar to that employed in Quebec. The first treatment is an exclusion (5% or 15%) of the highest buyer bids and seller offers. The second is a tax (2% or 10%) on all units offered for sale that remain unsold. Various combinations of the two treatments are also tested. The results suggest that exclusion of the highest bids and offers can decrease the price of the quota and that a 15% exclusion rate is more effective than a 5% rate. The tax alone has little impact on quota price. The combination of the two treatments generates a more marked reduction in both the number of exchanges and the price of the quota than when the tax or the exclusion is applied individually. However, the combination of treatments results in a greater loss of economic efficiency. In all cases, relatively small market price reductions are realized at the expense of substantial losses in economic efficiency. La présente étude teste de manière expérimentale la capacité d'une modification au système centralisé de vente du quota à faire diminuer le prix du quota laitier au Québec tout en minimisant les impacts négatifs des changements sur l'efficacité de l'enchère. Cette modification consiste à appliquer deux traitements sur l'enchère de prix uniforme où s'échange le quota. Le premier traitement consiste en une exclusion (5% ou 15%) des mises les plus élevées des acheteurs et des vendeurs. Le second traitement est une taxe (2% ou 10%) appliquée aux unités que les vendeurs mettent en marché et ne réussissent pas à vendre. Différentes combinaisons de ces deux traitements sont également testées. Les données générées permettent de conclure que le mécanisme d'exclusion des mises les plus élevées permet de faire diminuer le prix du quota, l'exclusion de 15%étant plus efficace que celle de 5%. Pour sa part, la taxe seule a peu d'impact sur le prix du quota tandis que la combinaison des deux traitements entraîne une diminution du nombre de transactions et du prix du quota plus marquée que lorsque les traitements de taxe et d'exclusion sont appliqués individuellement. Cela a comme corollaire d'entraîner une perte d'efficacitééconomique plus importante. Dans tous les cas, des baisses de prix de marché relativement modestes sont réalisées au coût d'importantes pertes d'efficacitééconomique.     

Foreign Direct Investment in China: An Examination of the Literature

Since 1978, when China announced its ‘open-door’ policy to pursue the country's long-term national goal, the Four Modernisations, more than 220,000 foreign funded ventures have been approved. By the end of 1994 some US$300 billion of contracted investment had been agreed and US$95 billion of utilized investment, making the country the most important recipient of foreign direct investment (FDI) in the developing world. This paper analyses the phenomenon of FDI in China. It examines the different forms and composition of FDI, reviewing its development since the early days of the ‘open-door’ policy and analysing its importance for Chinese domestic and export industries, as well as Western investor companies. Furthermore, the paper focuses on the world-wide sources of FDI in China and its distribution by both region and industry. Additionally, it reviews the existing research on FDI in China, emphasizing the investment mode of equity joint venture.