Measurement of technical and allocative efficiencies using a CES cost frontier: a benchmarking study of Japanese transmission-distribution electricity

This paper estimates the technical and allocative inefficiencies of the transmission-distribution sector of Japanese electric utilities using a panel data during the 1981–1998 period. A stochastic production frontier of the CES form is jointly estimated with input demand equations. Taking advantage of the self-duality, we retrieve the cost frontier by which the impacts of technical and allocative inefficiencies on costs and input demands are measured. The estimated elasticity of substitution is significantly different from unity in favor of the CES specification over the Cobb–Douglas. The results show that observed costs are 9 to 48% higher than the efficient level; technical inefficiency raises costs by 1 to 28%, while allocative inefficiency does so by 8 to 30%. Although their impacts on costs are similar, technical inefficiency more fluctuates so the differences in the performance of utilities are mainly due to technical inefficiency. We also find a substantial over-utilization of capital for all utilities.

Efficiency and Equity in School Funding: A Case Study for Kansas

This study measures cost inefficiency of Kansas public school districts and applied both mathematical programming and stochastic frontier approach. The empirical study uses two-stage data envelopment analysis model and the cost inefficiency effects model proposed by Battese and Coelli (Empirical Economics 24:325–332, 1995) and applied to a panel data. The results found mean inefficiencies from these two models are very close. The results indicate that Kansas school districts, on average, exhibit cost inefficiency in their operations, however, there is a tendency for inefficiencies to decline over time. The study does not find any strong evidence for lower efficiency due to lower expenditure per-pupil. Instead, we found inconclusive evidences where lower efficiency for certain school districts could be assigned to unfavorable environmental cost conditions.

Transaction tax and stock market behavior: evidence from an emerging market

This study examines the impact of a stamp tax rate increase on market behavior, using data from two stock exchanges in China. We find that when the tax rate increases from 0.3 to 0.5% (which implies that the transaction cost increases by about 1/3) trading volume decreases by 1/3. This implies an elasticity of turnover with respect to a stamp tax of −50% and an elasticity of turnover with respect to transaction cost of −100%. The markets’ volatility significantly increases after the increase in the tax rate. Furthermore, the change in the volatility structure indicates that the markets become less efficient in the sense that shocks are less quickly assimilated in the markets.

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Specification and estimation of nonstandard profit functions

This paper critically examines appropriateness of the nonstandard profit function (NSPF) as a tool for measuring profit efficiency. We show that there are some fundamental problems with the NSPF approach, the way it is currently specified and estimated. This is true irrespective of whether technical inefficiency is included or not. Instead of estimating profit efficiency directly from the NSPF, we suggest alternative specifications and recommend using the cost function approach and deriving profit efficiency therefrom. Data from US banks are used to estimate the cost function and the NSPF. Results from alternative specifications are then compared and analyzed.

Between European integration and regional autonomy: the case of Italy from an economic perspective

Italy has experienced a double political phenomenon over the last few decades: a transfer of powers to a supranational entity (the EU) and a move towards regional autonomy. This paper aims to evaluate how policy competences are attributed to and exercised by the European, national and regional institutions. It develops a set of quantitative indicators analysing the legislative production of the EU, the Italian parliament and the Italian regions in various policy areas. The main findings indicate a certain substitutability between European and national legislation and that different levels of government share competences in a larger number of sectors than suggested by the economic theory.

Enlarging the EMU to the east: what effects on trade?

The purpose of this article is to assess the implications of the Economic and Monetary Union (EMU) accession of eight Central and Eastern European Countries (CEECs) on their share of EMU-12 imports. Overcoming biases related to endogeneity, omitted variables and sample selection, our results indicate that the common currency has boosted intra-EMU imports by 7%. Under the assumption that the same relationship between the explanatory variables and imports will hold for EMU-CEEC trade, we intend to predict the future impact of the Euro. Our findings suggest that except for the least integrated countries, Poland, Latvia and Lithuania, all CEECs can expect increases in the EMU-12 import share.

Identifying development blocks—a new methodology

The paper specifies a quantitative methodology for exploring development blocks. The concept of ‘development block’ was a major contribution to the historical analysis of industrial transformation by the late Erik Dahmén, but development blocks have mainly been analyzed by qualitative methods and indirect indicators and not statistically identified. In this paper, development blocks are identified by means of a combination of co-integration analysis and Granger causality. Using these techniques, we are able to identify two partially overlapping development blocks in the Swedish economy, formed around the electricity generating sector: one with metal, metal goods, machinery and railways; and another with pulp and paper, chemicals, and machinery.

Economies of scale and scope in the European banking sector

In this article, using the data of 2008, we try to describe the impact of scale and product differentiation in 282 European banks. While evidence of the economies of scale is less clear, the results obtained using a translogarithmic function system show that significant economies of scope do exist even for new banking products like derivatives.

The Spanish Tomato Export Sector of the Almeria Region: An Econometric Approach

This article analyzes the current situation of the tomato export sector of Almeria, the principal exporting province of Spain. First, a critical view is presented relating to the internal organization of this sector; the most important problem observed is the marketing system which is atomized, heterogeneous and significantly difficult for raising funds from the individual partners in order to begin innovative projects. Second, to establish whether this area is losing market share, the sector is compared to the other principal tomato suppliers of the European Union (the Netherlands, Morocco, and other areas of Spain). The analysis shows Almeria has defended its market share in the most recent years. Finally, the most influential variables in the commercial process are analyzed by a tomato export model that shows there are substitution effects of the Almerian tomato for products from others origins, mostly the Netherlands.

The sector bias of skill-biased technical change and the rising skill premium in transition economies

We test the hypothesis that the sector bias of skill biased technical change is important in explaining the rising relative wage of skilled workers in the manufacturing sector in three Central and Eastern European transition countries. The econometric results broadly confirm that the concentration of skill biased technical change in the skill intensive sectors had a significant effect on the skill premium in these transition countries.

Constitutional choice and European immigration policy

The EU’s immigration policy is evaluated from the standpoint of constitutional economics. The main conclusion is that European immigration policy is trapped in a system of constitutional regulations that is too rigid as it is exclusively oriented towards the protection and securitisation of European borders. As such, it is not capable of allowing the development of a problem-solving capacity based on successive trials, and this produces negative outcomes for the whole of the EU.

The Forms and Determinants of Social Exclusion in the European Union: The Case of Luxemburg

The paper investigates the social exclusion process in the European Union (EU), particularly in Luxemburg, addressing both conceptual and empirical issues. It examines aspects such as: the most appropriate definition of social exclusion for the case of Luxemburg, the way economic and social disadvantages cumulate within the social exclusion process, and the main determinants of social exclusion, income poverty and deprivation. To analyze the topics mentioned above, different econometric models have been applied.

Measuring environmental efficiency of industry: a case study of thermal power generation in India

Technical and environmental efficiency of some coal-fired thermal power plants in India is estimated using a methodology that accounts for firm’s efforts to increase the production of good output and reduce pollution with the given resources and technology. The methodology used is directional output distance function. Estimates of firm-specific shadow prices of pollutants (bad outputs), and elasticity of substitution between good and bad outputs are also obtained. The technical and environmental inefficiency of a representative firm is estimated as 0.06 implying that the thermal power generating industry in Andhra Pradesh state of India could increase production of electricity by 6/ while decreasing generation of pollution by 6%. This result shows that there are incentives or win–win opportunities for the firms to voluntarily comply with the environmental regulation. It is found that there is a significant variation in marginal cost of pollution abatement or shadow prices of bad outputs across the firms and an increasing marginal cost of pollution abatement with respect to pollution reduction by the firms. This result calls for the use of economic instruments like pollution taxes instead of command and control regulation used currently in India to reduce air pollution.

When and why do Austrian companies issue shares?

This paper examines the issuance of share capital via the Vienna Stock Exchange between 1985 and 2004. Evidence is supplied concerning the aggregate factors that help to explain the time-series variation in both the numbers of and proceeds from initial public offerings (IPOs) and seasoned equity offerings (SEOs). Results indicate that there is no cyclical sensitivity of issues, but that firms successfully time their offerings to take advantage of high stock market valuations and the associated low cost of equity capital. Corporate indebtedness and interest rates are significant determinants of SEOs in statistical and economic terms. The proceeds from IPOs, rather than funds raised by firms already listed, are used to finance subsequent investment.

“Deja Vu All Over Again:” Constitutional Economics and European legal Integration

Existing theories of regional integration do not satisfactorily explain European legal integration. Like the bears’ porridge, one explains too much, another too little, and yet another requires unnecessary information. Constitutional economics, viewing regional integration as a process producing a constitution, is able to explain both momentum toward and resistance to legal integration in a parsimonious fashion. Further, it produces a unique analysis of the current circumstances of European legal integration, revealing that the Kompetenz–Kompetenz debate addresses the fundamental dilemma of compound republics. This also discloses that European integration has produced a novel answer to this old question.

International crises,instability periods and contagion: the case of the ERM

In this article we propose a two step procedure for modeling the propagation of financial shocks. The first step consists in the estimation, by means of SWARCH models, of the conditional probability of being in a period of high volatility, while in the second step such indicators are included in a structural simultaneous equations models for interdependences among different countries. The results show that episodes of financial crisis effectively happened during periods of high volatility and that such measures of instability are important in explaining the propagation of devaluation expectations between six European Countries during the ERM period.

Entrepreneurship and its determinants in a cross-country setting

The relative stability of differences in entrepreneurial activity across countries suggests that other than economic factors are at play. The present paper offers some new thoughts about the determinants of entrepreneurial attitudes and activities by testing the relationship between institutional variables and cross-country differences in the preferences for self-employment as well as in actual self-employment. Data of the 25 member states of the European Union as well as the US are used. The results show that country specific (cultural) variables seem to explain the preference for entrepreneurship, but cannot explain actual entrepreneurship. The present paper also introduces the remaining four papers of the special issue of the Journal of Evolutionary Economics, which center around the theme Entrepreneurship and Culture.

Advances in Inequality Measurement and Usefulness of Statistical Inference

Assessment of inequality measurement is the focus for this survey. All measures of inequality must be evaluated based on a set of desirable properties. More importantly, the usefulness of statistical inference for measures of inequality needs examination.

On local indeterminacy and endogenous cycles in Ramsey models with heterogeneous households

It is well-known that endogenous cycles can occur in Ramsey models with heterogeneous households and borrowing constraints. In this note, we address the issue of robustness in the more general case of endogenous labor supply and we explain the occurrence of local indeterminacy under progressive taxation.

How large is liquidity risk in an automated auction market?

We introduce a new empirical methodology that models liquidity risk over short time periods for impatient traders who submit market orders. Using Value-at-Risk type measures, we quantify the liquidity risk premia for portfolios and individual stocks traded on the automated auction market Xetra. The specificity of our approach relies on the adequate econometric modelling of the potential price impact incurred by the liquidation of a portfolio. We study the sensitivity of liquidity risk towards portfolio size and traders' time horizon, and interpret its diurnal variation in the light of market microstructure theory.

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