Does the Optimal Size of a Fish Stock Increase with Environmental Uncertainties?

We analyze the effect of environmental uncertainties on optimal fishery management in a bio-economic fishery model. Unlike most of the literature on resource economics, but in line with ecological models, we allow the different biological processes of survival and recruitment to be affected differently by environmental uncertainties. We show that the overall effect of uncertainty on the optimal size of a fish stock is ambiguous, depending on the prudence of the value function. For the case of a risk-neutral fishery manager, the overall effect depends on the relative magnitude of two opposing effects, the ‘convex-cost effect’ and the ‘gambling effect’. We apply the analysis to the Baltic cod and the North Sea herring fisheries, concluding that for risk neutral agents the net effect of environmental uncertainties on the optimal size of these fish stocks is negative, albeit small in absolute value. Under risk aversion, the effect on optimal stock size is positive for sufficiently high coefficients of constant relative risk aversion.     

Bayes–Nash equilibria of the generalized second-price auction

We develop a Bayes–Nash analysis of the generalized second-price (GSP) auction, the multi-unit auction used by search engines to sell sponsored advertising positions. Our main result characterizes the efficient Bayes–Nash equilibrium of the GSP and provides a necessary and sufficient condition that guarantees existence of such an equilibrium. With only two positions, this condition requires that the click–through rate of the second position is sufficiently smaller than that of the first. When an efficient equilibrium exists, we provide a necessary and sufficient condition for the auction revenue to decrease as click–through rates increase. Interestingly, under optimal reserve prices, revenue increases with the click–through rates of all positions. Further, we prove that no inefficient equilibrium of the GSP can be symmetric. Our results are in sharp contrast with the previous literature that studied the GSP under complete information.     

Value of a Statistical Life—the Case of Poland

This study investigates the relationship between wages and the risk of work-related death for male blue-collar workers. The size of the premium for risk and its statistical significance depend heavily on the inclusion of industry dummy variables into the regression. Irrespective of the type of risk variable used, controlling for industry at a finer breakdown lowers the price of risk and its statistical significance. Estimates of the value of a statistical life (VSL) proved to be more robust when an aggregated risk measure at three-digit occupational level was used. In this case, the VSL varied from 0.79 million USD (for the model with industry dummy variables at the three-digit level) to 2.41 million USD (for the model without industry dummy variables). To the best of the author’s knowledge, this is the first study estimating VSL using the compensating wage differential approach for countries in Central-Eastern Europe.     

Optimal design of pension funds: a mission impossible?

Summary. Nowadays many employers offer their employees the possibility of an insurance against too large losses in income when retiring or becoming disabled. This paper models the optimization problem of the employer when setting up such a so-called pension fund. Not surprisingly, it turns out that the optimal solution depends on the premium the employees are willing to pay at most for such an insurance. Since this is private information for an employee and hence not known to the employer, he needs to collect information regarding these maximum premiums. It is shown that if employees' characteristics only differ in the maximum premium they are willing to pay, the employer is unable to perfectly inform himself on these maximum premiums, i.e. he cannot create the right incentives for his employees to reveal their maximum premiums truthfully. Received: March 20, 2000; revised version: March 11, 2002 RID="*" ID="*" The authors acknowledge the helpful comments and suggestions of an anonymous referee. The research of J. Suijs is made possible by a fellowship of the Royal Netherlands Academy of Arts and Sciences (KNAW). Correspondence to: J. Suijs     

Optimal quality threshold of admission in a two-sided farmers’ market

We develop a two-sided model for a farmers’ market where farmers value the number of consumers, and consumers value the number of farmers and the average product quality in the market. Consumer preference over product quality provides an incentive for the farmers’ market to exclude farmers of the lowest product quality. Using the model, we identify what factors the farmers’ market has to consider in determining the optimal quality threshold of admission, an issue that has not received any formal study. Those factors include the network effects between farmers and consumers, consumer preference over product quality and variety, and the quality spread among farmers. We also outline an empirical estimation strategy in order to make use of the model developed in this study.     

Ramifications of a Flat Tax—Shifting the Burden to the Middle Class

An alternative to the current US tax system would be a flat tax. According to its supporters, the flat tax would decrease the complexity of the tax system. Opponents contend that the flat tax will shift the tax burden to the middle class. The current research tested the claim that the flat tax will shift the tax burden to the middle class by developing simulations of two flat tax proposals, the Steve Forbes Plan and the Hall and Rabushka Plan, and then examining the change in the tax burden for different income levels as compared to the current tax system. The results show that both plans shift more of the tax burden to middle income class taxpayers than under the current US tax system.

Meeting the Challenge of the 21st Century Sustainable growth with a focus on the environment and quality of life

Halfacenturyago,withbiscuitsandshoesamongstitsfamousproducts, rebrowouldhavebeenclassedasanindustrialtown.Today,50yearslater, rebroisregardedasathrivingtownwithadiverseeconomyinwhichlogisticsandservicecompaniesaretothefore.Thetransformationof rebrofromatraditionalindustrialtowntoatownwitharisingpercentageofservicecompanieshasinvolvedgrowthnotonlyfor rebroitself,butalsoforlargepartsoftheregionaroundthetown.Theenvironmentandqualityoflifehavenotbeenforgot teninthisgrowth.Quitethecontrary,increa…     

A characterization of the coskewness–cokurtosis pricing model

The coskewness–cokurtosis pricing model is equivalent to absence of any positive-alpha return for which the residual risk has positive coskewness and negative cokurtosis with the market. This parallels the CAPM and also the fundamental theorem of asset pricing.     

Optimal taxation in the Uzawa–Lucas model with externality in human capital

In this paper we study the optimal policy in the Uzawa–Lucas model with externality in human capital when agents value both consumption and leisure. We find that the government pursuing the first best can achieve its goal by a subsidy which depends on foregone earnings while studying and which is financed through a lump sum tax. Anyway, the optimal policy, that should be designed to provide incentives for agents to devote more time to schooling and cut both on leisure and working, is not unique. There exists an infinite number of combinations of consumption, capital income, labor income and lump sum taxes that can decentralize the first best.     

Financial conditions and the well-being of the real estate sector—A bottom-up default analysis on five ASEAN economies

This paper investigates the impact of financial conditions, for example, cross-border capital flows, interest rates and foreign exchange rates, on the well-being of the real estate developers in five Association of Southeast Asian Nations economies. The study uses a Bottom-up Default Analysis model to stress test their creditworthiness by reproducing the financial shocks during the global financial crisis, taper tantrum, and the U.S.-China trade war and COVID-19 pandemic. The median developers remain sound under the prescribed adversities. The performance is underpinned by their strong fundamentals and a conducive mix of monetary, foreign exchange, and open capital account policies by national authorities.     

The growth–distribution nexus in a mixed regime of education with a status motive: On the macroeconomics of the welfare state

We develop a growth model with human capital accumulation to study the effects of status-driven motivation on individuals' choice between public or private education. This choice interacts with and exacerbates the effects of status, with implications for growth and distribution. More motivated individuals work harder and choose private education. In a majority voting/median voter setup, individuals choose a public education size for which there is no trade-off between long-term growth and inequality. We also highlight the conflict of interest between individuals with respect to the size of the public education sector and the tax rate that supports it. We thus highlight important interactions between the macroeconomy, social attitudes and educational institutions and derive results of interest in a variety contexts. We end by drawing policy conclusions among which, the idea that in democracies, higher growth and lower inequality are mutually compatible when the government promotes public education.     

Karl Haushofer and geopolitics — the history of a German mythos

This essay attempts to reassess the writings of Karl Haushofer, a German professor of geopolitics during the period of the Third Reich. However, this examination is not to be another historical reflection. Instead it approaches the question what different kinds of historical reflections on Karl Haushofer as a person and his geopolitics were made in Germany and how they influenced the further geopolitical research. The different interpretations of Haushofer are examined in the form of a discourse analytic study. It shows that the different judgments concerning his work are open to diverse political interpretations.     

Experts with a conflict of interest: a source of ambiguity?

We present an experimental design where uncertainty is generated from the advice of experts with conflicts of interest. In this experiment clients are faced with a variant of a multi-armed bandit problem with a random end-time. On the known arm (the “task screen”), clients can earn a certain payment per completion of a decoding task. However, clients may also opt for the unknown arm where they earn an uncertain amount if they end the experiment on this “expert screen”. The amount is uncertain to the clients because the value is being communicated through an “expert” with conflicted incentives. A control session provides for direct transmission of the value to the clients. Our results show that ambiguity aversion is alive-and-well in this environment. Also, when we vary the wage rate on the known arm we find that higher opportunity cost clients are less likely to heed the advice of conflicted experts.     

Entrepreneurs with glamour? DEA performance characterization of high-tech and older-established industries

The development of high-tech industries for competitiveness is an important issue for government policy-makers. Prior work by scholars concentrates disproportionately on the modern economies conventionally classified as high technology, and underestimates the importance of the older-established sectors that comprise the bulk of economic activity. This study examines the managerial performance efficiency of 367 manufacture firms in Taiwan utilizing the two-stage data envelopment analysis technique. The empirical results indicate that the scale of the firms does play an important role in influencing the operating efficiency. One can increase the firm's performance by consolidating with other smaller units to achieve the optimal size. By employing a profitability/marketability matrix, this study better characterizes the operating performance of the firms. The result of this study has a broader implication in that prior studies neglect these older-established sectors in terms of their current performance and future development. This finding in turn reflects a major distortion in views about the roles of research and development and technological upgrading in modern regional economies as a whole.     

Guide the Construction of Ecological Province of China with the Ecological Economics Theory

A major issue in China‘s present ecological economic construction is to build the ecological province. In March of 1999,Hainan Province of China proposed setting up the first ecological province and was accredited by the Bureau of State Environment Protection as the pilot project. Up to now for only four years, Hainan, Jilin, Heilongjiang, Fujian, Zhejiang,Shandong, Anhui, Jiangsu, eight provinces in the wholecountry, having launched the establishment of the ecological province. Meanwhile, the provinces such as Shaanxi, Hebei,     

Estimation of the value of the marginal product of emission in a country where emissions output is regulated — an empirical study

Emissions resulting from the production process can be characterized as use of the elimination and disposal services of the ecological system. Hence, they are use of natural resources and thus an input to production. The present paper discusses an approach to evaluate the returns of these kind of services as a production factor.First, four main types of industrial emission are chosen —SO ₂,CO ₂,NO _xandparticulate matter — and integrated in a Cobb-Douglas production function. With this approach, the production elasticities and the marginal product of these types of emission can be estimated.Based on these results and assuming that marginal product equals price, the demand curve for emission is estimated. With this demand curve the consequences of different kinds of environmental policy are considered. Under further assumptions of optimal behaviour it can be shown that the demand curve for emission is equal to the curve of marginal costs of avoidance (MCA). Thus, the estimates of the demand curves can be considered as estimates of the MCA-curves. Furthermore the price elasticities of these four types of emission are estimated with this approach. The method used in the paper is suggested for calibration of CGE models.     

On the Measurement of Enterprise Growth——-The Ugly Duckling Turning into a White Swan

Based on the review of domestic analyses of current situation and development trend problems of enterprise growth, this paper proposes some key problems of measures to enterprise foundation, index of system and their reality in use.