Cultural distance and international trade in services: A disaggregate view

In this paper, we estimate the effect of “cultural distance” on bilateral trade in services. The measure of cultural distance we use is based on scores that reflect country averages of individuals’ attitudes towards inequality, self-orientation, competition, uncertainty, traditions, and indulgence. Controlling for standard ingredients of gravity equations, we show that an aggregate measure of cultural distance has a significantly negative effect on total bilateral services trade. Once we take a more disaggregate view, we find that the strength of this effect differs across various types of services and various aspects of cultural distance.     

Parking location and transit demand: A case study of endogenous attributes in disaggregate mode choice models

This paper discusses a simultaneous model of transport mode choice and optimal parking location for the auto mode. In developing this model, four extensions of disaggregate choice theory are made that should be useful in other applications. These extensions are: (1) the formulation of an econometric model that allows for continous endogenous attributes in discrete choice decisions; (2) the use of an econometric estimation technique that is implementable using existing computer programs; (3) the development of an explicit reduced form expansion path cost model of location decisions; and (4) the extension of aggregation procedures to predict both transit demand and the spatial distribution of parking.     

A model of local demand for education

A careful modeling of the spending behavior of local school districts in New Jersey is presented. The theoretical model relies on the common hypothesis of political competition leading to a median outcome as well as the assumption that school superintendents act as budget maximizers. The model is estimated for a sample of 177 school districts under three different aid formulas. Pooling of the cross sections suggests that the response of school expenditures to changes in variables other than those associated with school aid parameters has remained constant over time. The results are discussed in the context of recent theories regarding the effect of intergovernmental aid on the level of public expenditure.     

The demand for deductibles in private health insurance: A probit model with sample selection

In this paper we analyse the decision to prefer a health insurance with a deductible to one with complete coverage. We focus on health, medical consumption, and on socio-economic characteristics like age, income, education and family size. The analysis is based on a sample of 8000 privately insured families; about 60 percent of them did not wish to have a health insurance policy with a deductible. A corrective method for sample selectivity, analogous to Heckman's (1979) method, has been applied in probit analysis; the estimation results are compared with the maximum-likelihood estimates. Health, medical consumption and income are found to have a significant influence on the decision with respect to the type of insurance. Our results give an indication of the degree of adverse selection that may take place if health insurance policies are offered with the option to take a deductible in exchange of a premium reduction.     

A mixed-integer linear programming decision model for aquaculture

This paper presents a mathematical model for use in aquaculture, the rearing of aquatic animals in a controlled environment. The model addresses the real-world strategic planning requirements of an emerging technology as well as the short- and long-term production scheduling requirements of a mature aquaculture facility. A solution procedure for large-scale problems is described and tested, and an illustrative application is presented.     

The impact of consumer health information on the demand for health services

This paper empirically examines whether consumers use health information, from non-physician information sources, as a substitute or complement for health services – namely for physician visits and emergency room (ER) visits. An indicator of patient trust in physicians is developed and used as a proxy for potential unobserved heterogeneity that may drive both consumers’ propensity to seek information and to use physician services. The results, after correcting for sample selection bias and controlling for unobserved heterogeneity, concur with the literature, that consumer health information increases the likelihood of visiting a physician as well as the frequency of visits on average. However, low-trust consumers tend to substitute self-care through consumer health information for physician services. Further, better-informed consumers make significantly fewer ER visits suggesting that information may be improving efficiency in the market.     

A bivariate count data model for household tourism demand

Households' choice of the number of leisure trips and the total number of overnight stays is empirically studied using Swedish tourism data. A bivariate hurdle approach separating the participation (to travel and stay the night or not) from the quantity (the number of trips and nights) decision is employed. The quantity decision is modelled with a bivariate mixed Poisson lognormal model allowing for both positive as well as negative correlation between count variables. The observed endogenous variables are drawn from a truncated density and estimation is pursued by simulated maximum likelihood. The estimation results indicate a negative correlation between the number of trips and nights. In most cases own price effects are as expected negative, while estimates of cross‐price effects vary between samples. Copyright © 2005 John Wiley & Sons, Ltd.     

Cross-sectional estimation of a simultaneous model of tenure choice and housing services demand

In this paper we analyze the demand for housing services, integrating into a single analysis a systematic treatment of several important conceptual and empirical issues. Our three major objectives are to (1) evaluate the empirical importance of the simultaneity between the tenure choice and consumption level decisions; (2) analyze the relationship between household type and housing demand; and (3) present new estimates of the parameters of housing demand which are based on detailed microdata. In the process, we derive and estimate overall income and price demand elasticities which incorporate the impacts of income and price on both the tenure choice and consumption level decisions.     

A model for IPO pricing and contract choice decision

This paper attempts to reconcile the average underpricing phenomenon with the expected wealth maximizing behaviors of market participants. Under the usual informational asymmetry, the optimal offer price for best efforts IPOs is derived as a function of the uncertainty about market’s valuation, the expected return on proposed projects and the size of offerings relative to the firm’s market value. According to these firm-specific characteristics, best efforts IPOs can be underpriced, fairly priced, or overpriced. Employing the investment banker as an outside information producer, the basic pricing model is extended to provide empirical implication for underwriting contract choice decision as well as for the pricing. Consistent with the existing empirical evidences, the model predicts that the issuers with greater uncertainty about market’s valuation choose best efforts contract over firm commitment contract and that the dispersion of initial returns would be greater for best efforts IPOs than for firm commitment IPOs.     

A decision model for regional industrial recruitment and development

Although the practice of industrial recruitment is widespread among regions, its objectives and constraints are neither well established nor carefully evaluated in determining the most desirable industries. As a result, many regions frequently resort to a blind scramble for new industries. This paper suggests a decision model for a regional economy to determine the priority in industrial recruitment. The problem is formulated in terms of a mathematical programming model in which the objectives and constraints are explicitly stated. Regional input-output, table provides additional constraints in the model. The input-output table is also used in testing the economic feasibility of optimal solutions.     

A gravity model analysis of the demand for mass communications

The gravity model specification is shown to be applicable to a study of the demand for a mass communication medium. The data are taken from newspaper circulations in the San Francisco metropolitan area. The demand equations have properties different from those for either private communication or travel demands.     

A dynamic model for disaster response considering prioritized demand points

This paper addresses the problem of distributing relief supplies after the occurrence of a disaster. We develop a dynamic model to serve demand, while prioritizing the response, according to the level of urgency of demand points. Our model is thought to be applied during a planning horizon and it considers dynamic demand, capacity constraints and priorities. To evaluate the applicability of our model, we use a real case study of a flood occurred in Colombia. We also test the computational solvability of our model and we propose and test different solution methodologies for solving larger instances of our problem.     

Supply chain finance: A three-party decision model with suppliers' guarantees for retailers

Under the premise that financing constraints frequently occur in the supply chain, this paper investigates the financing model of the supplier providing guarantee for the retailer under symmetric and asymmetric information. The optimal solutions of the retailer, the supplier, and the bank are studied by using the Stackelberg game. Results show that increasing the supplier's guarantee proportion can effectively improve the bank's reasonable margin rate and increase the supplier's profit. Under the condition of asymmetric information, the bank can increase the probability of credit loan in the supply chain by reducing the cost of spot check and setting up a reasonable fine limit.     

Bureaucracy, monopoly, and the demand for municipal services

A model of municipal budget allocation is constructed. It is assumed that municipalities elect mayors whose preferences reflect those of their constituents and that the bureaucrats heading the public agencies are private-wealth maximizers. Following Niskanen it is argued that bureaucrats exploit their mayors in order to maximize their salaries which implies that the price-elasticity for municipal services will be unitary. A price index is constructed, and the implication is tested on a sample of 81 U.S. cities over the period 1951–1973. The time-series estimates of price, population, and income elasticities are compared with those of Bergstrom and Goodman and Borcherding and Deacon.     

The consumption–investment decision of a prospect theory household: A two-period model

This study extends the literature on portfolio choice under prospect theory preferences by introducing a two-period life cycle model, where the sufficiently loss averse household decides on optimal consumption and investment in a portfolio with one risk-free and one risky asset. The optimal solution depends primarily on whether the household’s present value of the consumption reference levels is below, equal to, or above the present value of its endowment income. Reference levels below the endowment income are associated with the self-enhancement motive. In this case, the household avoids relative losses in consumption in any present or future state of nature (good or bad). As a result the degree of loss aversion does not directly affect optimal consumption and risk taking activity. Reference levels equal to the endowment income are associated with the belonging motive. An example would be a household comparing to others that belong to the same social class. In this case the household’s optimal consumption is the reference consumption and the household will not invest in the risky asset. Finally, reference levels above the endowment income are associated with the self-improvement motive (or high aspirations). For such high reference levels, households cannot avoid experiencing a relative loss in consumption, either now or in the future. As a result, loss aversion directly affects consumption and risky investment.     

A pragmatic decision model for inventory management with heterogeneous suppliers

For enterprises, it is imperative that the trade-off between the cost of inventory and risk implications is managed in the most efficient manner. To explore this, we use the common example of a wholesaler operating in an environment where suppliers demonstrate heterogeneous reliability. The wholesaler has partial orders with dual suppliers and uses lateral transshipments. While supplier reliability is a key concern in inventory management, reliable suppliers are more expensive and investment in strategic approaches that improve supplier performance carries a high cost. Here we consider the operational strategy of dual sourcing with reliable and unreliable suppliers and model the total inventory cost where the likely scenario lead-time of the unreliable suppliers extends beyond the scheduling period. We then develop a Customized Integer Programming Optimization Model to determine the optimum size of partial orders with multiple suppliers. In addition to the objective of total cost optimization, this study takes into account the volatility of the cost associated with the uncertainty of an inventory system.     

The impact of office machinery,and computer capital on the demand for heterogeneous labour

We study the impact of office and computing machinery (OCM) on the labour demand for workers with different educational levels. The empirical analysis relies on a system of demand equations that nests the translog, the generalised Leontief and the normalised quadratic specifications. Using panel data on 35 German industries, we find little evidence for a robust substitutability relationship between unskilled workers and OCM capital in manufacturing industries. In the non-manufacturing sector, however, we find some evidence for substitutability between OCM capital and unskilled workers.     

A model for measuring the need for services in a district

Administrators of social programs are often faced with decisions regarding how to distribute available funds. An important factor in this decision is the geographic location of the population in need of the agency's services. One would assume that those areas of the community where there are more people in need of the agency's support would receive a larger portion of the budget. However, in many cases, dollars are apportioned without adequate knowledge of what parts of the community are in the greatest need of services.This paper presents a method that can be used by most agencies for making a determination of the service need in different parts of the community. The agency used in the model construction is the Office of Community Services (OCS). The mandate of OCS is to implement a comprehensive plan for the delivery of social services in New York City. The “community” (New York City) is divided into forty Human Resource Districts (HRD's). In each of these districts there are outstations that provide a range of social services.In the past, misleading population characteristics of the districts were used to represent the need for OCS services. The characteristics were misleading because they did not represent the number of persons who would be in need of the services. For example, the number of persons receiving public assistance would not adequately represent the number of persons who needed child health services. This is especially true because some persons who are not eligible for public assistance are eligible for child health services.     

A chance-constrained multiobjective model for mental health services planning.

Mental health services planning, and particularly the planning for deinstitutionalization, is a very complex problem. This paper suggests a chance-constrained goal programming (CCGP) approach to mental health services planning. The CCGP approach is based on the sequential solution of a linear programming formulation, allowing efficient solution of large-scale planning problems using commercially available linear programming computer codes. The procedure is demonstrated with a case example and implementation of the approach is discussed.     

A channel model of investment decision: An intertemporal planning approach

The paper considers some theoretical implications of the Oslo-Cairo intertemporal planning model (the channel model). A version of the channel model with private and public investment projects is developed. The optimality properties of the model are derived. It is shown that: (i) Pareto solution can be supported by competitive prices and (ii) a ranking criterion can be constructed in the spirit of cost-and-benefit analysis. The results brings the channel model theoretically in line with the classical resource allocation models.This paper is a revised and abridged version of Chapter Two of my doctoral dissertation at the University of Kansas. I wish to thank Professor Mohamed El-Hodiri, Chairman of my thesis committee, for his guidance and support and for introducing me to the theory of optimal control with delays. I would also like to thank Professors Van Vleck, Paul Comolli, David Burress and Tom Weiss for their helpful suggestions. The paper has benefited substantially from the comments provided by anonymous referees. I remain responsible for all errors and inaccuracies.