Asymmetric information in late 19th century cooperative insurance societies

Between 1880 and 1930, cooperative insurance was the main source of illness, accident, and death insurance in the United States, Canada, and England. This paper tests for asymmetric information in cooperative insurance societies and examines how their pricing policies affected the profile of members. We find strong evidence that, unlike their modern substitutes, cooperative societies were able to overcome the asymmetry of information. Furthermore, as a consequence of non-actuarial pricing, our results suggest that workers deferred their membership until they were about 40 years old.     

Collusive intra-industry trade in identical commodities

Collusive Intra-Industry Trade in Identical Commodities. — A homogenous-goods Cournot model with two countries and two firms is analyzed. Firms may collude by monopolizing their domestic markets, but they may also engage in collusive intra-industry trade. It turns out that, though such trade is costly because of transportation costs, firms might indeed trade since this enlarges the scope of successful collusion. Hence, intra-industry trade in homogenous goods is not a reliable indicator of competition.     

INTEGRATED PRODUCTION AND THE INVESTMENT–UNCERTAINTY RELATIONSHIP

This paper studies the role of production mode in determining the effects of an increase in uncertainty on the choice of investment outlay. In a continuous-time model of optimal capital investment with innovative R&D under demand uncertainty, we show that investments in both capital and innovative research decrease with an increase in uncertainty, and that such investments rise with the level of primary demand. Our result sheds light on the mode of production as a source of the negative investment–uncertainty relationship.     

How does a Change in the Excise Tax on Beer Impact Beer Retail Prices in South Africa?

This article uses price data, collected by Statistics South Africa, to estimate the effect of a change in the excise tax on the retail price of beer. We find strong evidence that the excise tax on beer is overshifted to consumers. The pass‐through coefficient is estimated at 4.83 (95% CI: 4.02; 5.64) for lager, and at 4.77 (95% CI: 4.04; 5.50) for all beer (which includes dark beer). This implies that for every R1/unit increase in the excise tax, the retail price increases by about R4.80/unit. Of the 23 brand‐packaging combinations considered, the pass‐through coefficients vary between 2.39 and 10.05 (median = 5.30). The majority of the price change in response to a tax change occurs immediately, and prices have fully adjusted two months after the excise tax increase becomes effective. Pass‐through differs substantially across packaging types. The pass‐through coefficient on 750 ml bottles is substantially lower than that of 330 ml (or 340 ml) cans and 6 × 330 ml (or 6 × 340 ml) “six‐packs.” The overshifting of the excise tax has positive implications for public health policy, since they increase the effectiveness of alcohol taxes as a tool to reduce the (excessive) consumption of beer.     

THE NEW ZEALAND PRESS ASSOCIATION 1880–2006: THE RISE AND FALL OF A CO-OPERATIVE MODEL FOR NEWS GATHERING

The establishment of New Zealand's press agency, the New Zealand Press Association (NZPA), as a co-operative news gathering agency in 1880 has traditionally been regarded as reflecting a pioneering spirit of newspaper unity or as being largely determined by the political situation of the time. But these explanations are insufficient. Applying economic and organisational theories of co-operatives to the history of NZPA, this paper reveals it was market conditions that led to the creation of NZPA as a co-operative news gathering service. Following profound changes in those market conditions, NZPA recently abandoned this co-operative news gathering model.     

The determinants of small and medium-sized firm internationalization and its relationship with productive efficiency

The Determinants of Small and Medium-Sized Firm Internationalization and Its Relationship with Productive Efficiency. — The creation of sale structures abroad (CSSA) is an intermediate stage in the process of internationalization when firms are small and foreign direct investment entail high sunk costs. This paper finds that ownership concentration (technological innovation, size, and age) negatively (positively) affects the CSSA decision and that, after controlling for the effect of access to foreign markets under the form of exports, CSSA firms are significantly more efficient than the control sample when efficiency is measured with a stochastic frontier approach. Ownership concentration seems to have two offsetting effects on efficiency: it increases participation to profits and therefore incentives to perform well, while it leads controlling shareholders to underinvest in risky ventures (such as internationalization).     

Profit Leak? Pre‐Release File Sharing and the Music Industry

Using data from an exclusive file‐sharing Web site that allows users to share music files using the BitTorrent protocol, I exploit exogenous variation in the availability of sound recordings in file‐sharing networks to isolate the causal effect of file sharing of an album on its sales. Using within‐album variation in illegal downloads and sales, I find that the effect is essentially zero: The elasticity of sales with respect to illegal downloads is one‐tenth of one percentage point. However, the finding that file sharing is not harmful to individual artists is not inconsistent with the well‐documented fact that file sharing is harmful to the music industry (the fallacy of composition). More important, I find that file sharing benefits more established and popular artists who are signed to major labels, which is consistent with recent industry trends.     

USING THE HIERARCHICAL LINEAR MODEL TO UNDERSTAND SCHOOL PRODUCTION IN SOUTH AFRICA

The emphasis placed in the existing South African school production function literature on better skilled teachers and better school management is discussed. Ordinary least squares and hierarchical linear production function models, using 2000 SACMEQ data, for the country and for a sub‐set of historically disadvantaged schools, are constructed. Ways of making the results more readable for policymakers are explored. The importance of physical infrastructure, textbook and nutrition budgets is highlighted by the models. Correct allocation of teaching and management time in schools, less learner repetition, and better teaching methodologies stand out as important school and classroom management imperatives.