Diversification Bias and the Law of One Price: An Experiment on Index Mutual Funds

Individual investors select high-fee index mutual funds despite the fact that the future payouts are nearly identical. The authors offer an explanation for this violation of the law of one price based on investor desire to diversify. While diversification in some settings may be beneficial, in the case of assets with identical payouts, fee minimization is the only rational strategy. The evidence confirms that investors diversify by selecting multiple higher fee funds rather than minimizing fees when investing in index mutual funds.     

Asymmetric competition and collection rates differentials: determinants of prices in international telephone service markets

The paper investigates determinants of pricing in international telephone service markets. The analysis—focused on 24 worldwide national markets—shows the impact of several telecommunications-specific and macroeconomic variables on collection rate differentials and traffic imbalance between countries. An econometric model is aimed at performing quantitative analysis and providing support to future telecommunications policies.     

Asymmetry in mobile access charges: is it an effective regulatory measure?

This paper analyses the regulation of the market of voice call termination on mobile networks, by considering the remedy of asymmetric access charges and the hypothesis of discriminatory retail pricing. In the two way interconnection, the operators revenue depends on two factors: the retail price and the access charge. If the retail prices are different between calls that terminate on the same network (on-net) and calls that terminate on the rival network (off-net), the competition is more complex, involving positive networks externalities for the incumbent operator. In order to reduce the competitive disadvantage for new entrants and smaller operators many European regulation authorities have introduced the remedy of asymmetric access charges. This paper is aimed at analysing the effectiveness of this regulatory measure, assuming that operators are differentiated in terms of brand loyalty and cost structure.     

The Influence of Reputation and Sector on Perceptions of Brand Alliances of Nonprofit Organizations

Brand alliances long have been used in the private sector and are being more frequently engaged by nonprofit organizations. It is assumed that the alliance benefits both organizations, particularly the focal nonprofit organization that strategically forms the partnership. But care must be taken in selecting partners. A quasi‐experimental design examines the relationship between partner reputation and sector (private or nonprofit) on subject willingness to contribute to a focal nonprofit organization. Partner public reputation was systematically varied using created organizations and a positive reputation enhanced willingness to contribute. Partnering with private sector organizations was only slightly less desirable than nonprofit organizations.     

School foodservice employees’ beliefs about local produce use at work and home

Sustainability practices are becoming an essential part of foodservice businesses. Schools often purchase local produce and use it in school meals as part of their sustainability efforts. School foodservice employees play an important role in the effectuation of these efforts and understanding their perceptions is important. A questionnaire was used to assess foodservice employees’ beliefs regarding the quality and benefits of local produce use in schools. Results indicate differences in employees’ perceptions regarding benefits and quality of local produce based on their perception of the importance of purchasing local produce for home use.     

Consistency and Recovery in Retail Supply Chains

Practitioners and researchers describe inventory service level with metrics that communicate the likelihood of demand fulfillment without considering the ongoing capabilities of the supplier, for example, in‐stock and fill rate. We develop a method for measuring inventory service level that incorporates such supplier capabilities, namely consistency (the ability of a supplier to fulfill orders repeatedly) and recovery (the ability of a supplier to fulfill orders after a lapse in service). Using data from two retail supply chains, we illustrate our approach. To demonstrate the impact of consistency and recovery on supply chain performance, we model a retailer purchasing from competing suppliers with different levels of consistency and recovery. The model incorporates the retailer's uncertainty about demand and the retailer's uncertainty about its suppliers' service levels. We characterize how the retailer's orders and profitability change with a supplier's delivery performance through numerical experiments calibrated with field data. We find notable differences in market share across suppliers with similar traditional inventory service level metrics but differences in consistency and recovery. Further, we observe that a retailer can increase its profitability by determining orders via consistency and recovery in lieu of common metrics like in‐stock. Given the influence of consistency and recovery on supply chain outcomes, we discuss implications for practice and future research.     

Corporate Headquarters Relocation: Evidence from the Capital Markets

This paper assesses the stock market reaction to announcements of corporate headquarters relocations and examines financial and geographical factors related to wealth effects and factors that influence the decision to relocate corporate headquarters. The results indicate that announcements of relocations are associated with significant positive stock price effects. On average, the stock price of relocating firms increases by 1.29% during the two-day period around the announcement. Abnormal returns are positively related to the availability of labor and negatively related to the cost of living in the new location and the change in employment levels. A logit analysis indicates that the probability of a firm relocating is partially determined by the firm size and the rental expenses/sales ratio. The results also indicate that firm size, the employment/asset ratio levels, and listing in the NYSE/AMEX affect the decision to relocate to a Fortune-ranked city. Finally, firms relocating to Fortune -ranked cities are characterized by a high level of insider ownership relative to firms moving to non-ranked cities.     

A JIT-type stocking system for hospital pharmacies: the stockless method

During the past few years, hospitals have been actively evaluating the use of newer-type stocking systems for their pharmacies. While "stockless," a just-in-time (JIT) variation, appears to be emerging as perhaps the most promising method, it is far from being accepted as the industry standard. Because of growing concern for health care reform, with its cost containment component, it may well be anticipated that both the pace and profoundness of these efforts will continue to intensify.     

Measuring sustainability: Why the ecological footprint is bad economics and bad environmental science

The ecological footprint is a measure of the resources necessary to produce the goods that an individual or population consumes. It is also used as a measure of sustainability, though evidence suggests that it falls short. The assumptions behind footprint calculations have been extensively criticized; I present here further evidence that it fails to satisfy simple economic principles because the basic assumptions are contradicted by both theory and historical data. Specifically, I argue that the footprint arbitrarily assumes both zero greenhouse gas emissions, which may not be ex ante optimal, and national boundaries, which makes extrapolating from the average ecological footprint problematic. The footprint also cannot take into account intensive production, and so comparisons to biocapacity are erroneous. Using only the assumptions of the footprint then, one could argue that the Earth can sustain greatly increased production, though there are important limitations that the footprint cannot address, such as land degradation. Finally, the lack of correlation between land degradation and the ecological footprint obscures the effects of a larger sustainability problem. Better measures of sustainability would address these issues directly.