Local elections and consumption insurance

During our sample period from 1987 to 2002, Chinese villages completed the transition from government‐appointed village leaders to elected ones. This article examines if and how much democratic elections of the village leaders affected consumption insurance by Chinese village residents. Exploring a panel dataset of 1,400 households from this period, we find that consumption insurance is around 20 percent more complete with elected village leaders. Furthermore, local elections improve consumption insurance only for the poor and middle‐income farmers, but not for the rich. The results are robust when we allow for pretrending, potential endogeneity of elections, and higher measurement errors for rich residents. We also find that the effects on consumption insurance are stronger when closer to the upcoming election year and when the village committees consist largely of non‐Communist Party members. These findings suggest that the election effects on consumption insurance partly come from increasing accountability to local constituents.     

Firm Investment decisions in the post‐conflict context

Economic and political transition can occur through peaceful or violent means. Violent transition disrupts the incentive for firms to make productive investments. This paper studies the determinants of profit reinvestment for firms in post‐conflict transition economies. Results indicate that while access to finance is an important determinant of reinvestment during transition, it is not as important in the post‐conflict context. However, property rights protections, in particular institutions of contract enforcement, are a more important determinant of profit reinvestment for firms operating in the post‐conflict environment than for firms in general. This indicates that obstacles to investment are context specific.     

Unrelated question model with two decks of cards

In this paper, we propose a new unrelated question model for estimating the prevalence of a sensitive characteristic within a population by utilizing two decks of cards. The resultant estimator is then compared to its competitors as to efficiency and as to protection of respondents. A real data application analyzing e-cigarette use among college students is considered.     

Is there a crisis in arts sponsorship?

What is the connection between Heinz Baked Beans, the Notting Hill Carnival and Windows 95? This paper examines present trends in arts sponsorship. Sponsorship by brands is developing rapidly, while traditional arts sponsorship as part of the corporate promotional budget is under threat. Examples of trend setting sponsorships from companies as diverse as Ernst & Young, Lilt and Beck's Bier, show that arts sponsorship is in transition. Arts organisations are having to adjust rapidly to the new environment if they are to fulfil their targets.     

Competing incremental and breakthrough innovation in a model of product evolution

This paper develops a growth model in which product cycles arise endogenously from investment in incremental and breakthrough innovations. Incumbent firms invest in incremental technology improvements with the aim of reducing production costs. Market entrants develop breakthrough product designs in order to capture the market from vintage product lines. The competing objectives of the two types of innovation generate product cycles within an environment of creative destruction, as new products displace old and are then manufactured using production technologies that are continuously refined. Investigating the relationship between innovation incentives and the average length of product cycles, we characterized three stable patterns of product evolution: incremental innovation alone, breakthrough innovation alone, and product cycles with both types of innovation. Numerical examples suggest that when the market exhibits stable product cycles, subsidies to either type of innovation raise the rate of economic growth and improve welfare.     

FUND SUBSTITUTION AND THE INCENTIVE EFFECT OF PUBLIC INVESTMENT SUBSIDIES

This paper analyses the observed phenomenon of public for private fund substitution in industrial assistance, by examining the public and private sector funding of investment under different assumptions about the nature of the private capital market. This bears on the effectiveness of industrial subsidies, and has implications for welfare and the design of optimal assistance contracts. It is shown that fund substitution depends crucially on the elasticity of investment with respect to the user cost of capital in the without-subsidy position, and on the nature of any amount and rate constraints on the assistance contract.     

Sudden change in a model of small firm growth

A catastrophe theory model of small firm growth allows for an abrupt change in small firm size. The model permits only smooth changes in the endogenous independent variables, turnover and profitability, yet allows sudden changes in the level of assets, the size variable. But not all growth paths suggested by the mathematics are likely to be met in the real world. Nevertheless, there are feasible phases of steady growth as well as feasible phases during which jumps occur.     

Ethics and corporate governance: The issues raised by the Cadbury report in the United Kingdom

In the late 1980s there was a series of sensational business scandals in the United Kingdom. There was particular public outrage at the plundering of pension funds by Robert Maxwell, at the failure of auditors to expose the impending bankruptcy of the Bank of Credit and Commerce International, and at the apparently undeserved high pay raises received by senior business executives. The City of London responded by creating a special committee to examine the financial aspects of corporate governance. This paper describes the resulting Code of Best Practice produced by the Cadbury Committee. To reduce the power of executive directors in the boardroom the Code recommends a greater role for non-executive directors, changes in board operations, and a more active role for auditors. The paper reviews the various published reactions to the Cadbury Report, and concludes that the Code is unlikely to halt the incidence of business scandals in the United Kingdom.Colin Boyd teaches at the College of Commerce, University of Saskatchewan. His study of the Zeebrugge Car Ferry Disaster is published in a number of strategy and ethics case-books. In 1993/94 he was a Visiting Research Fellow at the Centre for Applied Ethics, University of British Columbia, which provided financial support for the production of this paper.