Does China's demand boom curb Australian iron ore mining depletion?

Australia's resources boom is underpinned by increased demand from industrialising China and a rise in export prices. Current depletion rates will soon exhaust currently known reserves of iron ore and coal. This paper presents a dynamic optimisation model of a growing open economy where a social planner chooses the time path for depletion of a non‐renewable resource during a demand‐led resources boom. We find that for particular functional forms and in the absence of extraction and social costs, the optimal depletion rate equals the difference between the price elasticity of export demand times the world interest rate and growth in export demand. In contrast to the existing literature, we show that the optimal depletion rate is unaffected by a temporary increase in price, but reduced by growth in demand which is in turn sustained by offshore steel production and urbanisation. The main theoretical implication is that growth in export demand from China reduces the depletion rate. Australian iron ore exports, simulated using this theory, move together with actual volumes over the period 1995–2011, and the error between simulated and actual iron ore exports is lower for the model in this paper than it is for the model without growth in export demand.     

Effects of residential relocation on household and commuting expenditures in Shanghai, China

Over the past three decades, China's cities have undergone massive spatial restructuring in the wake of market reforms and economic growth. One consequence has been a rapid migration of urban residents to the periphery. Some movers have been forced out either by rising urban rents or government reclamation of their residences. Others have relocated willingly to modernized housing or for other lifestyle reasons. This article examines the effects of relocation to the urban edge on household well-being. It explores the factors underlying changes in housing and transportation costs as households move to the periphery. The research also examines whether those who moved involuntarily are affected differently from those who moved by choice. Results show that, relative to those who moved by choice, involuntary movers are disproportionately and adversely affected in terms of job accessibility, commute time, housing consumption and disposable income. The findings also show that, compared with higher-income households, lower-income groups are disproportionately affected in relation to housing costs, accessibility losses, disposable income and household worker composition. These results indicate that relocation compensation for involuntarily relocated households should be expanded to include more than just housing value: it should encompass urban location changes, household needs and relocation costs.     

Dividend distributions and closed-end fund discounts

Empirical support for the hypothesis that closed-end fund discounts are related to overhanging tax liabilities has been mixed. We introduce a new approach to testing this hypothesis by examining changes in discount levels following distributions of dividends and capital gains. Since distributions reduce future shareholder tax liabilities, the tax liability hypothesis implies that closed-end fund discounts should decline following distributions. Focusing on changes in discounts isolates this tax effect by eliminating the impact of other fund-specific factors on discount levels. Our results support the tax liability hypothesis, showing that short-run fluctuations in discounts are directly affected by taxable distributions.     

Applying Geographical Information Systems (GIS) to Environmental and Resource Economics

Many of the analyses undertaken byenvironmental and resource economics areintimately concerned with spatial variations.This article examines the contribution whichGeographical Information Systems (GIS) mayprovide in incorporating the complexities ofthe spatial dimension within such analyses. Thepaper introduces the reader to the types ofdata handled by a GIS and overviews thepractical functionality offered by suchsystems. A brief literature review issupplemented by a number of more detailedapplications illustrating various GIStechniques which may be of use to the appliedenvironmental or resource economist.     

Diagram for a small planet: The Production and Ecosystem Possibilities Curve

With the development of the GPI there is now an ecological alternative to GDP for measuring a country's economic performance, but we still lack an ecological alternative to the PPC for illustrating a country's economic problem. The diagram suggested here illustrates a country's production and ecosystem possibilities — including climate stability, flood control, carbon sequestration, aquifer recharge, scenery, recreation, biological diversity, and so on. Burning a rainforest to clear the land shifts a country's PPC outward, giving the visual impression of an unmitigated improvement; but such development causes a movement along the country's PEPC, as ecosystem services are transformed into GDP. The slope of the PEPC is the marginal rate of transformation, which equals the ratio of the land's marginal marketable product to its marginal ecosystem product. Changes in technology create substitution and income effects that help explain the enclosure movement and the environmental Kuznets curve. Much as employment of the human resource can be restrained to allow more leisure, development of the natural resource can be restrained to preserve more ecosystem services. Commercial lobbying interests and rivalries for positional goods create distortions that move a country along its PEPC to a materialistic misallocation, with too little conservation. An idealistic misallocation is also possible, with too much preservation of the natural environment. Small is beautiful, up to a point, and that is evident in this diagram. Jacob Viner's [Viner, J., 1937. Studies in the Theory of International Trade. Harper and Brothers, New York] analytical objections to the PPC are revived.     

Enhancing New Product Development Performance: An Organizational Learning Perspective

Several years ago, an editorial in a software industry journal asked readers, “Why aren’t they using all those marvelous methods?” The focus of the editorial was on software engineering methods, but the question also applies to the broader realm of new product development (NPD). Proven tools exist for gathering, disseminating, and using market information. But despite widespread recognition of the important role that market knowledge plays in NPD, most firms fail to employ these tools in a consistent manner.Marjorie E. Adams, George S. Day, and Deborah Dougherty contend that the tools for successful NPD cannot be implemented successfully until we understand the barriers that hinder an organization’s capabilities for learning about markets. To foster that understanding, they describe the results of a study that explores the organizational barriers to learning about markets for new products. The study examines 40 NPD efforts in 15 large firms, and it has the following goals: identifying the processes through which organizational barriers impede market learning, developing specific ideas for how NPD professionals can cope more effectively with these barriers, and offering suggestions for improving market tools and techniques to help overcome these barriers.The study identifies three organizational learning barriers: avoiding ambiguity, compartmentalized thinking, and inertia. For the participants in this study, these barriers persistently act in specific ways to inhibit market learning. In acquiring market information, people typically focus on less ambiguous, more easily understood technologies and business truisms. Dissemination of market information is hindered because people focus on their own goals, which are often defined within their department’s role instead of the overall goals of the project. Inertia acts as a barrier to the effective use of market information. That is, people tend to proceed as they always have, maintaining the status quo rather than adjusting actions to capitalize on market learning.By encouraging broad functional participation in the acquisition and interpretation of data, NPD organizations can reduce the perceived ambiguity of market information. However, cross-functional approaches are only one step in overcoming organizational barriers. Managers must enable teams to develop rich, vivid market data, help people extend established routines into new practices, and promote trust. Specific market research tools and methods that promote market learning are also suggested.     

Managing market relationships

The ability of a firm to create and maintain relationships with their most valuable customers is a durable basis for a competitive advantage. To keep this edge over rivals, who continually try to attract these customers away, a firm has to master the three elements of a market-relating capability. First, a relationship orientation must pervade the mind-set, values, and norms of the organization. Second, the firm must keep deepening its knowledge of these customers and putting it to work throughout the organization. Third, the key processes must be internally integrated and externally aligned with the corresponding processes of the firm's customers. George S. Day is the Geoffrey T. Boisi Professor, professor of marketing, and director of the Huntsman Center for Global Competition and Innovation at the Wharton School of the University of Pennsylvania. Previously, he was executive director of the Marketing Science Institute. He has authored 12 books and 125 articles in the areas of marketing and strategic business planning. He has received various awards, including two Alpha Kappa Psi Foundation Awards and two Harold H. Maynard Awards for the best articles published in theJournal of Marketing; in 1994, he received the Charles Coolidge Parlin Award for distinguished contributions to the field of marketing; and in 1996, he received the Paul D. Converse Award. He was selected as the outstanding marketing educator for 1999 by the Academy of Marketing Sciences.