Inequality and Unemployment Patterns in Europe: Does Integration Lead to (Real) Convergence?

The economic convergence criteria adopted in the Maastricht Treaty and the fiscal discipline of the Stability and Growth Pact enforced nominal convergence, leaving aside real convergence indicators. In this paper, we use cluster analysis to examine the convergence patterns of income inequality, absolute redistribution (a measure of governments’ effectiveness in correcting for inequality) and unemployment. The expected outcome after years of economic integration was, ex-ante, convergence to a single cluster. Our results, however, uncover a variety of groups, implying that economic integration has not led to real economic convergence. Moreover, the existence of different patterns suggests: (i) that traditional classifications (Anglo-Saxon, Continental European, European Periphery, and Nordic models) remain broadly valid; (ii) that there is no unemployment-inequality trade-off to be exploited in terms of economic policy; and (iii) that the redistributive capacity of governments plays a pivotal role in coping with inequality without negative effects in terms of unemployment.     

Quality management and collective mind: investigating university R&D from a group focus

This article analyses how Quality Management (QM) practices moderate the relationship between collective mind (CM), and knowledge transfer (KT) and absorption in university research and development (R&D) groups. The data are taken from 257 R&D groups in different Spanish universities. The findings show that the relationship between CM and KT is significant when QM is included as a moderating variable because QM permits better communication and fosters stronger ties between group members. In the case of knowledge absorption (KA), however, QM does not have a significant effect. The final section presents the study's conclusions and implications. As no studies have tested these effects empirically, our conclusions are highly relevant for academics and researchers.     

Economic impact of onabotulinumtoxinA for overactive bladder with urinary incontinence in Europe

Background: Overactive bladder (OAB) is a common condition that has a significant impact on patients’ health-related quality-of-life and is associated with a substantial economic burden to healthcare systems. OnabotulinumtoxinA has a well-established efficacy and safety profile as a treatment for OAB; however, the economic impact of using onabotulinumtoxinA has not been well described.

Methods: An economic model was developed to assess the budget impact associated with OAB treatment in France, Germany, Italy, Spain and the UK, using onabotulinumtoxinA alongside best supportive care (BSC)—comprising incontinence pads and/or anticholinergic use and/or clean intermittent catheterisation (CIC)—vs BSC alone. The model time horizon spanned 5 years, and included direct costs associated with treatment, BSC, and adverse events.

Results: Per 100,000 patients in each country, the use of onabotulinumtoxinA resulted in estimated cost savings of €97,200 (Italy), €71,580 (Spain), and €19,710 (UK), and cost increases of €23,840 in France and €284,760 in Germany, largely due to day-case and inpatient administration, respectively. Projecting these results to the population of individuals aged 18 years and above gave national budget saving estimates of €9,924,790, €27,458,290, and €48,270,760, for the UK, Spain, and Italy, respectively, compared to cost increases of €12,160,020 and €196,086,530 for France and Germany, respectively. Anticholinergic treatment and incontinence pads were the largest contributors to overall spending on OAB management when onabotulinumtoxinA use was not increased, and remained so in four of five scenarios where onabotulinumtoxinA use was increased. This decreased resource use was equivalent to cost offsets ranging from €106,110 to €176,600 per 100,000 population.

Conclusions: In three of five countries investigated, the use of onabotulinumtoxinA, in addition to BSC, was shown to result in healthcare budget cost savings over 5 years. Scenario analyses showed increased costs in Germany and France were largely attributable to the treatment setting rather than onabotulinumtoxinA acquisition costs.     

Flexible distribution functions,higher-order preferences and optimal portfolio allocation

In this paper we show that flexible probability distribution functions, in addition to being able to capture stylized facts of financial returns, can be used to identify pure higher-order effects of investors' optimizing behavior. We employ the five-parameter weighted generalized beta of the second kind distribution—and other density functions nested within it—to determine the conditions under which risk averse, prudent and temperate agents are diversifiers in the standard portfolio choice theory. Within this framework, we illustrate through comparative statics the economic significance of higher-order moments in return distributions.     

Reciprocal threats in multimarket rivalry: staking out ‘spheres of influence’ in the U.S. airline industry

The paper investigates the outcomes of multimarket competition among U.S. scheduled airlines when the interests and positions of the airlines differ in the mutually contested markets. Asymmetry in territorial interests provides multimarket competitors with footholds in important markets of their rivals, which can be used to deter the behavior of the rivals in other markets. Evidence suggests that airlines use footholds in their rivals’ important markets (particularly in their hubs) to reduce the competitive intensity of those rivals in the airlines’ own important markets (their hubs), and sustain their dominant positions (or spheres of influence) in those markets. Copyright© 1999 John Wiley & Sons, Ltd.     

Firms' Stakeholders and the Costs of Transparency

We develop a model of a firm whose production process requires it to initiate and nurture a relationship with its stakeholders. Because there are spillover benefits of being associated with a "winner," the perceptions of stakeholders and potential stakeholders can affect firm value. Our analysis indicates that while transparency (i.e., generating information about a firm's quality) may improve the allocation of resources, a firm may have a higher ex ante value if information about its quality is not prematurely generated. Transparency costs arise because of asymmetric information regarding the extent to which stakeholders benefit from having a relationship with a high-quality firm. These costs are higher when firms can undertake noncontractible innovative investments that enhance the value of their stakeholder relationships. Stakeholder effects of transparency are especially important for younger firms with less established track records.     

Modelling Competition in the Textbook Market: Some Lessons still to Learn

Many European governments still advocate a so-called ‘cultural exception’, intended to protect consumers and smaller bookshops, to keep their book markets isolated from competition. Other countries, with similar aims in mind, have chosen liberalization schemes instead. To reconcile these opposing views, this paper provides a theoretical framework to study the textbook market, depicting it as dominated by two simultaneous forces: horizontal differentiation among booksellers and a vertical relationship between publishers and bookshops. Using this model, we analyse the effects of alternative price schemes on the market structure and how potential benefits from price liberalization are influenced by the number (and size of) booksellers.     

The Importance of Quality,Satisfaction, Trust,and Image in Relation to Rural Tourist Loyalty

In the past decade, tourism firms have become aware of the great benefits of maintaining a solid base of loyal customers. Because rural tourism is a relatively new phenomenon in some countries, the main antecedent of tourism loyalty remains infrequently studied in rural lodgings. In this work, a structural equations model is explored, with PLS technique, giving relevance to the interrelationships among image, quality, satisfaction, and trust and among these variables and the tourists' behavior variables. Instruments are identified and exploratory research was undertaken among rural tourists of the main rural lodgings in two border regions of Spain and Portugal. The results confirm image as a direct antecedent of perceived quality, satisfaction, trust, and loyalty for rural tourism, too. The analysis also confirmed that quality has a positive influence on satisfaction and loyalty, and trust has a positive influence on loyalty. Image is shown as a key factor to rural lodging managers. This study may help rural tourism managers to develop and implement effective relationship marketing strategies.     

The value of the ‘swap’ feature in equity default swaps

When equity default swap (EDS) contracts were first included in a rated collateralized debt obligation (CDO) deal, some critics doubted the originality of the product. In fact, EDSs are equivalent to already existing binary barrier options on equity, except the premium is not paid upfront, but over time, and conditional on the trigger event not having occurred. Therefore, as opposed to existing options, the buyer of an EDS: (1) postpones payment for protection, and (2) purchases not only protection against a sharp drop in the price of equity, but also the right to cease payments in case the barrier is hit. This paper derives the closed-form pricing formula for equity default swap spreads under the Black–Scholes assumptions, and then quantifies the fraction of the EDS spread actually due to the ‘swap’ feature of the contract for plausible parameter values. It is found that the extra spread due to the swap nature of EDSs is economically significant only for high volatility, high trigger levels, and long time-to-maturity. The impact of interest rates on the value of the ‘swap’ feature is almost exclusively due to the postponement of payments.     

The cyclicality of consumption,wages and employment of the public sector in the euro area

This study empirically examines the business cycle behaviour of public consumption and its main components, the public wage bill (including its breakdown into compensation per employee and public employment) and intermediate consumption, in the euro area aggregate, euro area countries and a group of selected non-euro area Organization for Economic Co-operation and Development (OECD) countries (Denmark, Sweden, the UK, Japan and the US). It looks across a large number of variables and methods, using annual data from 1960 to 2005. It finds robust evidence supporting that public consumption, wages and employment co-move with the business cycle in a pro-cyclical manner with 1–2 year lags, notably for the euro area aggregate and euro area countries. The findings reflect mainly the correlation between cyclical developments, but also point to an important role of pro-cyclical discretionary fiscal policies.