Optimal fishery harvesting rules under uncertainty

This paper derives the optimal fishery harvest policy in a real-option model with a stochastic logistic growth process, harvest-sensitive output price, and both fixed and variable harvesting costs. The policy specifies the harvest trigger and harvest size, while outputs from the model include the value of the fishery and the risk of extinction. The optimal policy is illustrated with data from the Pacific Halibut Fishery. For this particular case, the optimal policy recommends harvesting when the fish stock rises to about three-quarters the environmental carrying capacity, and the amount harvested should be approximately a quarter of the prevailing stock. This harvesting policy maximizes the value of the fishery, and importantly, the resulting risk of extinction is negligible. We also carry out some sensitivity analysis to see how the optimal policy (and the resulting fishery value and risk of extinction) change when the input parameters are varied, particularly the ecological parameters intrinsic growth rate and volatility of the stock, and also the economic parameters that have been ignored in previous papers (price sensitivity and fixed cost). If the optimal policy is followed, the risk of extinction will be negligible, except for very low growth rate and high volatility.     

IMPACT OF THE NORTH AMERICAN FREE TRADE AGREEMENT ON THE U.S. TRADE WITH MEXICO

The North American Free Trade Agreement (NAFTA) took effect on January 1, 1994. The agreement is designed to reduce trade restrictions and enhance trade among Mexico, Canada, and the United States. The primary objective of this article is to examine and estimate the impact of NAFTA on the trade between Mexico and the United States. The data from 1989 to 1998 were used to estimate the overall trade as well as trade in three important products. The trade statistics were divided into two time periods: 1989-1993, before NAFTA, and 1994-1998, after NAFTA. The regression analysis and statistical t-test were employed to determine whether there were significant differences in the dollar volume of trade between the two time periods. The analysis of the data demonstrates that the trade between the United States and Mexico was significantly larger after NAFTA, which could not be attributed to other factors. However, the effects of other factors were analyzed. The success of the NAFTA model may have future policy implications in forging a Free Trade Area of the Americas (FTAA) in the near future.     

Talking Your Way into Entrepreneurial Support: An Analysis of Satisfaction Drivers in Entrepreneur Mutual Aid Groups

The role of organized peer networks in entrepreneurial support systems has been surprisingly neglected in the literature, despite their undisputed effectiveness in numerous areas outside the entrepreneurship realm. This study explores the efficacy of mutual aid groups for entrepreneurial support, as theoretically distinct from other group‐based mechanisms (such as peer group mentoring and many to one group mentoring). Drawing from respondent data of small, local mutual aid groups within the global entrepreneurship support organization (2,869 responses from members of 540 groups worldwide), we investigate the factors determining the entrepreneurs' satisfaction with the entrepreneur mutual aid groups. Understanding the antecedents of members' subjective satisfaction with the group serves an essential first step toward developing the models explaining the objective effectiveness of these organizations (e.g., performance, survival, and growth), in that the former is an essential, necessary condition for continuing participation in the voluntary mutual aid groups. Our analysis reveals that group climate and leadership are important drivers of group satisfaction.     

Agency cost of debt overhang with optimal investment timing and size

The concept of debt overhang (that is, an equity‐maximizing levered firm will under‐invest relative to a firm‐value‐maximizing firm) is well established in the literature. A number of papers have demonstrated it as delayed investment (when investment size is specified) or smaller investment (when investment time is specified). However, there is no work on the underinvestment effect when the firm chooses both size and timing of investment, as it usually does in real life. This is what our paper focuses on. When the firm has the flexibility to choose both size and time, the effect is complicated by the fact that delayed investment results in larger investment, which suggests that the underinvestment problem might be mitigated. We find, however, that the effect depends on how underinvestment is measured. When measured by the expected present value of investment, flexibility can mitigate or exacerbate the underinvestment problem, depending on the cost of installing capacity. But when measured by the agency cost, flexibility always exacerbates the underinvestment problem. It is shown numerically that, at the optimal leverage ratio, the agency cost with plausible parameter values can be economically significant. Thus, with the flexibility of choosing both time and size of investment, the debt overhang problem can be of significant practical relevance in corporate investment decisions.     

The Unique Identity (UID) Project,Biometrics and Re-Imagining Governance in India

At various points in its existence, the Indian state has deployed technologies to govern the nation. Recently, the state has undertaken a number of large-scale projects to make use of digital technology. The most controversial of these is the Unique Identity (UID) project, which is registering biometric, along with demographic, information about residents. This paper seeks to understand what is at stake politically in this technological intervention. It aims to explore the political logics and consequences of such a biometric system. It argues that UID re-imagines the economy and the state–citizen relationship as a series of transactions. Theoretically, the main thrust of this paper is to understand the “general economy of power”, as Michel Foucault calls it, which is unfolding in India around the issues of capitalist growth, inequality, social protection and terrorism—and UID signals the technological potential for the convergence of these concerns.     

An Empirical Analysis of Stock and Bond Market Liquidity

This article explores cross-market liquidity dynamics by estimatinga vector autoregressive model for liquidity (bid-ask spreadand depth, returns, volatility, and order flow in the stockand Treasury bond markets). Innovations to stock and bond marketliquidity and volatility are significantly correlated, implyingthat common factors drive liquidity and volatility in thesemarkets. Volatility shocks are informative in predicting shiftsin liquidity. During crisis periods, monetary expansions areassociated with increased liquidity. Moreover, money flows togovernment bond funds forecast bond market liquidity. The resultsestablish a link between "macro" liquidity, or money flows,and "micro" or transactions liquidity.     

Sustainable development of forest resources in industrialized countries

There is no general consensus about what sustainable development means. We seek to clarify the meaning and utility of the concept by focusing on forest resources in countries possessing higher levels of per capita incomes. The meaning of sustainable development becomes complex when one asks what social goals are being pursued, what types of stability are permitted, whether amenities and commodities should receive equal consideration, and to what landbase the concept should be applied. A simulation/linear programming model of California's private forest resource is used to demonstrate that strict decade-to-decade ‘even-flow’ stability of production may result in lower aggregate levels of output over a prolonged planning period, with ending levels of the stock resource that are scarcely greater than when output is permitted to vary over the planning period. The model was also used to show that greater levels of output and ending stocks are possible when the land base for sustainability assessment is not a restrictively small geographical area or a single class of ownership. In the case of National Forests and other public lands, the application of the sustainable development concept is significantly more complex because of the importance of amenity values and because of the inherent conflict between development and the preservation of ecosystems in a pristine state.     

Market response to dividend change announcements: unregulated versus regulated US firms

This paper attempts to determine whether there is a significant difference in how the stock market responds to dividend change announcements of regulated (both utilities and financials) versus unregulated firms and, if so, which factors cause this difference. An analysis of dividend change announcements of US firms over the period 1962–2016 shows that the market response is larger for unregulated than for regulated firms, but this difference is statistically significant only for dividend increases (not for dividend decreases). Further, cross-sectional analysis indicates that, for dividend increases, the difference between regulated and unregulated firms increases with diffused ownership and informational asymmetry. When both these factors are controlled for, the difference between regulated and unregulated firms becomes statistically insignificant. Thus, the evidence suggests that the significant difference in market response to dividend increases of regulated versus unregulated firms can be explained by differences in diffused ownership and informational asymmetry. There seems to be no intrinsic difference between regulated and unregulated firms in the market response to dividend decreases.