Valuing high altitude spruce-fir forest improvements: importance of forest condition and recreation activity

High altitude spruce fir forests are typical around the world and are often subjected to multiple forms of recreational use. In this paper, we use household and recreation group data for a spruce fir forest high in the Appalachian Mountains of the U. S. to evaluate the benefits from forest protection (i. e., from improving the forest condition). Our benefits estimation procedures use the referendum-type, contingent valuation (CV) approach of Cameron (1988). We modify the usual practice of obtaining a single willingness-to-pay (WTP) value by using alternative questionnaire scenarios and conducting tests to examine i) household and recreation group value sensitivity to forest condition, and ii) recreation group differences in WTP for forest protection. A first sample of southeastern U. S. households was asked to value a forest protection program for a spruce-fir forest showing no impact from insect disturbance or atmospheric deposition. The second sample was asked to value a protection program for a forest already experiencing impact from insect infestation and air pollution. Logit analysis of the two samples revealed no statistically significant difference in household WTP between the two forest protection programs. Further analysis indicated that consumptive forest users (i. e., hunters and anglers) held forest protection values that were sensitive to a change forest condition, while nonconsumptive forest users (i. e., campers and hikers) held values that were insensitive to the same condition change. Recreation group comparisons revealed that consumptive forest users also held lower values for forest protection than nonconsumptive recreationists. These results demonstrate the importance of estimating public values for forest protection in terms of heterogeneous groups rather than as a homogeneous whole.     

The cost of being late? The case of credit card penalty fees

This paper is the first in the literature to examine the determinants of US credit card penalty fees. Many critics of credit card fees – including a number of US Senators – have argued that credit card penalty fees reflect banks’ market share. Using a unique data set we find that fees are increasing in customer risk which supports the position of defenders of penalty fees, such as banks. However, our finding that fees are increasing in a bank's market share is consistent with the concerns expressed by politicians and regulators. We also find card penalty fees are direct substitutes for card interest rates.     

The effects of monetary policy changes on market interest rates in Greece: An event study approach

The operational procedures of the Bank of Greece underwent major changes during the 1990s. These shifts in operational strategy made interest rates the main tool of monetary policy for the first time in Greece. This paper examines the effects of changes in the bank's operational interest rates on market interest rates at eight maturities and for different operational regimes. A major feature of our study is the application of the event study methodology used in finance, which has not been employed in any previous study on this subject. We find that changes in official interest rates had a significant influence on short-term and intermediate-term rates and that this relationship was affected by the changes in the bank's operational procedure.     

A Parimutuel Market Microstructure for Contingent Claims

Parimutuel principles are widely used as an alternative to fixed odds gambling in which a bookmaker acts as a dealer by quoting fixed rates of return on specified wagers. A parimutuel game is conducted as a call auction in which odds are allowed to fluctuate during the betting period until the betting period is closed or the auction ‘called’. The prices or odds of wagers are set based upon the relative amounts wagered on each risky outcome. In financial microstructure terms, trading under parimutuel principles is characterised by (1) call auction, non‐continuous trading; (2) riskless funding of claim payouts using the amounts paid for all of the claims during the auction; (3) special equilibrium pricing conditions requiring the relative prices of contingent claims equal the relative aggregate amounts wagered on such claims; (4) endogenous determination of unique state prices; and (5) higher efficiency. Recently, a number of large investment banks have adopted a parimutuel mechanism for offering contingent claims on various economic indices, such as the US Nonfarm payroll report and Eurozone Harmonised inflation. Our paper shows how the market microstructure incorporating parimutuel principles for contingent claims which allows for notional transactions, limit orders, and bundling of claims across states is constructed. We prove the existence of a unique price equilibrium for such a market and suggest an algorithm for computing the equilibrium. We also suggest that for a broad class of contingent claims, that the parimutuel microstructure recently deployed offers many advantages over the dominant dealer and exchange continuous time mechanisms.     

The Attributes of a Costly Recall: Evidence from the Automotive Industry

While researchers have extensively documented the equity response to product recalls and subsequent shareholder losses, less attention in the literature has been given to examining the damaging recall attributes. Using 1973–1998 automotive safety recall data, this study identifies the kinds of recalls that cause significant shareholder losses. After constructing an equally-weighted automotive market index to control for industry effects and adjusting the abnormal returns to account for the degree of surprise in the recall announcement, the study estimates both percentage and real dollar abnormal returns. We find that the indirect costs of automotive recalls are likely larger than the direct costs.     

The British investor's gains from international portfolio investment

This paper analyses the effects of exchange controls on the ranking of British and overseas investments. A method is developed by which the costs of such controls can be incorporated into return calculations. It is shown that the adjustment of returns for exchange controls significantly alters the rankings of investments. An additional aspect of the paper is to rank domestic and foreign investments by stochastic dominance and compare the derived rankings with mean-variance. Again a significant differences in rankings is identifiable. It is concluded that the exchange rate regime, institutional exchange controls and the entire distribution of returns should be considered in ranking domestic and foreign investments.     

Oligopoly and welfare: A unified presentation with applications to trade and development

We develop a unified sequence of models to examine the determinants of price, output, profitability and concentration for different kinds of oligopolistic market. We relate various magnitudes of significance to judges of welfare and to policy makers, such as consumer surplus, profit, or added benefits of employment or trade surplus, to observable magnitudes such as the size and concentration of the market. It emerges that various appropriately formulated Herfindahl indices are useful in several of these relations. We attempt to present results in a way that is useful for empirical investigations and pay particular attention to applications in trade and development.