Nonparametric Efficiency Analysis under Price Uncertainty: A First-Order Stochastic Dominance Approach

This paper extends the nonparametric approach to efficiency analysis to deal with uncertainty of input-output prices. We generalize the notion of economic efficiency to derive necessary and sufficient first-order stochastic dominance (FSD) efficiency conditions. Interestingly, the FSD conditions include as limiting cases the traditional conditions for economic efficiency and technical efficiency. Furthermore, we propose empirical tests for these FSD conditions, which require minimal assumptions concerning the preferences of the decision-maker and the statistical distribution of the prices. From operational point of view, the FSD conditions can be tested empirically using standard mathematical programming techniques. An empirical application to the Dutch electricity distribution sector illustrates the approach.     

Relevant interventionist research: balancing three intellectual virtues

This paper argues for a balanced approach to considering the three intellectual virtues of Aristotle, brought forth by Flyvbjerg [2001. Making Social Science Matter: Why Social Inquiry Fails and How It Can Succeed Again. Cambridge: Cambridge University Press] – techne, episteme and phronesis – and links them to recent debates on the relevance of management accounting research. The intellectual virtue of phronesis is viewed as opening an avenue for conducting management accounting research that is societally relevant and the interventionist research (IVR) approach is suggested to form one natural platform for such research. The paper underlines that the intellectual virtue of episteme, being related to theoretical relevance, is a necessary element in all scholarly endeavours and that IVR has so far tended to suffer from being too much focused on the intellectual virtue of techne and thereby practical relevance only. The method of ‘engaged scholarship’ is offered as one fruitful option for balancing the three intellectual virtues and conducting research that is relevant to several dimensions.     

Charting the pacific: an empirical assessment of integration initiatives

Trade negotiations after Uruguay may well be dominated by the Pacific Rim, where two free trade areas (ASEAN Free Trade Agreement, or AFTA; and North American Free Trade Agreement, or NAFTA) already exist and larger agreements are under active discussion (involving the Asia Pacific Economic Cooperation, or APEC, area and an East Asian Economic Group). This article analyzes several initiatives using a simple global general equilibrium model that incorporates conventional welfare gains as well as benefits derived from firm level economies of scale, induced changes in foreign investment, and dynamic increases in productivity. Broad Pacific liberalization—i.e., East Asia, North America, and Australasia—is shown to be superior for each participant to liberalization limited to individual countries or East Asia, but not by much. Most favored nation liberalization is shown to be superior for each participant to preferential liberalization—if the actor is East Asia, but not the Pacific as a whole. These estimates will need to be refined, but they suggest that the benefits from Pacific liberalization could exceed $100 billion per year.     

Real option analysis of a technology portfolio

This article contributes to methodology of real options analysis of investments in capital intensive process industries, where relatively homogenous outputs are produced using commonly known production technologies. In addition to capacity expansion, the method can be used for analysis of mergers and acquisitions. Valuation of the real option is based on bid price; i.e., the maximum price the firm is willing to pay. To find such a price, stochastic optimization with an expected utility criterion is used to determine investments in product specific technologies as well as in publicly traded financial instruments (the competing investments). To operationalize the valuation principle, we develop a double binary tree employing Kalman filter for scenario generation. For exponential utility, valuation is carried out by dynamic programming. We extend known methods to allow interdependence of the mill cash flow and return on competing financial investments. For forest industries, we provide an illustration, where the underlying price process in our Kalman filter application is a vector error correction model.     

A kink that makes you sick: The effect of sick pay on absence

We exploit a regression kink design to estimate the elasticity of the duration of sickness absence with respect to replacement rate. Elasticity is a central parameter in defining the optimal social insurance scheme compensating for lost earnings due to sickness. We use comprehensive administrative data and a kink in the policy rule near the median earnings. We find a statistically significant estimate of the elasticity of the order of one.     

What Is the Economic Meaning of FDH? A Reply to Thrall

Journal of Productivity Analysis -     

Bildungspolitik, interdisziplin?re Personalentwicklung und Ressourcenabh?ngigkeit: Abh?ngigkeitsreduzierung durch staatlich beeinflusste Personalentwicklung?

High quality human resources are the keystone of global competitive capability for German companies. The availability of these resources, however, will change for the worse because of the downward trend of demographical developments in connection with the imperative of advanced job experience. In order to assure the supply of human resources and to diminish the resource dependency, companies foster??in best case interdisciplinarily??HR development. Also the German government is concerned in human resource supply to preserve competitiveness. By starting an educational policy initiative, the government tried to influence HR development of companies. This article aims against the background of the resource dependence perspective of Pfeffer and Salancik at examining in which way this educational policy initiative can actually assure a human resources supply and on which way a higher degree of efficiency can be achieved.