On the Relative Optimality of Environmental Policy Instruments: An Application of the Work of Alberto Alesina

We study the issue of optimality of policies devoted to environmental goals, building upon the recent and interesting work by Alesina and Passarelli (2010) and extending their analysis to the more general framework set up by Weitzman (The Review of Economic Studies 41: 477-491, 1974). We illustrate instruments that governments have at their disposal to reduce polluting emissions, and we point out the economic implications that may arise from the overlapping regulation through both instruments in the European context. We review the literature on political determination of environmental regulation. On the basis of existing literature, we show that political factors are more important than economic ones in explaining why particular instruments are implemented for certain problems (Hepburn et al. Climate Policy 6: 137–160, 2006). We recognize Alesina’s contribution which states that environmental policy, and the decision to adopt one tool instead of another, is subject to a complex political process. Governments are subject to pressure from politicians, households, and firms because their decisions imply winners and losers. Then, we focus in detail on the work by Alesina and Passarelli (2010) who consider which policy tool and at what level would be chosen by majority voting to reduce polluting emissions; they find out that even if a tax is in general superior to quantity based mechanisms (quotas and tradable permits), the majority may strategically choose a quantity mode in order to charge the minority a larger share of the cost for polluting emissions reduction. We extend Alesina’s analysis, focusing on the optimality of price-based mechanisms, since it is not always the case that price instruments are more efficient than quantity instruments. To this aim, we explicitly make use of Weitzman results (The Review of Economic Studies 41: 477–491, 1974), which suggest that if costs are highly nonlinear compared to benefits, then price-type regulation is more efficient, while if costs are close to linear, then quantity-type regulation is more efficient. We cast Alesina’s analysis in the European context, analyzing potential voting outcomes, assuming that EU countries can be arranged according to different criteria. We find that depending on the empirical distribution of voting countries, Alesina’s voting procedure leads to interesting different outcomes.     

Key Factors that Influence Consumer Preferences for Natural-Hyped Products

Natural-hyped products are receiving greater attention from and acceptance by consumers worldwide. Environmental factors that foster the demand for natural-hyped products, specifically hemp-based products include the deregulation of the cannabis industry and greater consumer desire for natural foods. Adding to this, the strategic use of stimulant type of cues (e.g., a cannabis leaf) included in product logos, ads, and packaging, seems to create hype associations when evaluating hemp-based products. In this context, this study presents empirical evidence (three experiments and two qualitative studies) that illustrates consumer preference for hemp-based products over ones that do not include hemp as an ingredient (hemp-free). The research focuses on identifying the psychological determinant that orients consumers towards hemp-based products. Findings suggest that the perceived naturalness is the psychological mechanism behind consumers positive evaluation of hemp-based products. Moreover, this study presents evidence that this evaluation is enhanced by the consumer's need for stimulation. Implications of the findings for the role of perceived naturalness and the need for stimulation in marketing strategies are discussed.     

The rise of risk-based pricing of mortgage interest rates in Italy

This paper assesses how much mortgage interest rates in Italy are priced on credit risk as proxied by the probability of household mortgage delinquency estimated using the EU-Silc database. Owing to data availability, we restrict the analysis of mortgage pricing to Italian households. Consistent with the more widespread use of credit scoring, estimates indicate that Italian lenders have increasingly priced mortgage interest rates on household credit risk. For mortgages granted between 2000 and 2007, we find that a 1% point increase in the probability of default is associated with a 21 basis point rise in mortgage interest rates, lower than the 38 basis point premium Edelberg (2006) estimated for the US at the end of the 1990s.     

Factores determinantes de la lealtad al proveedor de servicios turísticos online

The aim of this study is to analyze the factors determining loyalty towards online tourist services supplier with a model which integrates the influence of trust in tourism websites with the conceptual framework of the Theory of Planned Behaviour (TPB). The hypotheses were tested on a sample of 305 airline travel tickets online purchasers, with the use of structural equation models. The results of the empirical study suggest that the three variables of TPB (perceived control, subjective norm and attitude) positively influence loyalty towards Internet use to purchase airline tickets. The role of trust is especially relevant as it also boosts the effect of TPB variables. Finally, a set of managerial implications are considered.     

Simple money-based tests for choosing between private and public delivery: a discussion of the issues

The decision when to provide services by the public sector and when to use the private sector is a fundamental one. The economic literature emphasises that the efficiency of the mechanisms of delivery will depend on the contractual nature of what can be achieved by the parties and the political economy forces. Totally separate from this literature, however, governments have tried to implement practical and simple tests to indicate when to use private and when to use public delivery methods. The aim of this paper is to address some of the issues associated with simple money-based tests.     

Performance measurement and management in Portuguese law enforcement

Performance measurement of police services is complicated by ambiguous and complex goaland objectives-setting, and by the difficulties of measuring outputs. This article looks at the organizational and management changes being made in Portuguese police forces. The authors fill a gap in the literature on performance measurement in Portugal by taking a national approach to the study of how law enforcement agencies are introducing new management accounting changes. The article therefore widens the debate on performance measurement and performance improvements in law enforcement.     

In Defense of Boards

It is often assumed that bad corporate performance means a bad CEO. The task of a board of directors is then simple: dismiss the executive. If it fails to do so, the board is said to be indolent. We take a kinder approach to observed board behavior and point to the problems even well-intended boards would encounter. They face the twin task of disciplining and screening executives. We analyze the nature of the retention contract a board uses to discipline and screen executives. Consistent with empirical observation, we find that executives may become overly active to show their credentials, and that the link between bad performance and dismissal is weak.