Consumer Willingness to Pay for Cue Attribute: The Value Beyond Its Own

Using Certified U.S. Product as a product cue, we show that consumer willingness to pay for other identifiable search and experience attributes change. Certified U.S. Product serves as a substitute for Guaranteed Tender and a complement of Guaranteed Lean. Results have important implications for policymakers and food companies interested in food labeling programs in the presence of cue attributes such as Certified U.S. Product. The substitute effects of a cue attribute on other product attributes may contribute to deteriorating product quality and the complement effects of a cue attribute could improve product quality in the market.     

Academic practices of virtual learning by interaction

The way that the academic practice in higher education universities responds to the influence of computer networks and technology will be central to the definition of their future role. The traditional metaphor of university as self-contained village is challenged as knowledge becomes widely available on the Internet and teacher-student and student-student dialogues are not bound by spatial boundaries. The paper presents four metaphoric spaces that virtual dialogues can take place in. Each of these appears to fail the criteria of creating space where knowledge that a particular individual has can be shared, recreated, and amplified through interactions with others in academic contexts. We consider the effect of three driving forces that could create alternative teacher and student roles and dialogues between them. A technology-driven shaping of virtual learning may result in auto-responsive ‘robosapiens’, a relativist societal-driven shaping of virtual learning may result in socially isolated ‘nerds’. An environment in which technology is shaped by ethical evaluation with respect to higher level (e.g. meta-conceptual) learning is desired to raise the standards of intellectual and technological talents. Such an environment is considerably different from the norms of present-day universities and the every-day roles of teachers and students.     

Estimating cigarette-tax revenue

This paper presents a cigarette-tax revenue model which predicts potential tax revenues. The model is unique in that revenues are estimated in a two-stage process which is invariant to the type of state sales/excise tax regime. The model also controls for cross-state spillover effects. The empirical model was estimated using data from Alabama and surrounding states from 1955 to 1990. The results suggest the demand for cigarettes in Alabama is relatively inelastic; spillover effects are found but are small in scale; and additional revenue potentials can be realized by changes in the tax regime.     

Estimated Value of Increased Pricing Accuracy for Fed Cattle

To improve vertical market coordination beef packers have introduced fed cattle grid pricing systems that offer premiums or discounts for varying carcass quality and yield grades. This study calculates the value of cattle quality information for producers considering live, dressed, and grid pricing alternatives. The value of fed cattle quality and yield grade information is at least $15/head. When fed cattle are sold on a live weight basis, high-quality cattle subsidize low-quality cattle by an average of $30/head. Price signals that could improve beef market coordination are ignored when fed cattle are marketed using traditional live or dressed weight methods.     

Digital divide: determinants and policies with special reference to Asia

Access to the new information and communication technologies (ICT) remains extremely unequally distributed across and within societies. While there have been a good deal of popular discussions about this “digital divide”, not much is known about the quantitative significance of its various determinants. By undertaking a set of cross-country regressions, the paper finds that income, education, and infrastructure play a critical role in shaping the divide. Based on this analysis, the paper also offers some policy suggestions as to how to promote a wider diffusion of ICT in poorer societies.     

Designing environmental policy: lessons from the regulation of mercury emissions

In its waning days, the Clinton administration decided that it was appropriate to regulate mercury emissions from power plants. The incoming Bush administration had to decide how best to regulate these emissions. The Bush administration offered two approaches for regulating mercury emissions from power plants. The first was to establish uniform emission rates across utilities, as mandated by the 1990 Amendments. The second was to establish a cap on mercury emissions while allowing emissions trading in order to reduce the cost of achieving the goal. This paper presents the first cost-benefit analysis of this issue that takes account of IQ benefits. We find that the benefits of the mercury regulation are likely to fall short of the cost. This assessment is based on a number of assumptions that are highly uncertain. The finding of negative net benefits is robust to many, though not all, reasonable variations in the model assumptions. We also find that the emissions trading proposal is roughly $15 billion less expensive than the command-and-control proposal. Mr. Gayer is associate professor of public policy at Georgetown University and a visiting scholar at the American Enterprise Institute. Mr. Hahn is co-founder and executive director of the American Enterprise Institute-Brookings Joint Center for Regulatory Studies and a scholar at AEI. We would like to thank Mary Jo Krolewski, Leonard Levin, Joel Schwartz, Anne Smith, Nik Wada, and Chris Whipple for helpful comments and Jordan Connors, Laura Goodman and Molly Wells for valuable research assistance. The views expressed in this paper represent those of the authors and do not necessarily represent the views of the institutions with which they are affiliated.     

On the geography of conventions

Summary. We study an evolutionary model in which heterogenous boundedly rational agents interact locally in order to play a coordination game. Agents differ in their mobility with mobile agents being able to relocate within a country. We find that mobile agents enjoy a higher payoff and always benefit from increased mobility, while immobile agents benefit from increased mobility at low levels of mobility only. This wedge in payoffs weakly increases as mobility increases. Some extensions are discussed. Received: January 10, 2001; revised version: December 4, 2002 RID="*" ID="*" We thank, without implicating in any way, George Mailath for helpful discussions. Some of the ideas in this paper were developed during the V Conference of the Society for the Advancement of Economic Theory in Ischia, Italy. The NSF provided financial support. Correspondence to: T. Temzelides     

Log-concave probability and its applications

Summary. In many applications, assumptions about the log-concavity of a probability distribution allow just enough special structure to yield a workable theory. This paper catalogs a series of theorems relating log-concavity and/or log-convexity of probability density functions, distribution functions, reliability functions, and their integrals. We list a large number of commonly-used probability distributions and report the log-concavity or log-convexity of their density functions and their integrals. We also discuss a variety of applications of log-concavity that have appeared in the literature.Received: 31 December 2003, Revised: 22 March 2004, JEL Classification Numbers: C40, D40, D80. Correspondence to: Ted BergstromWe thank Ken Binmore and Larry Samuelson for encouragement and suggestments.     

Will the U.S. Auto Market Come Back?

In the Great Recession, the automotive industry has been one of the hardest hit sectors, along with the housing and financial industries. As the largest and most cyclical consumer spending sector, the automotive sector has historically been important for economic recovery after every postwar recession. Will it be the same this time? Will consumer demand for new vehicles stay depressed in a prolonged deleveraging process? In this paper, we present an analysis of the fundamental factors that determine long-term vehicle demand, together with the factors that drive its cyclical fluctuations. We believe the recovery of the auto industry is inevitable and that it will again become an important driver of the mid-term U.S. recovery. However, a quick return to the precrisis peak is unlikely, given the slow recovery of employment and housing markets and higher energy prices.