Cyclical behavior of crude oil markets and economic recessions in the period 1986–2010

For at least one century, crude oil has been one of the most important commodities for the worldwide economic activity. Important technological innovations, including chemical transformation processes and transportation systems, have been based on the availability or not of crude oil. In this way, a close understanding of the crude oil market dynamics should provide insights in important aspects related to potential directions of technological change for both improving crude oil transformation efficiency and substitution by alternative energy sources. This paper studies the dynamics of the crude oil price for the period from 1986 to 2010. To this end, the entropy time-asymmetry is computed along the price trajectory. Empirical results indicated the presence of a non-regular cyclical behavior with a dominant period of about 4.5 years. Some evidences pointing toward a comovement of entropy time-asymmetry peaks with major US economic recessions are found, suggesting a tight relationship between macroeconomy and crude oil prices. The results are discussed in terms of the major economic events that occurred in the upward and downward cycle periods and potential implications for the design of energy policies.     

Collusive behaviour under cost asymmetries when firms compete in supply functions

This paper investigates the effect of cost heterogeneity in cartel formation and its sustainability over time when firms compete in supply functions under uncertainty. We find that cartel formation and collusion sustainability are hindered as cost differences increase. Efficiency losses caused by collusive behaviour are shown to decrease as asymmetry increases and, therefore, welfare losses also decrease. We compare our results with those obtained under Cournot and Bertrand competition.     

Location of public and private firms under endogenous timing of choices

This paper studies the choices of locations in a mixed duopoly when production costs are endogenously determined and the public firm maximizes a weighted sum of social surplus and its profits. We find that the locations of the two firms are decided simultaneously when the weight of the public firm’s profits in its objective function is high enough. When this is not the case we find that one firm (not always the public firm but sometimes also the private one) behaves as a leader in the choice of location and location decisions are made sequentially. Moreover, in equilibrium, the production cost of the public firm is never higher than that of the private firm.     

Rivalry amongst European low cost airlines: Are shareholders enjoying the game?

We develop a model of quantity and price competition for low cost airlines based on announcements of new routes and their impacts on the announcer and on its rival. We find that both firms’ profits may rise or fall as a result of an announcement of new routes, depending on launching costs for the announcer, and on whether market expansion or market substitution is dominant for the rival. We present an empirical study for two European low cost airlines that shows asymmetric behaviour; while EasyJet announcements have positive effects on Ryanair’s share price, the opposite is does not occur. This suggests that an airline’s reputation for reacting in response to rivals’ announcements may affect the stock market and may thus affect announcement behaviour.     

‘Gay’ tourists and host community attitudes

Despite the growing interest in tourism by gay men, there is little evidence (other than journalistic) of host communities' views towards such tourists. This paper describes a study of such views in a small Mexican beach destination popular with gay tourists. The village is also popular with heterosexual visitors and is known for nude bathing and drug consumption. Interviews were undertaken with a number of residents and revealed disapproval of the gay tourists. This was attributed by residents to overt sexual behaviour, and although there was no evident homophobia, it is postulated that this underlay the attitudes. Copyright © 2010 John Wiley & Sons, Ltd.     

EXPLORING POTENTIAL ARMS RACES

Defense spending accounts for a larger share of national output in most countries than many of the other allocative decisions, both public and private, which the majority of economic research aims at explaining. Yet with notable exceptions, most economists have ignored this topic and relegated to political science the task of explaining how resources are allocated to this sector. This paper aims at contributing to this literature by economists. A theoretical model is developed to explain the dynamics of the arms acquisition process. Within this framework, defense expenditures are governed by the expenditures of potential adversaries if these exist. Then the model is empirically tested using a sample of countries or dyads which have been proposed to be adversaries. The direction of the prima facie causal relationship between the military expenditures of these dyads is investigated using parametric causality tests. The results indicate that some of these country's expenditures seem to reflect an arms race while other proposed dyads seem not to be adversaries, i.e., their expenditures are independent and therefore, seem to be governed by other than an external threat.     

Restricted origin principle under triangular trade flows: Implications for trade and tax revenues

In this paper we try to show that, even when we allow for the assumptions embodied in the standard literature of border tax adjustments, and furthermore restrict ourselves to the case of uniform as well as general taxes, across products and countries, the choice between origin and destination principles need not be irrelevant. In particular, when a triangular trade flow of products takes place between two states of a federation and foreign countries, unless the same principle of border tax adjustments is adopted on both domestic and foreign trade, part of the state tax base is transferred from one state to the other, leading to an undesirable reallocation of local tax revenues. We found that adoption by the Brazilian states of the restricted origin principle (origin principle applied to interstate trade and destination principle applied to foreign trade) led to a reallocation of local tax revenues from the Northeastern states to the residents of the rest of country. An obvious implication of this analysis is that reallocation of tax revenues due to bilaterally unbalanced trade could be easily adjusted by adoption of the same principle, origin or destination, for both domestic and foreign trade.     

Measurement and Testing for Equality of Foreign Price and Consumer Price Index Transmission in Russia

This paper tests for segmentation of retail meat markets in Russia before and after the financial crisis of 1998. Using monthly prices of pork and beef in 80 regions of Russia from 1994 to 1999, we measure the short-run response of regional prices to changes in foreign prices and domestic inflation. We find that changes in both foreign prices and domestic inflation have distinct impacts on the prices of these commodities in different Russian cities, indicating that the markets are segmented in the short run. An analysis of the effect of the financial crisis shows that the response to the crisis was mixed, with some regions showing more evidence of segmentation than others.