Uncertain tax rules and futures hedging

This paper considers the optimal futures hedging decision under uncertain tax treatment. If the Corn Products (CP) rule applies, gains or losses from futures trading can offset business gains or losses. However, under the Arkansas Best (AB) doctrine, offsetting is not allowed. We show that the risk neutral firm will not trade futures contracts if the probability the CP rule prevails is small. When the probability is sufficiently large, the firm will assume an underhedge. A risk averse firm is likely to trade, even if the AB rule prevails. As long as the CP ruling is not a sure thing, the firm will engage in underhedge. The effects of average business profits, the volatility of business profits, and risk aversion on the optimal futures position are provided. Copyright © 1999 John Wiley & Sons, Ltd.     

Einzelbesprechungen

Ohne ZusammenfassungAus dem Italienischen übersetzt von M. St. Braun, WienAus dem Russischen übersetzt von A. GerschenkronAus dem Italienischen übersetzt von Erich Allina     

Einzelbesprechungen

Ohne ZusammenfassungAus dem Italienischen übersetzt von M. St. Braun, WienAus dem Italienischen übersetzt von E. Allina, WienAus dem Russischen übersetzt von A. GerschenkronÜbersetzt von Paul Brüll, Wien.     

Some Surprising Properties of Power Indices

While it is troubling when power-index values change with the index, the problem is more severe: Different indices can generate radically different rankings. For example, a 15-player game exists with over a trillion different strict index rankings of the players. In contrast, with a fixed number of players certain indices always share the same ranking: e.g., the Shapley and Banzhaf rankings agree with three players, but they can have opposite rankings with more players. It is explained why index outcomes can be sensitive to assumptions and to when players leave a game. Journal of Economic Literature Classification Numbers: C71, D71.     

The neglect of spatial mobility in contemporary studies of work: the case of telework

Whilst many teleworkers are increasingly working beyond home and office, these mobile teleworkers are neglected in the telework literature. This neglect is addressed through reviewing relevant literature, developing a conceptual locational framework that accounts for mobile teleworkers and the presentation of an illustrative example which links to the theme of work–life balance in the telework literature.     

Perestroika and parallelism: advanced information technology and the soviet union

This paper begins by examining the history of Soviet computer hardware and software development, in part seeking the roots of the persistent Soviet lag behind the West. Then some impressions of the current situation are given, based around visits to a leading Soviet research establishment, the Institute for Space Research. At that Institute and others. parallel architectures are being used to gain reasonable computing power from what is by contemporary Western standards mediocre hardware. Impressive expertise, particularly in software development, is to be found, but it is still operating under constraints, such as difficult access to Western technology and technologists. In the last section of the paper it is argued that it is now in the interests of both East and West to ease that access. Improving and diffusing Soviet information technology is a key goal of the process of perestroika (restructuring). Cooperation with, rather than hostility to, Soviet efforts in information technology now makes sense for the West, especially Europe, because of the possibilities for mutually beneficial trade and also because we should wish perestroika to succeed.     

Bush v. Gore and the Effect of New Source Review on Power Plant Emissions

New Source Review (NSR) is a Clean Air Act regulation that requires electric utilities to meet emission standards when making modifications to existing power plants. The regulation increases the cost of replacing worn out parts, and limits the firm’s scope of potential capital investments. Such restrictions may lead to greater retirements and lower utilization, adversely affecting profits. Prior to the 2000 presidential election, investors expected Bush to have a narrower interpretation of NSR than Gore. Therefore, we use changes in stock prices to estimate the effect on profits of differences in NSR policy. Our results indicate that investors expected the average boiler to be $38 million more valuable under the Bush administration. Over the boilers’ lifetimes, the additional utilization will have increased emissions by 19 million tons of sulfur dioxide, 5.9 million tons of nitrogen oxides and 980 million tons of carbon dioxide, relative to natural gas generation.