Competition, Incentives, and Productivity in Chinese Township and Village Enterprises

Alternative explanations for the success of Chinese TVEs in the face of ambiguous property rights and incomplete markets are critically reviewed. The paper argues that, increasingly, competitive product markets and managerial incentives constitute the most plausible explanations. In view of the general lack of empirical tests for many of these explanations, the study tests for the relevance and relative importance of these factors with a sample of 200 large TVEs. Cross-section results for 1985 and 1989 provide relatively strong support for the relevance of product market competition, bonuses, proxies for technology access and local infrastructure on productivity. The effects on productivity of proxies for labor market and financial market competition, however, appear to be weak.     

Layoff taxes and minimum wage: Two complementary public policies

In a matching model in which the job destruction rate and the output are endogenous, we show that the presence of a binding minimum wage prompts firms to choose too risky jobs. Introducing layoff taxes therefore reduces unemployment and improves market efficiency.     

Induced innovation: an empirical test

A method is developed to empirically test the hypothesis of induced innovation as it has been specified and used in the theoretical literature. A strong and a weak version of the hypothesis is tested using sectorial data from the USA, Canada, Germany, France and the UK. The strong version tests for the exact dependency of the relation between the change in factor-productivities on the one hand and relative prices and actual factor-productivities on the other hand. The weak version only tests for the direction of this dependency. In all countries the weak hypothesis is accepted in all sectors except in ‘electricity, gas, and water’. The strong hypothesis is accepted in about half of all sectors. It is rejected only in sectors, in which the degree to which progress is intentional is low.     

Beyond One‐Size‐Fits‐All: Differentiating Market Access Measures for Commodity Systems in the Kenyan Highlands

Market access measures employed by economists and spatial analysts may not adequately capture local market or product‐specific variation. Analysis is conducted on the effects of market access on two commodities in the Kenyan highlands: milk and bean seeds. Both simple and composite measures of market access are applied to spatial price formation models to create spatial price decay functions in the context of household‐specific transaction costs. Composite measures of market access include negative exponential (using travel time or distance as cost) and gravity measures. The results demonstrate that the effects of market access differ significantly depending on the particular goods of interest. Simple measures of market access have the advantage of being more easily interpretable, and should therefore be preferred when communicating research outputs to the non‐scientific community, especially decision‐makers. The implications are that research addressing commodity‐specific development questions needs to look beyond generic measures of market access and develop tailored measures that reflect the characteristics of the commodity system of interest. The analysis also demonstrates that spatial price formation can be used to generate potentially more accurate measures of unit‐distance marketing costs.     

Aggregation of heterogenous beliefs,asset pricing,and risk sharing in complete financial markets

Given a competitive equilibrium in complete asset markets, we propose a method that aggregates heterogeneous individual beliefs into a single “market probability,” which, if commonly shared by investors, generates the same marginal valuation of assets by the market as well as by each individual investor. As a result of the aggregation process, the market portfolio may have to be scalarly adjusted, upward or downward, a reflection of an aggregation bias due to the diversity of beliefs. From a dual viewpoint, the standard construction of an expected utility-maximizing aggregate investor designed to represent the economy in equilibrium, is shown to be also valid in the case of heterogeneous beliefs, modulo the above scalar adjustment of the market portfolio, thereby generating an Adjusted version of the Consumption based Capital Asset Pricing Model (ACCAPM). We analyze how the allocation of aggregate and individual risks relates to deviations of individual beliefs from the aggregate market probability. Finally, we identify the channels through which the distribution of beliefs and other microeconomic characteristics (incomes, attitudes toward risk) across investors impact the pricing of risky assets an may contribute to explaining the equity premium puzzle.     

Stewardship vs. Stagnation: An Empirical Comparison of Small Family and Non‐Family Businesses*

abstract Two major perspectives can be construed in the literature concerning the nature of family owned businesses (FOBs). The first implies that these enterprises have unique characteristics of stewardship. FOB owners are said to care deeply about the long‐term prospects of the business, in large part because their family's fortune, reputation and future are at stake. Their stewardship is said to be manifested by unusual devotion to the continuity of the company, by more assiduous nurturing of a community of employees, and by seeking out closer connections with customers to sustain the business. The second perspective is less flattering. It proposes that FOBs are unusually subject to stagnation: they are said to face unique resource restrictions, embrace conservative strategies, eschew growth, and be doomed to short lives. This paper develops and examines the merits of the two perspectives, neither of which has been systematically articulated or researched. It does so in an empirical study of only small firms that are owned and managed by their founder. Within this sample, it compares firms that are FOBs, that is, family owned and managed, with non‐FOBs, that is, owned and managed by a founder with no other relative involved in the business. The findings show significant support for all three aspects of the stewardship perspective of FOBs, and no support for any elements of the stagnation perspective.     

Exchange-rate pass-through at the product level

Abstract.  We use a detailed database to investigate exchange-rate pass-through at the product level for a large number of countries. The empirical analysis suggests that pricing behaviours are dichotomous, with complete pass-through in around 25% of sectors and significant pricing-to-market in the remaining ones. Average long-run pass-through coefficient is close to 80%; this result hides a strong heterogeneity of pass-through behaviours across sectors. Even when composition effects are controlled for, average pass-through varies across importing countries. The econometric analysis shows that pass-through tends to be higher in volatile environments; in less developed countries; in weakly integrated markets.     

Productivity and environmental regulation: the effect of the nitrates directive in the French pig sector

This paper measures the ensuing changes in productivity in the French pig sector following the introduction of the European regulation addressing water pollution by nitrates from agriculture. Productivity is measured using the Malmquist–Luenberger index. The sources of changes in productivity observed are examined by breaking down this index into its technical progress and efficiency components. The results show that in the early stages, increases in productivity were stimulated by increased efficiency, before being driven by technical progress. The estimations regarding the sources of efficiency gains for the farms in the sample (technical efficiency, efficiency of scale and environmental efficiency) are then used to estimate the indirect costs and benefits (or negative costs) linked to the introduction of the environmental regulation controlling the disposal of organic manure and the management of nitrogen surplus from pig farms. The existence of a “win-win” effect as regards the Porter hypothesis relation between efficiency and environmental regulation is highlighted for the French pig sector.      

Evaluating the cost-effectiveness of secukinumab in moderate-to-severe psoriasis: a Japanese perspective

Aim: To evaluate the cost-effectiveness of secukinumab, a fully human anti-interleukin-17A monoclonal antibody, compared to other clinically used biologics (adalimumab, infliximab, and ustekinumab) in Japan for the treatment of moderate-to-severe psoriasis from the healthcare system (total costs) and patient co-payment (using different frequencies of drug purchase) perspectives.

Methods: A decision-tree (first year)/Markov model (subsequent years), with an annual cycle, was developed. The model adopted a 5-year time horizon. Efficacy inputs were obtained from a mixed-treatment comparison analysis, and other model inputs were collected from published literature and local Japanese sources. Model outcomes included quality-adjusted life years (QALYs) and an incremental cost-effectiveness ratio (ICER) in terms of cost per QALY gained. The annual discounting rate of 2% was applied to both costs and outcomes.

Results: Results for the healthcare system perspective showed that secukinumab had the highest number of quality-adjusted life years (QALYs) (4.07) vs other biologics, dominated ustekinumab and infliximab, and the ICER of secukinumab compared to adalimumab was ¥8,418,222/QALY gained. In the patient co-payment perspective with the monthly purchase of drugs, ustekinumab had the lowest co-payment cost, followed by infliximab, adalimumab, and secukinumab. In the patient co-payment perspective with a once every 3 months purchase of secukinumab and adalimumab, the co-payment costs of secukinumab, adalimumab, and ustekinumab became comparable, and infliximab had the highest co-payment cost.

Limitations: Only short-term efficacy data was modeled, as there was a lack of data on long-term outcomes. Treatment sequencing was restricted to first-line biologic treatment. Drop-out rates for comparators were assumed to be equivalent to secukinumab in the absence of available data.

Conclusions: Secukinumab is a cost-efficient treatment for moderate-to-severe psoriasis, providing greater health outcomes to patients at lower total costs compared to infliximab and ustekinumab, as well as comparable patient co-payment relative to other biologic treatments.     

The conscious consumer: taking a flexible approach to ethical behaviour

This paper considers the ethical purchasing of what is described as conscious consumers. Conscious consumers remain a ‘work in progress’, and present a complex mix of behaviours; while seeking ethical alternatives, other social and economic forces impact on their behaviour (e.g. family, convenience, price) such that positive ethical choices are not always made. Examining ethical consumption in this way reveals the ‘competing priorities, paradoxical outcomes, and the nature of compromises reached in real decision processes’. We identify two areas of theory relevant to the conceptualization of such consumers, flexibility and dissonance theory. A qualitative study of participants identified as conscious consumers was undertaken. As anticipated, the participants revealed a range of often contradictory behaviours regarding their ethical purchases. The relevance of flexibility and dissonance theory to their behaviour is discussed.