Optimal design of pro-conservation incentives

Payments for environmental services (PES) schemes have become an increasingly accepted and popular mode for governmental and non-governmental agencies to use in addressing local and regional declines in ecosystem services. In PES schemes, payments can either be tied to indicators of actions for service provision or to indicators of the generated service itself. Performance payments are synonymous for this second group, i.e. payments are completely contingent on the procurement of an environmental good or service. Such a focus raises several practical issues during implementation. We review and translate key aspects of the economic theory of incentives into the context of performance payment schemes with special attention paid to two practical issues: risks outside the individual's control and distortion in the measurement of environmental services. Four different incentive payment approaches are presented and the effects of risk and distortion on optimal incentives are discussed. The investigation of each payment approach is accompanied by a discussion of examples from the field.     

Cognitive Mapping: A Process to Support Strategic Planning in an Academic Department

Cognitive mapping has been used to support strategic planning in business. However, the process has seldom been utilized to support strategic planning in nonprofit public organizations, where many reporting lines are less clear. This paper describes how the cognitive mapping process was designed and implemented to help a large academic department identify and merge the individual goals of faculty members as a first step in creating a strategic plan. Each map was created using the Decision Explorer^TM software during individual interviews, as opposed to using paper and pencil. An action case approach was used to plan and evaluate individual mapping sessions. Eliciting individual cognitive maps led to greater engagement by faculty in the strategic planning process. Nearly all of the participating faculty members believed that the cognitive mapping process was helpful and insightful and the resulting map was accurate and complete.     

Exchange Rates and the Conversion of Currency‐Specific Risk Premia

How do the risk factors that drive asset prices influence exchange rates? Are the parameters of asset price processes relevant for specifying exchange rate processes? Most international asset pricing models focus on the analysis of asset returns given exchange rate processes. Little work has been done on the analysis of exchange rates dependent on asset returns. This paper uses an international stochastic discount factor (SDF) framework to analyse the interplay between asset prices and exchange rates. So far, this approach has only been implemented in international term structure models. We find that exchange rates serve to convert currency‐specific discount factors and currency‐specific prices of risk – a result linked to the international arbitrage pricing theory (IAPT). Our empirical investigation of exchange rates and stock markets of four countries presents evidence for the conversion of currency‐specific risk premia by exchange rates.     

From transition to competitionDynamic efficiency analysis of Polish electricity distribution companies1

In this paper, we test the hypothesis that the economic transition toward a market economy increases the efficiency of firms. We study 32 Polish electricity distribution companies between 1997 and 2002, by applying common benchmarking methods to the panel: the non‐parametric data envelopment analysis (DEA), the free disposal hull (FDH), and, as a parametric approach, the stochastic frontier analysis (SFA). We then measure and decompose productivity change with Malmquist indices. We find that the technical efficiency of the companies has indeed increased during the transition, while allocative efficiency has deteriorated. We also find significantly increasing returns to scale, suggesting that the regulatory authority should allow companies to merge into larger units.     

Bill-and-keep and the economics of interconnection in next-generation networks

As telecommunications networks are being transformed into all-IP, next-generation networks (NGNs), interconnection is attracting renewed regulatory debate. Next-generation features suggest that interconnection regimes developed for the internet or for traditional telephony networks are unlikely to be suitable in most NGN contexts. Efficient NGN interconnection will take advantage of NGNs’ technical possibilities (e.g., session control), facilitate their operational requirements (e.g., quality-of-service differentiation) and accommodate their service versatility. We discuss the application of alternative interconnection charging models (with a particular focus on bill-and-keep) by applying the main lessons from the interconnection literature in a framework designed for the practical needs of regulators. We show that in NGNs – as well as in other networks – there is no single interconnection charging model that maximizes economic efficiency in all circumstances. Finally, we discuss the implications for regulatory policy towards NGN interconnection.     

Sovereign credit spreads and the composition of the government budget

This paper investigates the relationship between sovereign credit spreads and the composition of the government budget. The key result of this paper is that governments that invest more and spend less on consumption have significantly lower sovereign credit spreads. This finding is in accordance with the endogenous growth theory, which predicts a positive impact of government investment and a negative impact of government consumption on the long-term growth rate. Finally, a broader tax base significantly reduces sovereign credit spreads. A possible explanation may be that governments with more tax receipts are less likely to have liquidity problems to finance their debt charges.     

Do Smaller Classes Always Improve Students’ Long‐run Outcomes?

We exploit the strict class size rule in Norway and matched individual and school register information for 1982–2011 to estimate long‐run causal effects on income and educational attainment. Contrary to recent evidence from the US and Sweden, we do not find any significant average effect on long‐run outcomes of reduced class size. We further use the large register data set and quasi‐experimental strategy to estimate whether the class size effect depends on external conditions facing students and schools, such as teacher quality, extent of upper secondary school choice, school district size, local fiscal constraints and labour market conditions. Overall, we find that the class size effect does not depend on these factors measured at the school district level. The absence of class size effects on long‐run outcomes in Norway is consistent with earlier findings for short‐run outcomes, using comparable data and empirical strategies.     

The acceptability of different types of soymilks available in Cape Town in consumers from high and low socio‐economic areas

The aim of this study was to determine the knowledge and acceptability of soymilk (defined as consumption pattern/usage and taste) by adult consumers, residing in different socio‐economic areas (low vs. high) in Cape Town. The study population of 214 participants were selected using convenience sampling. A questionnaire was developed in order to obtain demographic data (four items); basic general knowledge of soymilk (four items); and acceptability of the tested products (consumption patterns and taste) (eight items). There was a significant difference between the two groups (P = 0.000) regarding basic knowledge of soymilk, with significantly more in the high socio‐economic area (HSEA) having a score of at least 75%. Gender (P = 0.082) and age (P = 0.122) did not have a significant impact on the consumption patterns of soymilk. There was no significant difference between the two groups with respect to current usage (P = 0.228) and frequency of use (P = 0.213) of soymilk. However, a significantly smaller group (P = 0.000) of participants in the low socio‐economic area had previously tasted soymilk compared with those in the HSEA (16.7% vs. 41.5%; P = 0.000). In conclusion, socio‐economic status appeared to be associated with knowledge of soymilk. No significant differences with regard to gender, age or current usage in the two groups studied were noted.     

Pre-entry experience,technological complementarities,and the survival of de-novo entrants. Evidence from the US telecommunications industry

We investigate the effect of pre-entry experience on firms’ performance in terms of survival. In particular we focus on entrants from a related upstream industry – semiconductors – into a downstream industry – telecommunications. We examine a sample of 336 de-novo start-ups in the US telecommunication industry and we estimate a discrete time hazard model of firm exit. Our findings show that, after controlling for both firms and founders’ characteristics, firms whose founders had prior experience in a related upstream industry such as semiconductors enjoy a relatively lower hazard of exit with respect to intra-industry spinoffs and other types of start-ups. Additionally, background heterogeneity of the founding team is an important determinant of survival for the firms in our sample. Our results point to the role of interdependences and technological complementarities between two vertically related industries in affecting the performance of new entrants.