Divisionalization and franchising incentives with integral competing units

Existing game-theoretic models of divisionalization and franchising treat each firm's number of competing units as a continuous variable. We account for the integer constraint on divisions, and show that the continuous case reasonably approximates the equilibria of the discrete game.     

The predictability of returns on equity REITs and their co-movement with other assets

Recent evidence suggests that the variation in the expected excess returns is predictable and arises from changes in business conditions. Using a multifactor latent variable model with time-varying risk premiums, we decompose excess returns into expected and unexpected excess returns to examine what determines movements in expected excess returns for equity REITs are more predictable than all other assets examined, due in part to cap rates which contain useful information about the general risk condition in the economy. We also find that the conditional risk premiums (expected excess returns) on EREITs move very closely with those of small cap stocks and much less with those of bonds.     

The Financial Accelerator: Evidence from International Housing Markets

This paper shows novel evidence on the mechanism through which financial constraints amplify fluctuations in asset prices and credit demand. It does so using contractual features of housing finance. Among agents whose housing demand is constrained by the availability of collateral, those who can borrow against a larger fraction of their housing value (achieve a higher loan-tovalue, or LTV, ratio) have more procyclical debt capacity. This procyclicality underlies the financial accelerator mechanism. Our study uses international variation in LTV ratios over three decades to test whether (a) housing prices and (b) demand for new mortgage borrowings are more sensitive to income shocks in countries where households can achieve higher LTV ratios. The results we obtain are consistent with the dynamics of a collateral-based financial accelerator in international housing markets.We wish to thank an anonymous referee, Adam Ashcraft, Long Chen, Luigi Guiso (CEPR discussant), Steve Malpezzi, Walter Novaes, Marco Pagano (the editor), Raghuram Rajan, Luigi Zingales, and participants at the CEPR conference on Financial Structure and Monetary Policy Channels (Barcelona, July 2003) for helpful comments and suggestions. We also thank Olimpia Bover, Maria Chiuri, Nathalie Girouard, Tullio Jappelli, Steve Malpezzi, Felipe Morande, Marco Pagano, and Shiawee Yang for kindly providing us with data. The usual disclaimer applies.     

The effect of armed conflict on accumulation of schooling: Results from Tajikistan

This paper uses differences in regional and temporal exposure to the 1992-1998 armed conflict in Tajikistan to study the effect of violent conflict on schooling outcomes. Data on the past damage to a household's residences from the 1999 Tajik Living Standards Survey is used as well as data on the events during the conflict within a conceptual framework that controls for important individual, household and community characteristics. Girls who were of school age during the conflict and lived in affected regions were less likely to complete their mandatory schooling than girls of the same age who lived in the regions relatively unaffected by conflict. The results also indicate that exposure to violent conflict had a large and statistically significant negative effect on the enrollment of girls. No effect of regional and household conflict exposure on education of boys was found. The results are robust to community and household fixed effects, selection into violence and migration.     

Interactions between trade and environmental policies in the Czech Republic

The Czech Republic is obliged to implement pollution charges in accordance with the EU environmental policy. The charges may affect international competitiveness of the country, since they are applied to the domestically produced, but not to the imported commodities. We investigate how such environmental taxation of six main pollutants affects the Czech competitiveness. Using computable general equilibrium modeling with bottom-up approach, we consider a small-open economy with endogenous unemployment and ten types of taxes. A distinction between taxes on products and taxes on production is essential for analysis of a fiscal policy. Emissions reduction is possible in our model either through substitution with less polluting inputs, or a reduction of output, or through technical abatement. The last channel for emission reduction is ignored by other studies. The results show that the imports should not be affected by the tax reform, except for coal. Exports will increase in the non-energy-intensive and the biomass industries, but it will decrease in the chemical, the coal, and the metal industries. The overall effect on the trade balance is slightly negative. We conclude that investments in energy-saving technologies are necessary in order to preserve international competitiveness.     

Cost‐effective strategies to mitigate multiple pollutants in an agricultural catchment in North Central Victoria,Australia

Strategies to reduce phosphorus and sediment yields are identified for two Australian catchments using a nonlinear optimisation model. This provides novel insight into the cost‐effective management of dual pollutants of water courses in Australia. A strong degree of complementarity between the two pollutants is highlighted, given the adsorption of phosphorus to sediment that augments the value of gully and streambank management for mitigation. However, the relationship between the two pollutants is asymmetric. A 30 per cent reduction in phosphorus yield achieves a 75 per cent reduction in sediment yield in one catchment, while a 30 per cent reduction in sediment yield achieves only a 12 per cent reduction in phosphorus yield. Sediment abatement costs are low given the efficiency of gully and streambank management. A 30 per cent phosphorus reduction lowers profit by 3–7 per cent, while a 30 per cent sediment reduction lowers profit by around 1 per cent. Land‐use optimisation requires spatial heterogeneity in land‐use and gully/streambank management responses. Overall, this research demonstrates the need to determine whether one pollutant is more important than another, while recognising the potential that mitigation practices possess for the reduction of multiple emissions during their evaluation.     

The use of negotiation strategies among recreational participants with different involvement levels: the case of recreational swimmers

This paper is aimed to segment recreational swimmers according to their involvement level, profile the involvement groups according to demographic variables, and further test the role of negotiation strategies in the development of swimming involvement. Two hundred and sixty (N?=?260) recreational swimmers participated in the study and completed Kyle et al.'s three-facet involvement scale and Alexandris et al.’s five-dimension leisure negotiation scale. The results of cluster analysis revealed three distinct involvement groups: high, medium and low involved recreational swimmers. The high involved group consisted mainly of females, middle-aged and married individuals; the medium involved group did not have a clear demographic profile, while the low involved group consisted mainly of males and young individuals. The three involvement groups had statistical significant scores in all the five negotiation strategy dimensions, with the high involved individuals having the highest scores and the low involved individuals having the lowest ones. These results provide empirical support for the negotiation proposition, which was developed by Jackson, Crawford, and Godbey. They further contribute to the existing leisure literature by showing how demographic segmentation can be used in combination with psychographic variables in order to profile groups of participants.