Advertising,Price and Quality in Self–regulating Professions: A Survey

This paper surveys the theoretical and empirical literature on the relationship between advertising, fees and quality in the self–regulating professions. Much of the literature is derived from the perspective of advertising as an information–enhancing device, helping to reduce the information asymmetry between professional and client. This is consistent with the majority of the empirical studies which suggest that advertising tends to have a downward effect on professional fees, with little if any adverse effect on quality. There are, however, important issues of method and measurement which may lessen the force of this conclusion     

Cross Entropy Estimation of the Almost Ideal Demand System for Greek Consumption

Cross entropy is used to estimate the Almost Ideal Demand System for consumption in Greece. The entropy estimates are found to improve upon the SUR estimates. It is recommended that practitioners consider employing entropy based procedures in systems where the data set is small, where there are a large number of parameters, or where the data are deficient.     

Auditing in the Presence of Outside Sources of Information

We examine how an auditor's ability to terminate a multi-period client relationship provides the auditor with a real option whose value depends on the nature of informational asymmetry between the incumbent and other potential auditors. In particular, we isolate conditions under which the auditor's private and public sources of information behave as complements rather than substitutes. In such circumstances, increasing the likelihood of publicly provided information induces the auditor to expend more (rather than less)resources in private information gathering activities.     

Form, function, and finance: architecture and finance theory

At least at first glance, a bank’s customers ought to be concerned with only one thing—the price they must pay for the services they receive. Architecture beyond the merely functional ought to have no role, especially not in the modern global economy in which increasingly automated financial intermediation of all sorts appears to be approaching the ideals of pure competition and perfect efficiency. Even in these financially sophisticated times, however, symbols matter, and the message communicated by these symbols is one which cannot be communicated in any other way. It is necessary for a financial institution, and perhaps even the financial system itself, to have a strong visual presence. There is a visceral appeal of an architecturally distinguished building to the senses that speaks to us in a way that the cerebral appeal of pure information cannot.     

Fiscal sustainability and solvency: theory and recent experience in Indonesia

A major challenge for Indonesian economic policy makers is to avoid the recurrence of conditions that could trigger a new economic crisis. One of the important dimensions of this challenge will be to conduct fiscal policy in a way that is sustainable, given the level of interest rates and the rate of growth of the economy. This paper synthesises various approaches to the measurement of fiscal sustainability that have appeared in the economic literature, relates these measures to the fundamental concept of fiscal solvency, and applies the framework to Indonesia over the period 1991–2003. The domestic and foreign debt positions of the central government are treated separately, to capture the influence of exchange rate changes on the relative costs of domestic and foreign borrowing. The empirical analysis indicates that Indonesia has met the fiscal sustainability criterion in recent years, except when the rupiah has depreciated heavily.     

ECONOMIC EFFECTIVENESS OF BRAND ADVERTISING PROGRAMMES FOR U.S. ORANGE JUICE IN THE EUROPEAN MARKET: AN ERROR COMPONENT ANALYSIS

An econometric model is used to measure the impact of the Three-Party Programme on European demand for U.S. orange juice. The results show that the programme has helped expand the demand for orange juice in European countries and, from the viewpoint of the U.S. citrus industry, is an economically preferred way of generating additional exports compared with using price reductions to achieve additional sales.     

Editor's Introduction: Symposium on Free-Market Competitive Goals and Antitrust Policies

Review of Industrial Organization -