A survey and critique of multiobjective power plant siting decision rules

This paper reviews the use of multiobjective decision rules for solving power plant siting problems. After a discussion of exclusionary site screening methods for bounding the decision space, classes of multiobjective and goal programming desicion rules are discussedin the context of final site selection. Advances and limitations of these methods are highlighted. Although multiobjective decision rules have seen numerous applications to power plant siting in the literature, few electric utility companies have used these methods in practice. A review of the use of multiobjective methods in actual power plant siting decisions is also presented, and reasons for the paucity of real-world applications are suggested.     

Risk Transfer with Interest Rate Swaps

This paper proposes Entity‐Netted Notionals (ENNs) as a metric of interest rate risk transfer in the interest rate swap (IRS) market. Unlike the ubiquitous metric of notional amount, ENNs normalize for risk and account for the netting of longs and shorts within counterparty relationships. Using regulatory data for U.S.‐reporting entities, the size of the market measured by notional amount is $231 trillion, but, measured by ENNs, is only $13.9 trillion 5‐year swap equivalents, which is the same order of magnitude as other large U.S. fixed income markets. This paper also quantifies the size and direction of IRS positions across and within various business sectors. Among the empirical findings are that 92% of entities using IRS are exclusively long or exclusively short. Hence, the vast majority of market participants are prototypical end users, and the extensive amount of netting in the market is attributable to the activity of relatively few, larger entities. Finally, some sector‐specific empirical findings are inconsistent with widespread, prior beliefs. For example, pension funds and insurance companies are typically thought to be long IRS to hedge their long‐term liabilities, and these sectors are indeed net long, but approximately 50% of individual entities in these sectors are actually net short.     

Adjustment,employment characteristics and intra-industry trade

Adjustment, Employment Characteristics and Intra-Industry Trade. — In this paper we use data on individual workers to investigate a number of dimensions of adjustment and relate these to trade. Specifically, we estimate the relative incidence of changes in workers’ employment status with regard to sector, firm, occupation and region. We relate the incidence of adjustment to a range of labour market characteristics and indicators of trade exposure. Our findings are not consistent with the notion that there is a systematic relationship between the type of trade expansion (inter- or intra-industry) and the type of employment adjustment (within or between industry adjustment) or that there is less labour market adjustment associated with intra- than inter-industry trade.     

Strategy and Trade Union Effectiveness in a Neo-liberal Environment

In the absence of state sponsorship, unions must become more effective in the workplace or suffer the inevitable consequences. The analysis of union strategy and effectiveness, however, presents special difficulties. We adopt a strategic choice perspective, defining strategy as a framework of critical, enacted choices about the ends and means of an organization. For unions in a neo-liberal context, this means that strategy can be described in terms of the nexus between two complex dimensions: union-worker relations and union-employer relations. On this basis, we identify four broad patterns of union strategic choice in the New Zealand environment: classic, paper tiger, consultancy, and partnership unionism. Those patterns in which union-worker relations rely on 'servicing' are seen as fatally flawed at worst, and strategically vulnerable at best. On the other hand, those patterns in which union-worker relations are more securely based on servicing complemented with robust forms of organization also contain strategic tensions. These must be managed carefully if unions are to become more effective. While illustrated with New Zealand case studies, this framework provides lines of analysis for the strategic review of unions in neo-liberal contexts more generally.     

Discrimination among alternative models of international capital markets

Most empirical capital flow studies have estimated individual models, many by assuming exogenous interest rates. None of these studies has examined interest rate interdependence from the perspective of the models. In this study, a simultaneous equation model of capital flows containing previous models as special cases is estimated using the cross spectral technique of model discrimination. Based on examination of both the flow-differential link and interest rate interdependence resulting from capital flows, the evidence 1) supports a simultaneous equation stock adjustment model, and 2) suggests that interest rate endogeneity may not imply serious simultaneous equation bias for those previous studies which assume exogenous interest rates.     

The subtle danger of symmetry restrictions in time series regressions,with application to fertility models

It is widely known that linear restrictions involve bias. What is not known is that some linear restrictions are especially dangerous for hypothesis testing. For some, the expected value of the restricted coefficient does not lie between (among) the true unconstrained coefficients, which implies that the estimate is not a simple average of these coefficients. In this paper, the danger is examined regarding the additive linear restriction almost universally imposed in statistical research--the restriction of symmetry. Symmetry implies that the response of the dependent variable to a unit decrease in an expanatory variable is identical, but of opposite sign, to the response to a unit increase. The 1st section of the paper demonstrates theoretically that a coefficient restricted by symmetry (unlike coefficients embodying other additive restrictions) is not a simple average of the unconstrained coefficients because the relevant interacted variables are inversly correlated by definition. The next section shows that, under the restriction of symmetry, fertility in Finland from 1885-1925 appears to respond in a prolonged manner to infant mortality (significant and positive with a lag of 4-6 years), suggesting a response to expected deaths. However, unscontrained estimates indicate that this finding is spurious. When the restriction is relaxed, the dominant response is rapid (significant and positive with a lag of 1-2 years) and stronger for declines in mortality, supporting an aymmetric response to actual deaths. For 2 reasons, the danger of the symmetry restriction may be especially pervasive. 1st, unlike most other linear constraints, symmetry is passively imposed merely by ignoring the possibility of asymmetry. 2nd, modles in a wide range of fields--including macroeconomics (e.g., demand for money, consumption, and investment models, and the Phillips curve), international economics (e.g., intervention models of central banks), and labor economics (e.g., sticky wage models)--predict asymmetry. The conclusion of the study is that, to avoid spurious hypothesis testing, empirical research should systematically test for asymmetry, especially when predicted by theory.     

Credit access for high-risk borrowers in financially concentrated markets: Do SBA loan guarantees help?

The Small Business Administration's (SBA) loan guarantee program was established to correct financial capital market inefficiencies and improve small business access to financial capital. However, the SBA loan guarantee program has been criticized for its failure to improve the performance of financial capital markets available to small businesses. This study considers the financial capital market failure created by lenders' monopoly power (specifically, financial market concentration) in financial capital markets. Based on this potential market failure, a model is derived to evaluate the behavior of lenders and borrowers in financial capital markets. Using the national Survey of Small Business Finance, this study compares the financial characteristics of small business borrowers with and without SBA loan guarantees, and provides a qualitative assessment of the SBA's ability to correct financial capital market inefficiencies. When considering only the interaction between borrower quality and the degree of financial market concentration, high-risk borrowers in high concentration financial markets have a higher probability of receiving an SBA loan guarantee than low-risk borrowers in low concentration financial markets. However, when other factors influencing the demand for financial capital are included in the model, only the borrower attributes (credit risk and age) are significant. While the SBA loan guarantee program appears to partially mitigate the effects of the market failure caused by financial market concentration for high-risk borrowers, the program appears to be better designed to address borrower risk, rather than credit market failure.     

Modeling the diffusion of public policy innovations among the U.S. States

This paper describes and validates a general model of state diffusion of public policy innovations. The model can be used to identify whether new policies are likely to become fully adopted into the system of states and the time horizon over which this is likely to occur. Limitations and extensions of the model are also concluded.     

Hit and Run or Sit and Wait? Contestability Revisited in a Price-Comparison Site-Mediated Market

The price-comparison site, with its (near-)zero sunk costs of entry, would appear to approximate the “almost perfectly contestable market” envisaged by the contestability theorists where “hit-and-run” entry was conjectured to constrain sellers to zero-profit outcomes. We investigate hit and run using a unique unbalanced panel of 295 digital-camera markets mediated by NexTag.com. We find, however, in line with Farrell (1986a)’s prediction, a bifurcation of strategies with low reputation/smaller participants favouring a hit-and-run strategy involving lower entry prices and shorter forays into the market than their high reputation/larger rivals. Furthermore, the former entrants induce a much larger price response from low-reputation incumbents, reflecting the more intense rivalry for the price-sensitive consumers willing to eschew retailer reputations.