The welfare effects of restricted hospital choice in the US medical care market

Managed care health insurers in the USA restrict their enrollees' choice of hospitals to within specific networks. This paper considers the implications of these restrictions. A three‐step econometric model is used to predict consumer preferences over health plans conditional on the hospitals they offer. The results indicate that consumers place a positive and significant weight on their expected utility from the hospital network when choosing plans. A welfare analysis, assuming fixed prices, implies that restricting consumers' choice of hospitals leads to a loss to society of approximately $1 billion per year across the 43 US markets considered. This figure may be outweighed by the price reductions generated by the restriction. Copyright © 2006 John Wiley & Sons, Ltd.     

Agglomeration Effects and the Competition for Firms

A two-region economy consists of a given but different number of immobile workers in each region, and a given number of mobile firms. Firms create jobs where they locate, but there is frictional unemployment. Two sorts of agglomeration effects arise: those from economies of scale in matching, and those from production economies external to the firm. Regions may either be part of a unitary state in which case all regional policies are decided by the central government, or they may be part of a federal state in which case some policies are determined by the regional governments. We characterize the resource allocations in both a unitary and a federal state, and identify the set of instruments that are required to replicate the social optimum in each state.     

Comparing the Effectiveness of Traditional and Time Varying Hedge Ratios Using New Zealand and Australian Debt Futures Contracts

We apply cointegration methodology to the New Zealand and Australian 90-day, three-year and 10-year debt and futures markets. We compare traditional methods of calculating hedge ratios with those computed by using univariate and multivariate error correction models. We use out-of-sample forecasting to determine which approach is the most effective. Contrary to recent research, our results show that univariate and multivariate error correction models do not outperform more traditional methods of constructing hedges.     

Formal,Justice‐Oriented Voice in the Nonunion Firm: Who Speaks Up and When?

Employee willingness to exercise workplace voice has been the subject of much recent research. However, very different types of voice are observed within the workplace, with some forms of voice receiving limited scholarly attention. In particular, limited attention has been given to the determinants of formal, justice‐oriented voice within a nonunion context. Using a policy‐capturing design, we examine factors that affect decisions to use formal, justice‐oriented voice among 498 nonunion employees who had access to the same appeal procedure. The results suggest that this type of voice is affected by perceptions regarding immunity from negative managerial reactions to voice and also by factors associated with the utility of voice (e.g., the social power of those involved in the appeal and the evidence available to support the appeal). The results further suggest that perceived immunity moderates the impact of the social power of those involved in the appeal and the evidence available.     

Making Health Care More Affordable Through Health Insurance Finance Reform

The way that we finance health insurance today is both unfair and inefficient. The tax code subsidizes the most expensive employment-based policies while penalizing those who buy insurance on their own or choose more basic policies. By reforming this system, we can both make health care more affordable for millions of people and get higher-value care for the money that we spend. These reforms should be coupled with policies to ensure that basic private insurance is affordable for everyone, including those with chronic health conditions or low income, and to ensure that patients and physicians have the tools that they need to make well-informed decisions. JEL Classification I11     

Application and Assessment of an Ethics Presentation for Accounting and Business Classes

This paper describes a presentation on ethics for accounting and business students. In 2001 and 2002, major corporate failures such as Enron and Worldcom, combined with questionable accounting practices, made ethics a paramount concern to persons working in business and accounting. While financial statement analysis and regulatory requirements are important technical topics, the issue of ethics provides faculty a unique and very appropriate setting to discuss deeper truths about doing business and living life well. This paper briefly describes the development and assessment of one approach to presenting ethics built around a computerized slide show (PowerPoint). The goal of the presentation is to increase students’ understanding of the essential role of ethics to accounting and business. Following the presentation, students indicated a heightened recognition of the importance of ethics. Educators should do all that they can to encourage students to do the “right” thing, even in difficult circumstances. This encouragement may serve them well in school and later in their careers.     

Do Managers Use Meeting Analyst Forecasts to Signal Private Information? Evidence from Patent Citations

This study examines whether firms manage earnings to meet analyst forecasts to signal superior future performance. Prior research finds that firms use earnings management to just meet analyst forecasts and that these firms have a positive association with future performance (Bartov et al., 2002). There are two potential explanations for the positive association – signaling and attaining benefits that allow for better future performance (i.e., the real benefits explanation). Prior studies cannot provide evidence of signaling because they do not control for the real benefits explanation. Our research design enables us to control for the real benefits explanation because we can identify potential signaling firms within the sample of firms that just meet analyst forecasts. We use a unique database from the National Bureau of Economic Research to construct a proxy for the manager's belief about future firm value due to patents. We find that firms with more patent citations are more likely to just meet the analyst forecast and manage earnings to achieve this goal. We also find firms that just meet analyst forecasts with more patent citations have significantly better performance than firms with fewer patent citations, which is consistent with signaling and not the real benefits explanation.     

Tradability and market penetration costs: Explaining foreign market servicing intensities

Industry level data shows striking differences among sectors in ratios of exports to FDI sales. We identify the elements behind the sectoral differences in the mode of foreign market servicing in the context of a general equilibrium model of monopolistic competition. Our calibration exercise shows that traditional margins such as transportation, fixed entry costs, utility weights, and dispersion of firm productivity are not enough to capture the observed sectoral differences, as is commonly assumed. We propose augmenting the model to allow for sectoral differences in intangible costs of operating in a foreign market in order to explain these observations.