On the approximation of infinite horizon allocations

Summary Welfare maximizing models with infinite horizon allow us to obtain time consistent, perfect foresight allocations. However, their numerical implementation requires finite horizon models. In this paper we study the steady-state properties of such infinite horizon allocations as well as the appropriateness of specific finite horizon approximations. In particular, we compare the single agent, single capital good model by Cass (1965) which is cast in continuous time, with the multiagent discrete time formulation by Lucas and Stokey (1984) and with an overlapping generation version which follows Kehoe and Levine (1985). For a modification of the Lucas and Stokey model which has satiation in utility, a technique to derive error bounds is obtained for finite horizon approximation of a model with at most one capital good. This technique also applies to appropriate respecification of the Cass model and, if one is willing to accept some heuristics, to the cases with many capital goods and with overlapping generations.Revised version of a paper presented at the symposium on Applied General Equilibrium Models for Open Economies, organized by the Central Planning Bureau, Noordwijk, December 3–5, 1989.     

Utilizing e-business technologies in supply chains: The impact of firm characteristics and teams

This paper presents findings from an exploratory study that analyzes the drivers and outcomes of e-business technology use in the supply chain. Using a combination of case studies and survey data from a diverse sample of industries, the research examines how industry context, firm characteristics and firm-level strategic resources, such as purchasing teams, influence the exploitation of e-business technologies and the relationship between e-business technology use and firm performance. Based on a synthesis of related literatures from transaction cost economics and the relational view of the supply chain, a two-dimensional framework for e-business technology is proposed with transactional and relational dimensions. However, empirical analysis indicated that transactional technologies can be further subdivided into two factors: dyadic cooperation and price determination. Significant differences were found between the two dimensions in terms of their overall levels of adoption, with dyadic coordination being the most widely adopted. In addition, the development of strategic resources expanded, in particular internal and customer teams, the use of e-business technologies expanded. Purchasing organizational structure and firm size also were positively related to the adoption of transactional e-business technologies. Finally, of particular importance to practitioners, e-business technologies targeted at reducing dyadic coordination costs lead to improved financial performance.     

Labeling and the Realization of Cultural Values

Labeling plays a role of increasing significance as a technique to reveal, with adequate certification, the content of a product in both a physical and a moral sense by reporting, say, on labor conditions, environmental sustainability or animal friendliness of the product chain. Whereas voluntary labeling leaves all initiative to the private sector, under mandatory labeling the state imposes an obligation to label, often in conjunction with the requirement to meet official standards. Besides aiming to ensure product safety, standards derive from paternalistic motives and seek to mitigate external effects of consumption, to manage catastrophic risks, to improve the representation of the poor, and to preserve the cultural heritage. Nowadays, they are also used in the fight against crime and terrorism and for the protection of intellectual property rights. Standard-based labeling is a source of recurrent conflict because it serves both to protect the own culture and to export it. Developed countries fear that discretionary policies at a national level would harm their exports. They call for international harmonization of the standards but developing countries are reluctant to participate, because their exports might suffer, while antiglobalists denounce it as an instrument of domination by the North. The paper reviews the arguments on both sides. It adopts a WTO perspective in proposing that for non-product standards, international harmonization, rather than being attached to products, should apply to territories, be organized by subject and delegated to specialized international agencies that operate under the mandate of separate international treaties. But we differ from the WTO position when we argue first, that product as well as non-product standards should be modulated so as to reflect the cultural diversity across countries and their different stages of development, and second, that it should be permitted that countries refusing to sign a treaty should face import restrictions by signatories.     

A strategic network choice model for global container flows: specification, estimation and application

Container flows have been booming for decades. Expectations for the 21st century are less certain due to changes in climate and energy policy, increasing congestion and increased mobility of production factors. This paper presents a strategic model for the movement of containers on a global scale in order to analyse possible shifts in future container transport demand and the impacts of transport policies thereon. The model predicts yearly container flows over the world’s shipping routes and passing through 437 container ports around the world, based on trade information to and from all countries, taking into account more than 800 maritime container liner services. The model includes import, export and transhipment flows of containers at ports, as well as hinterland flows. The model was calibrated against observed data and is able to reproduce port throughput statistics rather accurately. The paper also introduces a scenario analysis to understand the impact of future, uncertain developments in container flows on port throughput. The scenarios include the effects of slow steaming, an increase in land based shipping costs and an increased use of large scale infrastructures such as the Trans-Siberian rail line and the opening of Arctic shipping routes. These scenarios provide an indication of the uncertainty on the expected port throughputs, with a particular focus on the port of Rotterdam in the Netherlands.     

“Fairtradization”: a performative perspective on fair trade markets and the role of retail settings in their enactment

In line with the Callonian approach in economic sociology, this paper introduces the concept of “fairtradization” to analyze the assemblages of human agents, material devices, and discourses through which the fair trade market is enacted. We argue that the retail setting is a key site for the enactment of particular versions of “fair trade,” focusing on a case study of the newly designed world shops in Flanders (Belgium). We reveal that the new shop design – aimed to address particular overflows resulting from the mainstreaming of fair trade – constitutes a multivocal shopping environment that enables four analytically distinct enactments of fair trade shopping. Our analytical approach opens up a more dynamic and complex understanding of fair trade beyond the unidirectional diagnosis of mainstreaming. More generally, it provides support for a radically performative view of consumption markets, pointing to the importance of retail settings as socio-material spaces for their enactment.     

Limits to Growth in Organic Sales

The price gap between organic and conventional food might explain the low market share of organics in the Netherlands. A real-life experiment was carried out in 2006 in order to determine the price sensitivity of consumer demand for organics. Consumer prices of selected organic products were reduced by up to 40% below current market levels. The price elasticity of demand was low, because not all consumers perceived the price reductions. Moreover, the offer of organic varieties is limited, as is the consumer’s willingness to pay for the social attributes of organics.     

Policy Options for China＇s Bio-ethanol Development and the Implications for Its Agricultural Economy

The present paper analyzes the potential impacts of bio-ethanol expansion on agricultural production, food prices and farmers＇ incomes in different regions of China. The results show that increase in demand for feedstock to produce bio-ethanol will lead to large increase in the prices of agricultural products. The increase in prices will trigger a significant rise in the production of feedstock at the cost of lower rice and wheat production. The study also reveals that the impacts of bio-ethanol on farmers＂ incomes vary largely among regions and farmer groups. Given the expected expansion of bio-ethanol production in the future, and the limited land resources for feedstock production in China, the viability of different crops as feedstock for bio-ethanol requires careful analysis before a large-scale expansion of China＇s bio-ethanol program. Bio-ethanol production in China should be relying more on the second generation of bio-ethanol technologies （i.e. using celluloses to produce bio-ethanol）, and China＇s government should increase research investment in this field.     

Consumer perception of deposit insurance: little awareness,limited effectiveness?

The empirical findings on bank runs and market discipline are at odds with the theoretical predictions from the literature, at least in emerging markets. Using unique survey data from the Netherlands, we explore two possible explanations: deposit holders may have limited knowledge of deposit insurance (DI)-schemes or they may not fully trust these schemes to be executed faithfully. We find that knowledge on the eligibility for DI is limited, particularly when it concerns minor banks. Nevertheless, households with more deposits have better knowledge of the DI-scheme and show higher levels of trust. In addition, deposit holders generally expect an associated payback time that well exceeds the time it has taken to pay back depositors in the past. Moreover, consumers believe repayment is more likely and faster for large, systemic banks. These results confirm that both households’ awareness of the coverage and trust in the operations of the DI-scheme are suboptimal.