Information,market power,and price volatility

We consider demand function competition with a finite number of agents and private information. We show that any degree of market power can arise in the unique equilibrium under an information structure that is arbitrarily close to complete information. Regardless of the number of agents and the correlation of payoff shocks, market power may be arbitrarily close to zero (the competitive outcome) or arbitrarily large (so there is no trade). By contrast, price volatility is always lower than the variance of the aggregate shock across all information structures. Alternative trading mechanisms lead to very distinct bounds as a comparison with Cournot competition establishes.     

Designing a medicalized wellness service: balancing hospitality and hospital features

Medicalized environments around the world are challenged with making trade-offs between the clinical nature of the service and the customer service elements needed to deliver the service. Many medicalized wellness services have yet to achieve an effective balance between their hospitality and hospital features to generate loyalty (repeat patronage). We present a case study of a blood service organization in a developed country that, at the time of data collection (2011), was working to resolve tension between clinical goals and expectations of Millennial donors. The results identified seven principles: ‘control over booking and service interactions’; ‘build social connections’; ‘offer a luxury, indulgent experience’; ‘build relationship with customer beyond the “medical” procedure’. The three remaining principles related to hospital-like features: ‘hide the functional/medical features of the service experience’; ‘demystify the “hidden” processes’; ‘ability for the physical service environment to be modified by the customer’.     

Measurement of patient-reported outcomes. 1: The search for the Holy Grail

Abstract

Patient-reported outcome measures (PROMs) are used to collect information directly from patients. They may cover several different types of outcomes ranging from symptoms, functioning, utility, satisfaction, through to quality-of-life (QoL). They generally consist of self-completed questionnaires that can be administered by means of hard copies or in a range of electronic formats. PROMs vary considerably in terms of the constructs they assess, the care with which they are developed, and their scientific quality. However, none of the PROMs available approach the quality of measurement achieved by measures/instruments used in physics. PROs are examples of latent variables. These are not directly observable, but can be inferred from, for example, responses to a questionnaire. The only measure of a latent variable that approaches the quality of measurement achieved by the physical sciences is the Lexile Framework for Reading. This framework is based on a construct theory that grew out of an analysis of several available reading measures. A specification equation was generated that was able to link the construct theory to scores obtained with the Lexile measure. A fundamental requirement of this quality of measurement is that the data collected with the model fit Rasch Measurement Theory (RMT). It is argued that PROM developers should aspire to match this level of measurement sophistication if their instruments are to provide valid insights into the impacts of disease and its treatment.     

Impacts of trade liberalization in Canada's supply managed dairy industry

Trade is an integral part of the Canadian economy. The main institutional drivers governing trade are bilateral and multilateral agreements outlining permissible trade distorting measures. Since its inception in 1972, Canada's supply management system has remained protected throughout trade negotiations. The system appears, by any economic measure, to be having an increasingly disproportional influence in recent trade negotiations. However, trade agreements serve not only to maximize social surplus, but also to maximize some measure of political welfare. Canada has recently negotiated three prominent trade agreements: the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) came into effect in the latter part of 2017; the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into effect at the end of 2018; and the Canada-United States-Mexico Agreement (CUSMA) could come into effect in 2020. Collectively, these agreements have guaranteed increased market access for fresh and processed dairy products. We build a spatial partial equilibrium model of the Canadian dairy industry consisting of three regions and 10 commodities to assess the individual and cumulative effect of these trade agreements. We pay particular attention to the institutional drivers within today's dairy sector: milk protein isolates; component pricing, including Class 7; and differential demand growth. We find that the aggregate impacts are: (a) a 1.4% decrease in the marginal retail price; (b) a 4.8% decrease in the blended producer price; and (c) an overall increase in social welfare of 7.8%. Worth noting, the decrease in producer surplus varies from 0.7% in the western region to 1.5% in Ontario. Our results may be relevant to future negotiations as well as the publicly promised compensation package for dairy producers.     

Integrating Financial Stability into Monetary Policy

The global financial crisis has highlighted the importance of integrating financial stability concerns into monetary policy. In the Bank of Canada’s view, monetary policy should be the last line of defence against threats to financial stability, behind the joint responsibility of borrowers and lenders, appropriate regulatory oversight, and sound macroprudential policies. Still, it is critical to understand the interlinkages between monetary policy and financial stability, given that the objectives are not always consistent. This implies the necessity of trade-offs. At the Bank of Canada, this is regarded as a problem of risk management rather than policy optimization. That is why the Bank operates a risk-management approach to monetary policy—keeping inflation control as its primary mission.     

Poor institutions as a comparative advantage

Classic theories of comparative advantage point to factor productivity and factor abundance as determinants of specialization and trade. Likewise, geography and topography can determine trade patterns. Institutions, however, are increasingly seen as important sources of comparative advantage. A global drug prohibition regime implies that institutional quality matters more than traditional sources in the drug trade. This paper theoretically models trade patterns of illicit goods and confirms the role of institutions empirically with respect to the drug trade. In particular, illicit enterprises gain force in countries where resources are scarce, drug enforcement is uncertain, and institutions are weak in absolute terms and relative to neighboring countries. I propose several policy alternatives that emphasize economic opportunity for the poor and institutional quality that complement drug prohibition.     

Employee satisfaction trajectories and their effect on customer satisfaction and repatronage intentions

Does improving employee happiness affect customer outcomes? The current study attempts to answer this question by examining the impact of employee satisfaction trajectories (i.e., systematic changes in employee satisfaction) on customer outcomes. After accounting for employees’ initial satisfaction levels, the analyses demonstrate the importance of employee satisfaction trajectories for customer satisfaction and repatronage intentions, as well as identify customer-employee contact as a necessary conduit for their effect. From a macro perspective, employee satisfaction trajectories strongly impact customer satisfaction for companies with significant employee–customer interaction, but not for companies without such interaction. From a micro perspective, employee satisfaction trajectories influence customer repatronage intentions for frequent customers, but not for infrequent customers. These effects are robust to controlling for previous customer evaluations and recent employee evaluations. Overall, these findings extend the dominant view of examining static, employee satisfaction levels and offer important implications for the management of the organizational frontline.

     

Your Governance or Mine?

In response to criticism directed at the resource sector's corporate governance, this paper examines the corporate governance and underlying firm characteristics of resource development stage entities (DSEs) relative to a size‐matched sample of non‐resource firms. We find that resource DSEs have different governance characteristics in the measures of board independence, chair/CEO duality and CEO cash bonuses. Furthermore, there are differences in the information environment measures of analyst following, debt levels, stock market return and stock turnover. Considering we document substantial differences in underlying firm characteristics, corporate governance differences are likely appropriate to the mining industry and should not be uniformly labelled as ‘bad’. Our results suggest that media rankings based on corporate governance scores may not accurately portray the resource sector. Overall, our results are of interest to Australian investors and regulators and contribute to a broader understanding of contextually contingent corporate governance.