Estimating the costs and benefits of soil conservation in Europe

Economics is about problems of choice. In erosion control, both public authorities and private land users are faced with such problems. What is the impact of erosion, both on-site and off-site, and to what extent can this impact be quantified? If we conceptualize this impact in terms of sustainability, how can we compare one type of effect against another? The former question can be answered only by natural scientists, the latter by economists and other social scientists. Weighing different aspects of sustainability requires value judgments, and economists are sometimes accused of having a jaundiced view of reality, wrongly supposing that decisions are based on rationality and denying the importance of emotion.However, let us assume that there is some mileage to be gained out of attempting to estimate the cost of erosion in an economic sense—which consists of converting the various effects into a common denominator: euros. If we can predict the impact of erosion control measures on erosion rates, we can know the benefit of these measures. The cost also needs to be calculated, not in terms of money but in terms of resources expended (which could have been used for other purposes) and in terms of possible negative impacts of erosion control (for instance, increased use of herbicides in reduced-tillage systems).There are important other considerations which economists may study. Firstly, there is the comparison of present versus future costs and benefits: how much can we sacrifice today for higher sustainability tomorrow?Secondly, there is the issue of private versus public costs and benefits: how do the goals of private land users differ from (those of?) the public good, how can this help us to predict land users’ behaviour, and what incentives would be appropriate to make them behave in such a way as to maximize the public good? Thirdly, how do we deal with uncertainty and risk?These problems loomed large in a study to support an extended impact assessment for the EU Soil Thematic Strategy, in 2005. Whereas much research has been done on erosion and its impact, much of this is on a small scale. The extent of the problem on a national, let alone a continental or a global scale, is still poorly known. The paper discusses how these problems were faced, which is not the same as saying they were resolved.     

Competition in the Financial Sector: Overview of Competition Policies

Competition in the financial sector, as in other sectors, mattersfor allocative, productive, and dynamic efficiency. Theory suggests,however, that unfettered competition is not necessarily bestgiven the special features of financial services. The authordiscusses these analytical complications before reviewing howto assess competition in the financial sector and its determinants.It is shown that competitiveness varies greatly across countries,in perhaps surprising ways, and that it is not driven by financialsystem concentration. Rather, systems with greater foreign entryand fewer entry and activity restrictions tend to be more competitive,confirming that contestability—the lack of barriers toentry and exit—determines effective competition. The authorthen analyzes how competition policy in the financial sectorhas generally been conducted and how changes in competitionin the financial services industries should affect competitionpolicy going forward. In part based on comparison with otherindustries, the author provides some suggestions on how competitionpolicy in the financial sector could be better approached aswell as what institutional arrangements best fit a modern viewof competition policy in the sector. The specific competitionchallenges for developing countries is also highlighted. Theauthor concludes that practices today fall far short of theneed for better competition policy in the financial sector. JEL codes: G10, G18, G28, L1, L5     

The effect of globalization on union bargaining and price-cost margins of firms

In recent years, Europe has witnessed an accelerated process of economic integration. This paper analyzes how increased economic integration has affected labor and product markets. We use a panel of Belgian manufacturing firms to estimate price-cost margins and union bargaining power and show how various measures of globalization affect them. Import competition puts pressure on both markups and union bargaining power, especially when there is increased competition from low wage countries. This suggests that increased globalization is associated with a moderation of wage claims in unionized countries, which should be associated with positive effects on employment.

Standing by Your Organization: The Impact of Organizational Identification and Abusive Supervision on Followers’ Perceived Cohesion and Tendency to Gossip

Abusive supervision has been shown to have significant negative consequences for employees’ well-being, attitudes, and behavior. However, despite the devastating impact, it might well be that employees do not always react negatively toward a leader’s abusive behavior. In the present study, we show that employees’ organizational identification and abusive supervision interact for employees’ perceived cohesion with their work group and their tendency to gossip about their leader. Employees confronted with a highly abusive supervisor had a stronger perceived cohesion and engaged in less gossiping behavior when they identified more strongly with their organization. Our findings illustrate that organizational identification functions as a buffer for those confronted with an abusive supervisor.     

Why are REITS Currently So Expensive?

Over the last several years, the price of listed real estate stocks has been unusually high relative to dividends. I find that neither low interest rates nor low risk premia can account for the high valuation ratios. Lower interest rates have been offset by rising risk premia to keep expected returns close to average. Instead, the market has priced in future income growth on commercial properties far above the growth rates seen in the data. High implied growth rates are less extreme for nontraditional REIT sectors. Income growth expectations are also less extreme for international listed real estate.     

Raising offtake from cattle grazed on natural rangelands in sub-Saharan Africa: a transaction cost economics approach

Farmers in sub‐Saharan Africa are constrained by large transaction costs associated with marketing of their livestock. However, transaction costs are often not taken into account in the analysis of factors hampering the development of livestock marketing in this region. This article empirically measures the influence of transaction costs on the offtake from cattle grazed on natural rangelands in Uganda. The study is based on the monitoring of 696 cattle transactions in three districts of Uganda from August 2004 to August 2005. The estimated models suggest that proportional transaction costs represented by the state of roads, distance to markets, and time taken to reach the market are important variables constraining market participation. In order to raise offtake from the national herd, it is essential to explicitly address these costs. One potential solution is collective action in marketing of livestock in which proportional and fixed transaction costs are reduced and shared among the group members.     

Competition and Scope of Activities in Financial Services

This article analyzes the costs and benefits of different degreesof competition and different configurations of permissible activitiesin the financial sector and discusses the related implicationsfor regulation and supervision. Theory and experience demonstratethe importance of competition for efficiency and confirm thata competitive environment requires a contestable system—meaningone that is open to competition—but not necessarily alarge number of institutions. A competitive banking system canimprove the distribution of consumer credit, enhance the corporatesector's access to financing, and mitigate the risks of financialcrises. In an open market, in which services and products areprovided in response to market signals, financial institutionsrespond by offering a wider scope of financial services. Theoptimal institutional design for supervisory functions is lessobvious.      

The Emergence of Equity Investment in Developing Countries: Overview

Equity flows to developing countries have increased sharplyin recent years. Foreign equity investment can be beneficialto developing countries because of its risk-sharing characteristicsand effects on resource mobilization and allocation. Empiricalevidence shows that the stock markets of developing countrieshave become more, although not fully, integrated with worldfinancial markets, and this increased integration implies alower risk-adjusted cost of capital. Constraints to furtherincreasing the flows and expanding the benefits are macroinstability,poorly functioning stock markets, and insufficiently open financialmarkets. Empirical evidence does not support the view that equityflows are more volatile than other types of capital flows orthat equity flows have a negative impact on the volatility ofstock prices.