The optimal trading and pricing of securities with asymmetric capital gains taxes and transaction costs

This article explores the optimal trading and pricing of taxablesecurities with asymmetric capital gains taxes and transactioncosts. In the long-term region, investors realize all gainsbelow some critical cutoff level, which we derive analytically.In the short-term region, investors defer all gains and, dependingupon the time remaining in the short-term region, may also defersmall losses. Contrary to common intuition, deferral of short-termlosses can be optimal even without transaction costs. The valueof tax timing is considerably higher under the optimal tradingstrategy than under alternative strategies previously analyzed.The impact of offset rules is also explored.     

The Impacts on U.S. and Canadian Slaughter and Feeder Cattle Prices of a U.S. Import Tariff on Canadian Slaughter Cattle

On 30 June 1999, the U.S. Department of Commerce issued a preliminary ruling instructing the U.S. Customs Service to require cash deposits or bonds totaling 4.73% (later increased to 5.57%) of the value of imported Canadian slaughter cattle. In November 1999, the U.S. International Trade Commission issued its final ruling which rescinded the anti‐dumping tariff. If the tariff had been permanently imposed, it would have affected import quantities of Canadian slaughter cattle and U.S. and Canadian slaughter and feeder cattle prices. Excess supply, import demand and price transmission elasticities are estimated and used within a comparative statics framework to estimate the impacts of the tariff had it been permanently imposed. We find that the effects of the tariff would have been small even if offsetting increases in carcass beef imports had not occurred. If offsetting carcass beef imports had occurred, any potential price gains could have been offset by increased logistical costs within the processing sector. Thus, this particular rent‐seeking activity would not have had a significant impact on U.S. cattle prices even if it had been permanently imposed. However, the tariff would have had significant negative effects on Canadian cattle prices. Le 30 juin 1999, le Département du Commerce des États‐Unis obligeait temporairement les douanes américaines à réclamer un dépôt ou une caution équivalant à 4,73 pour cent (portée à 5,57 pour cent par la suite) de la valeur des bovins de boucherie importés du Canada. En novembre de la même année, la Commission du commerce international américaine rendait sa décision finale, qui abrogeait le tarif anti‐dumping. Eût‐il été maintenu, pareil tarif aurait modifié les importations de bovins d'abattage canadiens, ce qui aurait affecté le prix des bovins d'engrais et d'abattage des deux pays. Les auteurs ont éalué l'offre excédentaire, la demande à l'importation et les élasticités du transfert des prix, puis ont recouru à un cadre de comparaison statique afin d'estimer les incidences du tarif, advenant le cas où il aurait étéétabli à demeure. On se rend compte qu'un tel tarif n'aurait guére eu de répercussions, même en freinant la hausse des importations de carcasses de büf. La majoration éventuelle des prix attribuable à la réduction des importations aurait pu être annulée par les coûts logistiques plus élevés des transformateurs. Par conséquent, cette activité de maximisation de la rente n'aurait pas eu d'impact significatif sur le prix des bovins aux États‐Unis. En revanche, l'imposition permanente du tarif aurait sensiblement diminué le prix des bovins au Canada.     

Retailers and consumers in sequential auctions of collectibles

Abstract.  We analyse an independent private-value model, where heterogeneous bidders compete for objects sold in sequential second-price auctions. In this heterogeneous game, bidders may have differently distributed valuations, and some have multi-unit demand with decreasing marginal values (retailers); others have a specific single-unit demand (consumers). By examining equilibrium bidding strategies and price sequences, we show that the presence of consumers leads to more aggressive bidding from the retailers on average and heterogeneous bidders is a plausible explanation of the price decline effect. The study of the expected revenue of the seller confirms the interest of auctioneers in inviting different types of bidders.     

Data preprocessing and data parsimony in corporate failure forecast models: evidence from Australian materials industry

The present study, based on data for delisted and active corporations in the Australian materials industry, is an attempt to develop a systematic way of selecting corporate failure‐related features. We empirically tested the proposed procedure using three datasets. The first dataset contains 82 financial economic factors from the corporation's financial statement. The second dataset comprises 73 relevant financial ratios, which either directly or indirectly measure a corporation's propensity to fail, and are conciliated from the first dataset. The third dataset is a parsimonious dataset obtained from the application of combining a filter and a wrapper to preprocess the first dataset. The robustness of this preprocessed dataset is tested by comparing its performance with the first and second datasets in two statistical (logistic regression and naïve‐Bayes) and two machine learning (decision tree, neural network) classes of prediction models. Tests for prediction accuracies and reliabilities, using the computational (ROC curve, AUC) and the statistical (Cochran's Q statistic) criteria show that the third dataset outperforms the other two datasets in all four predicting models, achieving various accuracies ranges from 81 per cent to 84 per cent.     

Regulatory design and technical efficiency: public transport in France

The provision of local public transport in France involves private and public firms and the use of incentive contracts to regulate them. We study the effect of these institutional features on the sector’s efficiency using a long panel data of firms, with a two-stage estimation procedure. First, we use nonparametric data envelopment analysis techniques to estimate input usage efficiency, following a conditional approach that controls for differences in the environments in which the firms operate. Second, we estimate semiparametric censored regressions, using fixed effects to control for unobserved sources of heterogeneity. Our results point to a differential effect of private and mixed public-private companies. In particular, having the performance of public operators as the benchmark, efficiency is relatively higher for private firms, but lower when the service is delegated to a mixed public-private firm. In the latter case, the effects diverge by contract type: when the contract is of the cost reimbursement type, performance is lower than the public firm benchmark, while for other contract types, there are no statistically significant differences.     

Constitutional Foundations of Economic Freedom: A Time-Series Cross-Section Analysis

Using time-series cross-section analysis, we provide additional empirical validation for the principal-agent model developed by Adserà et al. (2003). In our innovation, efficient economic policy is proxied by “economic freedom” from the Fraser Institute database and constitutional “political institutions” are proxied by variables from the Database of Political Institutions. Our results suggest that the more credible the threat of removal from office, the more government officials will pursue efficient economic policies. The authors are grateful to Alan Hamlin and an anonymous referee for their highly valuable input to the development of this paper. Tel.: +1-604-291-4167     

American theme restaurants: A study of consumer's perceptions of the important attributes in restaurant selection

In recent years, a number of American theme restaurants have established in Hong Kong. Keen competition exists for this type of restaurants. Customers who visit this type of restaurant seem not only to enjoy their food but also to enjoy their environment. However, little is known about what customers expect and how they select this type of restaurant. In order to have an understanding of customers’ behaviour in relation to the customers’ perceptions of important restaurant attributes in selecting an American theme restaurant in Hong Kong, a study was conducted. The results indicated that ‘Food quality’, ‘Servers’ attitude’, ‘Value for money’, ‘Atmosphere’ and ‘Word‐of‐mouth’ were the five important restaurant dimensions as considered by consumers in selecting an American theme restaurant. Customers for this type of restaurant are likely to be professionals, highly educated and belong to the middle‐income group in the society. Customers usually go to the American theme restaurants for meetings, fun and enjoyment. Marketing implications and directions for future studies are discussed.