Cost allocation and regulatory pricing in telecommunications : A UK case study

This article describes the application of alternative cost allocation methodologies to the Hull telephone system, which provides service to a small area of the UK independently of British Telecom. The article first discusses alternative uses of and methods for allocating costs among access, local usage and trunk usage. It then implements the fully distributed cost approach, using accountancy data provided by the company. In addition, several illustrative calculations are shown which cost individual services on a stand-alone basis using different technologies. The results broadly suggest that, on a full distributed cost basis, access costs exceed existing average tariff levels. The article concludes with some illustrative calculations showing the rebalancing of access and usage charges which would generate the same revenue but bring them more in line with costs.     

Framing the decision to buy long-term care insurance: losses and gains in the context of statistical and narrative evidence

Rational models have difficulty explaining low levels of demand for long-term care insurance. We posit that insurers have framed the need for insurance in a manner that unintentionally promotes risk-seeking behavior (i.e., high probability loss frame), and that alternative frames can better promote willingness to insure. We further posit that emotional frames are more effective than rational risk frames in promoting willingness to pay. Survey evidence supports these hypotheses: emotional narrative frames are associated with greatest willingness to pay, and the high probability loss frame was associated with among the lowest average amounts willing to pay.     

中国经济并非虚假繁荣

【美国《福布斯》10月26日】中国经济全面向好 10月22日出炉的官方数据显示，中国3季度中国经济增速高达8．9％。这主要是得益于中央和地方政府启动了大批营建和基建项目，以及出口显著回暖。同挤牙膏式的美国经济刺激计划不同，中国政府将6000G美元经济刺激计划基本上一步落实到位，并且辅之以投放超过1万亿美元的信贷资金。与之形成鲜明反差的是，美国银行业却一直在积聚存款而且惜贷意愿浓厚。     

Consumer substitution decisions: an integrative framework

Substitution decisions have been examined from a variety of perspectives. The economics literature measures cross-price elasticity, operations research models optimal assortments, the psychology literature studies goals in conflict, and marketing research has examined substitution-in-use, brand switching, stockouts, and self-control. We integrate these perspectives into a common framework for understanding consumer substitution decisions; their specific drivers (availability of new alternatives, internal vs. external restrictions on choice); the moderating role of a consumer’s commitment to an initially desired alternative; and the affective, motivational, cognitive, and behavioral outcomes of substitution. We use this framework to recommend new avenues for research.     

A supermartingale relation for multivariate risk measures

The equivalence between multiportfolio time consistency of a dynamic multivariate risk measure and a supermartingale property is proven. Furthermore, the dual variables under which this set-valued supermartingale is a martingale are characterized as the worst-case dual variables in the dual representation of the risk measure. Examples of multivariate risk measures satisfying the supermartingale property are given. Crucial for obtaining the results are dual representations of scalarizations of set-valued dynamic risk measures, which are of independent interest in the fast growing literature on multivariate risks.     

Switching Costs in the Wholesale Distribution of Cigarettes

Recent theories of price wars triggered by entry assign a critical role to switching costs in explaining price and output changes. Earlier, Elzinga and Mills (1998) showed that actual switching patterns following an episode of new entry in an industry are driven by the fact that buyers have different switching costs. The current paper draws on transaction-specific price and shipments data surrounding the 1984-1985 price war in generic cigarettes to explore the size and determinants of switching costs among wholesale cigarette distributors. Results show that switching costs vary across firms and are nontrivial in magnitude. Several implications of the findings are discussed.     

Disparities Old and New in US Mental Health during the COVID-19 Pandemic*

The COVID-19 pandemic has reduced well-being and economic security on a number of dimensions, likely worsening mental health. In this paper, we assess how mental health in the US population has changed during the pandemic. We use three large, nationally representative survey sources to provide a picture of mental health prior to and during the pandemic. We find dramatic but broad-based declines in the level of mental health from pre-pandemic baseline measures across both people and places. Rates of poor mental health have jumped roughly 25 percentage points, from a base of roughly one-third. We document substantial disparities in mental health but show that the pandemic has generally preserved, rather than widened, these. Significant worsening in relative mental health among Hispanics and respondents aged 30 and older are exceptions. Consistent with an important role for pandemic-specific shocks, We find that income loss, food insecurity, COVID-19 infection or death in one's close circle, and personal health symptoms are all associated with substantially worse mental health. If anything, the decline in mental health is worsening as the pandemic wears on and is becoming less related to local COVID-19 case rates.     

The effects of tariff increases on supply base complexity: A conceptual framework

Recent protectionist trends around the world have raised interest in newly enforced or increased tariffs and their effects on global supply chains. For firms sourcing globally, tariff introductions or increases significantly affect importing costs, which ultimately affect product costs. Such tariff changes may incentivize firms to adjust their supply base to mitigate these cost increases, thus altering the structure and complexity of firms' supply bases. In this paper, we first characterize the U.S. tariff landscape from 1997 to 2017. We then develop a conceptual model to explain how the severity and timing uncertainty of expected tariff increases influence a firm's speed of adapting to the changing tariff environment. Specifically, we explore firms' propensity to form or delete ties to suppliers, which influences supply base complexity. Moreover, we consider factors that moderate the relationship between severity, timing uncertainty, and supply base complexity, including a tariff's geographical scope, a firm's relative purchase spend, and supply risk. Our conceptual model offers both research and managerial implications.     

The Migration of Young Adults from Non-Metropolitan Counties

This article examines young adult migration from non-metropolitan counties to either different non-metropolitan counties or to metropolitan areas. The results show that expected gains in initial earnings provide young entrants to the labor force with a marked incentive to migrate from their non-metropolitan counties of origin. Initial earnings gains stem, in part, from higher returns to schooling in both metropolitan areas and other non-metropolitan counties. The propensity to migrate is also sensitive to the costs of migration, which, in turn, are correlated with paternal education and the local presence of extended family.