Water pollution and abstraction and economic instruments

The paper assesses the potential role for economic instrumentsin the regulation of water pollution and abstraction in thelight of the UK government's discussion documents. Economicinstruments offer the potential for greater cost efficiencyin achieving environmental targets than existing command-and-controlmethods. Applying economic instruments in the water context,however, is complex, because the location of pollution sourcesis critical and because of the interactions between pollutantsand between effluent and abstraction. Schemes for recyclingtax revenue to polluters in ways which preserve the appropriatemarginal incentives are examined, and the possibility of combiningthe existing quantitative controls with a tax scheme is explored.     

Welfare Consequences of Tight Price-Cap Regulation

This paper analyses the welfare effects of price-cap regulation of a multi-product monopolist when the price index has fixed weights. A tight cap can result in welfare below the level associated with an unregulated monopoly. This does not occur if the weights are based on lagged quantities and the level of the cap exceeds the previous period's total cost. In a two-period model the welfare problem is alleviated in the second period but first-period performance can be worse if the firm is not myopic.     

Financial market and housing wealth effects on consumption: a permanent income approach

The objective of this study is to examine the financial market and housing wealth effects on consumption. Housing has the dual functions as both a commodity yielding a flow of housing services and an investment asset yielding a flow of capital income. With the construction of an empirical framework based on the vector autoregression approach, the findings from this study suggest that a rise in housing price has both a positive wealth effect and a negative price effect on consumption. While the positive wealth effect is caused by an increase in capital income, the negative price effect is caused by an increase in the cost of housing services. In addition, the housing market wealth effect increases, at the expense of the price effect, with the level of housing-market leverage. These findings imply that the government policy of land supply aiming to stimulate the economy should strike a balance between the possible wealth and price effects of the housing market.     

Technology readiness and usage: a global-identity perspective

The past several decades have witnessed the rapid globalization of consumption markets and widespread diffusion of information and communication technologies. However, the use of technology by consumers is not a foregone conclusion. We investigate the role of global self-identity on the orientation toward technology readiness and usage. Relying on a social-identity model of motivation as our theoretical framework, we propose a model which incorporates global self-identity (i.e., cosmopolitanism/parochialism and global/local identification) and self-regulation (i.e., promotion and prevention focus) in predicting technology readiness and usage in a self-service technology context. The proposed model is tested in two different cultures, the U.S. and China, and is contrasted with two theoretically-competing models as well. Results provide support for the hypothesized model, and a number of limitations, implications, and directions for future research are discussed.     

TV Kills Social Capital?

The concept of social capital was introduced into public discussion by Robert Putnam in the mid-nineties. Since Putnam diagnosed a decline in social capital and, as a consequence thereof, a weakening of democracy and civic society in the USA, the concept gained theoretical and political meaning in German public debate as well. The major culprit contributing to the dramatic loss of social capital is said to be an old acquaintance: television. According to Putnam, about 40 percent of the decline is caused by electronic entertainment media, especially television. This article critically reflects on the theoretical foundations of Putnam’s construct of social capital. Using data from a representative survey in the German states of Lower Saxony and Saxony-Anhalt, we examine the relations between social capital on one hand, and television and Internet use on the other. Basically we confirm Putnam’s findings — but only to a degree not even close to the strength Putnam claims to ascertain.     

Bank-led restructuring in Poland: the conciliation process in action1

Poland's 1993 Enterprise and Bank Restructuring Programme (EBRP) tried to force state-owned commercial banks to build institutional capacity and resolve their problem loans. The outcome of its innovative bank-led workout (‘conciliation’) process, documented in this study of 62 firms, is decidedly mixed. The EBRP forced banks to confront their problems, helped them to build instituional capacity in their workout units, and furthered the difficult task of weeding out and closing clearly unviable firms. Yet it had limited power to promote needed restructuring or privatization in firms. The conciliation agreements were relatively unsophisticated and include few tangible requirements for operational or management change. The first two years of implementation saw a slowdown (over earlier years) in the rate of layoffs, a decline in average operating profitablility, and very little real privatization. The main impact of conciliation appears to have been to reduce debt service and thereby give firms ‘breathing room’.     

Does the Choice between Wage Inequality and Unemployment Affect Productivity Growth?

Abstract. We present a non-scale continuous-time overlapping-generations growth model that provides an explanation for why economies with relative wage rigidity feature higher unemployment, but not slower productivity growth, than economies with flexible wages. The compression of the wage distribution associated with relative wage rigidity slows down human capital accumulation and growth ceteris paribus . But unemployment among the low-skilled workers strengthens the incentives to invest in human capital and, hence, growth. The two effects are offsetting, and growth is independent of the prevailing degree of relative wage rigidity. This knife-edge result is robust with respect to some modifications of the model.