Price Cap Regulation in the Cable Television Industry: Why was the Demand Stagnant?

During the period of 1992 to 1996, the cable television industry in the United States was regulated by the FCC, which took several price cap measures. As a result, the increase in the price cable service substantially slowed. However, the cable demand did not rise as anticipated. Using a model of imperfectly discriminating monopoly, the paper empirically investigates this curious phenomenon of stagnant demand despite lower prices. The paper finds that the FCC's price capping constrained both demand and prices. The demand was constrained since the price cap was designed to cover almost all TV channels carried by cable systems, and subsequently discouraged cable systems from meeting different customer preferences with multi-tier services.     

TESTING FOR INTEGRATION IN EUROPEAN COMMUNITY AGRICULTURAL PRODUCT MARKETS

The degree of spatial market integration in European Community agricultural product markets is investigated. The methodology is based on co-integration analysis. A two-step testing procedure is applied to test the existence of the ‘Law of One Price’ which should be in force if these markets are truly integrated. The results show that market integration has not been achieved in a number of cases even when MCAs are subtracted from the price series used.     

A comparison of several approximations to the power function of the likelihood ratio test in covariance structure analysis*

In this paper we compare alternative asymptotic approximations to the power of the likelihood ratio test used in covariance structure analysis for testing the fit of a model. Alternative expressions for the noncentrality parameter (ncp) lead to different approximations to the power function. It appears that for alternative covariance matrices close to the null hypothesis, the alternative ncp's lead to similar values, while for alternative covariance matrices far from H_o the different expressions for the ncp can conflict substantively. Monte Carlo evidence shows that the ncp proposed in Satorra and Saris (1985) gives the most accurate power approximations.     

Innovators, Organization Structure and Management of the Innovation Process in the Securities Industry

This article examines innovation in the securities industry with the central objective of identifying factors that separate innovators from non-innovators. Akira Iwamura and Vijay Jog report results based on their survey of corporate finance vice presidents or CEO's of 43 investment houses from around the world. They conclude that innovative companies seem to be larger and have a well-defined strategy, with management defining the focus of the business. In addition, the firms have developed better communication channels, both internally and with their customers. Yet, the most significant difference that separates innovators from non-innovators is their management of the idea generation process, including concept generation and management's support. Innovators tend to approach idea generation in the following ways: they employ a variety of idea sources, both internal and external; they assign a specific person or group to be in charge of developing new ideas; they encourage employees at all levels to generate new ideas; they use a variety of innovative techniques to stimulate creativity; they reward their employees by non-monetary means; and they encourage group-level participation in evaluation decisions.     

Demand for durable and nondurable goods,environmental policy and consumer welfare

If a tax on energy affects the demand for a nondurable good, the stock of a durable good, and the proportion of the energy consumption per unit of service of the durable good, an integrated approach for investigating consumer demand for durables and nondurables is required. The purpose of this paper is to employ the concept of a variable expenditure function with quasi-fixed durable goods as arguments in order to derive a demand system for nondurable goods in prices of the nondurables, in the stocks of durables, and in variable expenditure. From the envelope condition desired stocks of durables can be calculated and investment demand for durables can be determined. For an application we choose a variable expenditure function based on the almost ideal demand specification, and evaluate alternative environmental policy measures using the equivalent variation for comparing the welfare effects.