Use and abuse of regulated prices in electricity markets: “How to regulate regulated prices?”

We consider the regulation of the tariffs charged by a public utility in the electricity sector. Consumers differ in terms of their privately known demands. When regulating a firm's tariffs, the government is concerned by the redistribution across consumer classes. A conflict between redistribution and screening induces pricing distortions when the firm is a monopoly. Introducing competition with an unregulated fringe improves efficiency but jeopardizes redistribution. In response to this problem, the government may now want to manipulate information about the incumbent's cost to restrict entry and better promote its own redistributive objective. To prevent such obstacle to entry, the government's discretion in fixing the incumbent's regulated tariffs should be restricted by imposing floors or caps on those tariffs and/or by controlling the market share left to the competitive fringe. We highlight the determinants of such limits on discretion and unveil to what extent they depend on the government's redistributive concerns.     

The purpose and effectiveness of technology transfer to small businesses by government-sponsored innovation centres

The Dutch government instituted regional innovation centres (ICs) for the stimulationof technology transfer to small business. In the context of an evaluation of these ICs, technology transfer is analysed on the basis of the adoption process according to Rogers. Attention is given to problems of bounded rationality, in particular tacit knowledge that arise especially among small business. Rogers criteria for adpoption are extended and supplemented with criteria for product innovation. The purpose of ICs is reconstructed as the guidance of firms in the adoption process, on the basis of the criteria. The analysis develops into a market segmentation of firms as a basis for a marketing plan for ICs. The segmentation corresponds with the taxonomy of firms in the context of diffusion that was developed by Pavitt on the basis of an innovation data base. Effectiveness of ICs is defined as the setting of proper priorities with respect to market segmentation, and a guidance of firms in the adoption process which enters and leaves the adoption process neither too late nor too early with approaches adopted to the market segments.     

Political fragmentation and projected tax revenues: evidence from Flemish municipalities

The level of revenues pocketed by a government during the fiscal year often deviates from that projected by this government in its budget. Despite a flourishing literature on, for example, the technical or procedural determinants of such forecast errors, little is yet known about how political stratagems may affect forecast errors. In the present paper, we analyse whether differences in the level of government fragmentation are useful in explaining local government tax revenue forecast errors—controlling for various other factors. Using data on 242 Flemish municipalities for the period 1992–2002, we find that two-party governments are more optimistic than single-party governments. In contrast to our initial expectations, governments with at least three parties are significantly more careful (or less optimistic) in their revenue projections than single- or two-party governments.      

Modeling of the clinical and economic impact of a risk-sharing agreement supporting a treat-to-target strategy in the management of patients with rheumatoid arthritis in France

Objectives: To evaluate the cost-effectiveness of a Treat-to-Target strategy with certolizumab pegol in patients with rheumatoid arthritis in the context of a pay-for-performance agreement in which medication costs are refunded in case of discontinuation during the first 3 months of treatment.

Methods: The Treat-to-Target strategy consisted of a systematic switch to second-line tumor necrosis factor (TNF)α inhibitor in case of an unmet ACR50 response at 3 months compared to current routine clinical practice. A reference cohort treated first-line with certolizumab pegol according to current practice without systematic switching was considered as the comparator. A decision-tree model was constructed to estimate clinical outcome (health assessment questionnaire-disability index or HAQ-DI score), time spent in ACR50 response (ACR 50), and direct costs of treatment over a 2-year period. HAQ scores were derived from American College of Rheumatology 50 (ACR50) responses. All TNFα inhibitors were assumed to have equivalent efficacy and tolerability. Costs were estimated at 2013 French retail prices (date of the pay-for-performance agreement).

Results: The mean duration of an ACR50 response was 1.23 years in the Treat-to-Target strategy certolizumab pegol cohort vs 0.98 years in the reference cohort, resulting in a mean gain in HAQ at 24 months of 0.117. The Treat-to-Target strategy with a mix of TNFα inhibitors as second-line therapy was more expensive than the reference strategy in absolute terms, but this difference was entirely offset by the pay-for-performance agreement. The Treat-to-Target strategy was, thus, cost-neutral over a 2-year period after the payback of CZP cost for patients not achieving the target at 3 months.

Conclusions: In the context of a pay-for-performance agreement, the management of patients with rheumatoid arthritis using a Treat-to-Target strategy with certolizumab pegol in first line is dominant compared to standard use of this drug in the French setting in 2013.     

The Importance of Mutual Understanding Between External Accountants and Owner–Managers of SMEs

This study investigates the perspective of the owner–manager of a small or medium‐sized enterprise (SME) on the importance of mutual understanding with an external accountant. Mutual understanding means that the owner–manager understands what the accountant is saying and feels understood by the accountant. The results, based on 310 completed surveys of Belgian owner–managers, show that owner–managers who have a high level of mutual understanding use the advice of their external accountant more extensively. This is in turn positively linked to the financial health of an SME. Furthermore, several drivers that enable the establishment of a high level of mutual understanding are explored. Owner–managers with a high level of mutual understanding consider their accountant as a strategic partner, experience a high level of proactive behaviour with them, have a higher frequency of formal contact, and perceive informal contact as important. External accountants should consider these opportunities in their client management and training of internal staff. Education of clients and openness also seem very important, as the level of a client's accounting knowledge, the number of accounting topics owner–managers deal with, and transparency towards the accountant are significantly positively related to mutual understanding.     

The real impact of a one-off fiscal restriction: empirical evidence of a flypaper effect in Flemish municipalities

This paper analyses the effects of a one-off fiscal restriction on Flemish local government spending. The authors provide evidence of a ‘flypaper effect’: fiscal restriction stimulated the sensitivity of local spending to grants. This means that higher-level governments (regional/national/supranational) need to take a flypaper effect into account when considering one-off fiscal restrictions on lower-level governments.     

A belief‐function model for the representation and the combination of uncertain audit evidence

This paper describes a belief‐function framework for representing and combining evidence in financial statement auditing. The use of belief‐function theory for these purposes is not new. A considerable amount of important research in this respect has been performed mainly by Srivastava and is described in numerous publications. One of his major achievements is the construction of a complete framework like the one described in this paper. The framework that we propose in this text takes a different point of view and addresses a number of limitations of Srivastava’s framework. Copyright © 1999 John Wiley & Sons, Ltd.     

LA DYNAMIQUE DES RÉFORMES D'INDUSTRIES DE RÉSEAUX:LE CAS DE L'ÉLECTRICITÉ ET DES CHEMINS DE FER EN GRANDE-BRETAGNE

RÉSUMÉ ** :  Cet article porte sur le design organisationnel des réformes d'industries de réseaux. Plus précisément, nous nous interrogeons sur la pertinence du modèle de déintégration verticale complète adopté par la Grande Bretagne dans les industries électrique et ferroviaire. Au regard de la rapiditéà laquelle les structures d'organisation initialement mises en place par les réformes ont été modifiées et compte tenu de la profondeur des transformations qu'elles ont subies, nous sommes en effet amenées à nous demander si le modèle de restructuration «radicale>> des industries en réseaux est efficace et peut s'inscrire dans la durée ou bien s'il ne constitue qu'une étape transitoire vers un schéma d'organisation plus stable et peut-être plus proche de la structure de gouvernance initiale.     

Indeterminacy with small externalities: The role of non-separable preferences

In this paper we consider a Ramsey one-sector model with non-separable homothetic preferences, endogenous labor and productive external effects arising from average levels of capital and labor. We show that indeterminacy cannot arise when there are only capital externalities but that it does occur when there are only labor external effects. We prove that sunspot fluctuations are fully consistent with small market imperfections and realistic calibrations for the elasticity of capital–labor substitution (including the Cobb-Douglas specification) provided the elasticity of intertemporal substitution in consumption and the elasticity of labor supply are large enough.