Shapley and Scarf housing markets with consumption externalities

We introduce externalities into the classical model by Shapley and Scarf; that is, agents care about others and their preferences are defined over allocations rather than over single indivisible goods. After collecting some results about the nonexistence of several cooperative solutions, we focus on stable allocations and propose domains of preferences that can guarantee that they both exist and form a stable set à la von Neumann and Morgenstern.     

The effect of management commitment to service quality on frontline employees' affective and performance outcomes: an empirical investigation of the New Zealand public healthcare sector

• Very little attention has been given to understand the antecedents of service recovery performance in a public healthcare setting. In this study, a cross-sectional survey investigates a model of service recovery performance. Frontline hospital employees completed a self-administered questionnaire on how factors characterising management commitment to service quality (MCSQ) affect their service recovery efforts. The results suggest the influence of MCSQ is mediated by frontline employees' affective commitment to their hospital. The research advances understanding of frontline service recovery performance in a public healthcare setting and the findings indicate that public healthcare managers can take actions on a number of fronts to assist progress towards the achievement of frontline service recovery excellence.

Copyright © 2006 John Wiley & Sons, Ltd.     

The role of fixed capital depreciations for TFP growth: evidence from firm level panel data estimates

The role of accounting depreciation rates and the stocks of fixed capital has been well established in the literature. By exploring available evidence on the value of fixed assets in certain countries, this paper makes use of firm level data on fixed capital depreciations over the period 1990–2008 from a group of OECD countries along with panel data estimations to investigate their role for total factor productivity (TFP) as it is defined through growth accounting, since different capital depreciation profiles imply different rates of capital accumulation and, therefore, different estimates of TFP. The empirical results indicate a positive relationship between the two variables under study.     

What Do Bettors Want? Determinants of Pari‐Mutuel Betting Preference

A bstract .   This paper is an analysis of the demand for thoroughbred racetrack wagers, examining evidence that would support the existence of two types of bettors: the risk-averse informed bettor versus the uninformed bettor. Looking at 12 major racetracks over the fall of 2002, we undertake an empirical examination of the determinants of bettors' preferences for particular wagers on specific races. The goal is to try to determine what individual aspects of a race (conditions, surface, participants, etc.) will encourage increased wagering dollars. With the advent of simulcasting, the competition for the wagering dollar is fierce, as the bettor can choose from more than 100 races daily, each race offering numerous betting options. We find for most wagers that higher quality participants, larger and more competitive fields, and turf races increase betting volume while higher pari-mutuel takeout, poor track conditions, and other races run concurrently reduce volume. However, more competitive fields reduce betting volume in the show and trifecta pools. Optimal field size is determined to be between 10 and 12 betting interests. Overall, we find support for the existence of a significant share of risk-averse informed bettors.     

Entry and product quality under price regulation

Spence (1975, footnote 5, p. 420) has shown that, in equilibrium, a price-regulated monopoly will supply a socially suboptimal level of quality. This tendency to undersupply quality has been used to justify an expansion of regulatory controls to the quality dimension in certain regulated industries (e.g., electricity and telecommunications). In this paper, we examine the effects of entry on equilibrium product quality in an industry which is price-regulated. A generalized conjectural variation model is used which allows both monopolistic and oligopolistic market structures. Using this model, we find that regulation generally leads to a socially nonoptimal (either too high or too low) level of quality, where the direction of the resulting departure from optimal quality depends upon the conjectures that firms form. Spence's result is obtained as a special case. We then demonstrate that a policy that encourages (or, at least, does not discourage) entry into the regulated market will cause equilibrium quality to move in a social-welfare-improving direction, regardless of the direction of the original distortion.     

Differencing of random walks and near random walks

The traditional rationale for differencing time series data is to attain stationarity. For a nearly non-stationary first-order autoregressive process—AR (1) with positive slope parameter near unity—we were led to a complementary rationale. If one suspects near non-stationarity of the AR (1) process, if the sample size is ‘small’ or ‘moderate’, and if good one-step-ahead prediction performance is the goal, then it is wise to difference the data and treat the differences as observations on a stationary AR (1) process. Estimation by Ordinary Least Squares then appears to be at least as satisfactory as nonlinear least squares. Use of differencing for an already stationary process can be motivated by Bayesian concepts: differencing can be viewed as an easy way to incorporate non-diffuse prior judgement—that the process is nearly non-stationary—into one's analysis. Random walks and near random walks are often encountered in economics. Unless one's sample size is large, the same statistical analyses apply to either.     

Employment,labor supply and real wages in market disequilibrium

The purpose of this paper is to provide estimates of a disequilibrium labor market model which has been fitted to the US private non-farm sector and to the manufacturing sector. After examining the rationale of the ‘minimum’-type disequilibrium model, we reject it in favor of a formulation suggested by Chow. The latter provides not only a wage adjustment mechanism, but also a quantity adjustment mechanism and treats wages and quantities symmetrically. The empirical findings for both sectors support the disequilibrium formulation employed and reject the equilibrium hypothesis for the labor market.     

The Attributes of a Costly Recall: Evidence from the Automotive Industry

While researchers have extensively documented the equity response to product recalls and subsequent shareholder losses, less attention in the literature has been given to examining the damaging recall attributes. Using 1973–1998 automotive safety recall data, this study identifies the kinds of recalls that cause significant shareholder losses. After constructing an equally-weighted automotive market index to control for industry effects and adjusting the abnormal returns to account for the degree of surprise in the recall announcement, the study estimates both percentage and real dollar abnormal returns. We find that the indirect costs of automotive recalls are likely larger than the direct costs.