The effects of scale in economic development: Tourism in Bali

Eric E. Rodenburg, The Effects of Scale in Economic Development: Tourism in Bali. Annals of Tourism Research 1980, VII(2):177–196. Planners promote tourism to meet the objectives of economic development. Different scales of enterprise, however, meet the objectives of planners in different ways. Data from Bali, Indonesia, illustrate the differential social and economic effects of three scales of tourism enterprise; large industrial, small industrial and craft tourism. A comparison of these segments of the continuum of tourism enterprises in Bali shows that the objectives of economic planners (increased earnings, foreign exchange, investment, job opportunities, production, entreprenuership, infrastructure, and the minimization of adverse social and cultural effects) are not best met through the promotion of large, industrially scaled enterprises.     

Interest rate volatility and home mortgage loans

The US economy has experienced substantial fluctuations in real and nominal interest rates since the 1970s. This article investigates empirically the relationship between home mortgage loans and volatility in mortgage rates for the period 1971:02 to 2003:03. Contrary to common wisdom, we find a positive relationship between mortgage rate volatility and home mortgage loans. Further investigation indicates that this is due to volatility in the bond market. In times of high interest volatility, households disinvest in government securities and invest in real assets, which yields a positive relationship between mortgage rate volatility and home mortgage loans.     

Analysis of a Generalized Penalty Function in a Semi-Markovian Risk Model

Abstract

In this paper an extension of the semi-Markovian risk model studied by Albrecher and Boxma (2005) is considered by allowing for general interclaim times. In such a model, we follow the ideas of Cheung et al. (2010b) and consider a generalization of the Gerber-Shiu function by incorporating two more random variables in the traditional penalty function, namely, the minimum surplus level before ruin and the surplus level immediately after the second last claim prior to ruin. It is shown that the generalized Gerber-Shiu function satisfies a matrix defective renewal equation. Detailed examples are also considered when either the interclaim times or the claim sizes are exponentially distributed. Finally, we also consider the case where the claim arrival process follows a Markovian arrival process. Probabilistic arguments are used to derive the discounted joint distribution of four random variables of interest in this risk model by capitalizing on an existing connection with a particular fluid flow process.     

Factors influencing the relative importance of marketing strategy creativity and marketing strategy implementation effectiveness

It seems logical that performance is maximized when a business produces a creative marketing strategy and achieves marketing strategy implementation effectiveness. However, cultural tensions and resource competition may make it difficult, or impossible, to achieve both. Contingency theory suggests that market and/or firm level influences may exist that make one or the other more important. Thus, it is important for researchers to investigate those conditions so that we can provide managers with guidance regarding where to allocate their resources. The study reported in this article assesses the impact that environmental conditions and business unit strategy have on the relative importance of marketing strategy creativity and marketing strategy implementation effectiveness. We discuss implications for managers and scholars.     

Investigating Preferences for the Local Delivery of Agri‐environment Benefits

Since 2005, Environmental Stewardship (ES) has been the principal agri‐environment scheme for England and is the key instrument for the delivery of increased environmental benefits from agricultural landscapes. The main objective of this study is to investigate the hypothesis that individuals have greater relative preferences for the environmental benefits associated with agri‐environment schemes when they are delivered within those landscapes closest to where they live. A choice experiment approach based on a national survey provides the data and a mixed logit approach is used to model relative preferences for the environmental benefits of ES across five generic landscape types. Results show that most respondents have a preference for benefits delivered in those areas closest and most accessible to where they live.     

Comparing Lead Users to Emergent‐Nature Consumers as Sources of Innovation at Early Stages of New Product Development

The large potential of lead users (LUs) in developing innovative and radically new product concepts is well established in the literature. However, in a widely acknowledged study, Hoffman et al. introduced the new concept of emergent‐nature consumers (ENCs) and showed the superiority of this group of individuals over LUs in developing new product concepts. Consequently, they postulated ENCs to be “the right consumers” to be integrated in new product development processes. In this article, we critically reflect and build on Hoffman et al.'s study and further investigate the promise of the ENC concept as compared to the LU concept. In a pilot study, we replicated the study by Hoffman and colleagues: We conducted a crowdsourcing competition and asked for concepts for new services; those concepts had been generated collectively by the participants and had been assessed by a consumer crowd. In the main study, the participants of a crowdsourcing competition submitted individually generated concepts for products, which were evaluated by industry experts. Across both studies, using different empirical methods in two different contexts, and in contrast to Hoffman et al.'s work, we find support for LUs outperforming ENCs (as well as average users) in generating the commercially most promising concepts. Thus, our insights reinforce the existing user innovation literature and the notion of LUs being the primary source of new product/service concepts.     

Evaluation of a mining project under the joint effect of commodity price and exchange rate uncertainties using real options valuation

Cash flows generated by mining projects tend to be volatile and are extensively influenced by exogenous variables, notably commodity prices and exchange rates. The traditional discounted cash flow (DCF) method, which is normally used for economic feasibility studies and mining project evaluations, presents inconsistencies because the method fails to adequately address uncertainties and operational flexibilities and often ignores certain specific market conditions. Numerous studies have been carried out for mining project evaluations using the real options valuation (ROV) technique for assessing commodity price uncertainty, but there is no research on the combined effects of price and exchange rate uncertainties. Therefore, in order to assess the economic viability of a mining project more accurately, the commodity price and its inherent volatility, the exchange rate and its inherent volatility, and the correlation parameters between them have been incorporated into the model and used in the evaluation process. One of the interesting findings revealed in the study is that project values are overestimated if only commodity price uncertainty is considered in evaluating the project value instead of the joint effect of commodity price and exchange rate uncertainties. This new ROV technique will explore the opportunity to utilize an alternative methodology for approximating project values and to identify valuation opportunities to enhance economic gains or to mitigate economic losses, where the DCF valuation method does not.