How limiting deceptive practices harms consumers

There are two competing sellers of an experience good, one offers high quality, one low. The low‐quality seller can engage in deceptive advertising, potentially fooling a buyer into thinking the product is better than it is. Although deceptive advertising might seem to harm the buyer, we show that he could be better off when the low‐quality seller can engage in deceptive advertising than not. We characterize the optimal deterrence rule that a regulatory agency seeking to punish deceptive practices should adopt. We show that greater protection against deceptive practices does not necessarily improve the buyer welfare.     

Crop Insurance as a Strategy for Adapting to Climate Change

Financial insurance for extreme events can play an important role in hedging against the implications of climate change. This paper combines a comprehensive estimation strategy and a unique panel dataset to study the role of financial insurance in farmers' welfare under uncertainty. Data are drawn from a large Italian farm panel dataset. We find that (i) demand for insurance products is likely to increase in response to climatic conditions, and (ii) that the use of insurance reduces the extent of risk exposure. We also find that farms growing more crops are less likely to adopt the insurance scheme. This confirms what is found in the theoretical literature. Crop diversification can be a substitute for financial insurance in hedging against the impact of risk exposure on welfare.     

Risk-type density diagrams by crash type on two-lane rural roads

The research presented here aims to plot density diagrams per road crash risk type to identify all possible scenarios where driving is less than safe. The starting point was the prediction of injury crash rate on horizontal homogeneous segments of two-lane rural roads for three main injurious crash types (head-on/side collisions, rear-end crashes, and single-vehicle run-off-road crashes) as observed on the network. A careful analysis of the database shows that a wide variety of factors appear to be influenced or associated with the crash dynamic, as follows: the road scenario (combination of infrastructure and environmental conditions found at the site at the time of the crash), mean lane width, the horizontal curvature indicator (measurement of the curvature change rate), and mean speed. Crashes recorded from 2003 to 2010, of which 1597 were injurious, and 645 resulted only in damage to property, were analyzed on more than 3700?km of road network in Southern Italy. Generalized estimating equations with a negative binomial distribution were implemented. Risk-type density charts were plotted to thoroughly identify all possible combinations of existing explicative variables producing hazardous conditions on the road. The different shades in the diagrams represent different ranges of injurious crash rates: the white band shows low levels, while a black band shows high values. It is not possible to consider working on an explanatory variable to reduce hazardous conditions on the road network without also considering how this variation might affect the influence of the remaining explanatory variables on crash phenomena and, consequently, on the predictive model. The risk maps make it possible to keep under control in a simple and immediate approach the way each variable as a result of variations of a part or of all.     

Putable common stock

The underpricing of initial public offerings is a well-documented phenomenon in the financial literature. The purpose of this paper is to show how this empirical regularity could be solved by an appropriate choice of financing instruments, namely, by an intelligent mix of common stocks and put options. The latter additional instrument, modeled in this paper as a lump sum paid by insiders of the firm to outsiders, helps alleviate the asymmetry of information existing between insiders and outsiders of the corporation, allowing good firms to sell the package they offer at the full information value.     

A model of dumping and protectionism in the United States

Zusammenfassung Dumping und Protektionismus in den Vereinigten Staaten-ein Modell. — Der Autor untersucht die Beziehung zwischen Antidumpingma\nahmen und dem neuen Protektionismus, reformuliert und erweitert die Theorie des Dumping und sch?tzt ein Modell mit simultanen Gleichungen, um die Ursachen und Wirkungen von Antidumpingma\nahmen in den Vereinigten Staaten zu überprüfen. Der empirische Test des Modells zeigt, da\ die Durchdringung des amerikanischen Marktes mit Importwaren negativ korreliert ist mit dem Prozentsatz der erfolgreichen Antr?ge auf Antidumpingma\nahmen, aber positiv mit der überbewertung des Dollar und dem Grad an Offenheit der US-Wirtschaft. Die Zahl der registrierten Antidumpingantr?ge steht in direktem Verh?ltnis zum wirtschaftlichen Wachstum der Vereinigten Staaten im Vergleich zu anderen Industriel?ndern, und der Prozentsatz der erfolgreichen Antidumpingantr?ge ist negativ korreliert mit der Handelsbilanz, der H?he des Volkseinkommens und der Anzahl der registrierten Antidumpingantr?ge.

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Résumé Un modèle du dumping et du protectionisme aux Etats-Unis. — Cette étude examine les relations entre l’action anti-dumping et le nouveau protectionisme, revise et étend la théorie du dumping et estime un modèle d’équations simultanées pour examiner les causes et les effets de l’action anti-dumping aux Etats-Unis. Le test empirique du modèle démontre que la pénétration de l’importation dépend (i) de sens inverse du rapport des requêtes anti-dumping déposées, mais couronnées de succès et (ii) de sens positif de la surévaluation du dollar et du degré que l’économie américaine est ouverte. Le nombre des requêtes anti-dumping déposées dépend directement du croissance économique des Etats-Unis en relation aux autres pays industriels. Le rapport des requêtes anti-dumping dépend de sens inverse de la balance commerciale, du niveau du produit domestique et du nombre des requêtes anti-dumping déposées.

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Resumen Un modelo de dumping y proteccionismo para los EE UU. — Este trabajo examina la relatión entre una medida antidumping y el nuevo proteccionismo, reformula y extiende la teoria del antidumping y estima un modelo de ecuaciones simultáneas para estudiar las causas y efectos de medidas antidumping en los EE UU. El test empirico del modelo muestra (1) que la penetration con importaciones esta inversamente relacionada con el porcentaje de peticiones antidumping exitosas registradas y afectadas positivamente por la sobrevaluación del dólar y el grado de apertura de la economia de los EE UU, (2) que el numéro de peticiones antidumping registradas esta relacionado directamente con el credimiento de los EE UU relativo al de otros pa?ses industriales, y (3) que el porcentaje de peticiones antidumping exitosas está inversamente relacionado con el balance comercial, el nivel de ingreso nacional real y el núméro de peticiones antidumping registradas.

     

Crop genetic diversity, farm productivity and the management of environmental risk in rainfed agriculture

This paper presents an assessment of the linkages between cropgenetic diversity, farm productivity and risk management. Aflexible moment-based approach is used to analyse the impactof crop genetic diversity on the mean, variance and skewnessof yield. Using farm-level data from Sicily (Italy), econometricevidence shows how crop genetic diversity can increase farmproductivity and reduce risk exposure. The empirical resultsindicate that crop genetic diversity can reduce variance, butonly if pesticide use is low. Furthermore, high diversity levelscan reduce downside risk exposure (e.g. the risk of crop failure).This provides useful insights on the linkages between resilienceand crop genetic diversity.     

The global economic consequences of the Uruguay Round

This paper examines the provisions of the recently completed Uruguay Round and evaluates the qualitative and quantitative effects of the Round on major countries and regions of the world. The implications of the Uruguay Round are measured using the G-cubed multicountry model. This model captures macroeconomic and sectoral linkages within the global economy. This study differs from other studies in that it considers the dynamic adjustment path, the impact of expectations formation, and the sectoral as well as macroeconomic consequences of the Round. The results are compared with other studies of the Uruguay Round. Ignoring major changes in productivity induced by the Round, it is found that the gains to the world economy are likely to be around $200 billion (1990) per year by the year 2000. The distribution of the gains across regions from the Round differ from other studies because of the adjustment of international capital flows. Private capital flows to regions that undertake the most extensive liberalization initially worsen their trade positions. In regions that liberalize less and experience a capital outflow, the production gains tends to be less than conventional studies find. The adjustment of private capital has important implications for exchange rates, and therefore for the adjustment of the international trading system over the decade of the implementation of the Round.     

Robustness of Forecasting Financial Crises in Emerging Market Economies with Data Revisions—A Note

Data revisions routinely introduced by the World Bank can lead to significant revisions in empirical results. We show this by re-estimating our aggregate indicator for predicting the 1997 Asian crisis utilizing the 1999 and 2004 updates of the 1996 World Bank data and comparing these results to those we obtained (this Journal, 2000) for predicting the same event using the original, unrevised, 1996 World Bank data. Since most data-gathering organizations routinely revise their data, this may represent a much greater problem for policy makers than might be recognized.