RECENT DEVELOPMENTS IN FRONTIER MODELLING AND EFFICIENCY MEASUREMENT

In this paper recent developments in the estimation of frontier functions and the measurement of efficiency are surveyed, and the potential applicability of these methods in agricultural economics is discussed. Frontier production, cost and profit functions are discussed, along with the construction of technical, allocative, scale and overall efficiency measures relative to these estimated frontiers. The two primary methods of frontier estimation, econometric and linear programming, are compared. A survey of recent applications of frontier methods in agriculture is also provided.     

Price-discriminating Marketing Board with Imperfect Supply Control: A Case of B.C. Mushrooms

The board that has had monopoly marketing powers over B.C.-produced mushrooms can sell either into the fresh market, or to processors, and can prevent arbitrage between consumers equalizing the price in the two markets. It must pay growers a 'pooled' price based on the average revenue received. The board controls growers' square footage through quotas but growers have some discretion over output from varying other inputs. It is shown that the combination of price pooling and imperfect supply control can generate very substantial welfare losses, especially in the context of the depressed market for processing mushrooms that existed in 1986. Full monopolization of the industry would actually reduce the welfare costs.
L'Office, qui détient le monopole de la commercialisation des champignons produits en Colombie-Britannique, peut vendre ces produits soit sur le marche du frais, soit aux transformateurs, et il peut empêcher l'arbitrage entre les consommateurs voulant équilibrer les prix sur les deux marchés. Il doit verser aux producteurs un prix commun basé sur les recettes moyennes resues. L'Office contrôle la superficie allouée aux producteurs, par le biais de contingents, mais les producteurs peuvent dans une certaine mesure varier leur production en modifiant d'autres facteurs de production. Il a été démontré que l'effet combiné de la mise en commun des prix et d'un mécanisme imparfait de gestion des approvisionnements peut entraîner des pertes de bien-être très substantielles, en particulier dans le contexte d'un marché en baisse, comme celui qui existait en 1986 dans le secteur de la transformation des champignons. La monopolisation complète de l'industrie réduirait en fait les coûts du bien-être.     

Negotiated versus Cost-Based Transfer Pricing

This paper studies an incomplete contracting model to compare the effectiveness of alternative transfer pricing mechanisms. Transfer pricing serves the dual purpose of guiding intracompany transfers and providing incentives for upfront investments at the divisional level. When transfer prices are determined through negotiation, divisional managers will have insufficient investment incentives due to hold-up problems. While cost-based transfer pricing can avoid such hold-ups, it does suffer from distortions in intracompany transfers. Our analysis shows that negotiation frequently performs better than a cost-based pricing system, though we identify circumstances under which cost-based transfer pricing emerges as the superior alternative.     

The power of tests for equivalent ARMA models: The implications for practitioners

Analysts frequently find it convenient to use the same ARMA model to make forecasts for multiple time series. The trick is to know when it is safe to assume that multiple series are generated by the same underlying process. Although several authors have developed statistical procedures for testing whether two models are equivalent, no one has shown how to determine the power of these tests. This paper shows how to determine the power of the most general test for equivalent ARMA models. It also shows how to quantify the effect of model misspecification errors on the accuracy of the forecast. An illustrative example and flowchart are then used to show how calculating the power of the test can enable the practitioner to safeguard against a serious degradation in the accuracy of the forecast.Jel classification: C12, C22, C53First version received: March 2002/Final version received: December 2002     

Solvency regulation in the property-liability insurance industry

This paper evaluates guaranty funds and solvency regulations. One main question addressed is how solvency regulations will benefit consumers. Many previous studies have found that most forms of solvency regulations do not have significant deterrent effects on insolvency. Even when solvency regulations are effective, they might still adversely affect consumers. This could happen because increasing the probability of solvency usually requires raising premiums. Therefore, it is interesting to see how regulators should design insurance regulations that benefit consumers. Insolvency of insurance firms provides a unique environment under which one is able to analyze the effects of solvency regulations and guaranty funds on the quality of insurance products and on consumers. This paper shows that guaranty funds are always desirable, but solvency regulations are of certain value only when they have the effect of protecting guaranty funds and alleviating the disincentives which they create.     

Transferring game attitudes to the brand: persuasion from age 6 to 14

ABSTRACT

This paper aims to replicate previous findings regarding the differential impact of TV advertising and advergames on children's brand attitudes and pester intentions. Using a large data-set (N = 940, M_age = 9.8, SD = 2.4), with children ranging between 6 and 14 years old, the influence of passive exposure to TV advertising is compared to active exposure to an advergame. In addition, the potential moderating effect of age is explored. In a between-participants experiment, Flemish children were randomly assigned to watch a TV ad, play an advergame, or a no marketing control condition. Results revealed that children who had played the advergame reported significantly more positive brand attitudes compared to children who had watched the TV ad and children in the no advertising exposure control group. Children's pester intent was significantly higher for the advergame compared to the TV ad, but not compared to the no advertising exposure control group. The findings further showed that children's attitudes towards the ad format mediate the impact of the advertising format on pester intent. The advergame was indirectly more persuasive than the TV ad since children reported more positive attitudes towards the advergame compared to the TV advertisement. Moreover, this mediation effect did not differ by children's age. Persuasion knowledge did not mediate the influence of the advertising format on pester intent since children's persuasion knowledge was not significantly related to pester intentions regardless of children's age.     

The value of conserving genetic resources for R&D: A survey

The value of genetic resources for R&D is placed within the framework of discussions concerning sustainability. We assess the extent to which society is able to invest now in order to prepare for future risks and uncertainties in the arrival of biological problems. Each of the approaches to valuation is discussed within this setting. Weitzman's approach to measurement is seen to be one that considers society's current objectives and information to be little relevant to future risks and uncertainties. Sedjo, Simpson and Reids' search-theoretic perspective is seen to reduce future uncertainties to highly tractable and known problems. Goeschl and Swanson's bio-technological approach also constrains the problem to be one without any real uncertainty, and focuses on the need to maintain genetic resources in order to maintain control over the problem. Kassar and Lasserre place uncertainty at the core of the problem, and assess the extent to which additional value is added by this feature. In sum all of the approaches to the problem evince a pessimism regarding the capacity of future technological change automatically to resolve these problems. Given this, the value of genetic resources depends on beliefs concerning the ability of current objectives to anticipate future risks and uncertainties.