Cellular telephones in the Israeli market: the demand,the choice of provider and potential revenues

This study presents the methodology, the estimates and a scenario for forecasting the demand for cellular telephones and their use in Israel. The analysis was based on the integration of three sub-models. The estimate of the consumer's decision on whether to purchase a cellular telephone and what type was obtained by using a discrete choice model of the multinomial logit type. The total number of cellular telephone purchases to be made in Israel during the years 1998–2008 was estimated using a logistic growth model employing aggregate data over time. The anticipated demand for airtime was based on findings of a survey carried out on a national sample, and on actual usage data on the various consumers during the years prior to the survey. The research shows the substantial economic potential of Israel's cellular telephone market.     

The prevalence of hyperbolic discounting: some European evidence

Experimental matching data are used from the 2000 Bank of Italy Survey of Household Income and Wealth (SHIW) and the 2000 wave of the Center for Economic Research (CentER) Savings Survey at Tilburg University to compare the relative frequencies of hyperbolic and exponential discounters. Among 3200 Italian respondents and 1400 Dutch respondents, less than a quarter exhibited hyperbolic discounting. This finding is both statistically significant and robust with respect to various assumptions regarding utility; moreover, it holds across a wide variety of economic, social and demographic characteristics. The youngest, poorest, most urban and least educated individuals are the most likely to be hyperbolic discounters. In addition, it is found that hyperbolic discounters accumulate less wealth and are somewhat less likely than exponential discounters to utilize commitment devices to constrain their future choices.     

Trade integration and risk sharing

What are the effects of increased trade in goods and services on the trade balance? We study the effects of reducing transport costs in a Ricardian model with complete asset markets and find that this increases the volatility of the trade balance. This result applies regardless of whether supply or demand shocks are the main source of economic fluctuations. Both type of shocks generate fluctuations in the trade balance that are in part moderated by stabilizing movements in the terms of trade. Trade integration dampens these terms of trade movements and, for a given distribution of shocks, amplifies fluctuations in the trade balance. To overturn this result, one must assume that either trade integration is sufficiently biased towards goods with strong comparative advantage and/or risk aversion is sufficiently extreme. We calibrate the model to U.S. data and find that, for reasonable parameter values, increased trade in services could double the volatility of the trade balance.     

Risk Sharing: A Long Run Issue?

We suggest, by means of integration and cointegration tools, and error correction model regressions, that international risk sharing is predominantly a short run concern. This finding has been obtained by using some new variants of the standard consumption insurance tests, and runs counter to some other recent empirical evidence. Moreover, we find mixed evidence as to the fact that the recent surge in international financial liberalization has improved on risk sharing, at least in the long run.     

Taxing women: A macroeconomic analysis

Based on well-known evidence on labor supply elasticities, several authors have concluded that women should be taxed at lower rates than men. We evaluate the quantitative implications and merits of this proposition. Relative to the current system of taxation, setting a proportional tax rate on married females equal to 4% (8%) increases output and married female labor force participation by about 3.9% (3.4%) and 6.9% (4.0%), respectively. Gender-based taxes improve welfare and are preferred by a majority of households. Nevertheless, welfare gains are higher when the U.S. tax system is replaced by a proportional, gender-neutral income tax.     

Bids for the UMTS system: An empirical evaluation of the Italian case

The aim of this paper is to analyze the licensing of the telecommunication spectrum as a public good and the search for equilibrium prices through bilateral bargaining and multilateral bidding. It develops a general model of price setting under dynamic uncertainty and applies it to the Italian auction for Universal Mobile Telecommunications System (UMTS). The empirical application shows that the model can be used both to determine the base price as well as other desirable characteristics to organize an auction and to better understand, after the auction is closed, what really happened in terms of the critical factors involved. After recalling some basic concepts on spectrum rights and reviewing the general experience with UMTS auctions in Europe, the formal model and its application are presented. The results confirm certain views on the Italian auction, which are widely shared but were never tested before, namely that: (i) given the initial price, the number of licenses offered for the bidding should have been fewer, or alternatively, (ii) given the number of licenses, the base price should have been higher and (iii) the main bidder underpaid for the license. The model also allows us to quantify the bidders’ reservation price and the State and the bidders’ implicit bargaining powers.     

Fairness and the Unselfish Demand for Redistribution by Taxpayers and Welfare Recipients

We theoretically illustrate how the aversion to unfairness triggers an unselfish though rational demand for redistribution. This leads the well-off to demand positive tax rates and the “poor” to reject extreme progressivity. We prove that the “rich” and the “poor” adjust their demand for redistribution in opposite ways when their sensitivity to fairness increases: while agents with above average expected income raise their demand for redistribution, agents with below average income lower it. We then provide empirical evidence of these behaviors using a nationally representative survey from Italy. The estimates confirm that a stronger aversion to unfair distributive outcomes is associated with a higher support for redistribution by individuals with high income and to a lower demand for redistribution by those with low income.     

Heterogeneity in risk aversion and risk sharing regressions

Heterogeneity in risk attitudes, if not properly accounted for, may induce a bias on the income coefficient of standard consumption insurance regressions. We show that, extending the theoretical analysis and empirical findings in Schulhofer‐Wohl (Journal of Political Economy, 2011, 119, 925–958), the sign of the bias is ambiguous, and depends on cycle‐related variables and on the covariances of both aggregate and idiosyncratic risk with individual risk aversion.