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.     

Household Food Demand in Burkina Faso: Implications for Food Policy

Chronic food production deficits since the early 1970s have prompted policymakers of Burkina Faso to emphasize technological research with the goal of increasing the production of the most-consumed locally-grown cereals: sorghum, millet and maize. Meanwhile, urban consumers have been developing preferences for rice and wheat, cereals that are primarily imported. This study estimates demand relationships among food items in Ouagadougou, Burkina. The results of the estimation suggest that prices, income, household composition, education, marital status and urbanization were jointly important in explaining household expenditure allocations. Both local and imported cereal consumption responded positively to an income increase. However, incremental income changes would lead to relatively greater consumption of locally produced cereals by low-income households whereas high-income households would consume relatively more wheat and rice. The household model is then used to demonstrate its relevance in addressing food policy issues, by forecasting the levels of urban grain demand under alternative income and demographic scenarios. With increased production due to advances in technology, the urban demand levels do not exhaust the rural surplus of local cereals, but deficits persist in the rice-wheat sector. The results underscore the importance of technological research since Burkina could become self-sufficient in at least the production of sorghum, millet and maize.     

Editorial

Original Papers

Editorial     

Ethical Dilemmas in Performance Measurement

In this article we discuss the ethical dilemmas facing performance evaluators and the "evaluatees" whose performances are measured in a business context. The concepts of role morality and common morality are used to develop a framework of behaviors that are normally seen as the moral responsibilities of these actors. This framework is used to analyze, based on four empirical situations, why the implementation of a performance measurement system has not been as effective as expected. It was concluded that, in these four cases, unethical behavior (i.e. deviations from the ethical behaviors identified in the framework) provided, at least to some extent, an explanation for the lower than expected effectiveness of the performance measurement procedures. At the end of the paper we present an agenda for further research through which the framework could be further developed and systematically applied to a broader set of cases.     

Spotting management fads

Business fads can change companies, for better or worse. They can introduce useful ideas but often fail to deliver on promises. So how can managers tell a fad from a tool that might endure? For one thing, beware of suspiciously simple techniques. If they seem too easy, they probably are.     

On the Feasibility of Risk Based Regulation

Risk based regulation has emerged as the primary ingredientin the Basel-II proposals, where a bank capital is to becomea direct function of a bank's riskiness. While the notion thatbank capital be risk sensitive is intuitively appealing, theactual implementation, in the form of Basel-II, carries withit a host of potentially perverse side effects. Basel-II mayincrease financial risk, both for individual institutions andthe entire banking system, and hence promote financial instability.This can happen, e.g., due to the endogenous nature of risk(JEL G2)     

商业银行制度演进的逻辑——一个基于社会资金流动视点的分析框架

从社会资金流动视点观察,银行的经济性质是社会资金流动的管道,银行的基本功能是为经济活动中的资金流动提供管道服务。商业银行制度演进的实质,是社会资金流动管道功能的发展,是对现代市场经济中资金流动新态势的真实再现。中国的商业银行改革和发展的路径,是实现从原来的国家融资工具向社会资金流动管道的转变。     

Relationships in the purchasing of business to business professional services: The role of personal relationships

There has been a shift from transactional to relational exchange and relationship marketing both in the business to business and professional services contexts. This paper seeks to explore the manner in which personal relationships affect the process and outcomes of purchasing of professional business services. Specifically, it focuses on the role of the professional service providers as boundary spanners in the formation of personal relationships. These personal relationships constitute the underlying basis of long-term relationships between the purchasing and provider organizations in such complex service settings. The findings of this study demonstrate that the manner in which the boundary spanners cultivate relationships support the concept of relationship specific tasks. It extends this conception by use of the data to outline the chronological process over time Understanding the roles, function, and ultimately importance, of these relationships facilitates the identification and development of appropriate strategies to manage these relationships.     

试析知识产品的价值形成和实现机制

传统的价值理论认为,商品的价值量取决于社会必要劳动时间,商品按照价值量相等的原则进行交换。商品的价格随商品的供求关系围绕着价值上下波动。知识产品的价值规则与此不同,它是由个别优等劳动时间决定,其价值实现是一种低价递减机制。