Net neutrality and asymmetric platform competition

Journal of Regulatory Economics - In this paper we analyze the interplay between access to the last-mile network and net neutrality in the market for Internet access. We consider two competing...     

Access regulation and infrastructure investment in the mobile telecommunications industry

While mobile virtual network operators (MVNOs) increase competition in the mobile telecommunications industry, granting market access to MVNOs may have unwanted consequences. In particular, infrastructure investment by incumbent mobile network operators (MNOs) may be smaller. This paper examines the effects of MVNO entry and access regulation on the investment behavior of MNOs. It uses firm-level data for 58 MNOs in 21 OECD countries during 2000–2008. The results suggest that mandated provision of access is related to lower investment intensity of MNOs, while voluntary access provision has no effect. Although reduced investment incentives do not necessarily correspond to under-investment, this underscores the need for those countries where MVNOs are provided access to address the issue of investment incentives.     

Comparaisons de divers types de programmes de stabilisation des revenus agricoles du Québec

Deux modèles de programmation mathématique (MOTAD–cible statique et MOTAD-cible dynamique) ont été utilisés pour analyser l'impact de trois différents programmes d'intervention gouvernementale sur l'allocation optimale des ressources et sur les revenus totaux d'une ferme représentative au Québec. Les résultats montrent que sous les scénarios ASRA/ASREC et RARB, les revenus espérés sont supérieurs pour le RARB comparativement à ASRA/ASREC à un bas niveau de risque, mais ils sont du même ordre lorsqu'on considère les niveaux de risque plus élevés. L'allocation des ressources et la taille de la ferme sont quelque peu différentes. Afin de comparer ces deux programmes d'intervention, deux ratios ont été calculés : les dépenses nettes des gouvernements par rapport au revenu brut et au revenu net de l'entreprise. Les résultats montrent qu'un programme de type RARB est supérieur à un programme de type ASRA/ASREC, et ce, même si les transferts par unité assurée sont les mêmes. Sous le scénario CSRN, les résultats indiquent que les fermes ont des tailles de deux à quatre fois plus petites que dans les scénarios ASRA/ASREC ou RARB et que la stratégie financière des dépôts et des retraits dans le compte CSRN est déterminante dans l'augmentation du revenu espéré de la ferme.     

Bounds for VIX futures given S&P 500 smiles

We derive sharp bounds for the prices of VIX futures using the full information of S&P 500 smiles. To that end, we formulate the model-free sub/superreplication of the VIX by trading in the S&P 500 and its vanilla options as well as the forward-starting log-contracts. A dual problem of minimizing/maximizing certain risk-neutral expectations is introduced and shown to yield the same value.The classical bounds for VIX futures given the smiles only use a calendar spread of log-contracts on the S&P 500. We analyze for which smiles the classical bounds are sharp and how they can be improved when they are not. In particular, we introduce a family of functionally generated portfolios which often improves the classical bounds while still being tractable; more precisely, they are determined by a single concave/convex function on the line. Numerical experiments on market data and SABR smiles show that the classical lower bound can be improved dramatically, whereas the upper bound is often close to optimal.     

Output and Price Determination in the Canadian Chicken Industry: Which Should Come First?

Bilateral bargaining between chicken producers and processing firms determined chicken prices in Ontario from 1995 to 2002. A significant reform in 2003 introduced a formula‐based live price that is a function of chicken producers' costs. The latter pricing mechanism reduces the risk faced by processing firms and producers because the chicken price is known when output decisions are made. However, the pricing formula also involves some risk in that the cost components may be far removed from actual costs when production is carried out. Expected farm prices under the two different pricing mechanisms are also not identical. The producers' and processors' expected utility of profits under each pricing mechanism is computed. The bargaining pricing mechanism generally yields higher expected utility for producers than the formula‐based price. Conversely, processing firms obtain a higher expected utility under the formula‐based pricing than under the bargaining framework. These conclusions critically hinge on the size of the producers' margin component in the formula‐based price. In that sense, the formula‐based pricing mechanism did not lessen the significance of relative bargaining strengths in establishing the distribution of welfare in the chicken industry. Des négociations bilatérales entre les producteurs de poulet et les entreprises de transformation déterminaient le prix du poulet vivant en Ontario de 1995 à 2002. Une formule de prix établie en fonction des coûts de production des producteurs de poulet fut introduite en 2003. Ce mécanisme réduit le risque auquel sont confrontés les transformateurs et les producteurs parce que le prix du poulet vivant est connu lorsque les décisions de production sont prises. Cependant, la formule de prix comporte aussi un risque dans le sens où la composante du coût dans la formule de prix peut être différente des coûts réels de production du poulet vivant. Les prix espérés du poulet vivant sont aussi différents dans les deux systèmes de prix. L'utilité espérée des profits pour les producteurs et les transformateurs de poulet est calculée dans les deux mécanismes. Le modèle fondé sur la négociation génère une utilité espérée des profits plus élevée pour les producteurs que la formule de prix. À l'inverse, les transformateurs obtiennent une utilité espérée des profits plus élevée selon la formule de prix que selon le modèle fondé sur la négociation. Ces conclusions sont étroitement liées à la taille de la marge des producteurs utilisée dans le calcul de la formule de prix. Dans ce sens, l'introduction d'un nouveau mécanisme de détermination des prix n'a pas modifié l'importance du pouvoir relatif de négociation dans la distribution du surplus économique au sein de la filière canadienne du poulet.     

Ancestry and development: New evidence

We revisit the relationship between ancestral distance and barriers to the diffusion of development by replicating previous results with a new genomic dataset on human microsatellite variation. We find a statistically and economically significant effect of ancestral distance from the technological frontier on income per capita. The historical pattern of the effect is hump shaped, peaking between 1870 and 1913, and declining steeply afterwards. This suggests that ancestral distance acts as a temporary barrier to the diffusion of development. We also find that ancestral distance from the frontier is a barrier to the spread of specific technologies and institutions in modern times.     

Efficacitè technique et coûts de production dans les secteurs laitiers du Québec et de l'Ontario

This study aims to estimate the level of technical efficiency in milk production and to analyze the relationship between the costs of production, the level of technical efficiency and farm size. Furthermore, the socio-economic variables that characterize the most efficient farms and those producing at lower cost are identified. The results indicate that in Quebec, the level of technical efficiency increases with herd size, but this increase is very small. In Ontario, herd size is not significant to explain technical efficiency. The level of education, the participation in milk recording programs, expenditures per cow fort are and artificial insemination, the quality of hay and the number of years as member of a management club are a11 variables that characterize efficient farms.     

EQUITY CORRELATIONS IMPLIED BY INDEX OPTIONS: ESTIMATION AND MODEL UNCERTAINTY ANALYSIS

We propose a method for constructing an arbitrage‐free multiasset pricing model which is consistent with a set of observed single‐ and multiasset derivative prices. The pricing model is constructed as a random mixture of N reference models, where the distribution of mixture weights is obtained by solving a well‐posed convex optimization problem. Application of this method to equity and index options shows that, whereas multivariate diffusion models with constant correlation fail to match the prices of index and component options simultaneously, a jump‐diffusion model with a common jump component affecting all stocks enables to do so. Furthermore, we show that even within a parametric model class, there is a wide range of correlation patterns compatible with observed prices of index options. Our method allows, as a by product, to quantify this model uncertainty with no further computational effort and propose static hedging strategies for reducing the exposure of multiasset derivatives to model uncertainty.     

Sources of Dependence and Strategies to Innovate: Evidence from Video Game SMEs

Recent studies call for reconsideration of the predictions of resource dependence theory, in light of contemporary industrial and economic environments. This study accordingly investigates the influence of dependence on the strategic choice to innovate by focusing on a rarely studied topic, namely, the sources of dependence. In studying small and medium‐sized video game enterprises, this paper provides empirical validation of dependence phenomena. These companies have limited resources, which inevitably creates dependence, exacerbated in innovative contexts because of the prevalence of negative effects, such as opportunism, abuse of power, limited innovation, or inequitable distributions of economic value. To deal with these negative effects, some enterprises use cooperation or integration strategies to try to minimize their dependence. The strategic choice then might be conditioned. The results of a comparative and qualitative study of five video game developers show that a lack of resources and skills is the primary source of dependence. In addition, a hierarchy of sources of dependence seems to guide the strategic choices of developers to innovate.     

The Collusion-deterring Effect of Pre-attributed Supplies and the Hog Auction in Quebec

The hog/pork industry in Quebec has been going through major institutional changes since 1989, the year an electronic auction was put in place to market all of the hogs in the province. Because the auction's ability to generate high prices did not meet the expectations of hog producers, the pure auction system was replaced by a hybrid one in 1994. In this system, most of the hog supply was pre-attributed to processors at a negotiated price based on the US. price while the remainder of the provincial supply of hogs was sold through the auction. In this paper, we investigate how a seemingly inefficient marketing mechanism like pre-attributions can increase the efficiency of a usually efficient mechanism like an auction. We present theoretical arguments regarding the sustainability of collusion under the pure auction and hybrid systems in addition to analyzing auction prices with modern time series tools.