Regulating Providers' Reimbursement in a Mixed Market for Health Care

Hospitals can be reimbursed for their costs in many ways. Several authors have investigated the effects of these reimbursement rules on physician incentives and, therefore, on the quantity of services provided to patients. A form of (linear) cost-sharing tends to emerge as the socially efficient reimbursement policy. We present a model of hospital reimbursement, based on Ellis and McGuire (1986). The new feature is that physicians can supply private health care services to a patient, as well as public sector ones; a common institutional arrangement in many health care systems. We investigate the optimal public sector reimbursement rule given that private market incentives must now be taken into account. Public sector cost-sharing remains socially efficient, but it is generally non-linear: the precise details depend on whether public and private services are substitutes or complements and on the degree of social efficiency achieved in the private sector. Other reimbursement schemes exhibit optimality properties not present in Ellis and McGuire's work.     

Evidence on the use of unverifiable estimates in required goodwill impairment

SFAS 142 requires managers to estimate the current fair value of goodwill to determine goodwill write-offs. In promulgating the standard, the FASB predicted that managers will, on average, use the fair-value estimates to convey private information on future cash flows. The current fair value of goodwill is unverifiable because it depends in part on management??s future actions (including managers?? conceptualization and implementation of firm strategy). Agency theory predicts managers will, on average, use the unverifiable discretion in SFAS 142 consistent with private incentives. We test these hypotheses in a sample of firms with market indications of goodwill impairment. Our evidence, while consistent with some agency-theory based predictions, does not confirm the private information hypothesis.     

Meeting Bougainville’s co-produced reporting expectations

Using the theory of indigenous alternatives, this paper considers whether the Autonomous Bougainville Government (ABG) complies with Bougainville’s co-produced financial reporting expectations. Textual analysis of the indigenous-led state audit reports from 2008 to 2013 shows that the ABG’s financial statements were disclaimed. The study considers how the deployment of indigenous alternative mechanisms may help improve reporting outcomes of the ABG.

IMPACT

Co-produced policies arranged in the aftermath of jurisdictions that have just endured civil wars may be well-intentioned but their impact may count for little if pedestrian processes, such as financial reporting and the rendering of accountability by an autonomous government, do not meet co-produced reporting expectations. This paper highlights how financial statements of the Autonomous Bougainville Government (ABG) from 2008 to 2013 did not meet those reporting expectations. The inability of the ABG to provide an account of its activities appears to undermine calls for Bougainville’s independence.     

Product Design: Preference for Rounded versus Angular Design Elements

Two experiments tested whether a general relative preference for objects with rounded rather than angular form (Bar & Neta, 2006, 2007) can be applied in the context of the design of consumer products. Images of product packaging—a chocolate product (Experiment 1) and water and bleach bottles (Experiment 2)—were manipulated with regard to the shape of both contour and graphics. There was a preference for rounded designs that extended to self‐report purchase likelihood—with additive effects of contour and graphics shape that could not be accounted for by design typicality or perceived ease of use.     

Arbitrage and knowledge

I investigate in depth the contemporary, nation-wide arbitrage phenomenon of copper penny hoarding. While penny hoarding represents a “pure arbitrage” opportunity, it also clearly demonstrates the knowledge problems that face those entrepreneurs who are fully informed about intra-market price differences. This paper contrasts the Neoclassical and Austrian views on the role of information and knowledge in arbitrage, emphasizing the greater depth in understanding to be gained from the knowledge-based Austrian approach, as opposed to the information-based Neoclassical approach.     

Book reviews

Quality & Quantity -     

Quantifying public preferences for agri-environmental policy in Scotland: A comparison of methods

This paper compares two methods for determining policy priorities for reform of Scottish agricultural support. Multifunctional agriculture attempts to establish a new balance between traditional commodity support and payment for the production of non-market goods and services that are increasingly demanded by the public. Supplying non-market goods presents particular problems for optimal policy design, not least the elicitation of consumer demand for those goods. From public focus groups, a range of attributes was derived as central to the Scottish public’s preferences for future agri-environmental reform. This information was then combined in two separate survey methods using the Analytical Hierarchy Process (AHP) and choice experiments (CE). Both applications suggest that the public has defined preferences and a willingness to pay (using general income taxation) to affect changes beyond the status quo, and that policy payments should be targeted towards both environmental and social benefits. The divergent preference orderings derived from the alternative methods can be considered in the light of previous methodological debates on question framing, bounded rationality and respondent uncertainty. We speculate about the validity of alternative methodologies for informing particular policy questions.     

Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods

We model firms as competing for socially responsible consumers by linking the provision of a public good (environmentally friendly or socially responsible activities) to sales of their private goods. In many cases, too little of the public good is provided, but under certain conditions, competition leads to excessive provision. Further, there is generally a trade-off between more efficient provision of the private and the public good. Our results indicate that the level of private provision of the public good varies inversely with the competitiveness of the private-good market and that the types of public goods provided are biased toward those for which consumers have high participation value.     

Attitudes of food entrepreneurs towards two grant schemes under the first England Rural Development Programme, 2000–2006

Grant schemes introduced under the first England Rural Development Programme (ERDP) (2000–2006) have been subjected to limited academic research and this paper aims to fill this gap by examining the attitudes of food entrepreneurs in two contiguous English regions to two key elements of the ERDP: the Processing and Marketing Grant (PMG) and the Rural Enterprise Scheme (RES). It does this through a qualitative analysis of data gathered from interviews with 20 ‘adopters’ and 20 ‘non-adopters’ of the two schemes in the South West and West Midlands regions of England. The analysis reveals that, despite the rural development rhetoric, neither the PMG nor the RES was particularly effective at funding enterprises beyond the farm gate; both schemes also appeared to attract what can be described as ‘serial adopters’ and to discriminate against those without experience of applying for government grants. Nevertheless, indirectly they did provide opportunities to safeguard and expand local and regional food production, processing and retailing in the two regions.     

Debt Relief for Low Income Countries: Is it Effective and Efficient?

Although a great deal of attention has been paid to IMF conditionality and to the effects of IMF programmes, relatively little attention has been paid to their completion rate. However, the record is that the clear majority of Fund programmes are uncompleted. Is this a cause for concern and why is it that the completion rate is low? In principle, a number of factors could be at work. Gaining a better understanding of what these are should allow policy reform at the IMF to improve performance. While there are things that we do not know and need to know about programme completion, we know enough to delineate the broad direction that policy should take.