Consumers’ willingness to pay for eco-friendly apples under different labels: Evidences from a lab experiment

An experiment was conducted in France to evaluate the impact of health and environmental information on consumers’ choices between conventional and organic apples. Results show that additional and precise messages about both pesticides use and pesticides residues significantly impact consumers’ choices between both products. The experiment also studied the effect of a new label signaling apples that only use few pesticides compared to conventional apples. With elicited willingness-to-pay, we show that the introduction of this new label increases the average participants’ surplus whatever the information context for participants, because of a higher quality compared to conventional apples and a lower price compared to organic products. In order to complement this label, a minimum-quality standard imposing the use of few pesticides is socially optimal when initial participants’ knowledge is limited.     

Novel versus familiar brands: An analysis of neurophysiology, response latency, and choice

Two experiments were conducted to analyze neurophysiological activation, response latency, and actual brand choice concerning novel and familiar brands. The results show that (1) the choice of novel brands (compared to the choice of familiar brands) is preceded by increased activation of both the cingulate gyrus and the ventromedial prefrontal cortex, as measured by a functional magnetic resonance imaging (fMRI) study; (2) novel brands are associated with longer choice response latency than familiar brands; and (3) positive mood enhances response latency of choosing novel brands compared to familiar brands.     

Spinoff dynamics beyond clusters: pre-entry experience and firm survival in peripheral regions

This paper investigates local spinoff dynamics in manufacturing industries in peripheral areas. It focuses on the question whether local inheritance of competences and routines from parent firm to spinoff is also relevant for firm survival in peripheral areas. The analysis is based on a unique data-set, tracking all manufacturing firms at five observation points during the time span of 1980–2004 in two case study regions in Switzerland. The results show that the local inheritance of capabilities gives spinoffs a competitive advantage in peripheral regions as well. Further, the findings suggest that spinoff dynamics differ between different types of peripheral regions, depending on their varying local economic conditions. Finally, spinoff dynamics in the periphery might be characterized by a stronger hostility of larger parent firms towards spinoffs. This research adds a distinct peripheral perspective to the entrepreneurial heritage literature and advocates for a more nuanced discussion on spinoff dynamics in varying geographical settings.     

THE ROLE OF THE SERVICE SECTOR IN THE ECONOMY OF METROPOLITAN GENEVA, 1975–1985

Modern production systems are characterized by the growth of service industries and the increasing interdependence between services and the production of goods. Further, current research is becoming increasingly concerned with the strategic role of certain service functions in the process of economic growth. In this paper we examine these phenomena in the specific context of the economic structure and evolution of metropolitan Geneva. We begin by presenting an alternative typology of economic activity, and then employ this typology to examine three aspects of Geneva's economic structure: its configuration in 1985; its evolution over the period 1975–1985; and intrametropolitan shifts of economic activity. Finally, we compare Geneva to other metropolitan areas and cities in Switzerland, France, and Canada, in order to demonstrate the universality of the processes taking place.     

Around Europe: Business Ethics in France: Framework for Future Developments

What are the economic, cultural and philosophical conditions in which French business ethics can develop and flourish? After a career in business, the author is now a Jesuit priest working in the social analysis programme PROJET in Paris.     

Jensen’s Inequality in Finance

The purpose of this paper is to measure the size and the statistical significance of three inequalities in the field of financial economics. The three are variants of Jensen’s inequality. The first inequality is a comparison of the expected value of a ratio to the ratio of the expected value, a problem that arises in pricing foreign exchange rates. The second is a comparison of the log of the expected value to the expected value of the log, a problem that arises in testing forward market efficiency, money demand, production functions, and trade gravity models. The third is a comparison of the expected utility to the utility of the expected value, and helps in determining the importance of the expected utility paradigm, and the magnitude of the equity risk premium. The methodology used is by simulation of random normal variables, thereby introducing sampling error. Despite this sampling error the conclusion is general: all three inequalities are economically material, and stand statistically as inequalities. The major conclusion is that Jensen’s inequality is not a theoretical and superfluous exercise in finance as some have advocated.

Selective penalization of polluters: an inf-convolution approach

Summary. We consider an asymmetric polluting oligopoly. We demonstrate that optimal tax rates per unit of emission are not the same for all firms. We call this property selective penalization. Our Optimal Distortion Theorem states that the efficient tax structure requires that high cost firms pay a higher tax rate. Our Pro-concentration Motive Theorem states that optimal taxes increase the concentration of the industry, as measured by the Herfindahl index. Our Magnification Effect indicates that the variance of marginal costs is magnified by a factor which depends on the marginal cost of public funds.JEL Classification Numbers: Q20, D60, D63.We wish to thank Peter Neary, Kim Long, Raymond Riezman and a referee for very helpful comments. Financial support from SSHRC and FCAR are gratefully acknowledged. We would like to thank Hassan Benchekroun, Kim Long, and Koji Shimomura for discussions and comments.     

Liquidity provision vs. deposit insurance: preventing bank panics without moral hazard

Equilibrium bidding strategies under most multi-unit auction rules cannot be obtained as closed form expressions. Research in multi-unit auctions has, therefore, depended on implicit characterization of equilibrium strategies using the first-order conditions of the bidders’ expected payoff maximization problem. In this paper we consider the pay-as-bid auction with diminishing marginal values for two units and show that any symmetric equilibrium in continuous strategies has the necessary properties to allow such a characterization. Moreover, any increasing solution to the system of differential equations that is used to characterize the equilibrium strategies describes an equilibrium strategy.Generous suggestions and comments from Richard Engelbrecht-Wiggans, Charles M. Kahn, and an anonymous referee are gratefully acknowledged.     

How to share when context matters: The Möbius value as a generalized solution for cooperative games

All quasivalues rest on a set of three basic axioms (efficiency, null player, and additivity), which are augmented with positivity for random order values, and with positivity and partnership for weighted values. We introduce the concept of Möbius value associated with a sharing system and show that this value is characterized by the above three axioms. We then establish that (i) a Möbius value is a random order value if and only if the sharing system is stochastically rationalizable and (ii) a Möbius value is a weighted value if and only if the sharing system satisfies the Luce choice axiom.