A core-theoretic solution for the design of cooperative agreements on transfrontier pollution

For a simple economic model of transfrontier pollution, widely used in theoretical studies of international treaties bearing on joint abatement, we offer in this paper a scheme for sharing national abatement costs through international financial transfers that is inspired by a classical solution concept from the theory of cooperative games—namely, the core of a game. The scheme has the following properties: total damage and abatement costs in all countries are minimized (optimality property), and no coalition or subset of countries can achieve lower total costs for its members by taking another course of action in terms of emissions or transfers, under some reasonable assumption about the reactions of those not in the coalition (core property). In the concluding section economic interpretations of the scheme are proposed, including its connection with the free-riding problem.     

Alternative Models of Trustworthiness of Service Providers

ABSTRACT

The structure and dimensionality of the trustworthiness construct are important theoretical and practical issues. Building on the work of Ennew and Sekhon and based on a sample of 625 respondents, this research identifies a six-factor structure of trustworthiness of service providers in the retail banking sector: customer orientation, integrity and honesty, communication and similarity, shared values, expertise, and ability and consistency. After assessing the reliability and validity of this factor structure, the study also compares the five alternative models of trustworthiness. Results indicated that the trustworthiness model with the six first-order factors has the best model fit. Higher order confirmatory factor analysis was used to identify three second-order trustworthiness factors, which are competency, openness, and benevolence. The various dimensions of trustworthiness are viewable as levers of improving a bank's trustworthiness in the minds of its current and potential customers.     

Role of source-destination proximity in international inbound tourist arrival: empirical evidences from India

This paper analyses the influence of source-destination proximity on the relationship between three key determinants of foreign tourist arrival and inbound international tourist volume in India. The data have been collected for top 11 source countries for a period of 1992–2013. By classifying source countries based on the air travel duration to the destination, three different clusters emerge. To analyze the data, panel modeling is used with a dependent variable having negative binomial distribution. The results of the overall panel modeling reveal that while Gross National Income (GNI) and Previous Year Arrival (PYA) are significant influence on inbound tourism demand but Relative Destination Price (RDP) is not. Further, the results show that for cluster 1 (nearby countries), only PYA is a significant influence; for cluster 2, PYA and GNI are significant; and for cluster 3, all three factors are significant. The findings have important implications for International Tourism Policy and Destination Marketing Programs.     

International treaties on trade and global pollution

The paper shows that global pollution need not rise under free trade in goods and/or emissions even in the complete absence of income effects. Differences in environmental concerns across the countries lead to differences in the pollution intensity of production and, thus, generate the possibility of increasing world output and income without increasing the world pollution by shifting the production of the polluting good from the country with higher pollution intensity of production to the country with lower one. We show that free trade in goods and/or emissions can induce precisely such a shifting of production with the country with greater environmental concern exporting the polluting good. The paper also demonstrates the possibility of a first-best international treaty on global pollution in which each country or group of countries is better-off.     

Industry Expertise,Information Leakage and the Choice of M&A Advisors

This paper examines the impacts of M&A advisors’ industry expertise on firms’ choice of advisors in mergers and acquisitions. We show that an investment bank's expertise in merger parties’ industries increases its likelihood of being chosen as an advisor, especially when the acquisition is more complex, and when a firm in M&A has less information about the merger counterparty. However, due to the concerns about information leakage to industry rivals through M&A advisors, acquirers are reluctant to share advisors with rival firms in the same industry, and they are more likely to switch to new advisors if their former advisors have advisory relationship with their industry rivals. In addition, we document that advisors with more industry expertise earn higher advisory fees and increase the likelihood of deal completion.     

Repetitive risk aversion

We propose a reasonable condition, which we call repetitive risk aversion (RRA), to be imposed on any utility function to account for the observed data on the relationship between the degree of absolute risk aversion and wealth. We deduce this condition from the concept of the fear of ruin (Aumann and Kurz 1977) and show it to be equivalent to the behaviorally meaningful condition that the risk premium is increasing at a non-increasing rate with the size of the bet. We drive mixed risk aversion, which is known to be stronger than standard and thus proper risk aversion, from RRA. We present several economic applications of RRA to demonstrate that it delivers better comparative static results.I am thankful to Jacques Drèze and Louis Eeckhoudt for their comments. I greatly appreciate the comments of an anonymous reviewer of this journal which have resulted in substantial improvement to both the content and presentation of the paper. An earlier version of this paper was presented at seminars at Brown, CORE, Hopkins, HKUST, Yale, and IMS     

The nonlinear input-output model

This paper develops a nonlinear input-output model in which the production functions can exhibit a mixture of returns to scale at the various stages of production. It is shown that the traditional properties of the linear input-output model can be replicated under an extremely plausible assumption, which we call the uniform dominant diagonal condition. On the basis of this assumption it is shown that the model satisfies a contraction property. This open up the possibility of using some quite powerful results from the contraction mapping theory, establishes the existence of solutions, efficient computational procedures, and leads to a rather transparent mathematical theory for the nonlinear input-output model.     

The Macroeconomic Management of Increased Aid: Policy Lessons from Recent Experience

The authors investigate the macroeconomic challenges created by a surge in aid inflows. They develop an analytical framework for examining possible policy responses to increased aid, in terms of absorption and spending of aid—where the central bank controls absorption, through monetary policy and the sale of foreign exchange, and where the fiscal authority controls spending. Different combinations of absorption and spending lead to different macroeconomic consequences. Evidence from five countries that recently experienced an aid surge (Ethiopia, Ghana, Tanzania, Mozambique, and Uganda) shows no support for aid-related real exchange rate appreciation in these countries, but it does indicate that the fear of Dutch disease played an important part in the policy reaction to aid surges. Fiscal and monetary authorities should coordinate their responses to an aid surge, because an uncoordinated response—typically when the fiscal authority wants to spend aid while the central bank wants to avoid exchange rate appreciation—can have serious negative macroeconomic consequences.     

Convenience and satisfaction: mediation of fairness and quality

This study investigates the role of service fairness and service quality in the relationship between service convenience types (decision, access, transaction, benefit and post-benefit) and customer satisfaction. Results show that service convenience has a significant positive impact on service fairness. Both service fairness and service quality mediate the relationship between service convenience and customer satisfaction. This study provides useful insights to both researchers and practitioners on the role of service convenience in improving service fairness, service quality and customer satisfaction. Findings of this study contribute to the literature by empirically investigating the impact of service convenience types on service fairness, service quality and customer satisfaction; and by examining the mediating role of service fairness and service quality between convenience types and customer satisfaction.