Your Place in Space: Classroom Experiment on Spatial Location Theory

The authors detail an urban economics experiment that is easily run in the classroom. The experiment has a flexible design that allows the instructor to explore how congestion, zoning, public transportation, and taxation levels determine the bid–rent function. Heterogeneous agents in the experiment compete for land use using a simple auction mechanism. Using the data that is collected, a bid–rent function is derived, and the experimental treatment is altered over the course of three sessions to uncover core concepts in urban economics. Moreover, this provides a tangible experience that can be used to help undergraduates relate to urban issues such as the steep rent gradient found around many larger colleges and universities.     

Robust monopoly pricing

We consider a robust version of the classic problem of optimal monopoly pricing with incomplete information. In the robust version, the seller faces model uncertainty and only knows that the true demand distribution is in the neighborhood of a given model distribution. We characterize the pricing policies under two distinct decision criteria with multiple priors: (i) maximin utility and (ii) minimax regret. The equilibrium price under either criterion is lower then in the absence of uncertainty. The concern for robustness leads the seller to concede a larger information rent to all buyers with values below the optimal price without uncertainty.     

Event History Data and Making a History out of Cross-Sectional Data

At the turn of 20th century social scientists have built up a large stock of cross-sectional data-sets to study social change. However, scholars more and more collect event history data containing the exact timing of events. Comparing the (dis)advantages event history data are to be preferred. However, for research on value change the event history approach is inapplicable, since it is not possible to ask the timing of a value change retrospectively. I will illustrate that value change (i.e. cohort differences) can be studied adequately with cross-sectional data, if information about the historical context is added. For this purpose I test Inglehart's value change thesis.Interestingly, there are also topics in which cross-sectional data-sets are unnecessarily being used. Using research on secularization as an example, I show that the event-history approach can be used to answer the question whether the decreasing number of religious people concerns a cohort-effect. However, whatever data-set is being used, to study cohort differences, one should always give a theoretical answer to the key-question: what exactly makes cohorts different     

Towards a Measure of Core Inflation using Singular Spectrum Analysis

This paper constructs a number of possible core measures of inflation using singular spectrum analysis (SSA). Annual changes in monthly inflation are decomposed into its trend, oscillatory and noise components in order to develop an understanding of the trend and cyclicality in South African headline inflation. Three cyclical components with differing amplitude and frequency are identified. The trend and cyclical components of inflation are found to be a good approximation of core inflation, the inertial part of inflation. These core measures are compared with other candidate core measures based on the properties of a good core inflation measure. Generally, the SSA measures outperform commonly used measures of core inflation based on both in‐ and out‐of‐sample performance.     

Additionality of public R&D grants in a transition economy

This paper examines the input and output additionality of public R&D subsidies in Western and Eastern Germany. We estimate the impact of public R&D grants on firms’ R&D and innovation input. Based on the results of this first step we compare the impact of publicly funded private R&D on innovation output with the output effect of R&D funded out of firms’ own pockets. We employ microeconometric evaluation methods using firm‐level data derived from the Mannheim Innovation Panel. Our results point towards a large degree of additionality in public R&D grants with regard to innovation input measured as R&D expenditures and innovation expenditures, as well as with regard to innovation output measured by patent applications. Input additionality has been more pronounced in Eastern Germany during the transition period than in Western Germany. However, R&D productivity is still larger for the established Western German innovation system than for Eastern Germany. Hence, a regional redistribution of public R&D subsidies might improve the overall innovation output of the German economy.     

Wrapped input selection using multilayer perceptrons for repeat‐purchase modeling in direct marketing

In this paper, we try to validate existing theory on and develop additional insight into repeat‐purchase behavior in a direct marketing setting by means of an illuminating case study. The case involves the detection and qualification of the most relevant RFM (Recency, Frequency and Monetary) variables, using a neural network wrapper as our input pruning method. Results indicate that elimination of redundant and/or irrelevant inputs by means of the discussed input selection method allows us to significantly reduce model complexity without degrading the predictive generalization ability. It is precisely this issue that will enable us to infer some interesting marketing conclusions concerning the relative importance of the RFM predictor categories and their operationalizations. The empirical findings highlight the importance of a combined use of RFM variables in predicting repeat‐purchase behavior. However, the study also reveals the dominant role of the frequency category. Results indicate that a model including only frequency variables still yields satisfactory classification accuracy compared to the optimally reduced model. Copyright © 2001 John Wiley & Sons, Ltd.     

Asymmetric Properties of Office Rent Adjustment

In this paper we use an error correction model for understanding the changes in real office rents for a panel of 15 U.S. MSA’s over the period 1990-2007. We find that office rents in all cities react positively to a rise in office employment and lagged rent changes, while lagged deviations from equilibrium rent levels exhibit a slow and partial adjustment over time. Given the non-negativity constraint of vacancy rates we extend the basic model by examining whether rents react to positive changes in employment conditional on the vacancy rate level. Our results show that office rents react significantly stronger to increases in employment when vacancy rates are below the long-term average. We also repeat the analysis for clusters of cities based on similarities in rent and employment dynamics using multi dimensional scaling. The cluster results confirm the overall conclusions and show that our results are not solely valid for the full panel of cities.