A revised Tobit procedure for mitigating bias in the presence of non-zero censoring with an application to milk-market participation in the Ethiopian highlands

Fixed transactions costs that prohibit exchange engender bias in supply analysis due to censoring of the sample observations. The associated bias in conventional regression procedures applied to censored data and the construction of robust methods for mitigating bias have been preoccupations of applied economists since Tobin [Econometrica 26 (1958) 24]. This literature assumes that the true point of censoring in the data is zero and, when this is not the case, imparts a bias to parameter estimates of the censored regression model. We conjecture that this bias can be significant; affirm this from experiments; and suggest techniques for mitigating this bias using Bayesian procedures. The bias-mitigating procedures are based on modifications of the key step that facilitates Bayesian estimation of the censored regression model; are easy to implement; work well in both small and large samples; and lead to significantly improved inference in the censored regression model. These findings are important in light of the widespread use of the zero-censored Tobit regression and we investigate their consequences using data on milk-market participation in the Ethiopian highlands.     

Convenience yield and the theory of storage: applying an option‐based approach

We propose that an options‐based approach is a superior alternative to the traditional cost‐of‐carry method to model both the behaviour of convenience yields and the commodity price responses to changes in inventory levels. This approach is shown to be more robust and avoids the simplifying assumptions embedded in cost‐of‐carry valuation which fully accounts for the non‐negativity constraint on inventory. Unlike the cost‐of‐carry approach, the options‐based approach does not treat the convenience yield as an exogenous factor. This offers a more natural measure of implied convenience yields in commodity trading strategies. We test the relationship between convenience yields and inventory levels for a number of liquidly traded base metals using both methods. Our results show that the relationship between convenience yields and inventory levels is strongly defined under the options‐based approach in line with market beliefs. This result is consistent with other studies that have used the options‐based approach in other nonmetals commodity markets.     

The cost of agricultural production risk

We examine the relative influence of preferences and technology on producers' ex ante willingness to pay for a reduction in production risk. A risk averse producer pays both an Arrow-Pratt risk premium to stabilize income and a ‘production premium’ to stabilize yield. Using soil-nitrate risks as our motivating example, we demonstrate that the production premium accounts for 40-85% of producers' willingness to pay for risk reduction. These results demonstrate the relative importance of technology over risk preferences when estimating the costs of agricultural production risk.     

An experimental approach to valuing new differentiated products

An experimental store was created to evaluate initial demand for locally produced and guaranteed tender steak products as a more realistic alternative to contingent valuation (CV) and dichotomous-choice experimental methods. Strengths of the approach are incentive compatibility, a realistic consumption set, and a familiar choice environment. Consumers selected among USDA Choice, premium quality, lean, guaranteed tender and locaily produced strip steaks. A double-hurdle count data model indicated initial willingness-to-pay (WTP) for locally produced steak comparable to prior CV results, but demand was highly elastic. Demand for premium quality steak crowded out demand for the guaranteed tender product, contrasting with prior dichotomous-choice experimental results.     

Empirical likelihood block bootstrapping

Monte Carlo evidence has made it clear that asymptotic tests based on generalized method of moments (GMM) estimation have disappointing size. The problem is exacerbated when the moment conditions are serially correlated. Several block bootstrap techniques have been proposed to correct the problem, including Hall and Horowitz (1996) and Inoue and Shintani (2006). We propose an empirical likelihood block bootstrap procedure to improve inference where models are characterized by nonlinear moment conditions that are serially correlated of possibly infinite order. Combining the ideas of Kitamura (1997) and Brown and Newey (2002), the parameters of a model are initially estimated by GMM which are then used to compute the empirical likelihood probability weights of the blocks of moment conditions. The probability weights serve as the multinomial distribution used in resampling. The first-order asymptotic validity of the proposed procedure is proven, and a series of Monte Carlo experiments show it may improve test sizes over conventional block bootstrapping.     

How does financial performance affect marketing? Studying the marketing-finance relationship from a dynamic perspective

In this article, the authors provide a dynamic framework for understanding the relationship between marketing and financial performance. They suggest that firms market to financial markets as well as to consumption markets and that some mixture provides superior long-term performance. The authors discuss the potential pitfalls of overemphasizing one market to the detriment of another and then provide a theoretical model of the factors that influence the extent of marketing to financial markets. This is followed by a discussion of implications for theory, practice, and future research. Mitchell J. Lovett (mitchell.lovett@duke.edu) is a Ph.D. student in the Fuqua School of Business at Duke University. His current research interests include consumer and seller learning in dynamic environments, competitive and dynamic marketing strategies, and the role of marketing in innovation. Jason B. MacDonald (jmacdona@boisestate.edu) is an associate professor of marketing in the College of Business and Economics at Boise State University. His current research interests include the role of marketing in investor relations and Internet marketing strategy.     

Calculating Trade Damages in the Context of the World Trade Organization's Dispute Settlement Process

Since its inception in 1995, the World Trade Organization (WTO) dispute settlement system has received over 250 notifications of trade disputes. While most have been settled, in a few cases the WTO arbitrators had to approve damage awards. This paper will use one of these cases ( Hormones ) to explain the methodology arbitrators use to calculate damages and how this methodology differs from an efficiency-based measure of welfare that economists would instinctively provide. Yet, there are rational reasons for this difference and the arbitrator's methodology does a better job of providing incentives for countries not to violate trade agreements.     

The functions of clothes and clothing (dis)satisfaction: A gender analysis among British students

This study examines the social psychological functions clothes fulfil for young women and men, and the role that these perceived functions play for their (dis)satisfaction with their clothing generally. Sixty female and sixty male British students indicated why an item of clothing they particularly valued was important to them, including perceived functional and mood-related benefits, but also clothes as means for expressing personal and social identity. They also completed a measure of general (dis)satisfaction with one's clothing (Francis, 1990), and described their current financial circumstances.Results of diverse multivariate statistical tests support all three sets of hypotheses: (1) By comparison, men take a more self-oriented approach to clothes, stressing their use as expressive symbols of personality and their functional benefits, whilst women also have other-oriented concerns, choosing to use clothes as symbols of their social and personal interrelatedness with others; (2) although the perceived need for new clothing depends partly on financial constraints, women are more concerned with clothing in the context of peer relations, independently of financial constraints; and (3) the patterns of links between social psychological functions of valued items of clothing and general clothing (dis)satisfaction are gender-specific.Implications of gender differences throughout the clothes consumption cycle — buying motivations, purchase, and use — are discussed with respect to differential aspects of clothing advertising likely to influence women's and men's purchases on the one hand, and with respect to consumer policy tasks in assisting consumers on the other, particularly in the context of addictive buying of women.

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Zusammenfassung Die Funktionen von Kleidung und die (Un)Zufriedenheit mit Kleidung: Geschlechts-spezifische Analyse bei englischen Studenten Die Studie untersucht zum einen die sozialpsychologischen Funktionen von Kleidungsstücken für junge Frauen und MÄnner und zum anderen die Rolle, die diese Funktionen für die (Un)Zufriedenheit mit ihrer Kleidung generell für die Betroffenen haben. Jeweils 60 weibliche und mÄnnliche englische Studenten gaben an, weshalb ein bestimmtes Kleidungsstück für sie besonders wichtig war; dabei spielten funktionale und stimmungsmÄ\ige Aspekte eine Rolle, aber auch der Aspekt, da\ Kleidungstücke persönliche und soziale IdentitÄt ausdrücken. Au\erdem wurde von ihnen ein Ma\ der generellen (Un)Zufriedenheit mit der eigenen Kleidung erhoben. Schlie\lich beschrieben sie ihre derzeitige finanzielle Situation. Die Ergebnisse der verschiedenen multivariaten Analysen bestÄtigen alle drei Gruppen von Hypothesen: (1) Im Vergleich haben MÄnner eine stÄrker selbstorientierte Beziehung zu Kleidungsstücken, die ihren Gebrauch als Ausdruck der eigenen Persönlichkeit und ihre tatsÄchliche Funktion betont, wogegen Frauen auch au\en-orientierte Aspekte verfolgen, indem sie Kleidungsstücke als Symbole ihrer sozialen und persönlichen Beziehung mit anderen auswÄhlen; (2) Auch wenn das Bedürfnis nach neuer Kleidung teilweise von den finanziellen Möglichkeiten abhÄngt, denken Frauen an Kleidung stÄrker im Zusammenhang mit Partner-beziehungen, und zwar unabhÄngig von der finanziellen Situation; (3) Die Beziehungen zwischen den sozialpsychologischen Funktionen besonders geschÄtzter Kleidungsstücke einerseits und der generellen (Un)Zufriedenheit mit der Kleidung andererseits sind geschlechtsspezifisch. Implikationen von Geschlechtsunterschieden wÄhrend des gesamten Konsumzyklus bei Kleidung — Kaufmotive, Kauf und Gebrauch — werden auch in Beziehung mit Einflüssen der Kleidungswerbung und mit verbraucherpolitischen Fragestellungen diskutiert.

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Jason Cox teaches psychology and sociology in London.     

Disguised Protectionism, Global Trade Rules and Alien Invasive Species

Current international law strongly favors policies designed to make imports safer (e.g., in terms of invasive species) over policies explicitly designed to discourage imports. We show that this preference may be counterproductive. A externality in trade is incorporated into a political-economy model of policy formation. Nations can address the externality by inspecting cargo and imposing a fine on contaminated imports. We compare the equilibrium when inspection is the only policy option relative to the equilibrium that emerging when nations may also manipulate the tariff. Ruling out the tariff causes socially excessive stringency in general, social welfare losses if domestic supply is highly inelastic, and in some circumstances an increase in the real tariff, measured as the difference between world and domestic prices.