A cost function approach to the estimation of minimum efficient scale,returns to scale,and suboptimal capacity: With an application to Canadian manufacturing

This paper presents a new method for utilizing the statistical cost technique to measure minimum efficient scale (MES), returns to scale and suboptimal capacity. An application of the duality theory between cost and homothetic production functions leads to justification for ignoring poor quality or unavailable capital data and the pooling of several years observations to improve the efficiency of the estimates. The methodology is applied to 91 four-digit Canadian manufacturing industries to obtain estimates of MES, returns to scale, and suboptimal capacity. For a subsample of industries, we demonstrate that the cost function estimates of MES and returns to scale are more closely related to engineering estimates than are the ad hoc estimates usually found in the industrial organization literature.     

A test of the efficiency of futures markets in commodities

Zusammenfassung Ein Test der Effizienz von Warenterminm?rkten. — In Reaktion auf die UNCTAD-Pl?ne zur Stabilisierung von Rohstoffpreisen durch beh?rdliche Ausgleichslager hat sich die Diskussion um Warenterminm?rkte als alternative, marktkonforme Stabilisierungsinstrumente erneut entfacht. Eine wesentliche Voraussetzung für den stabilisierenden EinfluΒ der Termingesch?fte auf die Kassapreise von Rohstoffen ist, daΒ die Terminm?rkte ?effizient? sind, d. h., die Terminmarktpreise s?mtliche jeweilig verfügbare Information widerspiegeln. In diesem Aufsatz wird die Effizienz der Terminm?rkte für fünf wichtige Rohstoffe (Kupfer, Zinn, Zucker, Kakao und Kaffee) des UNCTAD-Programms getestet. Dazu werden ARIMAZeitreihenmodelle der Kassapreise gesch?tzt und die Entwicklungen ex post vorhergesagt. Die so gewonnenen Ex-post-Prognosen sind effiziente Vorhersagen, da die Modelle alle systematischen Komponenten einer Zeitreihe erfassen, so daΒ der unerkl?rte Rest zufallsverteilt ist. Ein Vergleich zwischen dem mittleren quadrierten Vorhersageirrtum der Prognosemodelle und dem der Warenterminm?rkte zeigt, daΒ die Terminm?rkte in allen F?llen künftige Entwicklungen ebensogut oder besser anzeigen als die Modelle. Folglich kann die Hypothese, daΒ die untersuchten M?rkte im oben beschriebenen Sinn effizient sind, nicht verworfen werden.

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Résumé Un test de l’efficacité des marchés á terme des matières premières. — cet article nous faisons un test ?demi-fort? sur l’efficacité de marché pour cinq matières — le cuivre, l’étain, le sucre, le cacao et le café — pour lesquelles la CNUCED a proposé de stabiliser les prix par des schemes des stocks régulateurs. Les résultats indiquent que, pour la période observée, on ne peut pas refuser 1’ hypothèse que les marchés á terme de ces matières premières sont efficaces dans le sens que le marché emploie toutes les informations publiquement disponibles en formant les expectatives sur les prix au comptant futurs. Nous concluons que la stabilisation des prix au comptant de quelques matières premières pourrait être regardée comme alternative favorable vis-á-vis les schemes des stocks régulateurs de la CNUCED.

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Resumen El test de la eficiencia de mercados a futuro de productos primarios. — En este articulo se realiza un test de eficiencia de mercado de forma ?semi-fuerte? para cinco productos, espedficamente, cobre estafio, azücar, cacao, y café, cuyos precios UNCTAD ha propuesto estabilizar a través de esquemas de stocks amortiguadores. Los resultados indican que para el periodo estudiado, la hip?tesis de que los mercados a futuro para estos productos son eflcientes en el sentido de que el mercado emplea toda la informacion que se puede obtener püblicamente, informando sobre expectativas de los precios puntuales futuros, no puede ser rechazada. Se concluye entonces, que la estabilización de los precios puntuales para algunos productos primarios a través de mercados a futuro puede ser considerada como una alternativa favorable frente a los esquemas de Stocks amortiguadores de UNCTAD.

     

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Harris-Todaro migration-mechanism and the optimum development of the urban sector

"A time-minimization problem of attaining a full-employment state is solved in a dual economy model where the rural-urban migration mechanism is of [the] Harris-Todaro type. The optimum solution may appear as a policy of urban development at the most rapid rate."     

Does corruption affect income inequality and poverty?

This paper provides evidence that high and rising corruption increases income inequality and poverty. An increase of one standard deviation in corruption increases the Gini coefficient of income inequality by about 11 points and income growth of the poor by about 5 percentage points per year. These findings are robust to use of different instruments for corruption and other sensitivity analyses. The paper discusses several channels through which corruption may affect income inequality and poverty. An important implication of these findings is that policies that reduce corruption will most likely reduce income inequality and poverty as well. Received: March 2, 2000 / Accepted: September 20, 2001     

The Impact of Enterprise Size on Employment Tribunal Incidence and Outcomes: Evidence from Britain

Employment Tribunals are the formal means of adjudicating disputes over individual employment rights in the UK. This article hypothesizes that, because small firms favour informality over formality, they are more likely (i) to experience employee claims than large firms; (ii) to be subject to different types of claims; (iii) to settle prior to reaching a formal Tribunal; and (iv) to lose at a Tribunal. Data from the 2003 Survey of Employment Tribunal Applications are used to examine these hypotheses. They are generally supported, although in relation to the third there was no size effect. Furthermore, our results show that firms that have procedures and follow them are more likely to win than those firms that do not have any procedures. Recognizing the benefits of informality, while also ensuring that small firms follow proper standards of procedural fairness, is a policy dilemma that has yet to be resolved.     

Incumbents and protectionism: The political economy of foreign entry liberalization

This paper investigates the influence of incumbent firms on the decision to allow foreign direct investment into an industry. Using data from India's economic reforms, the results show that firms in concentrated industries are more successful at preventing foreign entry, state-owned firms are more successful at stopping foreign entry than privately-owned firms, and profitable state-owned firms are more successful at stopping foreign entry than unprofitable state-owned firms. The pattern of foreign entry liberalization supports the private interest view of policy implementation and suggests that it may be necessary to reduce the influence of state-owned firms to optimally enact reforms.     

The economic determinants of interest rate option smiles

We address three questions relating to the interest rate options market: What is the shape of the smile? What are the economic determinants of the shape of the smile? Do these determinants have predictive power for the future shape of the smile and vice versa? We investigate these issues using daily bid and ask prices of euro (€) interest rate caps/floors. We find a clear smile pattern in interest rate options. The shape of the smile varies over time and is affected in a dynamic manner by yield curve variables and the future uncertainty in the interest rate markets; it also has information about future aggregate default risk. Our findings are useful for the pricing, hedging and risk management of these derivatives.