Multi-product capacitated facility location problem with general production and building costs

This research introduces the multi-product capacitated facility location problem with general production and building costs (MP-CFLPGC). The MP-CFLPGC extends previous problems found in the literature by including multiple products and general production and building cost functions that allow the modeling of different behaviors like economies of scale and congestion. The MP-CFLPGC is formulated as a mixed integer linear program (MILP). To evaluate the performance of the proposed formulation we analyze the results of a commercial optimizer on a set of 288 randomly generated test instances that resemble the Colombian cement industry supply chain. After one hour the optimizer achieved an optimality gap of 1.0 % or less in 55 % out of the 288 test instances. On average the optimality gap was 3.57 %. Additionally, we propose a randomized mathematical-programming-based heuristic for the test instances where the MILP formulation presents significantly high optimality gaps.     

Heterogeneous Firms,Globalisation and the Distance Puzzle

Despite the strong pace of globalisation, the distance effect on trade is persistent or even growing over time (Disdier and Head, 2008). To solve this distance puzzle, we use the recently developed gravity equation estimator from Helpman et al. (2008) (HMR henceforth). Using three different data sets, we find that the distance coefficient increases over time when ordinary least squares (OLS) is used, while the non‐linear estimation of HMR leads to a decline in the distance coefficient over time. The distance puzzle, thus, arises from a growing bias of OLS estimates. The latter is explained by an increase in the importance of the bias from omitting the number of heterogeneous exporting firms relative to the bias from omitting zero trade flows. Furthermore, we show that including zero trade flows cannot solve the distance puzzle when using HMR. The HMR estimates are strongly correlated with the time pattern in freight costs reported by Hummels (2007).     

The Relationships of Empathy,Moral Identity and Cynicism with Consumers’ Ethical Beliefs: The Mediating Role of Moral Disengagement

This study examines the relationships of empathy, moral identity and cynicism with the following dimensions of consumer ethics: the passive dimension (passively benefiting at the expense of the seller), the active/legal dimension (benefiting from questionable but legal actions), the ‘no harm, no foul’ dimension (actions that do not harm anyone directly but are considered unethical by some) and the ‘doing-good’/recycling dimension (pro-social actions). A survey of six hundred Australian consumers revealed that both empathy and moral identity were related to negative beliefs regarding the passive and the active/legal dimensions of consumer ethics and were related to positive beliefs regarding the ‘doing-good’/recycling dimension. Cynicism was related to positive beliefs regarding the passive dimension of consumer ethics and was related to negative beliefs regarding the ‘doing-good’/recycling dimension. The role of moral disengagement in mediating these relationships was examined. Empathy and moral identity were only indirectly negatively related to the ‘no harm, no foul’ dimension of consumer ethics through moral disengagement, while cynicism was indirectly positively related to this dimension through moral disengagement. Theoretical and practical implications of these findings are discussed.     

Italy’s Political Upheaval and the Consequences of Inequality

Intereconomics - Political upheaval, with the dangerous rise of the far right – in Italy and Europe – is likely to be stabilised when politics and policies again turn their attention to...     

Should Variable Cost Aid to Attract Foreign Direct Investment be Banned? A European Perspective

The purpose of this paper is to analyze the European Commission’s approach to state aid to attract foreign direct investment (FDI) in a competition policy framework. The Commission considers variable cost aid (VCA) to be more distortive than start-up or fixed cost aid (FCA). This paper addresses that issue and checks whether allowing FCA while banning VCA is an optimal strategy for a supranational Competition Authority maximizing welfare. The model shows that a domestic government maximizing welfare always prefers VCA to FCA if both the incumbent and the entrant are foreign firms and if granting VCA does not cause the incumbent firm to exit the market. The model shows that banning VCA may lead to sub-optimal equilibria where welfare is not maximized.     

Making Sense of the Third Way

Books reviewed in this article:
Anthony Giddens, The Third Way
Tony Blair and Gerhard Schroeder, The Way Forward for Europe's Social Democrats – A Proposal