How wages and employment adjust to trade liberalization: Quasi-experimental evidence from Austria

We study the response of regional employment and nominal wages to trade liberalization, exploiting the natural experiment provided by the opening of Central and Eastern European markets after the fall of the Iron Curtain in 1990. Using data for Austrian municipalities, we examine differential pre- and post-1990 wage and employment growth rates between regions bordering the formerly communist economies and interior regions. If the ‘border regions’ are defined narrowly, within a band of less than 50 km, we can identify statistically significant liberalization effects on both employment and wages. While wages responded earlier than employment, the employment effect over the entire adjustment period is estimated to be around three times as large as the wage effect. The implied slope of the regional labor supply curve can be replicated in an economic geography model that features obstacles to labor migration due to immobile housing and to heterogeneous locational preferences.     

A test of trade theories when expenditure is home biased

We develop a criterion to distinguish two dominant paradigms of international trade theory: homogeneous-goods perfectly competitive models, and differentiated-goods monopolistically competitive models. Our analysis makes use of the pervasive presence of home-biased expenditure. It predicts that countries’ relative output and their relative home biases are positively correlated in differentiated-goods sectors (the “home-bias effect”), while no such relationship exists in homogeneous-goods sectors. This discriminating criterion turns out to be robust to a number of generalisations of the baseline model. Our empirical results, based on a world-wide cross-country data set, suggest that the differentiated-goods model fits particularly well for the machinery, precision engineering and transport equipment industries, which account for some 40% of sample manufacturing output.     

Economics at the FCC, 2011–2012: Spectrum Incentive Auctions, Universal Service and Intercarrier Compensation Reform, and Mergers

The past year in economics at the Federal Communications Commission covered a broad range of topics in telecommunications policy. This paper highlights the economic issues that are addressed in the following key areas: spectrum management, universal service and intercarrier compensation reform, and merger review. In spectrum management, the FCC received congressional authority to implement an ??incentive auction?? to repurpose television broadcasting spectrum into flexible-use licenses that will be suitable for mobile wireless service providers. We discuss some important issues in designing the auction. We next address some aspects of the FCC??s comprehensive reforms of intercarrier compensation, which mainly involves call termination rates, and of universal service. Finally, we discuss the economic analysis of two major mergers: AT&T-T-Mobile, which the FCC staff recommended should be referred to an administrative hearing, and Level 3/Global Crossing, which was cleared with no conditions.     

The price of variance risk

Between 1996 and 2014, it was costless on average to hedge news about future variance at horizons ranging from 1 quarter to 14 years. Only unexpected, transitory realized variance was significantly priced. These results present a challenge to many structural models of the variance risk premium, such as the intertemporal CAPM and recent models with Epstein–Zin preferences and long-run risks. The results are also difficult to reconcile with macro models in which volatility affects investment decisions. At the same time, the data allows us to distinguish between different disaster models; a model in which the stock market has a time-varying exposure to disasters and investors have power utility fits the major features of the variance term structure.     

Revisiting the effectiveness of the German accounting enforcement reforms: a replication study

Management Review Quarterly - In this paper, we replicate and extend the study “Economic Consequences of Accounting Enforcement Reforms: The Case of Germany” published by Ernstberger,...     

When pushing back is good: the effectiveness of brand responses to social media complaints

Conventional wisdom suggests that brands should respond in an accommodative way to consumer complaints. However, this research shows that observers of the communication between complainants and brands on social media may prefer a defensive response under specific conditions. Thus, this study helps managers to find optimal responses to social media complaints, thereby minimizing negative consequences. We introduce a previously unexamined key moderator that takes account of the observer perspective: the benefits sought in the context of a complainant–brand interaction (e.g., brand presences in social media). Hence, we differentiate hedonic from utilitarian contexts and we note the distinct observer benefits and corresponding preferences. A field study and a series of experiments show that a defensive response can be superior in hedonic contexts but inferior in utilitarian ones. We also show how response strategy indirectly affects observers’ behavioral consequences and identify complaint reasoning and brand communication style as relevant boundary conditions.

     

To pay or not to pay — the role of monetary incentives in an optimal blood donation service bundle

• This study derives four attributes that make up the typical blood donation service bundle. It focuses on the role of monetary incentives in such bundles, but also discusses three other attributes, namely the offering organization, the distance to donation location, and the donation time. Each attribute is discussed in the context of a blood donation marketing mix. In an empirical conjoint study, 529 potential blood donors evaluate different designs of blood donation service bundles. Monetary incentives are found to be the most important factor when donors compare different blood donation service bundles. It is found that the distance to the donation location is almost as important as monetary incentives. Blood donation organizations aiming to collect all blood donations from unremunerated blood donors should therefore shape their service bundles to be attractive for potential blood donors. It is concluded that nonpaying blood donation organizations have to offer superior convenience to their donors to be able to compensate for not offering monetary incentives. Operating with mobile donation teams is one of the concrete suggestions for blood donation marketing that are given in this study.

Copyright © 2013 John Wiley & Sons, Ltd.     

Can nature-based tourism benefits compensate for the costs of national parks? A study of the Bavarian Forest National Park,Germany

German national parks are increasingly under pressure from land use change and need objective information on economic values associated with different forms of use to help policy-makers resolve conflicting policy goals. To date, a complete cost–benefit analysis of a German national park has not been undertaken. This paper addresses this gap through a study from the Bavarian Forest National Park (BFNP), the oldest and best known park in Germany. The research questions are: (1) Is the designation of the national park economically justified? and (2) Can revenue from park tourism compensate for its costs? Databases used include a visitor and enterprise survey, qualitative interviews and secondary sources; analyses involved several interrelated environmental valuation methods. Results suggest that the BFNP is an economically favourable land use option under most scenarios. At national level, half of the scenarios show a benefit–cost ratio (BCR) greater than 1. At regional level the park acts as a tool for economic development, generating net monetary gains for surrounding counties, with BCRs of over 1 throughout. Tourism contributes to over 60% of the benefits and compensates for more than two-thirds of the costs in half of the scenarios discussed. Key policy implications are listed.     

Backdating executive stock options—An ex ante valuation

When backdating executive stock options (ESOs), the exercise price is set in favor of the recipient executive. Relative to a non-backdated benchmark, we find an (ex ante) upper bound for the cost of backdating to shrink from 10% to about 3.7%, as a consequence of the regime change represented by the Sarbanes-Oxley act (SOX).We frame the backdating behavior as a (compound) exotic option, considering both simple and extended models of the underlying ESO—in the latter case we draw on the analytical ESO models of Sircar and Xiong (2007). Post-SOX, we use a Longstaff-Schwartz inspired least squares Monte Carlo approach.