Nature Reserves as a Bioeconomic Management Tool: A Simplified Modelling Approach

This paper demonstrates analytically how a nature reserve may protect the total population, realize maximum sustainable yield (MSY) and economic yield (EY) and how this depends on biological growth, migration, reserve size and economic parameters. The pre-reserve population is assumed to follow the logistic growth law and two post-reserve growth models are discussed to explore the importance of model assumptions for assessment of reserves. The post-reserve growth has either a common carrying capacity as in the pre-reserve case, or each sub-population has its own carrying capacity proportionate to its distribution area. A combined model, as a continuum of the two models, is also formulated and briefly discussed. Population protection against extinction is assured against low cost harvesting, including zero cost, when relative reserve size is greater than relative migration. Reserve size may be tuned to realize MSY in one model, but not in the other. Economic yield is generally greater in the former, but maximum EY cannot be realized in any one.     

Cost Structure and Vertical Integration between Farming and Processing

In several food‐producing sectors, we observe vertical integration between the farming and processing stages. The salmon industry, which has motivated this paper, has seen a rise in large vertically integrated companies over the last decade, with direct ownership of production activities including hatcheries, fish processing and exporting. Both the farming and processing stages have become more capital intensive, which has led to a steeper U‐shaped average cost (AC) curve. In this paper we present a theoretical link between this technological shift and vertical integration: in a repeated game model of relational contracting, we show that when the AC curve is sufficiently steep, then processors and farmers are more likely to vertically integrate. The reason is that steep AC curves make it costly to deviate from the optimal production scale, which in turn makes processors more vulnerable to hold‐up and opportunistic behaviours from its suppliers.     

Do financial advisors exhibit myopic loss aversion?

Myopic loss aversion (MLA) has been proposed as an explanation for the equity premium puzzle, and a number of experiments on students indicate that people do exhibit MLA. However, many people do not rely on their own judgment when making investment decisions, but obtain help from financial investment advisors on how to allocate their wealth. The preferences and choices of financial advisors are thus important for understanding investment behavior. In this paper we make use of 50 professional financial advisors to examine whether they exhibit behavior consistent with MLA. Indeed, we find that they behave consistently with MLA to a larger extent than students.     

Recombination in the open-ended value landscape of digital innovation

Digital innovation introduces a new open-ended value landscape to anyone seeking to generate or capture new value. To understand this landscape, we distinguish between design recombination and use recombination, explore how they play out together, and redirect the attention from products and services toward digital resources. Digital resources serve as building-blocks in digital innovation, and they hold the potential to simultaneously be part of multiple value paths, offered through design recombination and assembled through use recombination. Building on this perspective, we offer the value spaces framework as a tool for better understanding value creation and capture in digital innovation. We illustrate the framework and offer the early contours of a research agenda for information systems researchers.     

Impacts of Norwegian Milk Quotas on Output Growth: A Modified Distance Function Approach

Quota regulations that prevent output expansion of farms and reallocation of output between farms can cause lower growth in output and productivity. The aim of this study was to explain the output growth rate of Norwegian dairy farms since 1976, and to decompose it into output, input, socioeconomic and technical change components. Instead of using the standard distance function approach for multi‐output technologies, we use a growth rate formulation, which automatically removes the farm‐specific effects. This formulation also helps to impose non‐negativity constraints on marginal products of inputs (input elasticities), which are often violated for many observations, especially when flexible functional forms are used. The farm‐level panel data cover three periods: before the quota scheme was introduced (1976–1982); the period with the most output‐restricting quota scheme (1983–1996); and the period with a more flexible quota scheme (from 1997 onwards). Results show that the milk quota regulations had a significant constraining effect on output growth, in particular on milk output in the period 1983–1996. Furthermore, the output mix has shifted towards meat production for the average farm. What emerges from this study is that output growth and technical change are negatively influenced by policy aims where productive performance has not been the primary objective, and that there is scope for increased farm growth if the quota regime is liberalised.     

The effect of cash flow on investment: an empirical test of the balance sheet theory

Using a large data set on investments and accounting information for private firms, we put the balance sheet theory to test. We find that firm cash flow has a positive impact on investment and that the effect is enhanced for firms which are more likely to be financially constrained. We also find that the investment-cash flow sensitivity is significantly larger and more persistent during the first half of our sample period, which includes a severe banking crisis and recession. Our results suggest that financial constraints matter more in periods characterized by adverse economic conditions.     

Playing the trust game with other people’s money

We experimentally investigate to what extent people trust and honor trust when they are playing with other people’s money (OPM). We adopt the well-known trust game by Berg et al. (in Games Econ. Behav. 10:122–142, 1995), with the difference that the trustor (sender) who sends money to the trustee (receiver) does this on behalf of a third party. We find that senders who make decisions on behalf of others do not behave significantly different from senders in our baseline trust game who manage their own money. But receivers return significantly less money when senders send a third party’s money. As a result, trust is only profitable in the baseline trust game, but not in the OPM treatment. The treatment effect among the receivers is gender specific. Women return significantly less money in OPM than in baseline, while there is no such treatment effect among men. Moreover, women return significantly less than men in the OPM treatment.     

Self-enforcing contracts in agriculture

This article examines a self-enforcing contract between a risk-neutralprincipal and a risk-averse agent who is able to hold up valuesex post. It shows that risk aversion and variance can only partlyexplain the contract's incentive intensity. Ex post bargainingpower and outside options will also determine contract choice.If the agent's ex post bargaining position is weak, the principalcannot commit to high-powered incentives, whereas if the agent'sex post bargaining position is good, the agent cannot committo low-powered incentives. The model may thus explain some puzzlesin agricultural contracts, in particular why risk-averse agentssometimes accept to be governed by high-powered incentive contractsthat are quite similar to fixed rental contracts, and why risk-neutralagents are sometimes offered share contracts with lower-poweredincentives.     

The roots of ethnic diversity

The level of ethnic diversity is believed to have significant consequences for economic and political development within countries. In this article, we provide a theoretical and empirical analysis of the determinants of ethnolinguistic diversity in the world. We introduce a model of cultural and genetic drift where new groups endogenously emerge among peripheral populations in response to an insufficient supply of collective goods. In line with our model, we find that the duration of human settlements since prehistoric times has a strong positive association with current levels of ethnolinguistic diversity. Diversity is further negatively correlated with the length of modern state experience and with distance from the equator. Our results are thus consistent with both ??evolutionary?? and ??constructivist?? hypotheses of ethnolinguistic fractionalization.