Price Cap Regulation in the Cable Television Industry: Why was the Demand Stagnant?

During the period of 1992 to 1996, the cable television industry in the United States was regulated by the FCC, which took several price cap measures. As a result, the increase in the price cable service substantially slowed. However, the cable demand did not rise as anticipated. Using a model of imperfectly discriminating monopoly, the paper empirically investigates this curious phenomenon of stagnant demand despite lower prices. The paper finds that the FCC's price capping constrained both demand and prices. The demand was constrained since the price cap was designed to cover almost all TV channels carried by cable systems, and subsequently discouraged cable systems from meeting different customer preferences with multi-tier services.     

A comparison of several approximations to the power function of the likelihood ratio test in covariance structure analysis*

In this paper we compare alternative asymptotic approximations to the power of the likelihood ratio test used in covariance structure analysis for testing the fit of a model. Alternative expressions for the noncentrality parameter (ncp) lead to different approximations to the power function. It appears that for alternative covariance matrices close to the null hypothesis, the alternative ncp's lead to similar values, while for alternative covariance matrices far from H_o the different expressions for the ncp can conflict substantively. Monte Carlo evidence shows that the ncp proposed in Satorra and Saris (1985) gives the most accurate power approximations.     

Innovators, Organization Structure and Management of the Innovation Process in the Securities Industry

This article examines innovation in the securities industry with the central objective of identifying factors that separate innovators from non-innovators. Akira Iwamura and Vijay Jog report results based on their survey of corporate finance vice presidents or CEO's of 43 investment houses from around the world. They conclude that innovative companies seem to be larger and have a well-defined strategy, with management defining the focus of the business. In addition, the firms have developed better communication channels, both internally and with their customers. Yet, the most significant difference that separates innovators from non-innovators is their management of the idea generation process, including concept generation and management's support. Innovators tend to approach idea generation in the following ways: they employ a variety of idea sources, both internal and external; they assign a specific person or group to be in charge of developing new ideas; they encourage employees at all levels to generate new ideas; they use a variety of innovative techniques to stimulate creativity; they reward their employees by non-monetary means; and they encourage group-level participation in evaluation decisions.     

Demand for durable and nondurable goods,environmental policy and consumer welfare

If a tax on energy affects the demand for a nondurable good, the stock of a durable good, and the proportion of the energy consumption per unit of service of the durable good, an integrated approach for investigating consumer demand for durables and nondurables is required. The purpose of this paper is to employ the concept of a variable expenditure function with quasi-fixed durable goods as arguments in order to derive a demand system for nondurable goods in prices of the nondurables, in the stocks of durables, and in variable expenditure. From the envelope condition desired stocks of durables can be calculated and investment demand for durables can be determined. For an application we choose a variable expenditure function based on the almost ideal demand specification, and evaluate alternative environmental policy measures using the equivalent variation for comparing the welfare effects.     

Stock Market Reactions to SFAS No. 96: Evidence from Early Bank Adopters

Statement of Financial Accounting Standards (SFAS) No. 96, “Accounting for Income Taxes,” issued by the Financial Accounting Standards Board (FASB) in December 1987 changed accounting for income tax recognition and accrual. The original deadline for implementation of SFAS No. 96 was December 15, 1988, and earlier adoption was encouraged. This study examines empirically the stock price impact of four pertinent announcement dates regarding SFAS No. 96 for 19 banks that adopted the statement in late 1987 and early 1988. Our results suggest that these early bank adopters have different characteristics from other banks that cause them to benefit from the changes in accounting for deferred taxes and explain their voluntary adoption of the standard.     

Trade and agricultural development in the 1980s and the challenges for the 1990s: Asia

Asian developing countries have had varying experiences in trade and agricultural development in the 1980s, attributable in part to their differing stages of economic development and structural characteristics. Other important influences relate to the external economic environment and the policy choices made by their governments not only during the period but also in the preceding decade. The achievements of Asian developing countries under the adverse external conditions of the 1980s are discussed in terms of their macrocconomic and agricultural growth, the commodity structure of agricultural growth, their food production and trade, the expansion and diversification of their agricultural exports, and the policy and nonpolicy factors affecting them. Special attention is given to the role of policy reforms implemented in China and the South Asian countries, following similar policy developments in Northeast and Southeast Asia in the 1960s and 1970s, toward greater openness in their trade regime and increased private-sector participation in the economy. These reforms have contributed to the observed acceleration in gup , agricultural, and export growth in the 1980s. However, macroeconomic imbalances have emerged that threaten the sustainability of economic liberalization in those countries. The major challenges for the 1990s also differ among the Asian developing countries. In the industrially advanced Northeast economies of Taiwan and South Korea, the primary need is to ease the transition of the remaining rural population as farm incomes continue to fall and workers move to industrial and service activities. This challenge has to be addressed in the context of growing external pressure to further open their domestic market for agricultural imports. Among the Southeast and South Asian countries, there is a need to reduce the existing policy biases against agriculture, particularly against export crop production. Moreover, China and the South Asian countries face the additional challenges of continuing to deregulate their trade regime and internal markets, and of promoting macroeconomic stability. Despite the external trend recently toward regionalism, Asian developing countries generally seem committed to an open trading system, on which in fact their past impressive economic performance has been predicated. An important challenge for them in the 1990s is to play an active role in arresting and reversing any protectionist tendencies arising from the formation of regional trading blocs and to support multilateral initiatives such as the Uruguay Round that promote global trade liberalization.