Economic and policy implications of spectrum license fee payment methods

This paper argues that “Do auctions raise consumer prices?” is a misleading question. License fee payment methods, rather than spectrum assignment methods, are key factors that bring forth different market outcomes in the wireless telecommunication industry. This paper analyzes and discusses the effects of three spectrum license fee payment methods—upfront lump-sum fees, royalties, and profit sharing—on economic efficiency, spectrum supply, and government revenue. Royalties create distortions in product and factor markets but can induce the government to increase spectrum supply and encourage firms’ investments. A caveat is that the analyses are based on the model assuming monopoly market and information certainty.     

Corporate Life Cycle and Earnings Benchmarks

We examine whether and how corporate life cycle significantly influences meeting or beating earnings benchmarks (MBE). We find that corporate life cycle plays a significant role in a firm's meeting or beating earnings benchmarks behaviour. Developing strategies that fit into the stage of corporate life cycle is crucial for corporate success. MBE is an important financial goal that requires strategies. In this study, we examine whether and how corporate life cycle significantly influences MBE. Specifically, we focus on the incentives of MBE in growth and mature firms. We find that corporate life cycle significantly influences a firm's tendency to meet or beat zero earnings, prior earnings and analysts’ earnings forecasts. Based on logit regressions for the period from 1988 to 2008, the results indicate that growth firms are more likely to meet or beat all three earnings benchmarks. Overall, the results of this study indicate that a firm's MBE behaviour should be examined in the context of its life cycle stage.     

An analysis of the impact of unionization on efficiency: evidence from a meta-frontier analysis

This article examines the impact of unions on the efficiency of establishments in the manufacturing industry by comparing the results from two different empirical strategies: stochastic frontier analysis (SFA) and meta-frontier analysis (MFA). While SFA concludes that union establishments show higher technological efficiency, the results are the opposite when estimating production functions with MFA. In SFA, unionized establishments appear to be more efficient because they remain closer to their own production frontier; however, in MFA – where groups with heterogeneous technology can be compared – we find that nonunionized establishments are more efficient because they are closer to the meta-frontier than their unionized counterparts.     

Comparison of Internet and interview survey modes when estimating willingness to pay using choice experiments

With the increasing use of the Internet as a survey mode, questions of mode effects and how potential effects influence inferences arise. Using a choice experiment combined with mixed logit estimation, willingness-to-pays (WTPs) for attributes are compared between the Internet mode and the more traditional interview survey mode. The results suggest that there are differences in WTP between the two survey models for three of four attributes. Furthermore, WTPs obtained from the interview survey are larger than the WTPs obtained from the Internet survey, suggesting potential social desirability behaviour by the interview respondents. Internet surveys involving sensitive issues may be desirable because of potential social desirability behaviour.     

Why have business cycle fluctuations become less volatile?

This paper shows that a standard Real Business Cycle model driven by productivity shocks can successfully account for the 50% decline in cyclical volatility of output, its components, and labor input that has occurred since 1983. The model is successful because the volatility of productivity shocks has also declined significantly over the same time period. We then investigate whether the decline in the volatility of the Solow Residual is due to changes in the volatility of some other shock operating through a channel that is absent in the standard model. We therefore develop a model with variable capacity and labor utilization. We investigate whether government spending shocks, shocks that affect the household’s first order condition for labor, and shocks that affect the household’s first order condition for saving can plausibly account for the change in TFP volatility and in the volatility of output, its components, and labor. We find that none of these shocks are able to do this. This suggests that successfully accounting for the post-1983 decline in business cycle volatility requires a change in the volatility of a productivity-like shock operating within a standard growth model. We thank Stephen Parente, Ed Prescott, John Taylor, and two anonymous referees for helpful comments and suggestions.     

Bargaining and Search with Incomplete Information about Outside Options

This paper considers a model of bargaining in which the seller makes offers and the buyer can search (at a cost) for an outside option; the outside option cannot be credibly communicated, and the seller's offer is recallable by the buyer for one period. There are essentially two equilibrium regimes. For sufficiently high search cost, the game ends immediately; otherwise the search occurs in equilibrium. Compared to the case where the buyer can communicate his outside option, the seller is worse off, and the game results in search for a smaller set of values of the search cost, i.e., less equilibrium delay.C72.     

Long-run money demand in Taiwan revisited: evidence from a cointegrating STR approach

Economic growth over the past two decades has failed to reduce income inequality. We contend that major reasons for this are the slowdown and bias in technological change (productivity growth). Given the complexity of the many interactions that take place, this phenomenon is best addressed in a general equilibrium context. For this purpose, we have developed a computable general equilibrium (CGE) model with advanced features relating to income distribution. We perform a series of simulations based on recent overall productivity changes, but under various forms of technological change bias, factor mobility, and government budgetary balance. We find the labour-augmenting technological change cases to be most consistent with recent experience.     

SPATIAL INTEGRATION OF URBAN WATER SERVICES AND ECONOMIES OF SCALE

This research attempts to analyze economic effects of spatial integration of urban water service markets in Korea, employing the notion of economies of scale in terms of cost-effectiveness. The economies of scale are measured by the elasticity of supply with respect to the production cost from the translog cost function of urban water supply enterprises. It was found that the economies of scale in most urban water utility firms of Seoul Metropolitan region have continuously increased during the period 1989–1994. While the economies of scale would be hardly influenced by the changes in population density, they would tend to decrease marginally in response to the rise in employment density. If the urban water markets of the Seoul Metropolitan Region were consolidated into a single water service market without any changes to the current spatial network of water supply and regional economic attributes, the production cost would be reduced up to 47.1 percent of the actual cost in 1994. Those savings would be enough to make up for the financial deficit of the water production of the Seoul Metropolitan Region.     

The joint replenishment and freight consolidation of a warehouse in a supply chain

We have developed joint replenishment and consolidated freight delivery policies for a third party warehouse that handles multiple items, which have deterministic demand rates in a supply chain. Two policies are proposed and mathematical models are developed to obtain the optimal parameters for the proposed policies. Four efficient algorithms are presented to solve the mathematical models for the two policies. The performances of the two policies with the parameters obtained from the proposed algorithms are then compared with the common cycle approach for 1600 randomly generated problems. The results show the robust performance of the proposed algorithm for both policies.