Airline Code-share Alliances and Costs: Imposing Concavity on Translog Cost Function Estimation

This paper provides an assessment of how airline code-share alliances affect the costs of the airline industry. It makes two contributions to the literature. First, it measures the effects of airline alliances by estimating a translog cost function using a panel dataset of 10 major U.S.-based airlines over 29 quarters. Secondly, it ensures concavity of the estimated cost function by using the procedure suggested by Ryan and Wales (2000, Economics Letters 67, 253–260). A conventional translog cost function is first estimated and scale estimates are computed. Unfortunately, the estimated function fails the curvature requirement, which makes interpreting the estimated effects of alliances somewhat dubious. Hence, we re-estimate the cost function by imposing local concavity restrictions. We find that large alliance partners have a small negative effect on airlines costs, but small alliance partners effect on costs appear to be positive, although the magnitude is negligible. We also find material differences in the estimates of scale economies after imposing local concavity.JEL classification: L00, L12, L93     

The Supreme Court and Beer Mergers: From <Emphasis Type="Italic">Pabst/Blatz</Emphasis> to the DOJ–FTC Merger Guidelines

The beer industry in the U.S. has undergone significant structural change in the post-WWII period. The industry also was the object of prominent antitrust challenges to horizontal mergers proposed during this time frame. This paper documents the trend of increasing seller concentration in the brewing industry and assesses the role that mergers played in this structural transformation. We also analyze the change in merger policy that has taken place since the Supreme Court originally addressed mergers in the beer industry as compared to current antitrust enforcement under the DOJ–FTC Merger Guidelines and recent judicial decisions.     

Knowledge and Values in Technology Education

This paper addresses two closely interrelated issues in Technology Education: knowledge and values. The starting point for the discussion is analysis of the nature of knowledge in technology education. Approaches for theorising knowledge will be analysed in this paper as well as problems associated with them. Three major types of problems are identified: problems with finding an appropriate approach for the analysis of technological knowledge; problems with a technocratic interpretation of technological knowledge for the purpose of its classification; and problems with establishing a consistent approach to distinguish common features of technological knowledge. A model that represents knowledge in technology education and the place of values in it is presented as a way of overcoming the problems specified. The claim is made that understanding of knowledge/values relationships can improve theoretical understanding of how technology education can be constructed.     

Adding Value to the Teaching and Learning of Design and Technology

It has been argued that design and technology can be used as a vehicle for teaching science and vice versa. In this paper, we report an investigation into Grade 6 students understandings of concepts embodied in the Systems strand of a technology syllabus as they grappled with a unit of work in technology for the first time. The unit of work involved students in the design and construction of simple systems, followed by experiences with more complex systems. Qualitative research methods were used to investigate the activities of the students as they engaged in the design and technology learning experiences for eight weeks. Data sources included student and teacher interviews, video and audio recordings of whole class and small group interactions, students notes, drawings and diagrams, and researchers field notes and reflections. Changes in students ability to identify the individual components and analyse how the components worked together in systems, and evidence of students use of scientific understandings for explanations, were noted as the unit of work progressed. An improvement was observed in students abilities to describe relationships between inputs, processes and outputs, and outline sequences of cause and effect. The technology and science appeared to be complementary as they developed technology specific and action-oriented technology and science language, which may be evidence of the presence of a community of learners. Recommendations are proposed for enhancing the value of both design and technology and science if both subjects are taught together as part of an integrated program in primary schools.     

Progression in Technology Education in New Zealand: Components of Practice as a Way Forward

Understanding and undertaking technological practice is fundamental to student learning in technology education in New Zealand, and the enhancement of student technological literacy. The implementation of technology into New Zealand’s core curriculum has reached the stage where it has become critical that learning programmes are based on student progression to allow for a seamless education in technology from early primary to senior secondary. For this to occur, teachers and students need to focus learning on key features of technology education. This paper is based on research initiated in 2001 which explored the nature of progression of student learning in technology. It draws on findings from research undertaken in New Zealand classrooms in 1999–2000 that resulted in the development of the technology assessment framework (TAF), (as reported in detail Compton & Harwood 2003). The 1999–2001 research was funded by the New Zealand Ministry of Education. Findings from the 2001 research allowed for the identification of key features of technology education that are relevant across all age groups, contexts and technological areas. These key features were collectively termed components of practice. The three components of practice established to date are brief development, planning for practice, and outcome development and evaluation. This paper discusses the development of progression matrices for each of these and provides illustrative examples of student work levelled against the matrix indicators of progression for brief development.     

Testing for Volatility Jumps in the Stochastic Volatility Process

This paper considers the stochastic volatility process with contemporaneous and correlated jumps in returns and volatility, which was proposed by Eraker, B., Johannes, M. and Poison, N. G. (Journal of Finance 53, 2003, 1269--1300) and proposes the Lagrange multiplier test for the presence of jumps in volatility. The test statistic is derived by regarding the degenerate density of volatility jumps with zero variance under the null as Dirac's delta function. The correlation parameter between jumps, which is a nuisance parameter unidentified under the null, is cancelled out in this test statistic and hence the test is free from the Davies problem (Davies, R. B., Biometrika 64, 1977, 247–254).     

On the asymptotic behavior of the prices of Asian options

In this paper, we study the price of a long term Asian option the pay-off of which is determined by the average price of the underlying asset during the last fixed number of days of its life. As one can imagine, it converges to the price of a plain vanilla option as the time to maturity increases. We explicitly obtained the asymptotic difference which will be useful for computing the price of Asian option in practice.     

Long-memory and heterogeneous components in high frequency Pacific-Basin exchange rate volatility

Recent research examining high-frequency financial data has suggested that volatility dynamics may be confounded by the existence of an intra-day periodic pattern and multiple sources of volatility. This paper examines whether these dynamics are present in the US Dollar exchange rates of five Pacific Basin economies. Using 30-min sampled returns, evidence of a ‘U’-shape intra-day pattern in volatility for regional markets is reported and controlled for using a Flexible Fourier transform. Supportive evidence for the existence of multiple volatility components is offered by semi-parametric fractional difference estimates of the long-memory properties of absolute exchange rate returns at various intra-day data sampling frequencies. Further parametric evidence of an explicit component structure in such high frequency exchange rate volatility is offered by the estimates of a component-GARCH model which comprises both a long-run volatility component exhibiting slow shock decay and a short-run volatility component exhibiting far more rapid decay, and provides a generally superior fit to the data. Further application of these C-GARCH models in the analysis of high frequency volatility spillovers between the currencies considered also reveals that such spillovers are predominantly transitory rather than highly persistent in nature, but that where volatility spillovers do impact on the long-run component of exchange rate volatility the Australian Dollar plays a pivotal role in the localised causality transmission mechanism.