The great American turnaround through teamwork visioning

Product and process quality are no longer sufficient to ensure operational excellence, regardless of enterprise. Quality is now a given with latent customer satisfaction the mission. Breakthrough excellence will occur only when individual attitude and behavior toward customer sensitivity and satisfaction become an obsession, a way of team life.     

Self-Selecting Agri-environmental Policieswith an Application to the Don Watershed

We consider a model of regulation for nonpoint source water pollution through non-linear taxation/subsidization of agricultural production. Farmers are heterogenous along two dimensions, their ability to transform inputs into final production and the available area they possess. Asymmetric information and participation of farmers to the regulation scheme put constraints on the optimal policy that we characterize. We show that a positive relationship between size of land and ability may exacerbate adverse selection effects. We calibrate the model using data on a French watershed and we simulate the optimal second-best policy and characterize the allocation of the abatement effort among the producers.Authorship is equally assigned among the different authors.     

A Structural Model for Evaluating the Sector-specific Impacts of Preferential Trade Agreements

This paper develops and estimates a structural model of imperfect competition in international markets. The model incorporates a flexible non-linear demand framework with structural price equations. A general Conjectural Variation approach is developed to characterize strategic interaction. This allows the simultaneous evaluation of the sector-specific terms of trade effects of a Preferential Trade Agreement (PTA), and the extent of international competition in the sector under consideration. The model is then used to evaluate the impact of the Lebanese–Egyptian PTA on the iron and steel import sector in Lebanon. Results confirm the need for a structural approach in the empirical assessment of PTAs.

Regulating Nitrogen Pollution with Risk Averse Farmers under Hidden Information and Moral Hazard

We consider a model of pollution regulation for a risk averse farmer involving hidden information, moral hazard, and risk-sharing. The representative farmer faces a production risk originating from nitrogen leaching, and privately observes the soil capacity in retaining nitrogen only after the regulation contract is signed. The latter specifies a transfer and a nitrogen quota, whose decomposition by the farmer among different production stages is unknown to the regulator. We first characterize the optimal solution to the regulator's problem. The sequential decision model is estimated on French crop production data, and the results are used to calibrate and simulate the optimal contract.     

Evaluating the impact of reforming the food subsidy program in Egypt: A Mixed Demand approach

Food subsidy is one of the policies considered to protect consumer welfare against food price increases, in particular when the insufficient local production has to be complemented by food imports with volatile prices. Egypt has experienced several “food crises” (the latest in 2008), which put an halt to attempts to reform in depth the system of food subsidies because of social unrest. In this paper, we use a Mixed Demand approach to analyze the consumption structure of Egyptian households. Our model specification takes into consideration the characteristics of the Egyptian food subsidy system, where some food items have predetermined quotas while others are associated with predetermined (subsidized) prices. Price, income and quota elasticities are estimated from the Egyptian family expenditure survey, and welfare change measures are derived by income class. Simulations of various options to eliminate subsidies on selected food items are conducted. We estimate the negative welfare impact of the reforms, especially in the context of increasing food prices, by comparing welfare effects of policy options by income quartiles and by household category (rural, urban).     

Organizational structure, redistribution and the endogeneity of cost: Cooperatives, investor-owned firms and the cost of procurement

As an organizational type, cooperatives are in general not the dominant form of enterprise. Nevertheless, cooperatives and cooperative-like organizations do play important roles in a number of sectors, suggesting that in some circumstances they are more efficient than other business forms. This paper explores the importance of membership goals on the relative efficiency of the cooperative form of organization. The cooperative cost (and hence production efficiency) advantage is directly linked to the goal alignment between the cooperative and its members, and is influenced by the extent of income redistribution between members and the degree of rent seeking that takes place in the organization. When there is no aversion to income inequality, the members produce at their first best levels. However, as aversion to inequality rises, the production profile of the members converges to the production profile generated when the members face an IOF. Regarding rent seeking, if the more (less) efficient members are able to get their profits valued more, total output is increased (decreased). As a consequence, consumers may benefit from the lobbying that occurs inside a cooperative where the powerful members are the most efficient agents.     

When cost improvements harm consumers

This paper demonstrates that improving cost efficiency in a vertical structure might sometimes be detrimental to consumers. This is in stark contrast with the standard microeconomics result which suggests that the surplus generated by any efficiency gain in production is shared between firms and final consumers, depending on the degree of market power. These new results may apply in contexts such as the diffusion of knowledge and techniques and governmental intervention through income support programs.      

Semiparametric estimation and testing in a model of environmental regulation with adverse selection

We consider a principal–agent model of environmental regulation with adverse selection, where firms are regulated through contracts. We show how the model allows to recover information on structural cost parameters. We use a semiparametric method to estimate consistently such parameters without specifying the distribution of the agents private information. We also show how to check for the specification of the econometric model, as well as auxiliary parametric assumptions, by means of specification tests based on nonparametric estimation. Results are used to discuss a selection of economic issues related to environmental regulation.First version received: August 2002/Final version received: November 2003Previous versions of this work were presented at Seminaire INRA-IDEI, Toulouse, the conference on Applications of semiparametric methods for micro-data, Tilburg, and seminars at UC Berkeley, University of Wisconsin–Madison, CREST, and INRA-LEA. We are indebted to participants, and especially Michael Visser, for their comments. We thank two referees for helpful comments. Financial support from the Conseil Régional Midi-Pyrénées and from INRA is gratefully acknowledged.     

Optimal environmental taxation and enforcement policy

We study the optimal environmental taxation and enforcement policy when (i) the regulator does not know the firms’ abatement costs, (ii) penalties for tax evasion are limited, and (iii) monitoring of pollution is costly. We show that the threat of being audited alter the usual firms’ incentives to over-estimate their abatement costs. In particular, depending on the firms’ abatement costs, the optimal policy may involve over or under-deterrence compared to the full information outcome. We then investigate the properties of a pollution standard. We show that this policy comes close to an environmental tax once the economic incentives of the accompanying enforcement policy are considered.