Tariff-Rate Quota Liberalization: The Case of World Price Uncertainty and Supply Management

This paper examines the options for liberalizing tariff-rate quotas when a marketing board controls domestic production and international prices are stochastic. Lowering over-quota tariff and increasing import quota volumes are not equivalent. The trade-offs between the two types of trade reforms are examined through numerical simulations for the Canadian chicken industry. Introducing world price variability results in a distribution of welfare impacts for the different groups in the industry. Consumers and processors gain more with tariff liberalization than with increased import quotas. The difference in producer surplus between liberalization regimes is truncated so that producers only see down-side risk under the tariff liberalization regime.
Le présent article a examiné les options concernant la libéralisation des contingents tarifaires lorsqu'un office de commercialisation encadre la production nationale et que les prix internationaux sont stochastiques. Diminuer le taux de droit hors contingent et augmenter les volumes de contingent d'importation ne sont pas des options équivalentes. Nous avons examiné les deux types de réforme commerciale en effectuant des simulations numériques pour le secteur du poulet au Canada. Incorporer la variabilité du prix mondial provoque une distribution de répercussions sur le bien-être des divers groupes du secteur. Les consommateurs et les transformateurs gagnent davantage en appliquant une libéralisation des droits hors contingent qu'en appliquant une augmentation des contingents d'importation. La différence quant au surplus des producteurs entre les régimes de libéralisation est tronquée de sorte que les producteurs ne voient que le risque de perte sous un régime de libéralisation tarifaire.     

Performance analysis for three pillars of sustainability

Journal of Productivity Analysis - Gross domestic product (GDP) has come under criticism as the only objective that countries should pursue for societal well-being. In this paper we apply an...     

The costs of reducing deforestation in Indonesia

In this second contribution to the Policy Dialogue, Colin Hunt emphasises the large contribution that oil palm plantations and the pulp and paper industry have been making to Indonesia's economic growth in recent years, notwithstanding the environmental consequences of such activities. The implication is that avoided deforestation can be expected to have a significant negative impact on segments of the population who would benefit from the business and employment opportunities that would otherwise be generated, directly or indirectly. Palm oil companies typically spend about three dollars on goods, services and labour for every dollar of profit. The author argues that any compensation package for avoided deforestation needs to include all the potential beneficiaries of palm oil production, not just the palm oil companies, and to generate economic activity similar to that being replaced. (Ed.)     

Stakeholder Orientations and Cost Management

We examine the effect of stakeholder orientation on firms' cost management as proxied by selling, general, and administrative (SG&A) cost stickiness. Using a sample of 19,783 firm‐years, we find that customer and employee orientation are associated with greater SG&A cost stickiness. Furthermore, the effect of customer orientation on SG&A cost stickiness is more prominent in firms where SG&A costs create high future value, growth firms, and firms with strong corporate governance. In contrast, the effect of employee orientation on SG&A cost stickiness is stronger in firms where SG&A costs create low future value, mature firms, and firms with weak corporate governance. Overall, the association between customer orientation and SG&A cost stickiness is consistent with efficiency considerations (i.e., adjustment costs). In contrast, the association between employee orientation and SG&A cost stickiness is consistent with agency motives such as empire building or “a preference for a quiet life.” In sum, we provide evidence that corporate orientation toward different stakeholders can have different efficiency implications in the context of SG&A resource adjustments and cost management.     

CEO optimism and forced turnover

We show theoretically that optimism can lead a risk-averse Chief Executive Officer (CEO) to choose the first-best investment level that maximizes shareholder value. Optimism below (above) the interior optimum leads the CEO to underinvest (overinvest). Hence, if boards of directors act in the interests of shareholders, CEOs with relatively low or high optimism face a higher probability of forced turnover than moderately optimistic CEOs face. Using a large sample of turnovers, we find strong empirical support for this prediction. The results are consistent with the view that there is an interior optimum level of managerial optimism that maximizes firm value.     

Political Leadership,Conflict and the Prospects for Constitutional Peace

The emphasis in constitutional political economy has been that new rules and institutions can be devised that improve the welfare of a society. Given the number of societies that are infected with political conflict and as a result lower levels of welfare, this paper attempts to analyse why we do not see more constitutional conventions aimed at eliminating conflict. The key idea is that expressively motivated group members may create incentives for instrumentally motivated group leaders such that it leads them to choose conflict rather than compromise. Nonetheless, it is not argued that such a peace is impossible to obtain. This leads to a further question, that if such a constitutional agreement could be found, would the expressive perspective alter the conventional instrumental perspective on the sort of constitutional reform that should be undertaken?     

Explaining participation in off-the-books entrepreneurship in Ukraine: a gendered evaluation

Despite the growing recognition that many entrepreneurs conduct some or all of their trade off-the-books, few have evaluated whether there are variations in the rationales of men and women engaging in this shadow enterprise culture. Reporting face-to-face interviews with 331 entrepreneurs in Ukraine during 2005–06, of whom 90 per cent operated partially or wholly off-the-books, the finding is that women are largely ‘reluctant’ entrepreneurs and men more commonly chiefly ‘willing’ entrepreneurs, although both motives are normally co-present to differing degrees in entrepreneurs’ explanations and their relative importance changes over time. The paper concludes by discussing the implications for both further research and public policy.     

Profit sharing and the quality of relations with the boss

Profit sharing generates conflicting changes in the relationship between supervisors and workers. It may increase cooperation and helping effort. At the same time it can increase direct monitoring and pressure by the supervisor, and mutual monitoring and peer pressure from other workers that is transmitted through the supervisor. Using UK data on satisfaction with the boss, we show in both cross-section and panel estimates that workers under profit sharing tend to have lower satisfaction with their supervisor. This result persists even as profit sharing has no or a positive influence on other dimensions of job satisfaction. Additional estimates show that lower satisfaction with the supervisor is largely generated by women, who may be less able to respond to peer pressure, and by non-union workers, who may have more to lose by failing to respond to peer pressure.