Numeraire choice in normalized quadratic functional forms

A semi-nested test procedure is developed for choosing the numeraire for a normalized quadratic profit function when too few observations exist for nested hypothesis testing and when too many alternatives exis for conventional non-nested testing. Sensitivity of empirical results to choice of numeraire price is examined using agricultural data for the US and ten multistate regions. Few test conclusions vary by numeraire but own price input demand elasticities differ greatly.     

Value Creation in the Insurance Industry

Using the insights of current research in corporate finance and financial institutions, the authors briefly present a consistent economic framework for looking at insurance. Shareholders of insurance companies provide risk capital that is invested in financial assets and therefore earns the market return of the assets it is invested in. However, due to the legal and fiscal environment insurance companies are in, they have a competitive disadvantage at investing, and this gives rise to frictional capital costs. The core competence of insurers is in managing the size of these frictional capital costs. Insurers must ensure that they can sell insurance for a price in excess of what they need to produce the cover they sell and compensate the incurred frictional costs on risk capital. It is through the ability to do so that insurers create shareholder value.     

Microenterprise Dynamics in Developing Countries: How Similar are They to Those in the Industrialized World? Evidence from Mexico

A rich panel data set from Mexico is used to study the patternsof entry, exit, and growth of microenterprises and to comparethese with the findings of the mainstream theoretical and empiricalwork on firm dynamics. The Mexican self-employment sector ismuch larger than its counterpart in the United States, whichis reflected in higher unconditional rates of entry into thesector. The evidence for Mexico points to the significant presenceof well-performing salaried workers among the likely entrantsinto self-employment, as opposed to the higher incidence ofpoorer wageworkers among the entrants into the U.S. self-employmentsector. Despite these differences, however, the patterns ofentry, survival, and growth with respect to age, education,and many other covariates are very similar in Mexico and theUnited States. These strong similarities suggest that mainstreammodels of worker decisions and firm behavior are useful guidesfor policymaking for the developing-country microenterprisesector. Furthermore, they suggest that, as a first approximation,the developing-country microenterprise should probably be viewedas they are in the advanced countries as offering potentiallydesirable job opportunities to low-productivity workers.     

The impact of seasonality on tourism and hospitality operations in the alpine region of New South Wales,Australia

Despite the recognized importance of seasonality for tourism businesses, there has been a distinct lack of studies undertaken in the past that discuss the impact of seasonality on alpine accommodation resorts, and more specifically that focus on an Australian location. The main purpose of this study was to examine whether or not the Australian alpine accommodation providers and ski operations have been significantly impacted by the issue of seasonality and to determine more specifically, had there been industry pressure placed on them to become all season operations? For this study, a total of 15 semi-structured interviews were conducted with managers of hospitality businesses located in the sub-alpine region of Jindabyne, and nearby alpine areas of Perisher and Thredbo in New South Wales, Australia. Study results indicated that the majority of managers acknowledged the fact that there has been an increase in the number of summer visitors each year which has pressured them to make changes to their operations. They conceded that such activity has served to reinforce a ‘stand alone’ mindset which was still prevalent amongst the majority of the managers in the region.