ECONOMIES OF SCALE AND SCOPE IN POSTAL OUTLETS UNDER CONSIDERATION OF UNOBSERVED HETEROGENEITY

ABSTRACT: We analyze economies of scale and scope in Swiss Post's post offices and franchised postal agencies under consideration of different underlying production technologies and unobserved factors using a latent class model. The results confirm the existence of unobserved heterogeneity and of increasing economies of scale and scope in the Swiss Post's outlet network.     

Information Technology and Establishment Size in America: Rybczynski Redivivus☆

The Rybczynski Theorem is one of the staples of international trade theory. In their article in this issue of the journal, J.J. Rosa and J. Hanoteau apply the theorem to a two-by-two world in which the two “industries” are small firms and large firms, and the two inputs are information and all other. The assumption that small firms are more information intensive, coupled with the fact that information has become pervasive in recent decades, allows them to derive the prediction that small firms will account for increasingly larger proportions of total output and employment in the economy. We highlight a couple of issues that we find problematic in the Rosa–Hanoteau study, and then develop two different empirical strategies to probe the connections between IT and the size distribution of establishments. First, we combine County Business Patterns with input–output data to explore whether the share of small plants has grown at a faster pace among industries that demand IT more heavily. Second, we explore, on an industry-by-industry basis and taking into account the potential endogeneity of IT location, whether clustering of IT firms in specific US counties is associated with a relatively large share of small establishments, on average, in those counties.     

Carbon Taxation, Fuel Substitution and Welfare in Australia

This paper examines the potential role for fuel substitution in electricity production in reducing carbon dioxide emissions over a ten-year time horizon. This is achieved by adding fuel substitution to output changes resulting from demand responses arising from a tax on carbon dioxide emissions. A time profile of adjustments is developed. The tax required for Australia to meet a 20 per cent reduction in emissions from 1993 levels is calculated and effects on inequality and social welfare are examined. The paper also examines the potential effect of a subsidy towards the use of low-emission fuels, financed from the carbon tax. A subsidy produces an improvement in emissions abatement and a lower tax required to reach the emissions target.     

Dialogue and debate in a post-normal practice of science: a reflexion

Scientific activities are always embedded in the cultural matrix that gives purpose to the enterprise, and so we need to develop a rich and meaningful view of social reality. In doing so we realise that we all live different lives, but each of us can broaden our knowledge of the social world through dialogue with others. If scientific questions, which relate directly to society, were researched in a ‘dialogical' manner, ways would be sought to understand the concerned individuals, populations or stakeholders. While never rejecting concern for internal coherence and rigour, science can cope better with future uncertainties, and better solve the problems of those peoples that make up society, by extensively utilising social dialogue.     

Mean-variance hedging for continuous processes: New proofs and examples

Let be a special semimartingale of the form and denote by the mean-variance tradeoff process of . Let be the space of predictable processes for which the stochastic integral is a square-integrable semimartingale. For a given constant and a given square-integrable random variable , the mean-variance optimal hedging strategy by definition minimizes the distance in between and the space . In financial terms, provides an approximation of the contingent claim by means of a self-financing trading strategy with minimal global risk. Assuming that is bounded and continuous, we first give a simple new proof of the closedness of in and of the existence of the F?llmer-Schweizer decomposition. If moreover is continuous and satisfies an additional condition, we can describe the mean-variance optimal strategy in feedback form, and we provide several examples where it can be computed explicitly. The additional condition states that the minimal and the variance-optimal martingale measures for should coincide. We provide examples where this assumption is satisfied, but we also show that it will typically fail if is not deterministic and includes exogenous randomness which is not induced by .