Performance Evaluation of Pension Funds Management Companies with Data Envelopment Analysis

This article uses Data Envelopment Analysis (DEA) to evaluate the performance of Portuguese pension funds management companies from 1994 to 2003, combining operational and financial variables. We evaluate how close the pension funds management companies are to the best practices frontier, also analyzing how they manage their funds. Implications of this research for managerial purposes are then drawn.     

Intrinsic quality improvements and network externalities

We analyze the optimal pricing choice of an incumbent firm that sells a good with network externalities and is threatened by the entry of a higher intrinsic quality variant. In the framework of a vertical differentiation model, we find a necessary and sufficient condition under which intrinsic quality improvement occurs as a result of this competition.     

Hidden monopsony rents in winner‐take‐all markets—sport and economic contribution of Spanish soccer players

In labor markets where few companies compete for many workers, economic theory predicts monopsony rents. Surprisingly, soccer clubs do not profit from the expected rents. The purpose of this study is to explain such contradictory evidence. Our model and empirical test, using data obtained from the Spanish professional soccer league for the season 2001/2002, suggests that monopsony rents that the clubs were to obtain from most of the soccer players would eventually revert to the superstars. The study also illustrates that the market value of players stems both from their sporting performance and their economic contribution. Copyright © 2007 John Wiley & Sons, Ltd.     

Equity in Poverty Program Evaluations

Poverty‐reducing programs often use indicators other than household income to transfer resources to the poor which has important implications in terms of equity of the program. This paper offers a decomposition methodology to analyze the horizontal and vertical equity components of a redistribution policy for subgroups defined according to policy‐relevant characteristics. Our measures are derived by comparing the cost of inequality in terms of equally distributed equivalent poverty gaps in the pre‐transfer income and post‐transfer income distributions. An application to the poverty‐reducing program Oportunidades in Mexico in 2006 reveals that the use of indicator variables more strongly correlated with pre‐transfer incomes in rural households can improve the redistributive effect while it also points out the difficulties of the program in targeting different levels of support among the poor, both within and between groups.     

Simultaneously determined,time-varying hedge ratios in the soybean complex

Time-varying hedge ratios are derived which account for the dynamic characteristics of prices in the soybean complex. A multivariate generalized autogressive heteroskedastic (MGARCH) model, along with other conditional models, is used to specify the relevant covariance matrix. While the time-varying representations of the variance matrix are statistically appropriateex anteand ex posthedging effectiveness indicate that they provide minimal gain to hedging in terms of mean return and reduction in variance over a constant conditional procedure. Whether similar findings arise from other applications of GARCH models to optimal hedging is a question for further research.     

Ownership of individual retirement accounts – an empirical analysis based on SHARE

This paper examines the household retirement saving decisions in what concerns to the ownership of Individual Retirement Accounts (IRAs) in eight European Union (EU) countries. IRAs are more and more seen as an alternative to public pension benefits, which are decreasing. Therefore, understanding the enrolment in IRAs, both the socio-economic factors and over time, is most important. Detailed empirical analysis of the factors that might influence the ownership of IRAs is presented based on Survey of Health Ageing and Retirement in Europe (SHARE), using data from Wave 2 (2006–2007) and Wave 4 (2010–2011). Further, to analyse the impact of legal retirement age in the ownership of IRAs, two subsamples are considered: people aged between 50 and 64 years old (50–64 years) and people aged 65 or over (≥ 65 years). The results suggest that age, years of education, income and ownership of dwelling influence positively and significantly household saving, while number of children, marital status and risk aversion have a negative effect. Marital status and income are not statistically significant for retired people. Policy implications are derived.     

Incentive Contracts for Natura 2000 Implementation in Forest Areas

The implementation of nature conservation policy is often based on contracts between public authorities and landowners. In this article, we model incentive contracts in forest areas in the presence of adverse selection and moral hazard when the conservation outcome is uncertain ex ante but observable ex post. The results show that agents who are likely to achieve a higher level of conservation should be offered a contract where transfers depend on the final outcome, with a bonus for a high ecological level of the forest. When conservation measures are correlated with forest management, we show that the contractual measures involve distorted transfers. We analyse the payment mechanisms used in France and Denmark in the context of the Natura 2000 policy. These mechanisms result in overcompensation and under-performance since they do not take the problem of moral hazard and natural variability into account.     

Analysing rationing policies: drought and its effects on urban users’ welfare (Analysing rationing policies during drought)

The aim of this paper is to study the impact on consumers of rationing policies implemented during water shortages. Water scarcity gives rise to the need for rationing, and various methods, including supply cutoffs, can be used. A model is devised to quantify the welfare losses associated with qualitive and quantitive restrictions. Based on virtual prices and using the consumer surplus as a welfare measurement, welfare variations for different users have been calculated. To achieve the aim, information relative to Seville (Spain) has been used, analysing the drought period that took place in the first half of the 1990s. It has been possible to observe the main source that led to welfare losses for each kind of user.     

Are We Forgetting Something? Remarks on the Connections Between Douglass North’s Contributions and Original Institutional Economics

Douglass North’s latest works have become central to the current discussion regarding the differences and similarities between new institutional economics (NIE) and original institutional economics (OIE). We seek to contribute to this debate by offering a specific analytical perspective to evaluating North’s contributions. After defining a set of philosophical and methodological principles that specifies OIE, we endeavor to verify if and how North’s work relates to these foundations. We believe that this methodological perspective brings to light a fundamental issue not stressed by earlier analyses: the profound difference between the institutionalisms regarding the role of market order as a mechanism of human sociability.