Estimating welfare changes from efficient pricing in public bus transit in India

Three different and feasible pricing strategies for public bus transport in India are developed in a partial equilibrium framework with the objective of improving economic efficiency and ensuring revenue adequacy, namely average cost pricing, marginal cost pricing, and two-part tariffs. These are assessed not only in terms of gains in economic efficiency, but also in changes in travel demand and consumer surplus. The estimated partial equilibrium price is higher in all three pricing regimes when compared to the current price. As a result, consumer surplus falls in all three cases. The price increase is much larger with average cost pricing compared to marginal cost pricing or two-part tariffs, and hence a larger fall in demand and consumer surplus occurs due to average cost pricing. While there is a gain in economic efficiency from marginal cost pricing and two-part tariffs, this improvement comes at the expense of reduced public bus transit demand and consumer surplus, given the price inelastic public bus transit demand estimated for India. Given the mobility needs and the developmental concerns of a growing economy such as India, the challenge for policy makers is to balance the gains in economic efficiency in the public bus transit sector against other social, political, and developmental goals.     

The indirect effects of foreign direct investment on trade: A network perspective

The relationship between international trade and foreign direct investment (FDI) is one of the main features of globalisation. In this paper, we investigate the effects of FDI on trade from a network perspective, since FDI takes not only direct but also indirect channels from origin to destination countries because of firms’ incentive to reduce tax burden, to minimise coordination costs and to break barriers to market entry. We use a unique data set of international corporate control as a measure of stock FDI to construct a corporate control network (CCN), where the nodes are the countries and the edges are the corporate control relationships. Network measures, as the shortest path length and the communicability, are then computed on the CCN to capture the indirect channel of FDI. Empirically, we find that corporate control has a positive effect on trade both directly and indirectly. The result is robust with different specifications and estimation strategies. Hence, our paper provides strong empirical evidence of the indirect effects of FDI on trade. Moreover, we identify a number of interplaying factors such as regional trade agreements and the region of Asia. We also find that the indirect effects are more pronounced for the manufacturing sector than for primary sectors such as oil extraction and agriculture.     

What Determines Export Diversification in the Development Process? Empirical Assessment

This paper assesses the role played by country‐specific factors as determinants of relative export diversification. Using a panel data set for 60 countries and 20 years (1985–2004), we confirm that even after clearing out differences in income per capita, cross‐country variability in the degree of export diversification is significant. In general, apart from per capita income, features influencing the size of accessible markets (domestic and foreign) are the most relevant and robust determinants of the export diversification process. Diversification opportunities grow if countries are large and not located far from economic core areas and when barriers to trade are restricted.     

Signaling in science-based IPOs: The combined effect of affiliation with prestigious universities,underwriters, and venture capitalists

This paper studies the combined effect of affiliation with prestigious universities, underwriters, and venture capitalists on the valuation of biotech ventures at IPO and their post-IPO performance. We argue that affiliation to a prestigious university provides the affiliated firm with a quality signal in the scientific domain. The pure quality signaling effect of the affiliation is isolated from the substantive benefits it provides by performing a difference-in-difference approach based on the scientific reputation of scientists in firms' upper echelons. The signal is stronger the weaker is the scientific reputation of scientists of the focal IPO-firm and is additive to those provided by prestigious venture capitalists and underwriters. Results for a sample of 254 European biotech ventures that went through an IPO between 1990 and 2009 confirm our predictions.     

Sustainability reporting and corporate identity: action research evidence in an Italian retailing cooperative

Cooperatives are facing the challenge to be competitive in the market, without losing their traditional values of mutuality and democracy. To do that, they need to re‐construct open and participative dialogue with their employees and members based on more democratic forms of communication and engagement. From this point of view, the measurement and communication of sustainability aspects may allow a dialogue to be mobilized with shareholders and stakeholders without losing the attention on competitive factors. Based on these premises, the article analyses the experience of a 5‐year action research project (from 2006 to mid‐2011), carried out within Unicoop Tirreno, an Italian consumers' cooperative, and aimed to implement different tools for sustainability accounting and to embrace a more open dialogue with stakeholders, in particular with employees and members. In this process of change, the tools implemented for sustainability accounting played a key role in supporting the cooperative to reinterpret its own values and in stimulating a new and participative management approach. The results indicate a virtuous circle between the management and measurement of cooperative principles and the management and measurement of sustainability issues.     

The impact of local and external university knowledge on the creation of knowledge-intensive firms: evidence from the Italian case

This paper investigates how far in space university knowledge goes to breed the creation of knowledge-intensive firms (KIFs), depending on the nature (either codified or tacit) and quality of this knowledge. We consider the impact of knowledge codified in academic patents and scientific publications and tacit knowledge embodied in university graduates on KIF creation in Italian provinces in 2010, while distinguishing between local university knowledge created by universities located in the same province and external university knowledge created by universities located outside the province. Our econometric estimates indicate that the positive effects of scientific publications and university graduates are confined within the boundaries of the province in which universities are located. Conversely, the creation of new KIFs in a focal province is positively affected by both local and external university knowledge codified in academic patents, even though the positive effect of this external knowledge rapidly diminishes with geographic distance. Furthermore, the above effects are confined to high-quality universities; low-quality universities have little effect on KIF creation.     

A reduced lattice model for option pricing under regime-switching

We present a binomial approach for pricing contingent claims when the parameters governing the underlying asset process follow a regime-switching model. In each regime, the asset dynamics is discretized by a Cox–Ross–Rubinstein lattice derived by a simple transformation of the parameters characterizing the highest volatility tree, which allows a simultaneous representation of the asset value in all the regimes. Derivative prices are computed by forming expectations of their payoffs over the lattice branches. Quadratic interpolation is invoked in case of regime changes, and the switching among regimes is captured through a transition probability matrix. An econometric analysis is provided to pick reasonable volatility values for option pricing, for which we show some comparisons with the existing models to assess the goodness of the proposed approach.     

On pricing lookback options under the CEV process

Abstract We consider the problem of pricing European lookback options when the underlying asset price is driven by a constant elasticity of variance (CEV) process. The evaluation model is based on the binomial approximation developed by Nelson and Ramaswamy (1990) and we show how to apply it in the case of such options. We develop simple pricing algorithms that compute accurate estimates of the option prices.     

Large,entrepreneurship and regional development policy: ‘growth poles’ in the Mezzogiorno over 40 years

Large firms are often perceived by economists and policy-makers as ‘growth poles’ to promote development in backward regions. The idea behind the ‘growth poles’ is that large firms may have a leverage effect on the birth and growth of small and medium sized firms. Regional policy in Italy, particularly in the Mezzogiorno, has subsidized large external plants since the 1950s. A new wave of planning agreements in the 1990s is going to redesign and to strengthen this policy orientation. This paper offers empirical data on plant location and growth at provincial level over 40 years. There is no evidence of overall long term growth impact of large acternal plants in the Mezzogiorno, while there are interesting variations by sectors. A theoretical interpretation of the impact of large firms on local entrepreneurial resources is offered, pointing to the negative effects of large firms on the supply of local entrepreneurship. Policy implications are discussed.     

Reasoning under uncertainty and multi-criteria decision making in data privacy

By means of an integration of decision theory and probabilistic models, we explore and develop methods for improving data privacy. Our work encompasses disclosure control tools in statistical databases and privacy requirements prioritization; in particular we propose a Bayesian approach for the on-line auditing in Statistical Databases and Pairwise Comparison Matrices for privacy requirements prioritization. The first approach is illustrated by means of examples in the context of statistical analysis on the census and medical data, where no salary (resp. no medical information), that could be related to a specific employee (resp. patient), must be released; the second approach is illustrated by means of examples, such as an e-voting system and an e-banking service that have to satisfy privacy requirements in addition to functional and security ones. Several fields in the social sciences, economics and engineering will benefit from the advances in this research area: e-voting, e-government, e-commerce, e-banking, e-health, cloud computing and risk management are a few examples of applications for the findings of this research.