A counter-example to an option pricing formula under transaction costs

In the paper by Melnikov and Petrachenko (Finance Stoch. 9: 141–149, 2005), a procedure is put forward for pricing and replicating an arbitrary European contingent claim in the binomial model with bid-ask spreads. We present a counter-example to show that the option pricing formula stated in that paper can in fact lead to arbitrage. This is related to the fact that under transaction costs a superreplicating strategy may be less expensive to set up than a strictly replicating one.     

Dimensions of entrepreneurial orientation and small and medium enterprise performance in emerging economies

The removal of trade barriers has encouraged the entry of new competitors into formerly protected markets. This situation creates pressure on many small and medium enterprises (SMEs) in emerging economies such as Tanzania. Using a survey method and cross-sectional research design, the research examines three dimensions of entrepreneurial orientation (EO), namely: pro-activeness, risk-taking and competitive aggressiveness. Understanding their relationships and variance may help to improve our ability to explain SME performance. The findings contribute to how SME performance in emerging economies can be enhanced to enable SMEs to face challenges posed by competitor influx in the context of an open market economy. The findings indicate a strong relationship between EO dimensions and performance, with risk-taking and competitive aggressiveness moderating the effect of pro-activeness. The proposed model could predict 72% of the variance explained in SME performance.     

Idiosyncratic use of credit facilities by consumers in an emerging economy

A worldwide increase in household debt since the turn of the century has created considerable concern about the indebtedness of households, especially those in emerging economies that have been hit particularly hard by the global economic slump. In this study, the credit consumption of consumers in Swaziland (N = 264) was investigated by means of a survey that aimed to identify and describe factors that encouraged consumers' use of credit, the influence of credit on their buying behaviour when choosing major household appliances or furniture as well as consumers' knowledge of the conditions of credit facilities that were available for their use in retail. Findings revealed that consumers unequivocally appreciate the convenience that is associated with credit, specifically to cope with unexpected purchases, to benefit from special offers and opportunity to afford expensive goods. These advantages apparently negate the negative consequences such as high interest rates and strain on household budgets. Mean scores that were obtained in the knowledge test that only reflected upon credit agreements that respondents have actually entered into in the past, confirmed their ignorance pertaining to their contractual obligations and their consequent vulnerability. Consumers' age and gender seem to have noteworthy consequences for efforts to enhance informed consumer decision‐making. Younger females were significantly better informed that their older counterpart while the reverse was true for males, although differences were not significant. The significant inverse relationship between income and the LS‐means for the credit knowledge test differ from findings in developed countries and provide valuable opportunity for further investigation.     

The potential impact of abolishing company tax in Ciskei

The purpose of this paper is to examine the likely effect of the abolition of company tax on the Ciskeian economy. After considering the case for and against a corporate tax exemption, the issues involved are analysed on two levels. Using aggregate data, drawn from available census data, we find that most firms seem likely either to prefer the existing package of industrial concessions to the tax holiday, or to be indifferent to either option. Similarly, a recent survey of manufacturing enterprises in Ciskei indicated that the majority would prefer the incentive package. Firms that might be attracted by the tax‐free option are likely to be relatively profitable, subsidiaries of multinational companies, and enjoying a higher turnover per worker than firms opting for the incentive package.     

Traders' Bidding Strategies on European Grain Export Refunds: An Analysis with Affiliated Signals

Using a multivariate distribution of traders' information with correlations, we specify the traders' bidding strategies on tenders of European soft wheat intervention stocks. We show that correlations may have opposing effects on the traders' bidding strategy, depending on their valuation of the grain. This structural approach allows us to estimate the traders' strategies using generalized method of moments procedures.     

Defence expenditure and development in South Africa

This article explores the channels through which defence can either promote or compromise economic development. It reviews the roles of the military as an agent for modernisation in developing societies and as an absorber of scarce resources. The article then examines how the military affected development in South Africa in the past and how it could do so in the future, given the decline in defence expenditure.     

In search of efficient network structures: the needle in the haystack

Searching for efficient networks can prove a very difficult analytical and even computational task. In this paper, we explore the possibility of using the genetic algorithms (GA) technique to identify efficient network structures in the case of non-trivial payoff functions. The robustness of this method in predicting optimal networks is tested on the two simple stylized models introduced by Jackson and Wolinsky (1996), for which the efficient networks are known over the whole state space of the parameters’ values. This approach allows us to obtain new exploratory results in the case of the linear-spatialized connections model proposed by Johnson and Gilles (Rev Econ Des 5:273–299, 2000), for which the efficient allocation of bilateral connections is driven by contradictory forces that push either for a centralized structure around a coordinating agent, or for only locally and evenly distributed connections. Murat Yıldızoğlu gratefully acknowledges the support of the CCRDT program of Aquitaine Region.     

Young adults’ consideration of their food choices a propos consequences for their future health

Many researchers have devoted much time and effort to explain the undesirable health outcomes associated with an excessive intake of certain types of fast foods. Particularly vulnerable, are young adults who move out of their parents' homes to live on their own, and then begin to rely on the multitude of so‐called “food away from home” options which are convenient, available and even desirable in their social circles. This study investigated young adults' consideration of the consequences of their consumption of food eaten away from home due to concern about unacceptable habitual behaviour that might negatively affect their future households. The survey involved 395 young adults up to 25 years of age who completed a structured questionnaire which relied on an established Consideration of Future Consequences scale. Data analysis involved exploratory factor analysis, t‐tests and Anova. Findings revealed some concern about the immediate consequences of respondents' fast food consumption, but concern about the future consequences seemed rather distant in their minds. Although significant differences were confirmed within gender and among population groups with regard to immediate concern about their fast food consumption, the means were nevertheless low throughout indicating that much needs to be done to sensitize young people about every day food consumption that might have dire consequences for their future health.