Hierarchical integration in production planning: Theory and practice

This paper discusses the issue of integrating various decision levels in hierarchical production planning systems. First the theory is briefly reviewed and then two case studies are presented. It is argued that it is not sufficient to have a good decision model at every level of the decision hierarchy. The different models should be carefully integrated. The potential problems resulting from a lack of integration are discussed. These problems are then illustrated in two case studies in order to be able to focus on actual managerial issues. It is shown how different decision levels supported by decision models were integrated in these two applications. Two important features are the crucial role of crossfunctional managerial committees in the integration process and the introduction of slack to avoid disaggregation problems.We do not claim to be exhaustive in presenting the problems related to integration nor do we claim that the solutions to the cases are the best possible ones. We do, however, hope that this paper motivates production managers to take a serious look at their hierarchical planning procedures.     

Heterogeneous Impact of Soil Contamination on Farmland Prices in the Belgian Campine Region: Evidence from Unconditional Quantile Regressions

We estimate a hedonic-pricing model using geo-coded farmland-transaction data from the Campine region, situated in the north-east of Belgium. Unlike previous hedonic studies, we use the method of unconditional quantile regression (Firpo et al., in Econometrica 77(3):953–973, 2009). An important advantage of this new method over the traditional conditional quantile regression (Koenker and Bassett, in Econometrica 46(1):33–50, 1978) is that it allows for the estimation of potentially heterogeneous effects of cadmium pollution along the entire (unconditional) distribution of farmland prices. Using a threshold specification of the hedonic-pricing model, we find evidence of a U-shaped valuation pattern, where cadmium pollution of the soil has a negative and significant impact on prices only in the middle range of the distribution, insofar as cadmium concentrations are above the regulatory standard of 2 parts per million for agricultural land. Results obtained from a probit model to classify land plots into different price segments further suggest that the heterogeneous impact of soil pollution on price can be directly related to the variety of amenities that farmland provides.     

An Associative Approach to Risk Perception: Measuring the Effects of Risk Communications Directly and Indirectly<1?tpb=-6pt?>

Risk perception is often measured by a direct method, e.g., a questionnaire. This mainly reveals the deliberate evaluation of a risk (a so‐called secondary evaluative process), whereas risk perception can also be based on a first, spontaneous reaction (a primary evaluative process). An indirect test such as the Extrinsic Affective Simon Task (EAST, De Houwer, 2003 De Houwer, J. 2003. The Extrinsic Affective Simon Task. Experimental Psychology, 50: 77–85. [Crossref], [PubMed], [Web of Science ®] , [Google Scholar]) may be needed to reveal this first, spontaneous reaction. In this study, a questionnaire and an EAST measured the effects of varying risk communications (high risk, low risk or control article), about high‐voltage power lines. The results of the EAST showed that the respondents associated power lines stronger with unhealthy than with healthy. However, the questionnaire results did not seem to indicate that the respondents considered power lines as risky. The EAST did not reveal an effect of article variation on the associations of power lines with (un)healthy. Conversely, the questionnaire results showed that article variation influenced the secondary evaluative process. Further, our findings demonstrated that the direct and indirect measures were unrelated. An indirect test may complement a direct test to get an overall picture of how people evaluate risks.     

Labor market fluctuations in the small and in the large

Shimer's calibrated version of the Mortensen–Pissarides model generates unemployment fluctuates much smaller than the data. Hagedorn and Manovskii present an alternative calibration that yields fluctuations consistent with the data, but this has been challenged by Costain and Reiter, who say it generates unrealistically big differences in unemployment from the differences in policy we see across countries. We argue this concern might be unwarranted, because one cannot assume that elasticities relevant for small changes work for large changes. Models with fixed factors in market or household production can generate large effects from small changes and reasonable effects from large changes. This is reminiscent of attempts to improve the labor market in the Kydland–Prescott model, especially ones incorporating household production, like Benhabib, Rogerson, and Wright.     

Economic modeling using evolutionary algorithms: the effect of a binary encoding of strategies

We are concerned with evolutionary algorithms that are employed for economic modeling purposes. We focus in particular on evolutionary algorithms that use a binary encoding of strategies. These algorithms, commonly referred to as genetic algorithms, are popular in agent-based computational economics research. In many studies, however, there is no clear reason for the use of a binary encoding of strategies. We therefore examine to what extent the use of such an encoding may influence the results produced by an evolutionary algorithm. It turns out that the use of a binary encoding can have quite significant effects. Since these effects do not have a meaningful economic interpretation, they should be regarded as artifacts. Our findings indicate that in general the use of a binary encoding is undesirable. They also highlight the importance of employing evolutionary algorithms with a sensible economic interpretation.     

Dividend Policies of Privately Held Companies: Stand‐Alone and Group Companies in Belgium

This study examines the dividend policies of privately held Belgian companies, differentiating between stand‐alone companies and those affiliated with a business group. We find that privately held companies typically do not pay dividends. Compared to public companies, they are less likely to pay dividends and they have lower dividend payouts. Our results also suggest that group companies pay more dividends than stand‐alone companies, consistent with the hypothesis that tax‐exempt group firms redistribute dividend payments on the group's internal capital market. Group companies pay higher dividends if they have minority shareholders.     

Incorporating Price-Induced Innovation in a Symmetric Generalised McFadden Cost Function with Several Outputs

This paper proposes a multiple-output Symmetric Generalised McFadden (SGM) cost function, incorporating both exogenous and endogenous technological change. Whilst exogenous technological change is captured by the usual time trend, endogenous or price-induced technological change is cast within a partial-adjustment framework involving lagged input prices. The study points to various dimensions or components of technological change, and allows to disentangle pure factor substitution, given the state of the technology, from factor substitution due to price-induced changes in technology. Under the conditions of non-jointness in input quantities, the model further allows to identify technological change biases for each output separately. An empirical application is presented in which the proposed model is applied to time-series data on the feed manufacturing industry in Belgium. To improve on the econometrics, the SGM cost function also incorporates linear splines.     

EU Anti‐dumping Measures against ASEAN Countries: Impact on Trade Flows*

In the present paper, anti‐dumping (AD) duties levied by the European Commission against products from ASEAN countries in the period 1991–2001 have been considered. The ASEAN countries were among the countries most targeted by AD measures imposed by the EU in the 1990s. A panel regression has been applied to estimate the impact of AD duties on trade in some 12 products that have been subject to AD duties targeting ASEAN countries in the period considered. A significant negative impact of AD duties is found, on both the value and the quantity of imports from ASEAN countries. Our estimation provides some (although not overwhelming) indications of trade diversion in favor of EU countries, but no evidence of trade diversion in favor of non‐targeted non‐EU countries.