Alternative Approaches to Compensation and Producer Rights

When policies are changed, it is not uncommon for losers to be compensated. Economic theory and quantitative analysis are useful in determining the efficiency gains/losses associated with a policy change, but are little help in deciding what the approach to compensation should be. The amount of compensation varies, depending on, in part, the political clout of the parties being negatively affected by a policy change—compensation is what politicians and the sector demanding compensation can agree on. We formulate four approaches to producer compensation within the context of the Ontario Tobacco Transition Program, where producers would have suffered losses in the absence of compensation. The approaches range from providing zero compensation to providing compensation based on the entire value of the tobacco quota. The Canadian government chose the latter and compensated producers for the termination of the tobacco quota program based on an approach that far exceeded other possible compensation approaches.     

Household Welfare and the Pricing of Cocoa and Coffee in Cote d'Ivoire: Lessons from the Living Standards Surveys

Cocoa and coffee are the most important crops in Côted'Ivoire. Until recently, the difference between world and administeredproducer prices provided an important source of government revenue.As a result of a continued decline of world prices of both crops,however, the Ivoirien government was forced to cut producerprices in half. Because 40 percent of Ivoirien households groweither cocoa or coffee, this cut can be expected to have a considerableimpact on the welfare level of these households. We use the1985 Living Standards Measurement Survey to estimate the welfareeffects of producer price changes for Ivoirien households, permittingan evaluation of the probable consequences of the recent pricecut. Using nonparametric econometric techniques, we find that,although many households will suffer losses of income, the cutswill not have adverse distributional effects: cocoa and coffeefarmers are scattered throughout the income distribution, butmost are concentrated in the middle.     

USING DIVIDEND POLICY AND MANAGERIAL OWNERSHIP TO REDUCE AGENCY COSTS

In this study we examine dividends and chief executive officer (CEO) stock ownership as interrelated mechanisms that may be used to reduce agency costs. We find a significant nonmonotonic relation between dividend yield and CEO stock ownership. Our evidence shows that until the CEO becomes entrenched, increased executive stock ownership reduces agency costs and decreases dividend yield. Beyond that point, increased stock ownership increases dividend yield. Whether additional stock ownership can reduce agency costs depends upon the CEO's degree of control in the firm.     

Teaching alternative income determination models via a classification matrix

Periodic income determination traditionally has been an important part of financial accounting theory courses. In this article, the authors present an approach for introducing and discussing alternative capital maintenance and net asset valuation concepts which determine periodic income. The authors believe that this approach provides students with the ability to view various accounting income theories in perspective and hence allows students to concentrate on the relative conceptual merits rather than the mechanics of the theories.     

Unrestricted Entry and Nonprice Competition: The Case of Technological Adoption in Hospitals

Medical technology adoption is a major contributor to rising health care expenditures in the US. Multiple market failures provide incentives for hospitals to adopt technologies. Unrestricted entry may result in excess capacity and reductions in output that are inefficient with respect to cost and quality. We analyze the effects of hospital entry in the market for coronary artery bypass graft surgery on the number of procedures performed at both the market and firm levels, using California data from 1983 to 1990. We test the hypothesis that entry has differential effects on hospital output in a market with nonprice competition, depending on market structure. Results show that as the proximity of the nearest competitor increases with entry, hospital output declines. Holding distance to the nearest competitor constant, increasing the number of competitors results in a smaller, but still significant, decrease in output. When there are few incumbents nearby, however, output does not change significantly with entry, suggesting "business-augmenting" effects that result in increased physician referrals offset much of the conventional "businessstealing" effects.     

Uncertainty and the comparative dynamics of stock price

This article derives an envelope theorem for dynamic economic problems under conditions of uncertainty. The theorem is motivated through analysis of a firm with an objective of maximizing shareholders' wealth. Envelope results are used to determine how the value of the optimizing firm is expected to change in response to shifts in several variables including the risk-free interest rate, the market risk premium, the tax rate, and the prices of output and inputs. Uncertainty is introduced into the model using a general measure-theoretic approach which does not require restrictive assumptions regarding the behavior of the problem's stochastic variables.     

Agile manufacturing: Relation to JIT, operational performance and firm performance

A structural model incorporating agile manufacturing as the focal construct is theorized and tested. The model includes the primary components of JIT (JIT-purchasing and JIT-production) as antecedents and operational performance and firm performance as consequences to agile manufacturing. Using data collected from production and operations managers working for large U.S. manufacturers, the model is assessed following a structural equation modeling methodology. The results indicate that JIT-purchasing has a direct positive relationship with agile manufacturing while the positive relationship between JIT-production and agile manufacturing is mediated by JIT-purchasing. The results also indicate that agile manufacturing has a direct positive relationship with the operational performance of the firm, that the operational performance of the firm has a direct positive relationship with the marketing performance of the firm, and that the positive relationship between the operational performance of the firm and the financial performance of the firm is mediated by the marketing performance of the firm.