International Interdependencies between the Deregulation of Domestic Service Industries: A Case Study of Aviation in North America

This article is concerned with the interdependence of national markets for service industries. It focuses in particular on the North American aviation industry. It looks at the effects that deregulation and other developments in the US market had on Canadian aviation and air transport policy after 1978. What emerges is that, in the aviation sector at least, national markets for services can no longer be treated in isolation from changes in other, and especially larger, national markets. This is not only a topic of academic interest but has implications for the development of EC policies.     

Pricing of telecommunications services

Recently many scholars have argued that society's welfare would be increased if the price of local telephone service were increased, and the prices for toll and enhanced telecommunication services reduced. In this paper we argue that the telecommunications policy literature has largely ignored the impact of varying technical standards on the cost-of-service. Consequently, the marginal cost of exchange service has been overstated. We also show that most work in this area has overstated the elasticity-of-demand for toll services. Taking into account quality and the appropriate elasticities, we conclude that no clear welfare gains will be achieved by raising the price of exchange service.     

A structural model of aircraft engine maintenance

We develop and estimate a simple regenerative optimal stopping model of aircraft engine maintenance that attempts to describe the behaviour of airline maintenance personnel. The model assumes that the decision to send an engine to the shop for overhaul is the solution to a stochastic dynamic programming problem that trades off the expected cost of continuing operation with the attendant risk of engine failure with the cost of performing the overhaul. We estimate the model using 42 engine histories from Pratt & Whitney, Inc. Estimation results indicate that such a model does not explain observed engine histories before deregulation, but does fit the data in the era since deregulation. The model also provides insight into the perceived relative costs of engine maintenance, in-flight shutdown, and ordinary operation.     

Economies of scope in the local telephone exchange market

Using cost data generated by an optimization model, we evaluate the degree of economies of scope in the local telephone exchange market. We find that economies of scope between switched and non-switched services are a decreasing function of customer density, while there are strong economies of scope, regardless of customer density, within the switched telephone market.The authors gratefully acknowledge partial funding from the National Regulatory Research Institute at the Ohio State University. This work was made possible in part by research computing facilities provided by the City University of New York and Tulane University. We thank Editor Michael Crew, two anonymous referees, and David Malueg for useful comments and suggestions. Remaining errors are, of course, our own responsibility.The computer software (compiled for use on MS-DOS machines) and user instructions developed for this paper are available at reproduction cost from the authors at either address. The authors are willing to collaborate with interested researchers in modifications of the source code; however, source code will not be distributed due to confidentiality restrictions.     

Efficient interconnection charges and capacity-based pricing

Capacity-based interconnection (CBI) prices vary exactly with the costs a network provider incurs when supplying an interconnecting party. That is, they equal incremental costs, rather than being averaged over any output measure. We argue such prices (1) are as practicable and more efficient than per minute rates based on long run incremental cost, (2) are more efficient than bill and keep, and (3) with mark-ups for cost recovery, are a practical and relatively efficient means of pricing wholesale interconnection services, being well-suited to both circuit and packet-based networks.

Futures and government: Combating the new philistinism

The downgrading of long-term forecasting and planning in the governments of a number of Western countries is traced to the rise of ‘the new philistinism’—blunt myopia and political opportunism—typified by the stance of the Thatcher and Reagan administrations. After a review of the fate of the proposals for an independent European futures unit deriving from the Europe Plus Thirty project, this article calls for another attempt to set up effective Western futures institutions. Not to forecast and not to plan is a use—or rather, a misuse—of government power.     

Fuly Distributed Cost Pricing,Ramsey Pricing,and Shapley Value Pricing: A Simulated Welfare Analysis for the Telephone Exchange

Economic theory has long been concerned with determining the optimal pricing scheme for a multiproduct monopoly, but it has been quite difficult to make use of developments in practice. Using LECOM, the Local Exchange Cost Optimization Model, over three stylized city maps, and assuming price elasticity values taken from the literature for four standard outputs of the local exchange, we demonstrate how fully distributed cost prices, Ramsey-optimal prices, Shapley prices, and standalone prices can be computed for a variety of baseline output levels. Analysis of consumer surplus changes relative to the marginal cost baseline shows that while Ramsey pricing maximizes social welfare over the set of schemes considered, only the Shapley approach results in subsidy-free prices.     

Elite Decision Makers' Strategic Use of European Integration and Globalisation Discourses: Irish and Danish Banking Sector Reforms in the 1990s and 2000s

This article investigates decision makers' strategic use of European integration and globalisation discourses to justify and coordinate national sector reforms. This is done using the example of banking sector reforms in two small European Union (EU) member states, Ireland and Denmark. Two key arguments are put forward: (1) National governments' ability to make credible claims about their ability to influence the direction of European integration is crucial in enabling them to justify sector reforms. Thus, as a full member of the European Monetary Union (EMU), Irish decision makers are able to make credible claims about their influence on European financial integration, an option not available to Danish decision makers since Denmark is not a Eurozone member; (2) Globalisation comprises a particularly compelling set of discourses which enables decision makers to carry through sector reforms in line with European integration measures, even in the absence of national commitment to the latter. Discourses of globalisation have thus become ‘the last resort’ for Danish decision makers in justifying and coordinating reforms that are in line with EU regulations and recommendations.     

Technology catch-up in agriculture among advanced economies

We examine whether countries with low initial levels of agricultural total factor productivity (TFP) tend to ‘catch up’ with the technology leaders. We first compare relative levels of agricultural TFP, capital services and labour input levels in agriculture for 17 OECD countries between 1973 and 2011. Then we apply (conditional) convergence analysis to the panel data to examine the speed of convergence and test whether the convergence is transitory or permanent by analysing TFP changes over the business cycle. Capital intensities, quality improvement of capital, factors such as human capital spillovers, and certain agricultural policies are conditioning variables. We examine how differences in relative capital intensities affect agricultural productivity convergence over the business cycle. We find evidence that the speed of convergence increases during periods of contraction in economic activity.