Optimal Licensing Policy under Vertical Product Differentiation

This paper explores a vertical product differentiation model with a licensing arrangement between a multinational firm with superior technology and a domestic firm with obsolete technology. We find that a subsidy provided by the domestic country's government to the domestic firm to assist with the licensing arrangement is welfare enhancing for the domestic country. Furthermore, both the multinational firm and the domestic country are better off under royalty than under fixed fee licensing. These findings stand in contrast to earlier results in the literature.     

Technology Transfer,Quality Standards,and North–South Trade

This paper examines the economic consequences of technology transfer through licensing in a North–South model of vertical product differentiation, based on a product‐line pricing framework. With its limited technological expertise, the southern firm cannot export to the northern market without purchasing the northern firm's “clean” and low‐cost technology. With North–South cost‐asymmetry, we conclude that the transfer of technology through licensing promotes trade, product variety and improves global welfare. However, without government intervention, the private levels of product quality chosen by firms tend to be lower than the socially optimal levels. This finding helps to explain why developed countries often set quality standards for imported foreign products.     

Mortgage‐Backed Securities (MBS): Is It a Curse or a Blessing for the Australian Home Loan Market? A Natural Experiment

The Australian home loan market has seen a significant and persistent boom over more than two decades. The extant literature exploring the underlying factors explaining this boom has predominantly looked at the demand side rather than the supply side. In this paper, we look at a major supply‐side issue, the introduction of mortgage‐backed securities and its likely impact on the home loan market. In doing so, we have developed a mathematical model that theorises this likely relationship. Our mathematical model predicts possible existence of an unstable equilibrium in the home loan market in the presence of mortgage‐backed securities. We have subsequently backed up our theoretical exercise with sound empirical evidence acquired and analysed as a natural experiment in the Australian scenario using quarterly market data on home loans and mortgage‐backed securities data for a 36‐year period from 1976 to 2012. Using unknown structural break tests, we have identified significant breaks around late 1992 to mid‐1995, clearly indicating that there were significant changes in the housing market due to the introduction of mortgage‐backed securities in early 1993. We have also performed a stability test confirming that under certain conditions this market can become unstable.     

Assessing the temporal stability of the ecotourism evaluation scale: testing the role and value of replication studies as a reliable management tool

Developing scales is a critical step in monitoring and evaluating ecotourism to ensure sustainability. Replicating studies to test if scales are enduring in evaluating visitors’ assessments of ecotourism is also essential to ensure reliability and credibility, and to track changes. This paper reports on a sample of 404 international visitors in Nepal's Annapurna Conservation Area, undertaken in 2012, to test for scale stability and change from a 2006 survey. The original scale was cross-validated by confirmatory factor analysis, and then mean-level change and rank-order stability of scale items were reported. There was strong support for the original factor model in the new sample; all items were loaded on a single construct; their loadings were statistically significant, the root-mean-square error of approximation was .076, the comparative fit index was .993, and the non-normed fit index was .987. Although a statistically significant decrease in the mean of scale items was found, the items’ rank-ordering remained similar. The Spearman's rank-order correlation between factor loadings of 2006 and 2012 was .714 and statistically significant. Cronbach's alpha was .845, comparable to the previous alpha of .910. The ecotourism evaluation scale showed temporal consistency but also detected changes in visitors’ attitudes requiring management attention.     

Visitor perceptions of World Heritage value at Sagarmatha (Mt. Everest) National Park,Nepal

World Heritage sites must exhibit outstanding universal value, integrity, and authenticity. Based on this context, this study examined whether visitors to Sagarmatha (Mt. Everest) National Park, Nepal (World Heritage Site inscribed under criteria vii in 1979) recognized it for its exceptional beauty and aesthetics. This study explored the basic concept of perceived park authenticity at this site, and associated factors that influenced the perception of World Heritage values. Questionnaire surveys were administered to 522 international visitors at the park. Exploratory factor analysis and ordinal logistic regression were used for analysis. Results indicated that visitors perceived the park to be authentic, preserved integrity, and constituted outstanding universal value. Additional regression results identified that overall trip satisfaction and educational level were statistically significant predictors of perceptions of authenticity, integrity and outstanding universal value of the park. Prior visits, substitutability of the park, age, and income were statistically significant predictors of perceptions of either authenticity, integrity or outstanding universal value of the park. Results suggest that emphasis on visitors‘ needs via interpretation and professional guides may solicit more favorable attitudes towards this site.     

A note on disease burden and pharmaceutical R&D

We examine the relationship between research and development (R&D) expenditures and the expected impact of diseases in a simple theoretical framework that allows for intellectual property rights (IPR) protection to be strong or weak. In our theoretical model, an agent forms an expectation of the impact of a disease using a publicly available statistic on the (population level) disease burden, such as disability-adjusted life year. We show that a profit-maximising firm will exert relatively more R&D effort on diseases with intermediate expected impacts. We also discuss how a weak IPR regime alters the pattern of R&D investment.     

Sequential technology adoption with asymmetric firms

Abstract

We analyse the incentives and welfare implications of costly technology adoption in a two-period duopoly model where firms have different amounts of capital. We also extend our framework to an open economy set-up and examine the relationship between trade and technology adoption. Our findings are as follows. First, no monotone relationship exists between the threshold cost of adoption and capital shares. Second, an unequal distribution of capital, despite lessening competition, can increase total surplus. Third, trade generally encourages adoption of modern technology unless the share of capital for the adopters is too low.