Welfare reducing licensing

In this paper, we characterize situations where licensing a cost reducing innovation to a rival firm using two-part tariff contracts (a fixed fee plus a linear per unit of output royalty) reduces social welfare. We show that it occurs if (i) the firms compete in prices, (ii) the innovation is large enough but not drastic, and (iii) the goods are close enough substitutes. Moreover, we show that, regardless of the type of competition, first, the optimal contract always includes a positive royalty and, second, even drastic innovations are licensed whenever the goods are not homogeneous.     

Smooth Transition ARCH Models: Estimation and Testing

In this paper, we suggest an extension of the ARCH model, the smooth-transition autoregressive conditional heteroskedasticity (STARCH) model. STARCH models endogenously allow for time-varying shifts in the parameters of the conditional variance equation. The most general form of the model that we consider is a double smooth-transition model, the STAR-STARCH model, which permits not only the conditional variance, but also the mean, to be a function of a smooth-transition term. The threshold ARCH model, the Markov-ARCH model and the standard ARCH model are special cases of our STARCH model. We also develop Lagrange multiplier tests of the hypothesis that the smooth-transition term in the conditional variance is zero. We apply our STARCH model to excess Treasury bill returns. We find some evidence of a smooth transition in excess returns, but in contrast to previous studies, we find almost no evidence of volatility persistence once we allow for smooth transitions in the conditional variance. Thus, the apparent persistence in the conditional variance reported by many researchers could be a mere statistical artifact. We conduct in-sample tests comparing STARCH models to nested competitors; these suggest that STARCH models hold promise for improved predictions. Finally, we describe further extensions of the STARCH model and suggest issues in finance to which they might profitably be applied.     

The effects of beach characteristics and location with respect to hotel prices

This paper measures the effects of beach characteristics and hotel location with respect to the beach on sun-and-beach hotel prices by using a well-established hedonic perspective. The paper’s main results are that, after controlling for the relevant variables, location in front of a beach increases the price of a room in costal hotels of Catalonia by a figure between 13 and 17%, and that a Blue Flag increases the price by around 11.5%. The effects on hotels’ prices of other beach characteristics (such as beach length, width, sand type or beach services) are also estimated. With these estimates, the paper ranks beaches according to their characteristics and provides a setting to assess different policies regarding beaches from the point of view of hotels, such as regeneration, maintenance or achieving a Blue Flag award.     

Urban destination loyalty drivers and cross-national moderator effects: The case of Barcelona

The objective of this paper is to analyze the loyalty of tourists to urban tourism destinations, studying the differences existing on the basis of nationality of origin. The review of the academic literature identified perceived value and satisfaction as antecedents of loyalty. A theoretical model was constructed which was tested empirically with a total of 927 surveys of Italian and American tourists in the city of Barcelona. In the study of the data, structural equation models (SEM) were used, by means of a multi-group analysis. The empirical results show that the causal relationships among perceived value, satisfaction and loyalty and the moderating effect of nationality are partially confirmed. This study contributes to better knowledge of the processes that lead tourists to be loyal to an urban tourism destination.     

A Note on Farmers' Retirement and Succession Considerations: Evidence from a Household Survey

Retirement and succession considerations of family farm operators in Maryland are considered in this paper. Retirement decisions are found to be mainly determined by personal considerations, and only secondary importance is given to succession considerations. However, the relative importance of succession considerations is positively related to the importance of the farm enterprise relative to other income-generating activities of the family. The conclusion is that retirement and succession decisions in family farms are not separable.     

Import Dependency and Structural Adjustment in Sub-Saharan Africa

One of the effects of structural adjustment programs in Sub-SaharanAfrica has been the reduction of imports in the face of scarceforeign exchange. This article takes the analysis of importdemand beyond the traditional income and price determinantsto account for factors likely to be important to Sub-SaharanAfrican countries in the 1990s. First, the effect of demandon imports is reflected by the level of absorption rather thanthe less direct income variable. Second, because adjustmentprograms may cut government consumption and, through increasesin interest rates, reduce investment, these components of absorptionare also considered independently to assess their differentialeffect on imports. Third, import barriers are often set in dollarterms to limit the use of foreign exchange. Because reliableand complete data for import restrictions are not available,the ratio of exports to debt is included as an indicator offoreign exchange availability to reflect its effect on tradebarriers and thus imports. The findings suggest that this morecomprehensive assessment of import demand will be needed ifthe size and even direction of changes in import demand in responseto policy reform is to be understood and anticipated.     

The determinants of wagering behavior

The total volume of wagering at a racetrack is important since it affects both racetrack and state revenues. This paper studies the factors that determine the volume of wagering. One of these factors is the sire stakes, a major form of government subsidy. We conclude that this subsidy has little or no economic impact on the volume of wagers. Unless the state recoups nearly all of the subsidy in other ways, such as sales taxes on racehorses, the sire stakes amount to a direct transfer from taxpayers to the breeding industry. We also develop information useful to racetrack managers.