Foods produced using biotechnology: how does the law protect consumers?

This paper addresses the following subjects: biotechnology and consumers, concern about risks, consumer acceptance, labelling of foods produced using biotechnology, the legal approach to consumer protection, and consumer protection policies relating to biotechnology products in the European Union, the United States, Turkey and global institutions such as the Convention for Biological Diversity (CBD) and the World Trade Organisation (WTO). It is likely that biotechnology will gain ground much more rapidly in the twenty‐first century than in the past. Despite rapid, detailed and precise advances in gene technology, its applications have not been the received with a great deal of consumer enthusiasm. Consumers have approached genetically modified foods with considerable apprehension and opposition. Consumer concerns about bioengineered food products focus on the questions of human health, environmental and social risks and benefits. The most important stages in the process of marketing new foods produced using biotechnology are to demonstrate user need and consumer acceptance. Generally, the technical complexity of biotechnology makes it difficult for consumers to understand details of the product and the specific attributes of biotechnology applications. Scientific uncertainty, the nature of consumer concerns and general reluctance to accept biotechnology products, increase the importance of consumer protection. Legal protection is a very important factor in the solution of new social problems related to technological advances. More specifically, consumer and environmental law support consumer protection related to foods produced with biotechnology. The basic principles of consumer law can be re‐formulated as consumer rights. Environmental law is a new phenomenon, but precautionary principles and public participation in decision‐making for environmental law are relevant to consumer protection relating to bioengineered food products.     

Pricing the risks of default

This paper decomposes default risk into timing and recovery risks. The two default components are explicitly priced as if they were traded in the futures market. We develop estimation strategies evaluating recovery risks and then construct implicit prices of contingent securities reflecting purely the timing risk. The models are estimated on monthly data for rates on certificates of deposit offered by institutions in the Savings and Loan Industry, during the 1987–1991 period. Empirical results support market expectations of lower likelihoods of default after 1989.     

POLICY PAPER: The Technical Process of Bank Privatization in Mexico

This paper describes the process of Mexican bank privatization that took place in 1991. We show that the Mexican government was very careful to ensure due process and transparency through the entire bank privatization process. However, the lack of a legal and regulatory framework and lax oversight shadowed the success of the technical process. Hence, the financial system in Mexico had to deal with a banking crisis shortly after their privatization, in 1994.     

Pricing Reinsurance Contracts on FDIC Losses

This paper proposes a pricing model for the FDIC's reinsurance risk. We derive a closed‐form Weibull call option pricing model to price a call‐spread a reinsurer might sell to the FDIC. To obtain the risk‐neutral loss‐density necessary to price this call spread we risk‐neutralize a Weibull distributed FDIC annual losses by a tilting coefficient estimated from the traded call options on the BKX index. An application of the proposed approach yield reasonable reinsurance prices.     

Hedging and Coordinated Risk Management: Evidence from Thrift Conversions

We provide an explanation for hedging as a means of allocating rather than reducing risk. We argue that when increases in total risk are costly, firms optimally allocate risk by reducing (increasing) exposure to risks that provide zero (positive) economic rents. Our evidence shows that mutual thrifts that convert to stock institutions increase total risk following conversion, consistent with their increased abilities and incentives for risk taking. They achieve this increase by hedging interest-rate risk and increasing credit risk. We provide some evidence that risk-management activities are related to growth capacity and management compensation structure attained at conversion.     

Change in market assessments of deposit-institution riskiness

Using the Goldfeld and Quandt switching regression method, this article investigates variability over 1975–1985 in the risk components of bank and saving and loan stock. We develop evidence that the market-beta, interest-sensitivity, and residual risk of deposit-institution stock vary significantly during this period. Reassessing previous event studies in light of these findings suggests that event-study methods tend to overreach their data. The Ohio State University University of Maryland     

Role of absorptive capabilities in outsourcing the headquarters selling task in the United States

Manufacturers often outsource headquarters selling task to sales and marketing agencies. Headquarters selling task is one of the most outsourced sales and marketing functions and it entails all the activities that a manufacturer conducts in order to sell its product line to the headquarters of a retailer. Thus, effective management of headquarters selling task has a strategic importance for the manufacturer. This study examines the role of absorptive capabilities in outsourcing headquarters selling task. Using resource-advantage theory, this study proposes a theoretical model to link the resources and absorptive capabilities of the outsourcer (manufacturer) and the outsourcee (sales and marketing agency) to performance outcomes. Using data from field interviews of managers an empirical model was tested. The results showed that resources of both the outsourcer and the outsourcee are important in turning potential complementarities into higher outsourcing performance. Contrary to the common belief that outsourcing is a one-sided transaction where only the outsourcee is responsible from the performance outcomes, this study suggests that both parties involved need to combine their resource assortments in the accomplishment of the task.