Issue 23 July 2007
I'll give … if you do (maybe)
What leads people to donate to a worthy cause? And what determines how much they give? Buskers, galleries, and other fundraisers have been collecting anecdotal evidence for years - and now work undertaken by Victoria University economists at Wellington's City Gallery has been able to formalise some aspects of donation behaviour. John Randal describes the results of this research.
Author:
John Randal
To ‘partner up’ or not ‘partner up’:the choice of organisational form
Professional services such as law, accounting, and medicine are typically organised as partnerships. However, in other service industries - as well as in the manufacturing and technology sectors - corporations are the norm. Glenn Boyle and René Le Prou look to explain this dichotomy.
There was sigma in them thar hills...
How astute are financial market traders? Some view traders as shrewd sharks, while others consider them to be mindless lemmings who follow one another from one ‘hot' investment sector to the next. And might their ability depend on the level of market competition? Lyndon Moore travels back in time - and across the Indian Ocean - to find out more.
Author:
Lyndon Moore
A stern look at the economics of climate policy
Climate change has been the highest profile issue in environmental politics for more than a decade, and political interest has reached a fever pitch over the past year. But while the science underlying this issue has been widely exposed, the economics has struggled to escape from academic circles and learned journals. Anthony Heyes brings it into the light of day.
Author:
Anthony Heyes
Incentives and Competition in the Ivory Tower
How to best fund universities is an ongoing, and unresolved, problem. Elizabeth Murray and Mike Webb argue that university funding in New Zealand over the last two decades has been characterised by a greater emphasis on competition - and that further pro-competition reforms are desirable.
Authors:
Elizabeth Murray, Mike Webb
Does substitute trading make insider-trading regulation ineffective?
Insider-trading regulation is intended to prevent a firm's insiders from using superior information to obtain excess profits at the expense of outside shareholders. But information advantages can be exploited in other ways, such as by trading in the securities of related firms. Consequently, as Hui Huang explains, the regulation of insider trading can have perverse consequences.
Author:
Hui Huang
Managing the Risk of Power Short falls: A Case of Chasing One's Tail
Electricity retailers sometimes find themselves in the situation where consumer demand exceeds their ability to supply. One possible response to this shortfall is to buy power on the spot market, but this is risky because of the volatile nature of spot prices. An alternative option is to hedge using financial derivatives. Thomas Noe outlines the complex hedging problem faced by power companies, describes the optimal strategy, and considers the feedback effect of this strategy on the underlying dynamics of the electricity spot market.
Author:
Thomas Noe
Management Shareholding ain't all it's cracked up to be
Stock- and option-based compensation is generally given to managers for the purpose of aligning their incentives with those of shareholders. But, as William Taylor points out, it may actually have the opposite effect: managers become over-exposed to their firm's fortunes and so make more conservative investment decisions than shareholders would like.
Author:
William Taylor
