Kevin J. Fox

Private Property and Economic Efficiency: A Study of a Common-Pool Resource

The British Columbia halibut fishery provides a natural experiment of the effects of “privatizing the commons.” Using firm‐level data from the fishery 2 years before private harvesting rights were introduced, the year they were implemented, and 3 years afterward, a stochastic frontier is estimated to test for changes in technical, allocative, and economic efficiency. The study indicates that (1) the short‐run efficiency gains from privatization may take several years to materialize and can be compromised by restrictions on transferability, duration, and divisibility of the property right; (2) substantial long‐run gains in efficiency can be jeopardized by preexisting regulations and the bundling of the property right to the capital stock; and (3) the gains from privatization are not just in terms of cost efficiency but include important benefits in revenue and product form.

Property Rights in a Fishery: Regulatory Change and Firm Performance

A new method is introduced and applied to analyse changes in productivity of firms harvesting a natural capital stock. The index-number technique decomposes the contributions of output prices, variable input prices, fixed inputs and productivity to firm profits, adjusted for changes in the natural capital stock. An application of the method is given using micro-level data from a common-pool resource. The indexes provide a ready-made comparison of all firms to the most profitable firm per unit of resource stock. Benchmarking with the decompositions also allows firms and regulators to determine what components are contributing most to economic profits and improve overall industry performance.

GDP Growth, Terms-of-Trade Effects, and Total Factor Productivity

The purpose of this paper is to assess the contribution of each one of the major factors explaining Australian nominal GDP growth: technological change, movements in the terms of trade, increases in the endowments of labour and capital, and changes in domestic output prices. We use an index number technique as well as an econometric approach. Moreover, we look at several methods to decompose total factor productivity growth into secular and unexpected components. All our empirical results have a tight theoretical foundation, being based on the GDP function approach to modelling the production sector of an open economy.

Efficiency in the public sector

List of contributors. Acknowledgements. Introduction. Section I: Issues in Public Sector Efficiency Evaluation. 1. Performance Assessment in the Public Sector C.A. Knox Lovell. 2. Why Have the Returns to Microeconomic Reform Been So Disappointing? J. Quiggin. 3. Performance Measurement and Resource Allocation S. Yaisawarng. 4. A Property-Rights Perspective of Efficiency: Privatizing the Commons R. Quentin Grafton, D. Squires. Section II: Efficiency Analysis in the Public Sector-Advances in Theory and Practice. 5. The Deadweight Costs of Capital Taxation in Australia W.E. Diewert, D. Lawrence. 6. A Comparison of Alternative Productivity Growth Measures: With Application to Electricity Generation T. Coelli. 7. Integrating Consumer Satisfaction into Productivity Indexes R. Fare, et al. 8. Productive Structure and Efficiency of Public Hospitals C.J. Morrison Paul. 9. Measuring Output of Hospital Services P. Roos. 10. Efficiency in the Provision of Municipal Nursing- and Home-Care Services: The Norwegian Experience E. Erlandsen, F.R. Forsund. Index.

Capacity Reduction, Quota Trading and Productivity: The Case of a Fishery

We present the first ex post study that quantitatively analyses the effects of a licence buy-back and enhanced quota trading on the profitability and productivity of individual vessels in a fishery. Using firm-level data and a profit index decomposition method, we find that small and large vessels and three different trawler fleets all experienced substantial productivity gains in the year immediately following a licence buy-back and the establishment of a quota brokerage service. The apparent ongoing benefits of the buy-back and increased quota trading over the sample period are in stark contrast to the generally unfavourable long-term outcomes commonly associated with vessel buy-backs in input-controlled fisheries.

Efficiency at different levels of aggregation: public vs. private sector firms

Abstract Using a standard definition of cost efficiency, a multi-product firm may be more efficient at producing each product than any other firm, yet it may not be the most efficient firm overall. The explanation for this seeming paradox leads to important implications for the reporting of efficiency scores at different levels of aggregation for the public sector versus the private sector. Studies which use aggregate data to evaluate public sector performance may be seriously flawed.

Specification of functional form and the estimation of technical progress

The use of the Translog functional form to estimate technical progress may result in misleading conclusions. Alternative analytic functional forms in the demand system approach to measuring technical progress are compared empirically. Specifically, Translog, Normalized Quadratic and Leontief functional forms are used in combination with linear representations of the time trend variable in the respective demand systems. Comparisons are made with the Fisher quantity index approach to measuring technical progress. There is some indication that curvature violations by the Translog model can lead to misleading results, suggesting a preference for even the inflexible Leontief model. Data for New Zealand was used as there is much interest in the relative decline in per capita income since the 1950s and the effects on productivity of the economic reforms of the 1980s. Using data for the period 1960—1989 it was found that productivity growth has been low over the sample.

Accounting for Growth and Output Gaps: Evidence from New Zealand

We evaluate New Zealands macroeconomic performance over the 1967-96 period, which witnessed numerous economic reforms. Using both index-number and econometric techniques, we decompose nominal GDP growth and the output gap into contributions from price level changes, productivity growth and changes in factor utilisation. Changes in domestic prices accounted for four-fifths of the growth in nominal GDP, while capital accumulation and employment growth were the most important factors determining real-output growth. Deviations in the domestic price level around its long-run trend contributed most heavily to changes in the nominal output gap. The real gap was influenced in any year variously by deviations of the terms of trade and labour input from their long-run trends, as well as by productivity shocks. Copyright 2002 by The Economic Society of Australia.

Splicing Index Numbers

This article demonstrates the compelling case for using the geometric mean formula for splicing overlapping index number series. The justification for using the geometric mean rests on the fact that it is the only symmetric mean formula that generates a spliced series that is invariant to rescaling of the original series.

COMMERCIAL PROPERTY PRICE INDEXES AND THE SYSTEM OF NATIONAL ACCOUNTS

The paper studies the problems associated with the construction of price indexes for commercial properties that could be used in the System of National Accounts. Property price indexes are required for the stocks of commercial properties in the Balance Sheets of the country. Related service price indexes for the land and structure input components of a commercial property are required in the Production Accounts of the country if the Multifactor Productivity of the Commercial Property Industry is calculated as part of the System of National accounts. The paper reviews existing methods for constructing an overall Commercial Property Price Index (CPPI) and concludes that most methods are biased (due to their neglect of depreciation) and more importantly, not able to provide separate land and structure subindexes. A class of hedonic regression models that is not subject to these problems is discussed.