T. Randolph Beard

Finite Mixture Estimation of Multiproduct Cost Functions

This paper presents a technique of cost-function estimation, based on the theory of finite mixture distributions, which allows for the simultaneous existence of multiple technologies of production when the researcher does not know which observations correspond to which technologies. The finite mixture technique provides estimates of the proportions of firms using the various technologies, facilitates comparisons between technologies, and preserves the traditional interpretations of cost estimation. After describing the mixture procedure, the technique is illustrated on a large sample of savings and loan associations, and it is concluded that this industry exhibits multiple technologies of production. Copyright 1991 by MIT Press.

A Valley of Death in the Innovation Sequence: An Economic Investigation

The road between a discovery generated from basic research to a commercial product or process is long and, according to some, rife with significant roadblocks. Innovators and investors alike routinely claim that a ‘funding gap’ or ‘Valley of Death’ exists between basic research and commercialization of a new product. We show that the standard explanations for underinvestment in R&D are not the cause of this phenomenon. Rather, the Valley of Death occurs only in the presence of ‘non-economic’ investments (such as government expenditures on basic research) that are made in very early stage research without sufficient attention to the likely investment decisions at later stages of the innovation process. Other implications for the Valley of Death of government funding of R&D are also considered. Some policy implications of these findings are provided. Copyright , Beech Tree Publishing.

Initial public offerings : findings and theories

Preface. Writings summarized. 1. Initial public offerings: an introduction. 2. History, regulation, and process. 3. Empirical findings. 4. Theoretical models of IPOs. 5. Testing theories of underpricing. 6.Conclusion. Bibliography. Endnotes. Index.

Modelling the consumer's decision to replace durable goods: a hazard function approach

This article analysis the consumers durable good replacement decision using hazard models. In contrast to the typical limited dependent variable model often used in durable good demand studies, hazard models allow for much richer replacement. To illustrate the technique, a recursive system consisting of a regression equation and a hazard model is used to examine home heating system replacement decisions by residencial customers of a major southeasten US electric utility. The results indicate that overall system replacement rates decline over time, and that the probability of replacement for specific households depends negatively on the age of the head of household abd the availability of natural gas, and positively on system age and higher than expected household energy use.

The medical community's opposition to organ markets: Ethics or economics?

A severe shortage of cadaveric human organs for transplantation exists in the U.S. The obvious cause of this shortage is our current public policy which proscribes payment for such organs. Support for this policy and opposition to the formation of organ markets has been quite strong among transplant suppliers (both hospital and physician groups). This paper critically evaluates the ethical arguments advanced to buttress this policy position and presents an alternative economic explanation based upon profit-maximizing behavior. The model we develop is based upon monopsony in organ procurement with a kinked (and possibly discontinuous) organ supply function.

The role of resale entry in promoting local exchange competition

This article examines the role of resale entry in achieving competition in local exchange telecommunications markets in the US under the Telecommunications Act of 1996. Contrary to the claims of many incumbent local exchange providers, we argue that: (1) resale entry produces direct competitive benefits; (2) resale entry will not reduce incumbent incentives to invest in the local network; and (3) resale entry will not reduce more beneficial facilities-based entry. We also examine avoided cost estimation issues in determining wholesale discounts.

Financial aspects of motor carrier safety inspection performance

This paper investigates the empirical relationships between the safety performances and the financial conditions and management forms of a group of motor carriers. Unlike previous work, we utilize cash flow analyses and random, comprehensive roadside safety inspection results to measure financial status and safety performance, respectively, thus avoiding many criticisms of previous studies.Several probit models are specified and estimated by the method of moments technique. The results strongly suggest that firm financial status is an important predictor of firm safety performance, that ‘closely-held’ firms exhibit substantially different behavior than other firms, that carriers respond to cargo-specific risks, and that some common safety inspection criteria seem to sensibly ‘measure’ safety.

The Broadband Adoption Index: Improving Measurements and Comparisons of Broadband Deployment and Adoption

Countries around the world are increasingly concerned as to whether the adoption of broadband technology by their respective citizens is sufficient to support economic growth and social development. Unfortunately, such concerns are often expressed in terms of where a country ranks among its peers by means of raw adoption numbers. Such raw data are often misleading and incomplete. In this Paper, we propose a different and more policy-relevant approach to adoption measurement. We develop a value-based Broadband Adoption Index (“BAI”) that compares the actual value to society that results from the adoption of broadband technology to a target level of adoption value. This target level will vary from country to country and is a function of the social value of broadband connectivity, measured as the difference in the social benefits and the costs of broadband. The BAI is specifically designed to accommodate and include the value of different connection modalities like mobile broadband into a single index, something that merely summing the number of connections cannot do. We believe that policymakers can adopt aspects of the BAI approach immediately, with particular attention to collecting and using proper information for policy decisions.

Price-Quality Tradeoffs and Welfare Effects in Cable Television Markets

The Telecommunications Act of 1996 reduced restrictions on the cable TV industry, providing completely deregulated rates in March 1999. Prior to that time the cable industry was generally allowed to increase rates so long as additional channels were supplied. In this paper we develop a simple tradeoff between price and quality in order to calculate the welfare tradeoff to consumers of the provision of one additional satellite channel. Gauging the impact of this quality change on consumers alone, we conclude that the increase in consumer gains due to an extra channel provision are almost exactly counterbalanced by reductions due to price increases. This ceteris paribus calculation does not mean, of course, that dynamic supply effects from the provision and availability of more channels will not increase future competition and potential consumer benefits.

Consumer Prices and the Federal Trade Commission's "Do-Not-Call" Program

The Federal Trade Commissions “do-not-call” program successfully cut the number of telemarketing calls for households that registered. Time savings and fewer interruptions are real benefits. However, telemarketing was one of the most successful marketing tools that firms used to offer lower-priced consumer telecommunications services directly, and do-not-call regulations largely eliminated this advertising method. The authors estimate that the average U.S. household will have between