Introduction Fertility levels are determined by social, religious, and cultural factors on one hand, and by financial considerations that affect the demand for children as well as the supply of children on the other. Using theoretical and empirical models we examine the private and social benefit of children, and the private and social welfare differences that are generated by technological innovation in fertility technology. Subjects and methods A theoretical model measures the marginal private and social benefit when the children’s potential output depends on the natural potential fertility combined with medical fertility technology. It is followed by an empirical model that focuses on the evaluation of the general public’s, and in vitro fertilization patients’ “willingness to pay” for fertility treatments. The economic evaluation method is based on willingness to pay, which is derived from answers to hypothetical questions. Results Based on questionnaires distributed between in vitro fertilization actual patients and the general public, the empirical model’s findings are that the average willingness to pay amongst patients is $5,482, whereas for the general public it is $4,398. Both the general public as well the actual patients are willing to pay more than the actual average cost of an in vitro fertilization treatment, which is $3,257. Conclusion We find that when considering the appropriate allocation of limited resources, subsidizing fertilization should receive high priority since the net benefits for both patients and society are high.

During the last decade the world has faced a tremendous development of information technology and telecommunication. This study investigates the impact of rumors (released on the web) on common stock returns. The findings indicate that the market responds positively to rumors. In particular, the impact is stronger for single than for multi rumors and for initial rather than subsequent rumors. Our results may prove useful to financial and portfolio managers by helping them in determining how much weight to place on different types of rumors.

Maintaining moderate level of income inequality is required for the sake of sustainable economic growth. The question that needs to be addressed is how to accurately measure income inequality. We modify the traditional Gini coefficient by using purchasing power parity (PPP). Usually, the PPP exchange rate is used to make comparisons of standards of living between countries at a certain point in time and over time. We adopt these techniques in order to undertake comparisons between income groups within a given country. Instead of simply measuring nominal dollar income inequalities, we recalibrate it and turn it into a more accurate measure of real income inequality. Our empirical findings show that the true income inequality within Israel is larger than the official numbers published by the CBSI, and that may underlie social and political instability as well as the sustainability of economic growth. Policy makers should therefore take our revised measure into account when setting appropriate social policies.

PurposeThe purpose of this paper is to develop a user‐oriented decision‐supporting applicable tool for selection of a single supplier out of a group of potential suppliers in a dynamic business environment over a finite planning horizon.Design/methodology/approachA qualitative and quantitative description of the impact of a change in one or several business environment parameters on current and future supplier choice; the methodology is accompanied by a visual representation of those impacts for the decision maker. The paper presents extended simulation experiments to test the proposed methodology.FindingsA strategy of replacing suppliers over a definite planning horizon based on a forecast of the business environment is significantly (2‐9 per cent) more efficient than a strategy of relying on a single leading supplier throughout the planning horizon. This efficiency gain is greater the more the business environment is dynamic.Practical implicationsThe proposed methodology is applicable to a broad range of service and manufacturing organizations that operate in dynamic business environments and rely on complex purchasing systems. Thanks to its simplicity, it can be applied to very large systems with a broad range of selection and/or environmental parameters.Originality/valueAlthough the supplier selection process has been extensively studied, the literature still lacks appropriate reference to the effects of a dynamic business environment on this process.

A fixed price policy regardless of expiration date may result in unsold inventory and sales loss. Price reduction over time as the expiration date approaches motivates customers to purchase all items, including the ones that are left with only a short interval until their expiration. We conduct a discrete event simulation that captures the main characteristics of this phenomenon. Results show that a moderate differentiation of price increases profits by 6%, a larger differentiation reduces profits. Profits are the highest for freshness-oriented customers. A fixed price policy is preferred in an environment of large variance and expected near term expirations.

This paper deals with optimal pricing in the network industry. We adopt the approach of two-way calling among individuals who differ in their utility towards sending and receiving calls, and use a very simple and stylized model which enables us to obtain some solid results. Pricing policies of uniform positive pricing on senders only vs. on both senders and receivers are compared to discriminatory policies including negative pricing on receivers, and the profit values as well as the consumer surplus and welfare values are compared for those pricing policies. We develop applicable results that can be derived from these policy comparisons.

In this paper we reconsider the issue of excise tax effects on elements such as who bears the excise tax burden, tax effectiveness, and tax efficiency. Usually these issues are discussed under an implicit assumption of homogeneous populations with identical demand curves for all customers. However, most populations are not homogeneous in income and tastes, and our goal is to compare the results for homogenous populations with the parallel results of a heterogeneous population with rectangularly distributed demand curves. The results of the analysis add another dimension to the often-discussed conflict between efficiency, fairness, and equality of the tax system.

Evaluating and selecting supplies are critical activities in the process of purchasing and supplying materials. Many manufacturing and service organizations operate in a constantly changing business environment and occasionally have to reconsider their steps in terms of supplier selection. This paper offers a methodology that takes into account the impact of a dynamic business environment on the supplier selection process. This methodology represents an applicable tool supported by decision for the planned selection of a single supplier that changes with time out of a supplier group over a finite planning horizon. The suggested methodology has been tested in a large Israeli organization-Clalit Health Services, which comprises large-scale logistical entity working with hundreds of suppliers on an ongoing basis. Our analysis of application results shows that the suggested strategy of switching suppliers over a predefined planning horizon according to the business environment forecast is over 10% more efficient compared to a strategy that does not change the leading supplier throughout the planning horizon. This average improvement is translated into expected efficiency gains on most operative dimensions which represent selection parameters, such as cost per unit, supply lead-time, reputation and more. Nevertheless, some of their value is lost due to some dimensions.

During the last decade the world has faced a tremendous development of information technology and telecommunication. This study investigates the impact of rumours (released on the web) on common stock returns. The findings indicate that the market responds positively to rumours. During the event day and the five preceding days, the abnormal stock return is positive and statistically significant. In particular, the impact is stronger for single than for multi-rumours, for initial rather than subsequent rumours and for realized rumours than for nonrealized rumours.

We expand on the work of Kahneman and Tversky and further develop the optimal pricing policy given a reference price that generates psychological effects. We suggest the possibility of the existence of an inter-temporal substitution effect, challenging the standard substitution effect which always points to a reverse relationship between current and future quantity demanded and price. The optimal pricing trajectories are developed for various possible interrelationships between the reference price and the actual price and their possible influence on customer behavior.

In the current paper we propose to distinguish between micro and aggregate Laffer functions. We prove that in spite of the fact that a Laffer curve of any representative individual may have one peak point where tax revenue is at its maximum, the aggregate Laffer curve is more likely to have multiple peaks. We show this for the case where there is a high degree of wage distribution inequality along with a backward bending supply curve of labor, which appears to be the case for many Western countries. Since this scenario is typical of many countries, the welfare implications of the multi-peak Laffer curve should be considered by the policy maker.

Abstract This paper examines pricing policy, quality levels, consumer surplus and social welfare for the monopoly and non‐monopoly case. It is shown that given certain realistic assumptions, the network industry under unregulated monopoly would yield more social welfare than in the case of several producers in the industry, and would therefore be socially preferred.

This paper has two purposes: first, to demonstrate a utility function of consumption and leisure that leads to a backward-bending supply of labor. The second purpose is to show that in spite of the fact that a Laffer curve of any individual in a society may have one-peak point where tax revenue is at its maximum, the aggregate (macro) Laffer curve is very likely to have multi (or at least dual) peaks. This is caused by the high degree of inequality in wage distribution in most western countries.

Conclusion  When a given pie is redivided in a less equalitarian manner, it is uncertain whether those already undertaking illegal activity will increase or decrease their activities, since the return to illegal activities is countered by the loss due to punishment (which is more painful to a criminal who failed) on one hand, and from the cost of the sacrifice of utility from legitimate activities on the other hand.If the absolute level of wealth remains constant but relative position declines, an incentive is generated to re-establish a person's standing by joining the crime industry. This is certainly the case at the margin for those close to the boundary of joining, i.e., those who are almost indifferent between joining or remaining within the legal framework.Assuming an individual is already participating in illegal activities, the effect of either an absolute or relative change in his level of wealth on his level of illegal activities is indeterminate. This applies both to the case where the total wealth of the society is fixed and the share of the pie going to the rich rises and the case where the total pie rose but the entire gain went only to the rich.In summary, it has been shown that an increase in wealth inequality has an indeterminate outcome both with respect to the decision of the poor on whether or not to enter the crime industry and with respect to the decision of those already participating in illegal pursuits to increase or decrease their level of activity. This conclusion is somewhat contrary to the general consensus of the literature, which appears to hold that increases in wealth inequality will tend to increase both the level of participation in the crime industry and the level of output within the industry.

In this paper we broaden current models of interdependent utility functions, develop a more general and inclusive model of interdependency, and demonstrate the specific nature of the Pareto improvement achievable through cooperative behavior of all individuals with different tastes who adopt similar (or identical) consumption baskets. The resulting model helps to explain such diverse phenomena as the declining importance of the family unit as well as the trend toward a more diverse consumption pattern among communal groups such as the Israeli kibbutz.

The current practice of most universities is to require of each faculty member (hereafter referred to as 'fin') a certain minimum quota of teaching hours and published papers. Fac ulty members who have a comparative (or even absolute) advantage in research are not permitted to transfer time from teaching to research and vice versa. It is obvious that each individual fm is prevented by these re strictions from achieving his own efficient time allocation between teaching and re search (where his vmp in teaching is equal to his vmp in research). In addition, prohibiting trade between fins prevents the achievement of collective efficiency of time allocation be tween faculty members (such that the vmp of each fm are equal in both teaching and re search). The result is therefore a welfare loss to both fins and society. A simple model demonstrates the basic considerations. We shall adopt the following notation. Ai = the number of journal quality articles produced by the /th faculty member. Atj = the articles that the /th fm writes for _ the 7th fm. A ? the quota of articles per period re quired for each fm. LRi = the number of hours per period that the /th fm devotes to research. Loi = the number of hours per period that the /th fm devotes to earning income _ outside the university framework. LT = a fixed quota of lecture hours per pe