Surplus Revenue Research Articles

Second best toll and capacity optimisation in networks: solution algorithm and policy implications

This paper looks at the first and second best jointly optimal toll and road capacity investment problems from both policy and technical oriented perspectives. On the technical side, the paper investigates the applicability of the constraint cutting algorithm for solving the second best problem under elastic demand which is formulated as a bilevel programming problem. The approach is shown to perform well despite several problems encountered by our previous work in Shepherd and Sumalee (Netw. Spat. Econ., 4(2): 161–179, 2004). The paper then applies the algorithm to a small sized network to investigate the policy implications of the first and second best cases. This policy analysis demonstrates that the joint first best structure is to invest in the most direct routes while reducing capacities elsewhere. Whilst unrealistic this acts as a useful benchmark. The results also show that certain second best policies can achieve a high proportion of the first best benefits while in general generating a revenue surplus. We also show that unless costs of capacity are known to be low then second best tolls will be affected and so should be analysed in conjunction with investments in the network.

Sixteenth Century Hospital Reform: Henri IV and the Chamber of Christian Charity

Created in 1606, the Chamber of Christian Charity was intended to fund pensions for former army officers and amputated soldiers by reviewing the operations and expropriating surplus revenues from local charitable foundations - abbeys, monasteries, hospices and local hospitals. This article explores the reasons behind Henri IV's initiative and the new methods used - royal commissioners and a centralized approach - to try to resolve what was seen as a traditional problem of corruption and redundancy in French poor relief structures. It will analyse the difficulties encountered by the Chamber and the legal obstacles to the whole effort to intervene in local municipal and ecclesiastical institutions to show that the experiment never produced the anticipated results and was abandoned shortly after the king’s assassination in 1610.

Wasteful Labeling

The role of labeling is to solve the adverse selection problem caused by unsubstantiated claims from firms. The problem however is likely to remain unsolved if the labeling agency is not trustworthy. The agency can be suspected to divert the fees charged for labeling from their primary purpose of collecting information in order to raise excessive revenue. This paper addresses this issue and shows that labeling may be wasteful if the agency is likely to be untrustworthy. To award firms green labels, the agency may charge fees that exceed the Ramsey level at which the revenue needed for collecting information is raised with a minimal loss in terms of efficiency.

Biopharmaceuticals in the Russian Federation: A snapshot of policies for registration, reimbursement and use

Global biopharmaceutical industry is entering a new area. The first biopharmaceuticals, released 20–25 years ago are out of patent protection already. The top selling biopharmaceuticals with a market volume of tens of billions of US dollars will be out of patent by 2010. And the process will go on and on. Transnational corporations are sounding alarm: by producing bio-generics new biotechnologies, mostly of India and China, threaten multibillion profits of Big Pharma, the phrase often used to refer to companies with revenue in excess of $3 billion, and/or R&D expenditure in excess of $500 million. The largest transnational companies launched huge PR campaigns against bio-generic producers under the cover of safety concerns for the public. Though there is a scientific basis for some concern due to the fact that bio-generics are not absolute copies of originator brands, and thus differ from chemical generics, patient safety care is definitely not the sole reason for their anxiety. There are at least two major points among the other objectives on the agenda for biologics of Big Pharma. Firstly, they aim at not allowing bio-generics on established markets for as long as possible and specifically on the markets of those countries with weak biotechnological expertise. This PR campaign is aimed at the regulatory authorities of these countries. Thus limiting generic competition transnational companies keep for themselves sales at the desirable high level. For example, Johnson & Johnson received more than 25 billion dollars only for its erythropoietin over a period of less than 10 years. Sales of biopharmaceuticals of the so called “big four” consisting of erythropoietin, interferon alfa and beta, and filgrastim are still at the multibillion level.

Toward a Meaningful Alternative Medicine

In 1998, Phil Fontanarosa and George Lundberg declared, no alternative They maintained there is only scientifically proven, evidence-based medicine supported by solid data or unproven medicine, for which data lacking. Fontanarosa and Lundberg continued: Regardless of the origin or type of therapy, the theoretical underpinnings of its mechanism of action, or the practitioner who delivers it, the critical questions are the same. What the therapy? What the disease or condition for which it being used? What its purported benefit to the patient? What are the risks? How much does it cost? And, perhaps most important, does it work? (1) issue of the Journal of the American Medical Association in which this appeared contained six randomized clinical trials that evaluated various alternative interventions for the treatment of common clinical conditions. Now, more than ten years later, the enterprise of alternative and complimentary medicine boasts annual revenue in excess of sixty billion dollars, and visits to alternative practitioners outnumber visits to primary care providers. (2) But by no means should this be taken as an affront to Fontanarosa and Lundberg. Today, whole journals are devoted to evidence-based alternative medicine, and ancient practices are subjected to the rigor of randomized controlled trials. Sometime during medical school, I attended an alternative medicine conference in Chicago. keynote address was by a general internist trained in several other modalities, and a critic of holding alternative medicine accountable by Western standards. His practice, however, was a hodgepodge of interventions. Some of the medicine he practiced was evidence-based--hypnotism for smoking cessation--and he emphasized the data for it. Some were therapies that were conceivably testable, but had not yet been verified, and some were interventions that ran contrary to the best large population evidence in medicine. He argued that he did not need evidence to know what worked--citing patients who simply felt better after acupuncture--though he had earlier basked in the level one evidence for hypnotism. His talk was philosophically confused. But most importantly, his practice did little to add richness to the way patients thought of health. It was aspiritual and faddish. At a time when medicine increasingly pulled toward both evidence-based and alternative medicine, a number of philosophical issues arise, but they are all concerned with our conception of good health and the healthy life. I will argue that there a unique way to think of alternative medicine, a way to preserve it in the midst of the evidence-based movement. We should move toward a rich and meaningful philosophy of meditative medicine. Looking to Heidegger late works of the German philosopher Martin Heidegger were marked by recurring themes of poetry and technology as contrasting ways of making sense of the world (of Revealing, as Heidegger put it). Heidegger used these terms not only in the concrete way we think of them, but also as placemarkers for their essence. essence of technology for Heidegger calculative thinking--the use of objects to achieve some purpose--while the essence of poetry and art meditative thinking--reflecting on the beauty inherent in how things are. Heidegger believed that Man's nature was not restricted to either one of these modes of thinking; it encompassed both. So, though often described as antitechnology, Heidegger in reality was concerned that The approaching tide of technological revolution in the atomic age could so captivate, bewitch, dazzle, and beguile man that calculative thinking may someday come to be accepted and practiced as the only way of thinking. (3) issue then becomes saving man's essential nature. Therefore the issue keeping meditative thinking alive. …

Catastrophe Management in a Changing World: The Case of Hurricanes

This article features a presentation and discussant comments on hurricane and wind insurance organized by Richard A. Derrig for the American Risk and Insurance Association (ARIA) 2007 Annual Meeting in Quebec City, Quebec, Canada. The moderator, Richard A. Derrig, is President of OPAL Consulting LLC, Providence, RI. Richard formed OPAL after retiring in 2004 from the Auto Insurers and Insurance Fraud Bureaus of Massachusetts. He has published numerous articles on auto insurance, fraud, and other important insurance issues in risk and insurance and actuarial journals. The principal presenter is Jay S. Fishman, Chairman and Chief Executive Officer of The Travelers Companies, Inc., a Fortune 100 company with assets in excess of $100 billion and revenues in excess of $25 billion. Travelers offers a wide range of property and casualty insurance products and services to businesses, organizations, and individuals in the United States and selected international markets. Mr. Fishman was named President and Chief Executive Officer of Travelers in 1998 and Chairman in 2000. From early 2000 until October 2001, he also served as Chief Operating Officer of Finance and Risk for Citigroup, as head of Citigroup's global insurance businesses and head of its consumer business in Japan and Western Europe. Mr. Fishman is an alumnus of the University of Pennsylvania, having graduated with a bachelor's degree in economics, magna cum laude, in 1974 and with a master's degree in accounting from the Wharton School, also in 1974. At the University of Pennsylvania, he is a member of the Board of Trustees, the Board of Overseers of the Graduate School of Education, and the Industry Advisory Board of the Financial Institutions Center for the Wharton School. He serves on the Board of Directors of the National Academy Foundation. Also, he is an active member of the Business Council, a Vice Chairman of the Kennedy Center Corporate Fund Board in Washington, D.C., and a past Chairman of the American Insurance Association. Our two discussants are Professors Joan Schmit and Martin Grace. Joan holds the American Family Insurance Chair in Risk Management and Insurance at the University of Wisconsin-Madison, where she has been on the faculty since 1988. Currently, she is Chair of the Actuarial Science, Risk Management, and Insurance Department in the School of Business. She also holds a visiting appointment with the University of St. Gallen. Dr. Schmit has been active in several important professional associations. She has been an academic moderator for the International Insurance Society and on the Research Committee of that organization. She is a past President of ARIA, the Insurance Society, and the Risk Theory Society. She has served on the board of the Griffith Foundation and is a Research Fellow at the China Center for Insurance and Social security Research at Peking University. The second discussant, Professor Grace, is currently the Associate Director of Research at the Center for Risk Management and Insurance at Georgia State University. He is an Associate in the Andrew Young School of Public Policy Studies and holds a law degree and a Ph.D. in economics from the University of Florida. Dr. Grace's research focuses on public policy, regulation and taxation, and his research has been published in many economics, insurance, and public policy journals. He is a former President of the Risk Theory Society and a current Associate Editor of the Journal of Risk and Insurance. Richard A. Derrig (Moderator): The focus of today's discussion concerns the tail of loss distributions. The tail is associated with catastrophes, or cat risk, such as the devastation from Hurricanes Katrina, Wilma, Andrew, and others.1 Catastrophes such as these are not just a U.S. issue, but an international issue. Jay Fishman will provide his perspectives on the effect of wind in catastrophic losses while Professors Schmit and Grace will follow with discussions that put wind catastrophes in general insurance contexts. …

Biotechnology business models work: Evidence from the pharmaceutical marketplace

A study was undertaken that validates the business models of biotechnology companies that compete in the pharmaceutical marketplace. Strategic alliances, largely with established pharmaceutical companies, have enabled biopharmaceutical companies to obtain revenues prior to achieving their goal of manufacturing and marketing their own products. As a result, despite the generally long lead-times to commercialisation, an increasing number of biopharmaceutical companies are demonstrating financial success in the marketplace, particularly with respect to revenues, at a faster pace than occurred for both the traditional pharmaceutical and the specialty pharmaceutical companies. There were 244 biopharmaceuticals approved for 366 indications from 1982 to 2005, of which 48 per cent of the approvals for both the products and the indications occurred in the period 2001–2005 (representing just 21 per cent of the 24-year period). From 1990 to 2005, the ten largest US biopharmaceutical companies increased their total revenues from $1.1bn to $31.7bn and turned a combined loss of $0.3bn to net income of $6.2bn. During this time-frame the number of US biopharmaceutical companies reporting revenues in excess of $1bn increased from zero to eight.

A case study: How to rationalise concert entertainment ticket pricing

This paper demonstrates how we can rationalise ticket pricing to capture the surpluses, commonly found in ticket markets, for the artist. In the past two months, ascertain-ment collected data and analysed ticket prices for Eric Clapton's sold out concert in Oklahoma City, OK. Clapton's tickets were sold at a face value of $65 and $85 through Ticketmaster. Yet the secondary market of ticket brokers found demand could yield as much as $700 per ticket. We determined that over $250,000 in surplus revenue was not captured by Clapton. The primary data we collected have generated statistical links between prices and demand for tickets. Specifically, we have found that tickets must be sold for a wider array of prices, and we have determined an exponentially priced schematic to estimate an optimal set of prices to reduce the differential between primary and secondary ticket prices, capturing more revenue for concert artists.

Biotechnology business models work: Evidence from the pharmaceutical marketplace

A study was undertaken that validates the business models of biotechnology companies that compete in the pharmaceutical marketplace. Strategic alliances, largely with established pharmaceutical companies, have enabled biopharmaceutical companies to obtain revenues prior to achieving their goal of manufacturing and marketing their own products. As a result, despite the generally long lead-times to commercialisation, an increasing number of biopharmaceutical companies are demonstrating financial success in the marketplace, particularly with respect to revenues, at a faster pace than occurred for both the traditional pharmaceutical and the specialty pharmaceutical companies. There were 244 biopharmaceuticals approved for 366 indications from 1982 to 2005, of which 48 per cent of the approvals for both the products and the indications occurred in the period 2001–2005 (representing just 21 per cent of the 24-year period). From 1990 to 2005, the ten largest US biopharmaceutical companies increased their total revenues from $1.1bn to $31.7bn and turned a combined loss of $0.3bn to net income of $6.2bn. During this time-frame the number of US biopharmaceutical companies reporting revenues in excess of $1bn increased from zero to eight.

Double optimal stopping times and dynamic pricing problem: description of the mathematical model

In many industries, managers face the problem of selling a given stock of items by a deadline. We investigate the problem of dynamically pricing such inventories when demand is price sensitive and stochastic and the firm’s objective is to maximize expected revenues. Examples that fit this framework include retailers selling fashion and seasonal goods and the travel and leisure industry, which markets space such as seats on airline flights, cabins on vacation cruises, hotels renting rooms before midnight and theaters selling seats before curtain time that become worthless if not sold by a specific time. Given a fixed number of seats, rooms, or coats, the objective for these industries is to maximize revenues in excess of salvage value. When demand is price sensitive and stochastic, pricing is an effective tool to maximize revenues. In this paper, we address the problem of deciding the optimal timing of a double price changes from a given initial price to given lower or higher prices. Under mild conditions, it is shown that it is optimal to decrease the initial price as soon as the time-to-go falls below a time threshold and increase the price if time-to-go is longer than adequate time threshold. These thresholds depend on the number of yet unsold items.

Fiscal reforms and income inequalities in Senegal and Burkina Faso: a comparative study

There have been income and welfare redistribution in Burkina Faso and Senegal occasioned by fiscal reforms undertaken within the context of the WAEMU, where a unique VAT tax and common tariffs harmonization were adopted. The measure of redistributive effects and the costs of the horizontal inequality generated by the new taxations shows that, although the reforms are deemed positive for both countries, Burkina Faso benefited more. This is mainly explained by the relatively important place of fiscal evasion, with the self-consumption and the informal sector, and by the fact that most of the goods consumed by the poor households are not liable to taxation. The performances of tax systems have been improved, with an appreciable reduction in inequality in the two countries, particularly for Burkina Faso. The excess fiscal revenues generated from taxation are more important after the reform for both Senegal and Burkina Faso. African Journal of Economic Policy Vol. 11(2) 2004: 73-92

A Self-Financing, Multimodal, Public–Private Partnership Approach to Restore Metropolitan Mobility

The operate-design-build-operate concept presented in this article involves introducing rush-hour tolls prior to infrastructure investment to manage demand, with surplus revenue dedicated for infrastructure expansion. Not only would the existing highway system operate more efficiently, but so would the improved system. This approach provides up-front toll revenue to help pay for expensive urban freeway expansion projects, making them more financially feasible. The approach can facilitate private involvement in the delivery of integrated roadway pricing and transit and high-occupancy-vehicle systems in metropolitan areas. New public-private partnership approaches are suggested that employ outcome-based contracting systems and financial incentives to maximize public mobility goals. An illustrative application at the regionwide level is discussed.

Oil price shocks—money supply causality: Some evidence from Algeria

When oil exports provide most of a country's fiscal revenue, the causal relation between international oil price shocks and money supply variations may be instrumental to monetary policy conduct. Responding to this causal relation and apprehensive about excess monetary liquidity risks, Algerian policymakers have recently adopted new measures aimed at sterilising the country's excess hydrocarbon export revenues. This study will test for the causal relation between oil prices and Algeria's money supply during the 1970–2002 time period. Econometric estimation reveals the surprising result of no significant presence of Granger causation between the two variables. However, further examination shows a relation instead with the country's total oil exports. Finally, using the bootstrapping technique, simulation results show that a negative and significant correlation has characterised the association between oil exports and the country's money supply. These findings are consistent with the country's recent economic stabilisation efforts to sterilise excess monetary liquidity.

OPTIMAL PRICING: THE ROUTE TO A SELF‐FUNDING INFRASTRUCTURE ‐ AND MORE

Optimal pricing delivers not only a self‐funding infrastructure but also the additional revenues to reduce economically damaging taxes on capital, labour and final consumption. For the transport sector, this result has now been established by a concerted international research effort. Optimising prices across all modes of transport will ensure the efficient use of existing infrastructure, provide the informational base to optimise investment decisions and generate revenues in excess of both current infrastructure costs and the costs of justified investments.

New Phytologist evolves and strengthens

<i>New Phytologist</i> evolves and strengthens

The Vulnerability Framework Integrates Various Models of Generating Surplus Revenue

Budgets operationalize the strategic planning process, and institutions must have surplus revenue to be able to cope with future operations. There are three approaches to generate surplus revenue: increased revenue, decreased cost, and reallocation of resources. Extending their earlier work, where they established strategic benchmarks for annual funds and endowment payout, the authors demonstrate how each of the surplus revenue-generating approaches can be combined into an integrated vulnerability model. This integrated vulnerability model provide a taxonomy for institutions to identify appropriate environments in which to emphasize one or more of the surplus generating approaches, which in turn should improve the institution's strategic planning process.

The Marginal Cost of Funds and the Shadow Prices of Public Sector Inputs and Outputs

Existing studies on the marginal cost of funds (MCF) do not incorporate the public sector inputs explicitly. Incorporating labor and capital as public sector inputs raises questions concerning the definition and the usage of the MCF, and its relation to public sector shadow prices. This paper finds that the MCF should be defined based on the excess revenue rather than the gross revenue; that general equilibrium effects on individuals' net income and government's inframarginal expenditures should be incorporated; and that the MCF measures an element in the shadow price that is solely attributable to the marginal financing, justifying the role of the MCF in cost-benefit analysis and tax reform.

Tax Cuts and the Recession in the Massachusetts Fiscal Crisis

Massachusetts, like many states across the country, is facing its worst fiscal crisis since World War II. Budget cuts of $1 billion in the last fiscal year have been followed up by cuts of $2 billion in the current one. Rather than raise taxes, the state has slashed key services for the majority of its citizens. The consensus among politicians and pundits is that the problem is the recession, or, alternatively, extravagant state spending in the 1990s. But an analysis of state tax revenue data reveals that the major reason for the budget shortfall is legislated cuts in capital gains tax rates and declines in the yield of the corporate income tax. Without these policy decisions to cut taxes, the state would not be facing a budget crisis. The $4.6 billion foregone in tax revenue, saved in a rainy day fund, would have more than compensated for the $4 billion in spending cuts enacted in the last three fiscal years. Unless the state restores tax rates to previous levels, it will continue to experience serious budget shortfalls and more cuts to essential services. In the future, lawmakers should resist the temptation to cut taxes during boom times. After all, a bust is always just around the corner. Instead of lowering taxes, the state should save excess revenue, then draw on reserves to maintain spending during recessions.

Which technology for urban public transport?

The merits of alternative urban and inter-urban public transport systems have been the subject of some debate, particularly since the publication of the UK's 1998 transport policy White Paper A New Deal for Transport. This current paper aims to assess some of the conflicting empirical evidence in the UK and abroad in order to allow an objective assessment of the policy implications. Section 2 presents an overview of technical and financial characteristics of mainly urban public transport systems, including capital and operating costs of recent light rail, guided bus, bus priority and suburban rail systems. Section 3 explores the evidence on the wider costs and benefits of systems in the UK, including wider environmental and socio-economic impacts. Although more expensive to build (under similar conditions), light rail systems often carry more passengers than ‘intermediate’ bus-based systems such as guided bus and segregated busways. There is not much between public transport systems on the basis of operating costs per passenger-km, except metro systems, which are twice as expensive to run as bus-based systems. When comparing revenues and operating costs directly, all modes except suburban regional rail appear capable of covering operating costs overall, with light rail and some of London's suburban rail services providing a marginal surplus of revenue. Average speeds of light rail and bus-based systems are comparable. In heavily congested corridors, new light rail systems can reduce journey times significantly, but such reductions are lower for bus-based systems, mainly because of the relatively limited amount of segregated right of way and priority at traffic signals. This highlights the fact that bus priority systems act primarily as ‘congestion busters’ at hot spots, which can be implemented more flexibly and gradually than for rail-based systems. Currently, electric propulsion appears to be the best option to mitigate air pollution and noise. However, new clean vehicle technologies will soon be in a position to play a major role in reducing emissions, in particular for bus-based systems. In terms of external costs per bus/train-km, environmental costs appear higher than accident costs, but lower than congestion externalities.

Auctioning capacity at airports

Market mechanisms for slots need a clear definition of capacity. This paper suggests that a slot should be treated as a bundle of various aspects of airport capacity, combined in flexible proportions according to the type of air movement. Ancillary rules to prevent the build-up of market power would be required in any market mechanism for slots. Slot auctions have considerable potential to increase economic efficiency, though there is also a complementary role for secondary markets. The need for economic regulation of airports will not be removed simply by auctioning slots, though the price signals provided by auctions can be used to improve the planning of airport capacity expansions. Even if receipts from auctions are used to fund capacity expansions, there is likely to be excess revenues due to the scarcity of airport capacity caused by environmental and planning constraints.