An overlapping generations approach to price policies in privatehealthcare insurance. The Catalan case

We analyze premium policies and price dispersion among private healthcare insurance firms from an overlapping-generations model. The model shows that firms that apply equal premium to all policyholders and firms that set premiums according to the risk of insured can coexist in the short run, whereas coexistence is unlikely in the long run because it requires the coincidence of economic growth and interest rates. We find support for the model’s results in the Catalan health insurance industry. Keywords: Economic theory, price policies, health insurance, health economics, overlapping-generations. JEL Classifications: I11 / L11 / L23

Understanding the gains from wage flexibility: The exchange rate connection

We study the gains from increased wage flexibility and their dependence on exchange rate policy, using a small open economy model with staggered price andwage setting. Two results stand out: (i) the impact of wage adjustments on employment is smaller the more the central bank seeks to stabilize the exchange rate,and (ii) an increase in wage flexibility often reduces welfare, and more likely so ineconomies under an exchange rate peg or an exchange rate-focused monetary policy.Our findings call into question the common view that wage flexibility is particularlydesirable in a currency union.

The Price of luck

We find that the vast majority of students taking an advanced undergraduate finance course show a preference for luck in a classroom experiment. In Phase I of the experiment part of the students, group A, were asked to guess a coin toss five times in a row. In Phase II the rest of the students, group B, were given 10 EUR to bet on some of the Group A students taking a second go at guessing a sequence of five coin tosses (Phase III). Group B students’ bets were by default allocated to the worse performing student in Phase I. Switching to better performing Group A students was costly. A total of 23 out of 28 students were willing to pay for switching and thus showed a preference for luck.

Differences in seasonal price patterns among second home rentals and hotels: Empirical evidence and practical implications

Hotels and second home rentals are two of the most important tourist accommodation options in Spain. In terms of seasonality, almost all previous studies have analysed tourism demand from the point of view either of total arrivals or the number of tourists lodged in a single accommodation type (hotels, rural accommodation, etc). However, there are no studies focusing on price seasonality orcomparing seasonality among different accommodation types. By using seasonality indicators and a price index constructed by means of hedonic methods, this paper aims to shed some light on seasonal pricing patterns among second home rentals and hotels. The paper relies on a 2004 database of 144 hotels and 1,002 apartments on the Costa Brava (northeast Spain). The results show that prices for second home rentals display a smoother seasonal pattern than hotels due to reduced price differences between shoulder (May and October) and peak periods (August)

The impact of inbound demand on price levels in tourism municipalities : Empirical evidence from Catalonia

It is usually argued that tourism exerts negative economic impacts in host jurisdictions through the increase in prices linked to increasing demand for basic services and goods from tourists. This paper surveys 149 products in 45 tourism and non-tourism jurisdictions in Catalonia (which represent a total of 18,500 prices) in order to test empirically several hypotheses related to differences in price levels in tourism and non-tourism jurisdictions. The main results show that prices in tourism jurisdictions are not significantly higher than those in non-tourism ones. The analysis suggests that tourists are likely to pay higher prices than natives for some products

Price differences between domestic and international air markets : an empirical application to routes from Gran Canaria

In this paper we examine whether airline prices on national routes are higher than those charged on international routes. Drawing on a database prepared specifically for this study, we estimate a pricing equation for all routes originating from Gran Canaria, Canary Islands, Spain; differentiating between national and international routes. A key difference between these two route types is that island residents benefit from discounts on domestic flights. When controlling for variables related to airline characteristics, market structure and demand, we find that national passengers who are non-residents on the islands are paying higher prices than international passengers.

Price rivalry in airline markets: A study of a successful strategy of a network carrier against a low-cost carrier

Competition in airline markets may be tough. In this context, network carriers have two alternative strategies to compete with low-cost carriers. First, they may establish a low-cost subsidiary. Second, they may try to reduce costs using the main brand. This paper examines a successful strategy of the first type implemented by Iberia in the Spanish domestic market. Our analysis of data and the estimation of a pricing equation show that Iberia has been able to charge lower prices than rivals with its low-cost subsidiary. The pricing policy of the Spanish network carrier has been particularly aggressive in less dense routes and shorter routes.

HouSI: Heuristic for delimitation of housing submarkets and price homogeneous areas

This paper seeks to address the problem of the empirical identification of housing market segmentation,once we assume that submarkets exist. The typical difficulty in identifying housing submarkets when dealing with many locations is the vast number of potential solutions and, in such cases, the use of the Chow test for hedonic functions is not a practical solution. Here, we solve this problem by undertaking an identification process with a heuristic for spatially constrained clustering, the"Housing Submarket Identifier" (HouSI). The solution is applied to the housing market in the city of Barcelona (Spain), where we estimate a hedonic model for fifty thousand dwellings aggregated into ten groups. In order to determine the utility of the procedure we seek to verify whether the final solution provided by the heuristic is comparable with the division of the city into ten administrative districts.

Asymptotic analysis of stock price densities and implied volatilities in mixed stochastic models

In this paper, we obtain sharp asymptotic formulas with error estimates for the Mellin con- volution of functions de ned on (0;1), and use these formulas to characterize the asymptotic behavior of marginal distribution densities of stock price processes in mixed stochastic models. Special examples of mixed models are jump-di usion models and stochastic volatility models with jumps. We apply our general results to the Heston model with double exponential jumps, and make a detailed analysis of the asymptotic behavior of the stock price density, the call option pricing function, and the implied volatility in this model. We also obtain similar results for the Heston model with jumps distributed according to the NIG law.