The price elasticity of demand for common stock

We study the price elasticity of demand for the common stock of an individual corporation. Despite the prevelance of assumptions that demand is perfectly elastic, there is little if any direct evidence in the literature to either support or reject that contention. Consistent with the notion of finite price elasticities, we find that the announcement of primary stock oferings by regulated firms depresses their stock prices and little if any evidence that this decline is the result of adverse information about future cash flows. Attempts to relate offer announcement effects directly to possible determinants of price elasticities, however, are inconclusive.

Adaptation to Changes in the Coffee Value Chain and the Price of Coiffee among Coffee Producers in Two Villages in Kilimanjaro, Tanzania

Market liberalization in Tanzania has eroded the monopoly of the cooperative unions by allowing private coffee buyers (PCBs) to compete with them on equal footing. Similarly, farmers groups and primary societies are now allowed to sell coffee at auction. Thus, farmers have various options for selling their coffee. Similarly, the coffee industry has experienced large fluctuations in prices and stagnation in production. How do farmers react to these changes? Can and do farmers profit from different market conditions and sell to different traders at the lower end of the value chain, or do they remain with cooperatives or farmers groups? This study was conducted in Mruwia and Mshiri villages in Moshi Rural district. Whereas Mshiri village remains attached to the Kilimanjaro Native Cooperative Union (KNCU), Mruwia has detached from this organization and sells coffee independently. The sample (103) was randomly selected from the coffee farmers in the two villages. Data were collected through surveys, focus group discussions (FGDs), and socio-anthropological methods (participant-observation, biographies, and thematic interviews). Results indicate that the selection of whom to sell coffee depends largely on farmers’ dependence on coffee and prices, other benefits accrued, and whether the initial costs are covered by buyers. Additionally, most respondents did not sell coffee to PCBs. Thus, prices, the institutional infrastructure, and the structure of local communities were important when making decisions about how and with whom to trade.

Dangers of ‘Facebook Login’ for Mobile Apps: Is There a Price Tag for Social Information?

Social networks offer horizontal integration for any mobile platform providing app users with a convenient single sign-on point. Nonetheless, there are growing privacy concerns regarding its use. These vulnerabilities trigger alarm among app developers who fight for their user base: While they are happy to act on users’ information collected via social networks, they are not always willing to sacrifice their adoption rate for this goal. So far, understanding of this trade-off has remained ambiguous. To fill this gap, we employ a discrete choice experiment to explore the role of Facebook Login and investigate the impact of accompanying requests for different information items / actions in the mobile app adoption process. We quantify users’ concerns regarding these items in monetary terms. Beyond hands-on insights for providers, our study contributes to the theoretical discourse on the value of privacy in the growing world of Social Media and mobile web.

Forecasting Intraday Stock Price Trends with Text Mining Techniques

In this paper, we describe NewsCATS (news categorization and trading system), a system implemented to predict stock price trends for the time immediately after the publication of press releases. NewsCATS consists mainly of three components. The first component retrieves relevant information from press releases through the application of text preprocessing techniques. The second component sorts the press releases into predefined categories. Finally, appropriate trading strategies are derived by the third component by means of the earlier categorization. The findings indicate that a categorization of press releases is able to provide additional information that can be used to forecast stock price trends, but that an adequate trading strategy is essential for the results of the categorization to be fully exploited.

Do Information, Price, or Morals Influence Ethical Consumption? A Natural Field Experiment and Customer Survey on the Purchase of Fair Trade Coffee

We address ethical consumption using a natural field experiment on the actual purchase of Fair Trade (FT) coffee in three supermarkets in Germany. Based on a quasi-experimental before-and-after design the effects of three different treatments – information, 20% price reduction, and a moral appeal – are analyzed. Sales data cover actual ethical purchase behavior and avoid problems of social desirability. But they offer only limited insights into the motivations of individual consumers. We therefore complemented the field experiment with a customer survey that allows us to contrast observed (ethical) buying behavior with self-reported FT consumption. Results from the experiment suggest that only the price reduction had the expected positive and statistically significant effect on FT consumption.

The Long-Run Relationship between Money, Nominal GDP, and the Price Level in Venezuela: 1950 to 1996

This paper explores whether a significant long-run relationship exists between money and nominal GDP and between money and the price level in the Venezuelan economy. We apply time-series econometric techniques to annual data for the Venezuelan economy for 1950 to 1996. An important feature of our analysis is the use of tests for unit roots and cointegration with structural breaks. Certain characteristics of the Venezuelan experience suggest that structural breaks may be important. Since the economy depends heavily on oil revenue, oil price shocks have had important influences on most macroeconomic variables. Also since the economy possesses large foreign debt, the world debt crisis that exploded in 1982 had pervasive effects on the Venezuelan economy. Radical changes in economic policy and political instability may have also significantly affected the movement of the macroeconomy. We find that a long-run relationship exists between narrow money (M1) and nominal GDP, the GDP deflator, and the CPI when one makes allowances for one or two structural breaks. We do not find such long-run relationships when broad money (M2) is used.

Minimizing the Price of Tranquility: How to Discourage Scotland's Secession from the United Kingdom

What some view as overly-generous funding of the Scottish parliament results from Scotland.s credible threat to secede from the United Kingdom. Scotland is shown to benefit from a second mover advantage in a non-cooperative sequential game over the allocation of public funds. Various reform proposals are criticized for not recognizing that reform of Scottish government finances must be consistent with Scotland.s credible threat. Fiscal autonomy -- in which the Scottish parliament finances a much greater proportion of its spending from Scottish-sourced taxes, is demonstrated to be a viable reform within the existing political context and, in some circumstances, could remove Scotland.s second mover advantage. We also use a cooperative bargaining game model to demonstrate that an Australian style grants commission would not be a viable reform in the British context.

Responding to Price Signals in Communal Agriculture: Shaker Hog Production, 1788-1850

Isolated Shaker communal farms stressed self-sufficiency as an ideal but carefully chose which goods to buy and sell in external markets and which to produce and consume themselves. We use records of hog slaughter weights to investigate the extent to which the Shakers incorporated market-based price information in determining production levels of a consumption good which they did not sell in external markets: pork. Granger causality tests indicate that Shaker pork production decisions were influenced as hypothesized, strongly by corn prices and weakly by pork prices. We infer that attention to opportunity costs of goods that they produced and consumed themselves was a likely factor aiding the longevity of Shaker communal societies.