The simple economics of risk-sharing agreements between the NHS and the pharmaceutical industry

The Janssen-Cilag proposal for a risk-sharing agreement regarding bortezomib received a welcome signal from NICE. The Office of Fair Trading report included risk-sharing agreements as an available tool for the National Health Service. Nonetheless, recent discussions have somewhat neglected the economic fundamentals underlying risk-sharing agreements. We argue here that risk-sharing agreements, although attractive due to the principle of paying by results, also entail risks. Too many patients may be put under treatment even with a low success probability. Prices are likely to be adjusted upward, in anticipation of future risk-sharing agreements between the pharmaceutical company and the third-party payer. An available instrument is a verification cost per patient treated, which allows obtaining the first-best allocation of patients to the new treatment, under the risk sharing agreement. Overall, the welfare effects of risk-sharing agreements are ambiguous, and care must be taken with their use.

A framework for using real data with distributed low cost sensors

Currently, due to the widespread use of computers and the internet, students are trading libraries for the World Wide Web and laboratories with simulation programs. In most courses, simulators are made available to students and can be used to proof theoretical results or to test a developing hardware/product. Although this is an interesting solution: low cost, easy and fast way to perform some courses work, it has indeed major disadvantages. As everything is currently being done with/in a computer, the students are loosing the “feel” of the real values of the magnitudes. For instance in engineering studies, and mainly in the first years, students need to learn electronics, algorithmic, mathematics and physics. All of these areas can use numerical analysis software, simulation software or spreadsheets and in the majority of the cases data used is either simulated or random numbers, but real data could be used instead. For example, if a course uses numerical analysis software and needs a dataset, the students can learn to manipulate arrays. Also, when using the spreadsheets to build graphics, instead of using a random table, students could use a real dataset based, for instance, in the room temperature and its variation across the day. In this work we present a framework which uses a simple interface allowing it to be used by different courses where the computers are the teaching/learning process in order to give a more realistic feeling to students by using real data. A framework is proposed based on a set of low cost sensors for different physical magnitudes, e.g. temperature, light, wind speed, which are connected to a central server, that the students have access with an Ethernet protocol or are connected directly to the student computer/laptop. These sensors use the communication ports available such as: serial ports, parallel ports, Ethernet or Universal Serial Bus (USB). Since a central server is used, the students are encouraged to use sensor values results in their different courses and consequently in different types of software such as: numerical analysis tools, spreadsheets or simply inside any programming language when a dataset is needed. In order to do this, small pieces of hardware were developed containing at least one sensor using different types of computer communication. As long as the sensors are attached in a server connected to the internet, these tools can also be shared between different schools. This allows sensors that aren't available in a determined school to be used by getting the values from other places that are sharing them. Another remark is that students in the more advanced years and (theoretically) more know how, can use the courses that have some affinities with electronic development to build new sensor pieces and expand the framework further. The final solution provided is very interesting, low cost, simple to develop, allowing flexibility of resources by using the same materials in several courses bringing real world data into the students computer works.

Delegation and information sharing in oligopoly

Information sharing in oligopoly has been analyzed by assuming that firms behave as a sole economic agent. In this paper I assume that ownership and management are separated. Managers are allowed to falsely report their costs to owners and rivals. Under such circumstances, if owners want to achieve information sharing they must use managerial contracts that implement truthful cost reporting by managers as a dominant strategy. I show that, contrary to the classical result, without the inclusion of message-dependent payments in managerial contracts there will be no information sharing. On the other hand, with the inclusion of such publicly observable payments and credible ex-ante commitment by owners not to modify these payments, there will be perfect information sharing without the need for third parties. Keywords: Information sharing, Delegation, Managerial contracts. JEL classification numbers: D21, D82, L13, L21

Investor protection, risk sharing and inequality

This paper studies the relationship between investor protection, financial risk sharing and income inequality. In the presence of market frictions, better protection makes investors more willing to take on entrepreneurial risk while lending to firms. This implies lower cost of external finance and better risk sharing between financiers and entrepreneurs. Investor protection, by boosting the market for risk sharing plays the twofold role of encouraging agents to undertake risky enterprises and providing them with insurance. By increasing the number of risky projects, it raises income inequality. By extending insurance to more agents, it reduces it. As a result, the relationship between the size of the market for risk sharing and income inequality is hump-shaped. Empirical evidence from a cross-section of sixty-eight countries, and a panel of fifty countries over the period 1976-2000, supports the predictions of the model.

Sharing competences in strategic alliances: a case study of the Cosan and Shell biofuel venture

In a competitive world, the way a firm establishes its organizational arrangements may determine the enhancement of its core competences and the possibility of reaching new markets. Firms that find their skills to be applicable in just one type of market encounter constraints in expanding their markets, and through alliances may find a competitive form of value capture. Hybrid forms of organization appear primarily as an alternative to capturing value and managing joint assets when the market and hierarchy modes do not present any yields for the firm's competitiveness. As a result, this form may present other challenging issues, such as the allocation of rights and principal-agent problems. The biofuel market has presented a strong pattern of changes over the last 10 years. New intra-firm arrangements have appeared as a path to participate or survive among global competition. Given the need for capital to achieve better results, there has been a consistent movement of mergers and acquisitions in the Biofuel sector, especially since the 2008 financial crisis. In 2011 there were five major groups in Brazil with a grinding capacity of more than 15 million tons per year: Raízen (joint venture formed by Cosan and Shell), Louis Dreyfus, Tereos Petrobras, ETH, and Bunge. Major oil companies have implemented the strategy of diversification as a hedge against the rising cost of oil. Using the alliance of Cosan and Shell in the Brazilian biofuel market as a case study, this paper analyses the governance mode and challenging issues raised by strategic alliances when firms aim to reach new markets through the sharing of core competences with local firms. The article is based on documentary research and interviews with Cosan's Investor Relations staff, and examines the main questions involving hybrid forms through the lens of the Transaction Cost Economics (TCE), Agency Theory, Resource Based View (RBV), and dynamic capabilities theoretical approaches. One focal point is knowledge "appropriability" and the specific assets originated by the joint venture. Once the alliance is formed, it is expected that competences will be shared and new capabilities will expand the limits of the firm. In the case studied, Cosan and Shell shared a number of strategic assets related to their competences. Raízen was formed with economizing incentives, as well to continue marshalling internal resources to enhance the company's presence in the world energy sector. Therefore, some challenges might be related to the control and monitoring agents' behavior, considering the two-part organism formed by distinctive organizational culture, tacit knowledge, and long-term incentives. The case study analyzed illustrates the hybrid arrangement as a middle form for organizing the transaction: neither in the market nor in the hierarchy mode, but rather a more flexible commitment agreement with a strategic central authority. The corporate governance devices are also a challenge, since the alignment between the parent companies in the joint ventures is far more complex. These characteristics have led to an organism with bilateral dependence, offering favorable conditions for developing dynamic capabilities. However, these conditions might rely on the partners' long-term interest in the joint venture.

Information Sharing and the Stability of Cooperation in Research Joint Ventures.

The model studies information sharing and the stability of cooperation in cost reducing Research Joint Ventures (RJVs). In a four-stage game-theoretic framework, firms decide on participation in a RJV, information sharing, R&D expenditures, and output. An important feature of the model is that voluntary information sharing between cooperating firms increases information leakage from the RJV to outsiders. It is found that it is the spillover from the RJV to outsiders which determines the decision of insiders whether to share information, while it is the spillover affecting all firms which determines the level of information sharing within the RJV. RJVs representing a larger portion of firms in the industry are more likely to share information. It is also found that when sharing information is costless, firms never choose intermediate levels of information sharing : they share all the information or none at all. The size of the RJV is found to depend on three effects : a coordination effect, an information sharing effect, and a competition effect. Depending on the relative magnitudes of these effects, the size of the RJV may increase or decrease with spillovers. The effect of information sharing on the profitability of firms as well as on welfare is studied.

The Alberta Dilemma: Optimal Sharing of a Water Resource by an Agricultural and an Oil Sector

The purpose of this paper is to characterize the optimal time paths of production and water usage by an agricultural and an oil sector that have to share a limited water resource. We show that for any given water stock, if the oil stock is sufficiently large, it will become optimal to have a phase during which the agricultural sector is inactive. This may mean having an initial phase during which the two sectors are active, then a phase during which the water is reserved for the oil sector and the agricultural sector is inactive, followed by a phase during which both sectors are active again. The agricultural sector will always be active in the end as the oil stock is depleted and the demand for water from the oil sector decreases. In the case where agriculture is not constrained by the given natural inflow of water once there is no more oil, we show that oil extraction will always end with a phase during which oil production follows a pure Hotelling path, with the implicit price of oil net of extraction cost growing at the rate of interest. If the natural inflow of water does constitute a constraint for agriculture, then oil production never follows a pure Hotelling path, because its full marginal cost must always reflect not only the imputed rent on the finite oil stock, but also the positive opportunity cost of water.

Influence of farmers educational level on comprehending, acting-upon and sharing of agro advisories

Although short messaging service (SMS) through mobile phones has quickly gained popularity among most other sectors in India, its potential is not fully realised in the agriculture sector as a cost effective service to reach farmers and elicit desirable action. Despite the cost effectiveness, mobile messaging has remained a challenge in the farming sector in terms of its end use and action as far as extension systems are concerned. While there could be many influencing factors affecting the utility of mobile messages, this study assumed that educational level of farmers could be a major factor. A telephone survey was conducted to ascertain the influence of farmers’ education on the level of utilisation of mobile-based advisories. Farmers with higher education level showed better comprehension of advisories, actedupon the advisories more promptly and shared the information with fellow farmers more often than those with lower education level. There was a significant association between comprehending, sharing and acting upon advisories. This has implications to achieve enhanced extension reach with higher efficiency in terms of cost and time.

Asset pricing when risk sharing is limited by default: a theoretical framework

We study the asset pricing implications of an endowment economy when agents can default on contracts that would leave them otherwise worse off. We specialize and extend the environment studied by Kocherlakota (1995) and Kehoe and Levine (1993) to make it comparable to standard studies of asset pricillg. We completely charactize efficient allocations for several special cases. We illtroduce a competitive equilibrium with complete markets alld with elldogellous solvency constraints. These solvellcy constraints are such as to prevent default -at the cost of reduced risk sharing. We show a version of the classical welfare theorems for this equilibrium definition. We characterize the pricing kernel, alld compare it with the one for economies without participation constraints : interest rates are lower and risk premia can be bigger depending on the covariance of the idiosyncratic and aggregate shocks. Quantitative examples show that for reasonable parameter values the relevant marginal rates of substitution fali within the Hansen-Jagannathan bounds.

An overview on network cost allocation methods

This work is devoted to Study and discuss the main methods to solve the network cost allocation problem both for generators and demands. From the presented, compared and discussed methods, the first one is based on power injections, the second deals with proportional sharing factors, the third is based upon Equivalent Bilateral Exchanges, the fourth analyzes the power How sensitivity in relation to the power injected, and the last one is based on Z(bus) network matrix. All the methods are initially illustrated using a 4-bus system. In addition, the IEEE 24-bus RTS system is presented for further comparisons and analysis. Appropriate conclusions are finally drawn. (C) 2008 Elsevier B.V. All rights reserved.

Least-cost Disjoint Paths with Dependent Cost Structure in Wavelength Continuous Optical WDM Networks

One of the important issues in establishing a fault tolerant connection in a wavelength division multiplexing optical network is computing a pair of disjoint working and protection paths and a free wavelength along the paths. While most of the earlier research focused only on computing disjoint paths, in this work we consider computing both disjoint paths and a free wavelength along the paths. The concept of dependent cost structure (DCS) of protection paths to enhance their resource sharing ability was proposed in our earlier work. In this work we extend the concept of DCS of protection paths to wavelength continuous networks. We formalize the problem of computing disjoint paths with DCS in wavelength continuous networks and prove that it is NP-complete. We present an iterative heuristic that uses a layered graph model to compute disjoint paths with DCS and identify a free wavelength.

Sharing evidence of sustainable land management impacts

Ensuring sustainable use of natural resources is crucial for maintaining the basis for our livelihoods. With threats from climate change, disputes over water, biodiversity loss, competing claims on land, and migration increasing worldwide, the demands for sustainable land management (SLM) practices will only increase in the future. For years already, various national and international organizations (GOs, NGOs, donors, research institutes, etc.) have been working on alternative forms of land management. And numerous land users worldwide – especially small farmers – have been testing, adapting, and refining new and better ways of managing land. All too often, however, the resulting SLM knowledge has not been sufficiently evaluated, documented and shared. Among other things, this has often prevented valuable SLM knowledge from being channelled into evidence-based decision-making processes. Indeed, proper knowledge management is crucial for SLM to reach its full potential. Since more than 20 years, the international WOCAT network documents and promotes SLM through its global platform. As a whole, the WOCAT methodology comprises tools for documenting, evaluating, and assessing the impact of SLM practices, as well as for knowledge sharing, analysis and use for decision support in the field, at the planning level, and in scaling up identified good practices. In early 2014, WOCAT’s growth and ongoing improvement culminated in its being officially recognized by the UNCCD as the primary recommended database for SLM best practices. Over the years, the WOCAT network confirmed that SLM helps to prevent desertification, to increase biodiversity, enhance food security and to make people less vulnerable to the effects of climate variability and change. In addi- tion, it plays an important role in mitigating climate change through improving soil organic matter and increasing vegetation cover. In-depth assessments of SLM practices from desertification sites enabled an evaluation of how SLM addresses prevalent dryland threats. The impacts mentioned most were diversified and enhanced production and better management of water and soil degradation, whether through water harvesting, improving soil moisture, or reducing runoff. Among others, favourable local-scale cost-benefit relationships of SLM practices play a crucial role in their adoption. An economic analysis from the WOCAT database showed that land users perceive a large majority of the technologies as having benefits that outweigh costs in the long term. The high investment costs associated with some practices may constitute a barrier to adoption, however, where appropriate, short-term support for land users can help to promote these practices. The increased global concerns on climate change, disaster risks and food security redirect attention to, and trigger more funds for SLM. To provide the necessary evidence-based rationale for investing in SLM and to reinforce expert and land users assessments of SLM impacts, more field research using inter- and transdisciplinary approaches is needed. This includes developing methods to quantify and value ecosystem services, both on-site and off-site, and assess the resilience of SLM practices, as currently aimed at within the EU FP7 projects CASCADE and RECARE.

Efficient top-down set-sharing analysis using cliques

Abstract. We study the problem of efficient, scalable set-sharing analysis of logic programs. We use the idea of representing sharing information as a pair of abstract substitutions, one of which is a worst-case sharing representation called a clique set, which was previously proposed for the case of inferring pair-sharing. We use the clique-set representation for (1) inferring actual set-sharing information, and (2) analysis within a top-down framework. In particular, we define the new abstract functions required by standard top-down analyses, both for sharing alone and also for the case of including freeness in addition to sharing. We use cliques both as an alternative representation and as widening, defining several widening operators. Our experimental evaluation supports the conclusión that, for inferring set-sharing, as it was the case for inferring pair-sharing, precisión losses are limited, while useful efficieney gains are obtained. We also derive useful conclusions regarding the interactions between thresholds, precisión, efficieney and cost of widening. At the limit, the clique-set representation allowed analyzing some programs that exceeded memory capacity using classical sharing representations.

Precise set sharing and nullity analysis for java-style program

Finding useful sharing information between instances in object- oriented programs has been recently the focus of much research. The applications of such static analysis are multiple: by knowing which variables share in memory we can apply conventional compiler optimizations, find coarse-grained parallelism opportunities, or, more importantly,erify certain correctness aspects of programs even in the absence of annotations In this paper we introduce a framework for deriving precise sharing information based on abstract interpretation for a Java-like language. Our analysis achieves precision in various ways. The analysis is multivariant, which allows separating different contexts. We propose a combined Set Sharing + Nullity + Classes domain which captures which instances share and which ones do not or are definitively null, and which uses the classes to refine the static information when inheritance is present. Carrying the domains in a combined way facilitates the interaction among the domains in the presence of mutivariance in the analysis. We show that both the set sharing part of the domain as well as the combined domain provide more accurate information than previous work based on pair sharing domains, at reasonable cost.