Can consumer complaints reduce product reliability? Should we worry?

We analyze a monopolist’s pricing and product reliability problem when consumers are entitled to product replacement but have heterogeneous cost of exercising this right, and we assess the implications of a decrease in consumers’ claiming cost on reliability, profit, and welfare. We find that reducing consumers’ claiming cost may reduce reliability and increase profit. Additionally, the model can explain why some firms encourage consumers to complain while others discourage consumers from complaining. We also show that welfare and profit are partially aligned, specially when consumers’ claiming cost are relatively low and the firm prefers to promote complaints; consequently, we find that encouraging complaints will eventually increase welfare

The cost of changing your mind!

A recent decision of the Queensland Civil and Administrative Tribunal dealt with the liability of a purchaser to pay a termination penalty where a contract for the purchase of a residential property was terminated during the ‘cooling-off’ period. The decision is Lucy Cole Prestige Properties Broadbeach Pty Ltd ATF Gaindri FT Trust t/as Lucy Cole Prestige Properties Broadbeach Pty Ltd v Kastrissios [2013] QCAT 653.

Low-cost railway level crossings - breaking down the barriers

Level crossing risk continues to be a significant safety concern for the security of rail operations around the world. Over the last decade or so, a third of railway related fatalities occurred as a direct result of collisions between road and rail vehicles in Australia. Importantly, nearly half of these collisions occurred at railway level crossings with no active protection, such as flashing lights or boom barriers. Current practice is to upgrade level crossings that have no active protection. However, the total number of level crossings found across Australia exceed 23,500, and targeting the proportion of these that are considered high risk (e.g. public crossings with passive controls) would cost in excess of AU$3.25 billion based on equipment, installation and commissioning costs of warning devices that are currently type approved. Level crossing warning devices that are low-cost provide a potentially effective control for reducing risk; however, over the last decade, there have been significant barriers and legal issues in both Australia and the US that have foreshadowed their adoption. These devices are designed to have significantly lower lifecycle costs compared with traditional warning devices. They often make use of use of alternative technologies for train detection, wireless connectivity and solar energy supply. This paper describes the barriers that have been encountered for the adoption of these devices in Australia, including the challenges associated with: (1) determining requisite safety levels for such devices; (2) legal issues relating to duty of care obligations of railway operators; and (3) issues of Tort liability around the use of less than fail-safe equipment. This paper provides an overview of a comprehensive safety justification that was developed as part of a project funded by a collaborative rail research initiative established by the Australian government, and describes the conceptual framework and processes being used to justify its adoption. The paper provides a summary of key points from peer review and discusses prospective barriers that may need to be overcome for future adoption. A successful outcome from this process would result in the development of a guideline for decision-making, providing a precedence for adopting low-cost level crossing warning devices in other parts of the world. The framework described in this paper also provides relevance to the review and adoption of analogous technologies in rail and other safety critical industries.

Liability of country foreignness and liability of regional foreignness: their effects on geographic diversification and firm performance

The costs of inter- and intra-regional diversification have been widely discussed in the existing international business literature, but the findings are mixed. Explanations for the mixed findings have important managerial implications, because business managers have to estimate accurately the costs of doing business within and across regions before they make their internationalization decisions. To explain the existing mixed findings, this study differentiates between liabilities of foreignness at the country and regional levels, and explores the joint effects of liability of country foreignness (LCF) and liability of regional foreignness (LRF) on the performance of internationalizing firms. Using data from 167 Canadian firms, we find that LCF may not necessarily be negatively correlated with intra-regional diversification, but LRF is positively correlated with inter-regional diversification. LCF moderates the relationship between LRF and inter-regional diversification, and also mediates the relationship between intra-regional diversification and firm performance. LRF mediates the relationship between inter-regional diversification and firm performance. Missing one or more of these variables may result in different cost estimates. Identification of the relationships between these variables helps to improve the accuracy of estimating the costs of doing business aboard.

Limited liability and non-responsiveness in moral hazard and adverse selection problems

This work analyses the optimal menu of contracts offered by a risk neutral principal to a risk averse agent under moral hazard, adverse selection and limited liability. There are two output levels, whose probability of occurrence are given by agent’s private information choice of effort. The agent’s cost of effort is also private information. First, we show that without assumptions on the cost function, it is not possible to guarantee that the optimal contract menu is simple, when the agent is strictly risk averse. Then, we provide sufficient conditions over the cost function under which it is optimal to offer a single contract, independently of agent’s risk aversion. Our full-pooling cases are caused by non-responsiveness, which is induced by the high cost of enforcing higher effort levels. Also, we show that limited liability generates non-responsiveness.

A summary of the possibilities and probable cost of the proposed plan for workmen's compensation and old-age pensions for American brewery workmen; based upon the collection, study and tabulation of specific retruns from 16,374 members of the International Union of United Brewery Workmen of America,

Mode of access: Internet.

Annual industrial accident cost in Illinois, an estimate, based chiefly on 1949 data.

Cover title.

The High Cost of Hasty Hiring

Carefully reading employment applications and checking out all references and prior-employment records is vital to hotel managers and personnel directors today. Many legal suits are the result of employees who, hired quickly because of an immediate need, commit some crime in relation to guest rooms or property.

Reducing the global burden of depression : population level analysis of intervention cost-effectiveness in 14 world regions

International evidence on the cost and effects of interventions for reducing the global burden of depression remain scarce. Aims: To estimate the population-level cost-effectiveness of evidence-based depression interventions and their contribution towards reducing current burden. Method: Primary-care-based depression interventions were modelled at the level of whole populations in 14 epidemiological subregions of the world. Total population-level costs (in international dollars or I$) and effectiveness (disability adjusted life years (DALYs) averted) were combined to form average and incremental cost-effectiveness ratios. Results: Evaluated interventions have the potential to reduce the current burden of depression by 10–30%. Pharmacotherapy with older antidepressant drugs, with or without proactive collaborative care, are currently more cost-effective strategies than those using newer antidepressants, particularly in lower-income subregions. Conclusions: Even in resource-poor regions, each DALYaverted by efficient depression treatments in primary care costs less than 1 year of average per capita income, making such interventions a cost-effective use of health resources. However, current levels of burden can only be reduced significantlyif there is a substantialincrease substantial increase intreatment coverage.