Pricing inefficiencies in private real estate markets using total return swaps

Efficient markets should guarantee the existence of zero spreads for total return swaps. However, real estate markets have recorded values that are significantly different from zero in both directions. Possible explanations might suggest non-rational behaviour by inexperienced market players or unusual features of the underlying asset market. We find that institutional characteristics in the underlying market lead to market inefficiencies and, hence, to the creation of a rational trading window with upper and lower bounds within which transactions do not offer arbitrage opportunities. Given the existence of this rational trading window, we also argue that the observed spreads can substantially be explained by trading imbalances due to the limited liquidity of a newly formed market and/or to the effect of market sentiment, complementing explanations based on the lag between underlying market returns and index returns.

Logistics inefficiencies in latin american landlocked countries

This document sets out an initial proposal for measuring costs in logistics chains, and is part of a line of work of the Natural Resources and Infrastructure Division of the Economic Commission for Latin America and the Caribbean (ECLAC) that seeks to identify logistics inefficiencies in Latin America and the Caribbean that are detrimental to the sustainability of national and regional growth.

Cost Improvements, Returns to Scale, and Cost Inefficiencies for Real Estate Investment Trusts

This paper extends the existing research on real estate investment trust (REIT) operating efficiencies. We estimate stochastic-frontier, panel-data models specifying a translog cost function. The specified model updates the cost frontier with new information as it becomes available over time. The model can identify frontier cost improvements, returns to scale, and cost inefficiencies over time. The results disagree with most previous research in that we find no evidence of scale economies and some evidence of scale diseconomies. Moreover, we also generally find smaller inefficiencies than those shown by other REIT studies. Contrary to previous research, higher leverage associates with more efficiency.

Skill development for innovative procurement environments in construction

The construction industry should be a priority to all governments because it impacts economically and socially on all citizens. Sector turnover in industrialised economies typically averages 8-12% of GDP. Further, construction is critical to economic growth. Recent Australian studies estimate that a 10% gain in efficiency in construction translates to a 2.5% increase in GDP Inefficiencies in the Australian construction industry have been identified by a number of recent studies modelling the building process. They have identified potential savings in time of between 25% and 40% by reducing non-value added steps in the process. A culture of reform is now emerging in the industry – one in which alternate forms of project delivery are being trialed. Government and industry have identified Alliance Contracting as a means to increase efficiency in the construction industry as part of a new innovative procurement environment. Alliance contracting requires parties to form relationships and work cooperatively to provide a more complete service. This is a significant cultural change for the construction industry, with its well-known adversarial record in traditional contracting. Alliance contracts offer enormous potential benefits, but the Australian construction industry needs to develop new skills to effectively participate in the new relationship environment. This paper describes a collaborative project identifying skill needs for clients and construction professionals to more effectively participate in an increasingly sophisticated international procurement environment. The aim of identifying these skill needs is to assist industry, government, and skill developers to prepare the Australian construction workforce for the future. The collaborating Australian team has been fortunate to secure the Australian National Museum in Canberra as its live case study. The Acton Peninsula Development is the first major building development in the world awarded on the basis of a joint alliance contract.

The role of decision-maker preferences in tenancy selection of CBD office accommodation – preliminary literature review

The literature and anecdotal evidence suggests that that there is more to tenancy selection (firm location) than the profit maximisation drive that traditional neo-classical economic location theory suggests. In the first instance these models assume property markets are rational and perfectly competitive; the CBD office market is clearly neither rational nor perfectly competitive. This fact alone relegates such models to the margins of usefulness for an industry that seeks to satisfy tenant demand in order to optimise returns on capital invested. Acknowledgment of property market imperfections are universally accepted to the extent that all contemporary texts discuss the lack of a coherent centralised market place and incomplete and poorly disseminated information processes as fundamental inadequacies which characterise the property market inefficiencies. Less well researched are the facets of the market which allow the observer to determine market activity to be significantly irrational. One such facet is that of ‘decision maker preferences’. The decision to locate a business operation at one location as opposed to another seems ostensibly a routine choice based on short, medium and long term business objectives. These objectives are derived from a process of strategic planning by one or more individuals whose goal is held to be to optimise outcomes which benefit the business (and presumably those employed within it). However the decision making processes appear bounded by how firms function, the institutional context in which they operate, as well as by opportunistic behaviour by individual decision makers who allow personal preferences to infiltrate and ‘corrupt’ the process. In this way, history, culture, geography, as well as institutions all become significant to the extent that these influence and shape individual behaviour which in turn determine the morphology of individual preferences, as well as providing a conduit for them to take effect. This paper exams historical and current literature on the impact of individual behaviour in the decision making process within organisations as a precursor to an investigation of the tenancy decision making process within the CBD office market. Literature on the topic falls within a number of research disciplines, philosophy, psychology and economics to name a few.

The innovation deficit in public services : the curious problem of too much efficiency and not enough waste and failure

It has long been recognised that government and public sector services suffer an innovation deficit compared to private or market-based services. This paper argues that this can be explained as an unintended consequence of the concerted public sector drive toward the elimination of waste through efficiency, accountability and transparency. Yet in an evolving economy this can be a false efficiency, as it also eliminates the 'good waste' that is a necessary cost of experimentation. This results in a systematic trade0off in the public sector between the static efficiency of minimizing the misuse of public resources and the dynamic efficiency of experimentation. this is inherently biased against risk and uncertainty and therein, explains why governments find service innovation so difficult. In the drive to eliminate static inefficiencies, many political systems have susequently overshot and stifled policy innovation. I propose the 'Red Queen' solution of adaptive economic policy.

The economics of credence goods: An experimental investigation of the role of verifiability, liability, competition and reputation in credence goods markets

Credence goods markets are characterized by asymmetric information between sellers and consumers that may give rise to inefficiencies, such as under- and overtreatment or market break-down. We study in a large experiment with 936 participants the determinants for efficiency in credence goods markets. While theory predicts that either liability or verifiability yields efficiency, we find that liability has a crucial, but verifiability only a minor effect. Allowing sellers to build up reputation has little influence, as predicted. Seller competition drives down prices and yields maximal trade, but does not lead to higher efficiency as long as liability is violated.

The role of the rule of law in virtual communities

There is a severe tendency in cyberlaw theory to delegitimize state intervention in the governance of virtual communities. Much of the existing theory makes one of two fundamental flawed assumptions: that communities will always be best governed without the intervention of the state; or that the territorial state can best encourage the development of communities by creating enforceable property rights and allowing the market to resolve any disputes. These assumptions do not ascribe sufficient weight to the value-laden support that the territorial state always provides to private governance regimes, the inefficiencies that will tend to limit the development utopian communities, and the continued role of the territorial state in limiting autonomy in accordance with communal values. In order to overcome these deterministic assumptions, this article provides a framework based upon the values of the rule of law through which to conceptualise the legitimacy of the private exercise of power in virtual communities. The rule of law provides a constitutional discourse that assists in considering appropriate limits on the exercise of private power. I argue that the private contractual framework that is used to govern relations in virtual communities ought to be informed by the values of the rule of law in order to more appropriately address the governance tensions that permeate these spaces. These values suggest three main limits to the exercise of private power: that governance is limited by community rules and that the scope of autonomy is limited by the substantive values of the territorial state; that private contractual rules should be general, equal, and certain; and that, most importantly, internal norms be predicated upon the consent of participants.

Australian data breach notification : avoiding the State/Federal overlap

Mandatory data breach notification has become a matter of increasing concern for law reformers. In Australia, this issue was recently addressed as part of a comprehensive review of privacy law conducted by the Australian Law Reform Commission (ALRC) which recommended a uniform national regime for protecting personal information applicable to both the public and private sectors. As in all federal systems, the distribution of powers between central and state governments poses problems for national consistency. In the authors’ view, a uniform approach to mandatory data breach notification has greater merit than a ‘jurisdiction specific’ approach epitomized by US state-based laws. The US response has given rise to unnecessary overlaps and inefficiencies as demonstrated by a review of different notification triggers and encryption safe harbors. Reviewing the US response, the authors conclude that a uniform approach to data breach notification is inherently more efficient.

Construction project delivery and industry skills : crafting a better fit

The construction industry should be a priority to all governments because it impacts economically and socially on all citizens. Sector turnover in industrialised economies typically averages 8-12% of GDP. Further, construction is critical to economic growth. Recent Australian studies estimate that a 10% gain in efficiency in construction translates to a 2.5% increase in GDP ----- ----- Inefficiencies in the Australian construction industry have been identified by a number of recent studies modelling the building process. They have identified potential savings in time of between 25% and 40% by reducing non-value added steps in the process. A culture of reform is now emerging in the industry – one in which alternate forms of project delivery are being trial. ----- ----- Government and industry have identified Alliance Contracting as a means to increase efficiency in the construction industry as part of a new innovative procurement environment. Alliance contracting requires parties to form relationships and work cooperatively to provide a more complete service. This is a significant cultural change for the construction industry, with its well-known adversarial record in traditional contracting. Alliance contracts offer enormous potential benefits, but the Australian construction industry needs to develop new skills to effectively participate in the new relationship environment. ----- ----- This paper describes a collaborative project identifying skill needs for clients and construction professionals to more effectively participate in an increasingly sophisticated international procurement environment. The aim of identifying these skill needs is to assist industry, government, and skill developers to prepare the Australian construction workforce for the future. The collaborating Australian team has been fortunate to secure the Australian National Museum in Canberra as its live case study. The Acton Peninsula Development is the first major building development in the world awarded on the basis of a joint alliance contract.

Innovative project procurement in the Queensland government : the Woodford Correctional Centre

Much of the effort of the construction industry is directed towards the provision of services and products, many with substantial long term implications. Systems and procedures have evolved over centuries to provide these services and products, but inefficiencies have developed. One strategy for improving the efficiency of the construction industry is to restructure the systems and procedures which deliver projects so that improved benefits to the end users are provided. In this paper, contemporary systems and procedures for the delivery of projects are reviewed and the roles of the major stakeholders are examined. The recent construction of Woodford Correctional Centre in Queensland is reviewed as a case study in restructuring the delivery process and the lessons learned from this successful project are summarised.

Determinants and consequences of information sharing with key suppliers

The economic environment of today can be characterized as highly dynamic and competitive if not being in a constant flux. Globalization and the Information Technology (IT) revolution are perhaps the main contributing factors to this observation. While companies have to some extent adapted to the current business environment, new pressures such as the recent increase in environmental awareness and its likely effects on regulations are underway. Hence, in the light of market and competitive pressures, companies must constantly evaluate and if necessary update their strategies to sustain and increase the value they create for shareholders (Hunt and Morgan, 1995; Christopher and Towill, 2002). One way to create greater value is to become more efficient in producing and delivering goods and services to customers, which can lead to a strategy known as cost leadership (Porter, 1980). Even though Porter (1996) notes that in the long run cost leadership may not be a sufficient strategy for competitive advantage, operational efficiency is certainly necessary and should therefore be on the agenda of every company. ----- ----- ----- Better workflow management, technology, and resource utilization can lead to greater internal operational efficiency, which explains why, for example, many companies have recently adopted Enterprise Resource Planning (ERP) Systems: integrated softwares that streamline business processes. However, as today more and more companies are approaching internal operational excellence, the focus for finding inefficiencies and cost saving opportunities is moving beyond the boundaries of the firm. Today many firms in the supply chain are engaging in collaborative relationships with customers, suppliers, and third parties (services) in an attempt to cut down on costs related to for example, inventory, production, as well as to facilitate synergies. Thus, recent years have witnessed fluidity and blurring regarding organizational boundaries (Coad and Cullen, 2006). ----- ----- ----- The Information Technology (IT) revolution of the late 1990’s has played an important role in bringing organizations closer together. In their efforts to become more efficient, companies first integrated their information systems to speed up transactions such as ordering and billing. Later collaboration on a multidimensional scale including logistics, production, and Research & Development became evident as companies expected substantial benefits from collaboration. However, one could also argue that the recent popularity of the concepts falling under Supply Chain Management (SCM) such as Vendor Managed Inventory, Collaborative Planning, Replenishment, and Forecasting owe to the marketing efforts of software vendors and consultants who provide these solutions. Nevertheless, reports from professional organizations as well as academia indicate that the trend towards interorganizational collaboration is gaining wider ground. For example, the ARC Advisory Group, a research organization on supply chain solutions, estimated that the market for SCM, which includes various kinds of collaboration tools and related services, is going to grow at an annual rate of 7.4% during the years 2004-2008, reaching to $7.4 billion in 2008 (Engineeringtalk 2004).