Moral Systems in the Regulations of Nonprofits: How Value Commitments Matter

This essay explores how three behavior-shaping systems - legal, market, and moral - influence the fundamental tasks of both for-profit and nonprofit organizations, including organizational goal-setting; motivation of participants; and deterring and reducing abuse of power. After identifying key features of these normative systems and their characteristic differences, the author argues that the influence of moral systems on nonprofit organizations may be underestimated, especially in view of their potentially unifying role with respect to all of the fundamental tasks. He suggests that the prospects for effective reform of nonprofit governance and accountability regimes are improved when the mechanisms and effects of these moral systems are taken into account.This publication is Hauser Center Working Paper No. 33.6. Hauser Working Paper Series Nos. 33.1-33.9 were prepared as background papers for the Nonprofit Governance and Accountability Symposium October 3-4, 2006

Advertising Restrictions and Competition in the Children's Breakfast Cereal Industry / Restrictions et compétition publicitaire dans l’industrie des céréales pour enfants

This paper takes advantage of the ban on advertising directed at children in the province of Quebec to study the effect of advertising in the children's breakfast cereal industry. Advertising is viewed alternatively as anti-competitive, if it increases brand loyalty, or as pro-competitive, if it acts a substitute for brand recognition. I construct a model of established and non-established brands in which advertising serves to inform consumers about the existence of brands. The model predicts that the effect of prohibiting advertising is to permit established brands to enjoy greater market share at the expense of newer and less well-known brands. This prediction is supported by the data: older, better-known brands have higher market share in Quebec than in regions where advertising is permitted and the opposite is true for non-established brands. This result suggests that in this market the effect of advertising cannot be to increase perceived product differentiation and reduce competition. Nous prenons avantage de l'interdiction de diffuser de la publicité à l'intention des enfants au Québec pour étudier l'effet de la publicité dans l'industrie des céréales. La publicité est considérée comme étant anti-concurrentielle si elle augmente la loyauté envers la marque, alors qu'elle est vue comme étant bénéfique pour la concurrence si elle agit comme un substitut à la reconnaissance de la marque. Nous construisons un modèle de marques établies et non-établies sur le marché où la publicité a pour but d'informer les consommateurs sur l'existence des marques. Le modèle prédit que toute prohibition de la publicité a pour conséquence de permettre aux marques établies d'augmenter leur part de marché au détriment de celles qui sont nouvelles et moins connues. Ce résultat est validé par les données. En effet, les marques les plus anciennes et les mieux connues ont des parts de marché plus élevées au Québec que dans les régions où la publicité est permise. L'inverse est vrai pour les marques non-établies. Notre résultat suggère que dans ce marché, la publicité ne peut pas augmenter la différenciation de produit et réduire la concurrence.advertising restrictions, market concentration, established brands, Réglementation de la publicité, concurrence, marques établies

Consumer Search and Information Intermediaries

In this paper we model the market for a homogeneous good and examine the role of information in determining market outcomes. Unlike in Baye and Morgan (2001) where consumers can only learn about the prices charged by different firms by subscribing to an information intermediary’s service, we allow consumers to shop for price quotes. We are interested in determing the impact on market outcomes of allowing for this additional means of information acquisition. Relative to the case where consumers have no interest in searching for prices, consumers become no better off as the cost of search falls. The intermediary, in an effort to compensate for the loss of revenue that it might have earned from consumers, increases the fees that it charges to firms for the right to advertise their product through it. As a result, fewer firms advertise in equilibrium, and so, those that do post higher prices, and, in expectation, consumers pay more for the product. The price increase appropriates all of the gains in consumer surplus generated by the decrease in the cost of search.Search, advertising, information intermediary, price dispersion

Energy Regulation in Quebec

This report characterizes the regulation of energy markets in general and focuses on the electricity and natural gas markets of Québec. Markets are regulated if they are deemed to represent natural monopoly situations or if unregulated firms would not take into account externalities that they might generate. Energy market regulation has been justified with the claim that regulation represents the “second-best” alternative. That is, given a situation in which there is market failure, the outcome derived under regulation may be better than the outcome that would arise if the market were unregulated. Government intervention may be required in order to protect the interests of consumers. Energy markets have been considered natural monopoly situations in large part because of the enormous fixed costs associated with production and distribution. Furthermore, electricity and natural gas are generally considered essential goods, or more accurately, goods with significant positive externalities from reliable supply. A reliable supply is necessary for the proper functioning of any modern economy and a private market might not provide equally for all people in a service area. In recent years, however, certain segments of some energy markets have been liberalized, since these segments might not actually be natural monopoly situations and/or because the market may provide means to ensure that firms internalize externalities. We describe the experiences of a number of jurisdictions that have experimented with energy market liberalization and show that restructuring is feasible and may provide an improvement over the status quo if market power can be limited. We consider the potential for restructuring in Québec’s energy markets which are currently mainly regulated by the Régie de l’énergie du Québec. Québec’s electricity market does not represent a typical case for the restructuring of the production side since the vast majority of its generating capacity comes from hydro projects. Over 90% of Québec’s installed electrical capacity is hydro generated, making Québec the second most hydro-dominated market in the world after Norway. Furthermore, this capacity is highly concentrated on three river systems. The usual model of forced divestiture by hydrologic system is therefore likely to introduce market power in a restructured market, and may lead to greater inefficiencies than those present under regulation. In order for any market restructuring to succeed, (at least) one of two approaches must be undertaken. A system of tradable water rights could be established in parallel with a competitive power pool in order to allow divestiture of individual plants within a river system and/or Québec’s markets could be opened to foreign production. The retail segment of Québec’s energy markets could potentially benefit from liberalization. The only obvious difference between Québec’s energy markets and those in other jurisdictions is Québec’s price-equalization policy. Lower prices could prevail if competition were introduced to the markets for electricity and natural gas, but not for all consumers. Québec’s insistence on uniform prices throughout the province means that some consumers are currently paying below market price for energy. Prices for these consumers could rise if the market is restructured.

Native and Non-Native Speaker Judgements on the Quality of Synthesized Speech

The difference between native speakers' and non-native speak- ers' naturalness judgements of synthetic speech is investigated. Similar/difference judgements are analysed via a multidimen- sional scaling analysis and compared to Mean opinion scores. It is shown that although the two groups generally behave in a similar manner the variance of non-native speaker judgements is generally higher. While both groups of subject can clearly distinguish natural speech from the best synthetic examples, the groups' responses to different artefacts present in the synthetic speech can vary