The firm under uncertainty: capital structure and background risk

This paper examines the interplay between the real and financial decisions of the competitive firm under output price uncertainty. The firm faces additional sources of uncertainty that are aggregated into a background risk. We show that the firm always chooses its optimal debt-equity ratio to minimize the weighted average cost of capital, irrespective of the risk attitude of the firm and the incidence of the underlying uncertainty. We further show that the firm's optimal input mix depends on its optimal debt-equity ratio, thereby rendering the interdependence of the real and financial decisions of the firm. When the background risk is either additive or multiplicative, we provide reasonable restrictions on the firm's preferences so as to ensure that the firm's optimal output is adversely affected upon the introduction of the background risk. --Background risk,Capital structure,Price uncertainty

Regular and Estimable Inverse Demand Systems: A Distance Function Approach

To be useful for realistic policy simulation in an environment of rapid structural change, inverse demand systems must remain regular over substantial variations in quantities. The distance function is a convenient vehicle for generating such systems. While it directly yields Hicksian inverse demand functions, those functions will not usually have an explicit representation in terms of the observable variables. Note however that this problem need not hinder estimation and could be solved by using the numerical inversion estimation approach. This paper develops the formal theory for using distance functions in this context, and demonstrates the operational feasibility of the method.Inverse Demands; Distance Functions; Numerical Inversion Estimation Method; Separability.

The Benefit Function Approach to Modeling Price-Dependent Demand Systems: An Application of Duality Theory

In this article we advocate more extensive use of the benefit function in specifying price-dependent or inverse demand models. In particular, we demonstrate how duality theory may be used to establish the inter-relationships between the Marshallian (or Hicksian) inverse demands and Luenberger's adjusted price functions, allowing estimable inverse demands to be derived directly from a benefit function. We also make use of a numerical inversion estimation method to rectify the "unobservability of utility problem" encountered in the empirical analysis of these inverse demands. To illustrate the usefulness of the proposed methods, we estimate two systems of inverse demands for Japanese quarterly fish consumption. Results generally indicate that the proposed methods are promising and operationally feasible so that we have opened up a wider range of empirical inverse demand specifications that can be subjected to tight theoretical restrictions.Benefit Functions; Duality Theory; Numerical Inversion Estimation Method

Developing and Distributing Essential Medicines to Poor Countries: The DEFEND Proposal

The poorest nations of the world suffer from extreme disease burdens, which go largely untreated because weak incomes and the prevailing system of intellectual property rights fail to provide sufficient incentives to develop new treatments and distribute them at low cost. Recent price reductions for HIV/AIDS drugs are encouraging but offer only a limited solution. We discuss the economic tradeoffs involved in supporting drug and vaccine research through exclusive rights and distributing the fruits of that research to poor countries. We offer a proposal to overcome these incentive problems. Our DEFEND ("Developing Economies' Fund for Essential New Drugs") proposal would work within the existing international legal structure but significantly would raise the returns to R&D in critical medicines and expand distribution programs. A public international organization would purchase the license rights for designated areas and distribute the drugs at low cost with a required co-payment from local governments. Furthermore, governments would restrict parallel trade to support desirable price discrimination. Costs would be funded largely by increased foreign assistance from the developed nations, but these costs would be low in relation to current aid budgets. We believe a strong program could be mounted for $8 billion to$12 billion per year and would be an extremely effective use of foreign aid.Drug pricing; Essential medicines; Parallel imports; Developing countries; Patents

Towards a more nuanced theory of elite capture in development projects. The importance of context and theories of power

Elite capture in development projects is problematic across a wide range of cultures, governance contexts and geographical locations. The dominant development discourse suggests that elite capture can be addressed using principles of good governance and participatory democracy. We critique the notion that this is sufficient to challenge practices of elite domination that detrimentally affect the outcome of development projects. Using a Foucauldian notion of power we suggest that power relationships are more complex than current conceptualisations of elite capture allow. We offer some definitions and suggest a common conceptual framework to unify the concept of elite capture across cultures. This conceptual framework is used to analyse data from 2 case studies in south western Zambia. We conclude that the dominant discourse ignores complex power relationships and uses a simplistic notion of political legitimacy that may enhance elite capture rather than prevent it. The concept of political legitimacy needs to be expanded to include traditional institutions that are not elected, while still applying principles of participation and accountability to the design of institutions.Publisher PDFPeer reviewe

Software for Tracking Costs of Mars Projects

The Mars Cost Tracking Model is a computer program that administers a system set up for tracking the costs of future NASA projects that pertain to Mars. Previously, no such tracking system existed, and documentation was written in a variety of formats and scattered in various places. It was difficult to justify costs or even track the history of costs of a spacecraft mission to Mars. The present software enables users to maintain all cost-model definitions, documentation, and justifications of cost estimates in one computer system that is accessible via the Internet. The software provides sign-off safeguards to ensure the reliability of information entered into the system. This system may eventually be used to track the costs of projects other than only those that pertain to Mars

Improved design of all-optical processor for modular arithmetic

A new improved design of an all-optical processor that performs modular arithmetic is presented. The modulo-processor is based on all-optical circuit of interconnected semiconductor optical amplifier logic gates. The design allows processing times of less than 1 µs for 16-bit operation at 10 Gb/s and up to 32-bit operation at 100 Gb/s

Tracking Lumbar Vertebrae in Digital Videofluoroscopic Video Automatically

Low back pain becomes one of the significant problem in the industrialized world. Efficient and effective spinal motion analysis is required to understand low back pain and to aid the diagnosis. Videofluoroscopy provides a cost effective way for such analysis. However, common approaches are tedious and time consuming due to the low quality of the images. Physicians have to extract the vertebrae manually in most cases and thus continuous motion analysis is hardly achieved. In this paper, we propose a system which can perform automatic vertebrae segmentation and tracking. Operators need to define exact location of landmarks in the first frame only. The proposed system will continuously learn the texture pattern along the edge and the dynamics of the vertebrae in the remaining frames. The system can estimate the location of the vertebrae based on the learnt texture and dynamics throughout the sequence. Experimental results show that the proposed system can segment vertebrae from videofluoroscopic images automatically and accurately. © Springer-Verlag 2004.postprintThe International Workshop on Medical Imaging and Augmented Reality (MIAR 2004), Beijing, China, 19-20 August 2004. In Lecture Notes in Computer Science, 2004, v. 3150, p. 154-16

Design of fast core node processor for packet forwarding without header modification in optical networks

We present a design of a fast all-optical core-node processor that performs packet-forwarding in optical networks without header-modification. The design is based on bit-serial architecture using TOADs as logic-gates that perform modulo-arithmetic to forward packets