The first novel contribution of this paper is represented by the intro- duction of the shadow cost of public funds in the public firm’s objective function. That is, we assume that the public firm is required to take into account the distortionary effect of the taxes that are needed to cover its deficit and, in general, public expenditures. In fact, absent lump-sum tax instruments, if government rises 1 Euro from taxation, society pays (1 + λ) Euros. Coherently, public profits, when positive, avoid an equivalent public transfer, reducing distortionary taxes. 4 As initially analyzed in Meade (1944) and exploited in Laffont and Tirole (1986, 1993), this approach has been used to characterize public mo- nopolies running a deficit and, more generally, regulated markets. Here we apply the same analysis to a public firm competing in a duopoly and to the effects of privatization, given that getting money for reduc- ing public debt or distortionary taxes, is often a complementary target of privatization. The main consequence is that, taking into account the shadow cost of public funds, the public firm puts more weight on its own profits mimicking, at least partially, the behavior of a private firm. The second contribution of this work is that we consider the effect of privatization on the timing of competition by endogenizing the determi- nation of simultaneous (Nash-Cournot) versus sequential (Stackelberg) games. That is, the structure of the game is not assumed a priori, but is the result of preplay independent and simultaneous decisions by the players. In fact, in many economic situations it is often more reason- able to assume that firms choose not only what action to take, but also when to take it. Moreover, we believe that this approach is especially relevant for the analysis of privatization, given that results and policy prescriptions emerged in the literature crucially rely on the type of com- petition assumed. For example, in de Fraja and Delbono (1989) it is shown that privatization may improve welfare under Cournot compe- tition even without efficiency gains; while, if a Stackelberg game with
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In the last decades of the XX century a process of liberalization and/or privatization occurred in most of the industrialized countries and nowadays public utilities are generally no longer run by public monopolies. The motivations for this program were essentially linked to the general perception of poor performance of public monopolies and to the idea that entry of private subjects could enhance efficiency. For example, during the nineties, in Italy, in France and in UK, as well as in many EU countries, the public incumbent faced the entry of private competitors in many communication services. The same occurred in the production of electricity, in gas retailing and more recently in some postal services. In the same years, national (public) airlines started competing with private or foreign ones in the domestic markets. Moreover, examples of public monopolies that became mixed oligopoly can be found in a broad range of industries including railways, steel and overnight-delivery industries, as well as services including banking, home loans, health care, life insurance, hospitals, broadcasting, and education. In these cases, instead of regulating a privatized monopoly, governments decided to enforce a facility-based competitions in order to achieve a so-called dynamic efficiency. 1
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The first novel contribution of this paper is represented by the introduction of the shadow cost of public funds in the public firm’s objective function. That is, we assume that the public firm is required to take into account the distortionary effect of the taxes that are needed to cover its deficit and, in general, public expenditures. In fact, absent lump-sum tax instruments, if government rises 1 Euro from taxation, society pays (1 + λ) Euros. Coher- ently, public profits, when positive, avoid an equivalent public transfer, reducing distortionary taxes. 4 As initially analyzed in Meade (1944) and exploited in Laffont and Tirole (1986, 1993), this approach has been used to characterize public monopolies running a deficit and, more generally, regulated markets. Here we apply the same analysis to a public firm competing in a duopoly and to the effects of privatization, given that getting money for reducing public debt or distortionary taxes, is often a complementary target of privatization. The main consequence is that, taking into account the shadow cost of public funds, the public firm puts more weight
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Our model captures corruption of tax inspectors and bureaucracy that delivers public services to the private sector. Corruption of tax inspectors decreases the effective tax revenue and thus limits the production of the public productive input. Even though the taxpayers enjoy a lower tax burden, the lesser amount of public productive input leads to lower productive capacity of the firms. The corrupt bureaucracy misuses a part of public funds and wastes public resources on the non-productive red tape and thus further reduces the amount of the public goods. Since the firms are willing to pay bribes, as long as it decreases the burden of excessive red tape. As the hidden purpose of excessive red tape is to coerce the firms pay bribes, the corrupt officials happily accept the bribes. This condition effectively creates a parallel shadow taxation of the firms and offsets any gain obtained by the taxpayer from tax evasion. As a result, the overall burden of the government run by corrupt bureaucracy becomes quite heavy. Even though this type of income redistribution does not change the total disposable income of the households, nevertheless it creates huge distortions in capital accumulation as it decreases returns on private capital rented by the firms. As the relative cost of the public inputs increases with higher corruption, the firms receive less productive input from the government. As a result growth potential is lower than if there were no corruption.
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(1+λ) Euro. Consequently, public pro Þ ts, when positive, avoid an equivalent public transfer, reducing distortionary taxes. Public Þrm’s proÞt and deÞcit are not a neutral transfer among agents of the same economy. They ought not to be weighted as private Þrm’s proÞts or consumer net surplus in the utilitarian measure of welfare, but they should be weighted 1+λ. Even though there is no general agreement on the objective of the public Þ rm (Vickers and Yarrow, 1991), we believe that our proposal, in a partial equilibrium setting meets the intuition of Marchand et al. (1984). Moreover, there is large empirical evidence of prices above marginal cost with soft budget constraint and also positive pro Þ ts by public Þ rm, where the latter occurs more frequently in the mixed oligopoly context than in natural public monopolies. Thus, we do not require the public Þ rm to act under hard budget constraint and the pro Þ t will be positive or negative depending on the importance of the distortion due to taxation and the amount of Þ xed costs.
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cle. We have selected five projects covering all three funds. This selection is too small to be representative. Instead, we have selected the projects with an eye to diversity. The first project, on civil registries in Mali, is a typical good governance project in the field of a core state function: establishing the population of a state. The second one, on the cashew sector in Mali, is a traditional development project which is only marginally re- lated to migration and focuses on private actors. The third one, repatriation from Libya, looks at a major humanitarian/migration project. In the fourth project, providing the Turkish Coast Guard with boats built by a private shipyard concerns a standard pro- curement situation in the field of migration management, with the peculiarity that it is implemented by the International Organization for Migration (IOM), an intergovernmen- tal organisation with UN status. The final project is one of the massive financial trans- fers to allow international and national organisations to assist the 5.6 million Syrian ref- ugees in Iraq, Jordan, Lebanon and Turkey. By including projects from different fields (good governance, development, humanitarian assistance, migration management), projects with direct (Section III.1) and indirect (Section III.2, III.4, III.5) as well as mixed (Section III.3) management, and projects implemented by UN organisations (repatria- tion, coast guard boats) as well as European development agencies (both projects in Mali, Syrian refugees) we aim to cover a selection of projects typical for the activities of the funds. 91 Also, we have selected both projects which at first sight seemed to be cov-
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Using quarterly data over the period from 1989:Q2 to 2012:Q4 this study provides several useful insights on the inclusion of REITs in the blended public and private real estate portfolio suggested by NAREIT (2011). First, in line with previous studies this paper shows that a blended portfolio of REITs and private real estate funds shows greater Sharpe performance than either fund type alone. Second, the greatest contribution to risk in the blended public and private real estate portfolio comes from REITs. More importantly the ‘required return’ of REITs, due to its contribution to risk, is greater than its actual return in the blended portfolio. This means that the weight of REITs in the blended portfolio suggested by NAREIT cannot be justified on risk contribution to risk grounds. Nonetheless, a sub-period analysis shows that REITs offer returns benefits when it is most needed, in periods when the private real estate market declines. This implies that fund managers need to pay particular attention to the performance of the REIT market when developing their blended public and private real estate portfolio strategy. Consequently, private real estate fund managers will need to develop a new set of financial analysis skills in order to evaluate REITs; otherwise they may not hold the optimum mix of public and private real estate.
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The second phase witnessed the entry of other mutual funds sponsored by nationalized banks and insurance companies. In 1987, State Bank of India (SBI) and Canara Bank have set up SBI mutual fund and Canara Bank mutual fund under the Indian Trust Act, 1882. In 1988, UTI floated another offshore fund namely, The India Growth Fund which was listed on the New York Stock Exchange (NYSE). By 1990, the two nationalized insurance companies- LIC & GIC and three nationalized banks namely, Indian Bank, Bank of India, and Punjab National Bank (PNB) have established wholly owned mutual fund subsidiaries. In October 1989, the first regulatory guidelines were issues by RBI, but these were applicable only to the mutual funds sponsored by banks. Subsequently, the government of India issued comprehensive guidelines in 1990 which were applicable to all mutual funds. With the entry of public sector funds during this phase, there was a tremendous growth in the size of mutual fund industry with investible funds at market value, increasing to INR 53,462 crores and the number of investors had increased to over 23 million. The buoyant equity markets in 1991-92 and the tax benefit under equity linked saving schemes enhanced the attractiveness of equity funds during the Phase II.
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The marginal productivity of IT capital was identical to the actual price of IT capital in the long-run equilibrium. In the short-run, the marginal productivity of IT capital was not identical to the actual price of IT capital. The ratio of the shadow value of IT capital to the actual price of IT capital indicates the eﬃciency in IT capital’s investment. This value is generally the value of Tobin’s Q, in spite of the diﬀerence of the model in the case of IT capital. There are many studies on the measurement of Tobin’s Q in general capital. The value is ordinarily between 0.5 and 2 in general capital. In the USA, Morrison (1997) has conducted the only study to measure the Tobin s Q of IT capital. The results show that the value is low and is located in a narrower range around 1. In Japan, Shinjo and Cho (1998) applied Morrison’s strategy with similar results to those of Morrison (1997). The increase of investment of IT capital is actually stronger than that of general capital; hence the low Q value is not natural. Our results diﬀer from those of previous studies: our results for the measurement periods except 1990 and 1991 are significantly larger than those of Morrison (1997) and Shinjo and Cho(1998). Therefore, there is high investment incentive in most periods.
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For actual programming period 2014-202, the regulation for European Structural and Investment Funds (ESIF) represents a radical change for Operational Programmes. The Common Provisions Regulation (CPR) emphasises programme objectives, the logic of intervention to achieve the expected results and the evaluation of effectiveness and impacts. Furthermore it requires from Managing Authorities and the Commission annual reporting on outputs and results, including findings of evaluations where available. In order to strengthen the contribution of evaluations to the effectiveness of the programmes, the CPR makes it compulsory for Managing Authorities to design evaluation plans at the beginning of the programming period.
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Relative P/E Analysis compares the buyer's P/E and the acquisition P/E to have an understanding of the deal. The acquisition P/E gives an indication of the implied return on the equity from this investment. It compares the price being paid with the earnings being bought. The inverse of P/E is the return on the investment. This return is to be compared with the cost of equity to establish whether it is sufficient or not. This can be easily observed by looking at the relative P/E of the buyer and the acquisition. If the buyer P/E is lower than the acquisition P/E than the cost of raising buyer equity is higher than the return expected from the target equity being purchased. The buyer P/E needs to be higher than the acquisition P/E in order for the deal to be accretive. In case of this deal one sees that the Buyer's P/E post-merger for both the years is above the acquisition P/E, this was also evident from the EPS accretion that was happening and the positive synergies (in terms of profits) that were there.
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The global financial crisis has brought in its wake increasing attention to the rise of finance, the consolidation of corporate and class power, intensifying income and wealth inequality, as well as skyrocketing public debts. And in this context, it seems that Marx’s writings on the public debt might be as relevant as ever. This article revisits Marx’s notion of an aristocracy of finance by addressing the following questions. Who are the dominant corporate owners of the US public debt? Has public debt ownership become more or less concentrated over time? Is the public debt still concentrated in the financial sector, or has the so-called financialization of industrial firms spread ownership across different sectors? Has the recent rise in money manager funds, including pension, mutual and other investment funds, transformed the class politics of public indebtedness? Does the public debt still redistribute income between classes? And finally, what are the political consequences of a given pattern of public debt ownership?
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Harsh public budget constraints which reduce the public funding available to cultural operators, are likely to impose radical changes in their strategies. However, this “bad news” may give cultural operators the chance to re-think their mission in line with the new set of incentives they face: they might try to exploit new market opportunities, enlarging the scope of their cultural production as well as incorporating other non market-oriented objectives. These strategies range from an additional supply of a specific type of cultural product (live artistic performances, visual arts exhibitions, etc.) to the supply of a larger variety of cultural products and services, including artistic educational activities for social inclusion. Along these lines they can also take advantage of the opportunity in order to make their business more profitable as well as to generate positive externalities which can be appreciated by a larger part of the local community and favour the social cohesion.
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In conditions of real Czech economy, the relationship between the state and private sectors is shown in the form of subsidies for businesses enterprises; although at ﬁ rst sight the available data do not demonstrate the key role of public ﬁ nance. Another form of limited understanding of the importance of public funds is the concept of ﬁ nancial structure of a company understood by contemporary theory of ﬁ nance of ﬁ rm (in Czech context) as a set of sources for ﬁ nancing entrepreneurial activities – public funds are virtually not mentioned here.
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In our review of the literature we have identified only two studies that have focused on the impact of public R&D funding on the creation of biotechnology startups: Chen and Marchioni (2008) and Zucker et al. (1998). Both studies find a positive relationship between indicators of publicly funded R&D activity and local biotechnology firm births. Our study adds to the findings of these two studies and introduces a number of methodological and measurement improvements. For instance, these previous studies do not distinguish between the type of organization that receives the public funding and performs the R&D. Here, we recognize the potential for differential efficiencies between industrial and academic R&D organizations on the rate of firm creation (Bade and Nerlinger, 2000; Karlsson and Nyström, 2011) and examine the impacts of public R&D funds directed to universities, private firms, research institutes and research hospitals separately. The two previous studies have also measured the impact of federal R&D outlays on firm creation in the biotechnology industry for rather short periods of time (up to two years). Here, we extend the period of analysis to 18 years (1992 to 2010) recognizing the inherent long cycles involved in R&D funding, knowledge development and potential firm creation from such new knowledge. As well, instead of proxies of R&D intensity employed in the two previous studies (a life sciences index and a count of faculty members with grants) we use a more direct and sharper measure of R&D activity, namely, the dollar amount of R&D funding awarded to universities, private firms, research institutes and research hospitals.
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This paper examines the social opportunity cost of a hypothetical public project in Australia and compares these values with the cost of the project as measured by factor prices. Since 2001, the Australian taxation system has included an ad valorem tax, the Goods and Services Tax, however relatively little analysis of the impact of this tax on public project evaluation methods has been undertaken. This tax creates divergences between social opportunity cost and conventional cost measures. Therefore it is
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−.10, 𝑛𝑛. 𝑠𝑠) . What this means for the unstandardized coefficient of -.104 is that if the date of approval of overhead cost budget is increased or extended by 1 day, the frequency of release of imprest to academic departments will decrease by -.104 holding the other variables constant. For the standardized coefficient of -.092, it means that if the date of approval of overhead cost budget is increased or extended by 1 standard deviation, the frequency of release of imprest to academic departments will decrease by -.092 standard deviation holding the other variables constant. At a t-test statistic of -1.006, this negative relationship was not significant at the alpha level of .05 (i.e. .317). Date of approval of overhead cost budget was not significant and this suggest that it does not have any predictive ability i.e the frequency of release of imprest to academic departments is not sensitive to changes in the date of approval of the overhead cost budget. Late approval of overhead cost budget was therefore, not responsible for the delay in the release of imprest to academic departments of university of calabar. This finding is not consistent with the works of Obadan  which attributed the delay in the release of budget implementation funds to the late passages of 2005 and 2006 capital budgets of Nigeria. It is also not consistent with the finding of Absorption of Fund Brief  that late release of funds to the energy sector of Kampala was due to delays in the approval of warrants. The contribution of the current study to the extant literature is that even though late budget approval and late release of warrant had strong association with the late release of government funds, they have negligible or no association with the release of imprest funds to spending units in public institutions of developing countries. We can however, further verify this inconsistency by extending the current research to private institutions in Nigeria.
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There is no consensus in the literature as to how to measure the marginal cost of public funds. Most prominent are two competing proposals which can be traced back to the Pigou-Harberger-Browing approach and the Stiglitz-Dasgupta- Atkinson-Stern approach. The latter approach emphasizes the so called revenue effect, an income effect, whereas the former approach only involves substitution effects. The proposal of the Pigou-Harberger-Browing approach is the appropriate measure if the Hicksian demand for each taxed private commodity is independ- ent of the public good provision level while the proposal of the Stiglitz-Dasgupta- Atkinson-Stern approach is the appropriate measure if the Marshallian demand for each taxed private commodity is independent of the public good provision level.
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Even if “shadow banks are easier to define by what they are not than by what they are” (The Economist, Special Report International Banking, May 10 th 2014), recent banking and financial literature provides different definitions of shadow banking. McCulley (2007) introduces the notion of shadow banking as an unregulated financial institution characterized by high leverage without to benefit from a safety net or other official guarantees. According to Adrian and Ashcraft (2016), the shadow banking system is a web of specialized financial institutions that conduit funding from savers to investors through a range of securization and secured funding techniques, while Claessens and Ratnovski (2014) define shadow banking as all financial activities, except traditional banking, requiring a private or public backstop to operate. For Mehrling et al. (2013) shadow banking is simply money market funding of capital market lending, sometimes on the balance sheets of entities called banks and sometimes on their balance sheets. Moreover, the Financial Stability Board (2011) defines the shadow banking system as the system of credit intermediation that involves entities and activities outside the regular banking system. In addition, revealing its prejudice about the role of shadow banking in financial turmoil, it states that shadow banking encompasses all financial activities and entities that increased systemic risk owing to maturity/liquidity transformation and/or leverage and/or showing indications of regulatory arbitrage as well.
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Whenever two positive whole numbers are chosen, one is the first shadow value and the other is the second shadow value. After the first shadow value and the second shadow value are multiplied and a product is derived and after the value of 1 is subtracted from the derived product value, the first base value is derived. The first base value is added to both the first shadow value and the second shadow value, next, a common exponent is used to raise the first shadow value, the second shadow value and the first base value. After raising the first shadow value, the second shadow value and the first base value to the common denominator, there will be a raised first shadow value, a raised second shadow value and a raised first base value. Finally, multiplying the base value to a positive whole value and deriving a product, then adding the product to the raised first shadow value and to the raised first base value and deriving a raised and added first shadow value, and raised and added first base value. The public key is the raised and added first shadow value and the raised and added first base value and the private key is the raised second shadow value and the original first base value.
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