Is it socially responsible to price at a premium, company branded generic pharmaceuticals in emerging economies? Building toward an answer to this question, the study first describes the role of the branded generic sector in the economic success of the global pharmaceutical industry. Second, the concept of “shared value,” i.e., the link between competitive advantage and corporate social responsibility, is introduced and applied to the global pharmaceutical industry’s position on marketing generic pharmaceuticals. Third, an empirical evaluation ascertains whether there (...) is sufficient shared value for this company branded generics pricing strategy to be considered “socially responsible.” Fourth, after concluding there is sufficient shared value, a discussion section offers a public/private framework that will help ensure that safe and effective pharmaceuticals are sold to consumers in developing economies. Lastly, a summary and conclusion section completes the article. (shrink)

The motive of this study is to identify the factors influencing the willingness to pay (WTP) a premium price for socially responsible food products (SRFPs) in India. This study is based on primary survey of 398 respondents. Descriptive statistics and factor analysis have been used for data analysis. Further, logistic regression was used to examine the factors affecting the WTP a premium price for SRFPs. Results demonstrate that respondents of higher age are more likely to pay premium (...) prices for SRFPs. Male consumers are two times more likely to have higher WTP for SRFPs. WTP a premium price is significantly influenced by the consumers' reference group, pro‐environmental intention, and concern for the animals. Gender, age, consumers' reference group, pro‐environmental intention, and concern for the animals determine WTP premium prices for SRFPs. There are relatively very limited researches on this topic in emerging economies including India, where the adoption of socially responsible products is in early stage. The practical implications of this study are to help in increasing the sales of the SRFPs and producers to develop appropriate policy design. (shrink)

Sustainable luxury is a strategic issue for managers and for society, yet it remains poorly understood. This research seeks to clarify how corporate social responsibility actions directly and indirectly affect consumers’ willingness to pay a premium price for luxury brand products, as well as how a long-term orientation might moderate these relationships. A scenario study presents fictional CSR actions of two brands, representing different luxury products, to 1,049 respondents from two countries. The results of a structural equation modeling approach (...) show that the luxury brands’ CSR actions negatively affect customer WTPP overall and for each brand. The luxury brands’ functional and symbolic value dimensions positively mediate the effects of CSR actions on WTPP, whereas social value does not. The effects of CSR actions and brand symbolic value on WTTP do not differ between countries. The effect of functional value on WTPP differs across countries, such that it is stronger for high-LTO than low-LTO cultures. Inversely, the effect of social on customer WTPP is stronger for low-LTO than high-LTO cultures. These findings have theoretical and practical implications for luxury brand managers. (shrink)

We conduct an online survey experiment to determine the influence of multifunctionality recognition in agriculture on the price premiums of environmental-friendly agricultural products. We use the case of fish-friendly rice produced in Shiga prefecture, Japan, which contributes to the conservation of the water and ecosystem in rural areas around Lake Biwa by setting up fish ways and reducing the use of herbicides. We assume two conditions for consumers to pay premiums on environmental-friendly agricultural products. The first is that consumers recognize (...) multifunctionality in agriculture. The second condition is that consumers have a correct understanding of environment-friendly agricultural products. We thus examine the effects of respondents’ attributes on their responses to two types of visual stimuli: one associated with the multifunctionality of agriculture and information about environment-friendly agricultural products. In the analysis of the respondents; willingness to pay, the price premium of the group with both the stimulus and information is significantly higher than the price premium of the control group with no interventions. However, the price premium of the group with only the stimulus is not statistically different for the control group. The policy implication of this research is that consumers are more likely to support agri-environmental policies if they recognize both the multifunctionality of agriculture and the properties of environmental-friendly agricultural products. The two types of stimuli have complimentary effects on increasing price premiums. Promoting the recognition of multifunctionality is especially important for those who do not usually access information on agriculture. (shrink)

Eco-labels emphasize information disclosure as a tool to induce environmentally friendly behaviors by both firms and consumers. The goal of eco-labels is to reduce information asymmetry between producers and consumers over the environmental attributes of a product or service. However, by focusing on this information asymmetry, rather than on how the label meets consumer needs, eco-labels may send irrelevant, confusing, or even detrimental messages to consumers. In this article, the authors investigate how the environmental signal of eco-labels interacts with product (...) characteristics such as brand, quality, and price. In a discrete choice experiment, the authors examine consumer response to two similar eco-labels for wine, one associated with a quality reduction and the other not. The results show that respondents preferred both eco-labeled wines over otherwise identical conventional counterparts when the price was lower and the wine was from a lower quality region. However, they preferred conventional, more expensive wine from a high-quality region. This preference indicates that respondents not only obtain some warm glow value from eco-labeled wine but also possibly interpret eco-labeling as a signal of lower quality. This relationship held across both types of eco-labels, meaning that consumers did not understand the difference between them. This research contributes to the literature on information disclosure policies by highlighting important elements for effective eco-labels. These elements include consumer awareness and understanding of the eco-label, and consumer willingness to pay for an eco-labeled product. The results emphasize the need to create eco-labels that communicate clearly both the environmental attributes and the private benefits associated with them. (shrink)

From a giant of health care policy, an engaging and enlightening account of why American health care is so expensive -- and why it doesn't have to be. Uwe Reinhardt was a towering figure and moral conscience of health care policy in the United States and beyond. Famously bipartisan, he advised presidents and Congress on health reform and originated central features of the Affordable Care Act. In Priced Out, Reinhardt offers an engaging and enlightening account of today's U.S. health care (...) system, explaining why it costs so much more and delivers so much less than the systems of every other advanced country, why this situation is morally indefensible, and how we might improve it. The problem, Reinhardt says, is not one of economics but of social ethics. There is no American political consensus on a fundamental question other countries settled long ago: to what extent should we be our brothers' and sisters' keepers when it comes to health care? Drawing on the best evidence, he guides readers through the chaotic, secretive, and inefficient way America finances health care, and he offers a penetrating ethical analysis of recent reform proposals. At this point, he argues, the United States appears to have three stark choices: the government can make the rich help pay for the health care of the poor, ration care by income, or control costs. Reinhardt proposes an alternative path: that by age 26 all Americans must choose either to join an insurance arrangement with community-rated premiums, or take a chance on being uninsured or relying on a health insurance market that charges premiums based on health status. An incisive look at the American health care system, Priced Out dispels the confusion, ignorance, myths, and misinformation that hinder effective reform. (shrink)

The BP neural network model is a hot issue in recent academic research, and it has been successfully applied to many other fields, but few researchers apply the BP neural network model to the field of automobile insurance. The main method that has been used in the prediction of the total claim amount in automobile insurance is the generalized linear model, where the BP neural network model could provide a different approach to estimate the total claim loss. This paper uses (...) a genetic algorithm to optimize the structure of the BP neural network at first, and the calculation speed is significantly improved. At the same time, by considering the overfitting problem, an early stop method is introduced to avoid the overfitting problem. In the model, a three-layer BP neural network model, which includes the input layer, hidden layer, and output layer, is trained. With consideration of various factors, a total claim amount prediction model is established, and the trained BP neural network model is used to predict the total claim amount of automobile insurance based on the data of the training set. The results show that the accuracy of the prediction by using the BP neural network model to both the data of Shandong Province and to the data of six cities is over 95%. Then, the predicted total claim amount is used to calculate premiums for five cities in Shandong Province according to credibility theory. The results show that the average premium of the five cities is slightly higher than the actual claim amount of the city. The combination of BP neural network and credibility theory can perform accurate claim amount estimation and pricing for automobile insurance, which can effectively improve the current situation of the automobile insurance business and promote the development of insurance industry. (shrink)

The core goal of this study is to empirically investigate whether there is a “world price” of corporate sustainability. This is assessed in the context of standard asset pricing models—in particular, by asking whether a risk premium attaches to a sustainability factor after controlling for the Fama–French factors. Both time-series and cross-sectional tests are formulated and applied. The results show that (1) global Fama–French factors have strong power to explain global equity returns and (2) sustainability investments have no significant (...) impact on global equity returns. The absence of a significant relationship between sustainability and returns implies that large institutional investors are free to implement sustainability mandates without fear of breaching their fiduciary duties from realising negative returns due to incorporating a sustainability investment process. (shrink)

We survey the literature that has explored the implications of decision-making under ambiguity for financial market outcomes, such as portfolio choice and equilibrium asset prices. This ambiguity literature has led to a number of significant advances in our ability to rationalize empirical features of asset returns and portfolio decisions, such as the failure of the two-fund separation theorem in portfolio decisions, the modest exposure to risky securities observed for a majority of investors, the home equity preference in international portfolio (...) diversification, the excess volatility of asset returns, the equity premium and the risk-free rate puzzles, and the occurrence of trading break-downs. (shrink)

We revisit the question of price elasticity of employer-sponsored insurance (ESI) take-up by directly examining changes in the take-up of ESI at a large firm in response to exogenous changes in employee premium contributions. We find that, on average, a 10% increase in the employee's out-of-pocket premium increases the probability of dropping coverage by approximately 1%. More importantly, we find heterogeneous impacts: married workers are much more price-sensitive than single employees, and lower-paid workers are disproportionately more likely to (...) drop coverage than higher-paid workers. Elasticity estimates for employees below the 25th percentile of salary distribution in our sample are nearly twice the average. (shrink)

Consumer trust is a key prerequisite for establishing a market for credence goods, such as “green” products, especially when they are premium priced. This article reports research on exactly how, and how much, trust influences consumer decisions to buy new green products. It identifies consumer trust as a distinct volition factor influencing the likelihood that consumers will act on green intentions and strongly emphasizes the needs to manage consumer trust as a prerequisite for the development of a market for (...) green products. Specifically, based on a mixture of qualitative and quantitative methods, it is found that lack of consumer trust is a barrier for the development of a market for organic food in Thailand. Two focus groups and ten in-depth interviews revealed low knowledge about and low trust in organic food, certification, control, and labeling. Further, a mall-intercept survey revealed that lack of system trust reduces consumer expectations about benefits of buying organic food, and it makes them less likely to buy organic food. Mistrust in the control system and in the authenticity of food sold as organic has a significant negative impact on self-reported buying behavior. Implications for policy and future research are discussed. (shrink)

Rent-control laws limiting the rents private landlords can charge tenants are controversial in the United States. Critics have condemned rent control’s mandated wealth transfer from landlords to tenants, and economists have decried its negative effects on rental supply and quality. With the advent of the sharing economy, rent-controlled tenants can rent out their below-market units for short durations at market-level or premium prices, a practice I term “rent control sharing.” The reaction to rent-controlled tenants pocketing money from Airbnb (...) and other homesharing sites at the expense of their hapless landlords has been negative. Yet, the sharing economy has not changed an essential feature of rent control: the redistribution of wealth from landlord to tenant. Instead, Airbnb and similar platforms have altered the form of the redistribution and the legal relations between landlord and tenant, and increased the salience of the wealth transfer from landlord to tenant. As a result, rent control sharing collides with public preferences for in-kind redistribution and stronger legal protections for property used personally or intimately. This Article explores how rent control sharing accentuates some of the flaws of rent control and fuels the debate over rent control’s future. (shrink)

Normative and historical arguments support the idea that religion potentially shapes decisions to support fair trade products. That said, the question of how religion influences organizational decision-makers to purchase fair trade products in a business-to-business context has remained largely unaddressed. This research examines the interactive effect of individual religious commitment and contextual religious salience on an individual’s willingness to pay a price premium for a fair trade product, when buying on behalf of an organization. Findings from two experimental studies (...) reveal that the effect of a decision-maker’s religious commitment on his or her willingness to pay a price premium, for the purchase of a fair trade product on behalf of an organization, is moderated by the contextual salience of religion. Specifically, when religion is highly salient in the organizational context, religious commitment is positively related to the decision-maker’s willingness to pay a premium for the fair trade product; when contextual religious salience is low, religious commitment and willingness to pay a premium are unrelated. Implications for theory and practice are presented. (shrink)

Driven by increased consumer interest and stakeholder pressure, the number of Fairtrade (FT) products has been steadily increasing. The mainstreaming of FT means that the products are now facing stiff competition within the generic product categories in which they operate. While consumers may pressure organizations for ethical conduct, they are less willing to pay premium prices for fairly traded products. For FT to continue to grow, more efficient operating models are required to offset the premium prices (...) paid to producers to ensure competitiveness in the market. One such improvement approach may be the management of FT supply chains. To investigate the feasibility of this approach, this article systematically combines literature on FT with key supply chain management (SCM) constructs and theories. We discuss existing SCM paradigms in the context of FT and demonstrate aspects where the efficiency of FT chains needs to be improved to ensure their viability. We present propositions that demonstrate the key limitations of the FT model from the point of view of SCM theory and practice and suggest the potential changes needed in the management of FT supply chains. The article provides a timely first attempt to systematically combine FT with SCM constructs, thus establishing a basis for the further development of FT chains and for the improvement of the operating efficiency within them. (shrink)

This paper analyzes the possibilities and challenges of Fair Trade certification as a movement seeking to improve the well-being of small-scale coffee growers and coffee laborers in the global South. Six months of fieldwork was conducted in 2005–2006 to study the roles of a wide range of farmers, laborers, cooperative administrators, and export companies in Fair Trade coffee production and trade in Nicaragua. The results of our evaluation of the ability of Fair Trade to meet its objectives indicate that Fair (...) Trade’s opportunities to provide a significant price premium for participating farmers largely depend on world coffee prices in mainstream markets. While Fair Trade has promoted premiums for social development for participating producers and strengthened the institutional capacities of the cooperatives involved, its ability to enhance significantly the working conditions of hired coffee laborers remains limited. (shrink)

This article analyzes the distribution of benefits from Fair Trade between producing and consuming countries. Fair Trade and conventional coffee production and trade were examined in Nicaragua in 2005-2006 and 2008. Consumption of the respective coffees was assessed in Finland in 2006-2009. The results indicate that consumers paid considerably more for Fair Trade-certified coffee than for the other alternatives available. Although Fair Trade provided price premiums to producer organizations, a larger share of the retail prices remained in the consuming (...) country relative to conventional coffee trade. Paradoxically, along with the certified farmers and cooperatives, Fair Trade empowers roasters and retailers. (shrink)

The use of algorithmic prediction in insurance is regarded as the beginning of a new era, because it promises to personalise insurance policies and premiums on the basis of individual behaviour and level of risk. The core idea is that the price of the policy would no longer refer to the calculated uncertainty of a pool of policyholders, with the consequence that everyone would have to pay only for her real exposure to risk. For insurance, however, uncertainty is not only (...) a problem – shared uncertainty is a resource. The availability of individual risk information could undermine the principle of risk-pooling and risk-spreading on which insurance is based. The article examines this disruptive change first by exploring the possible consequences of the use of predictive algorithms to set insurance premiums. Will it endanger the principle of mutualisation of risks, producing new forms of discrimination and exclusion from coverage? In a second step, we analyse how the relationship between the insurer and the policyholder changes when the customer knows that the company has voluminous, and continuously updated, data about her real behaviour. (shrink)

In recent years, insurance companies have begun tracking their customers’ behaviors and price premiums accordingly. Based on the Market-Failures Approach as well as the Justice-Failures Approach, I provide an ethical analysis of the use of tracking technologies in the insurance industry. I focus on the use of telematics in car insurance and on the use of fitness tracking in life insurance. The use of tracking has some important benefits to policyholders and insurers alike: it reduces moral hazard and fraud, increases (...) actuarial fairness, and incentivizes safe behavior. These benefits, however, are outweighed by significant moral objections. First, the use of tracking technologies significantly undermines the fairness of the interaction between insurance companies and policyholders. Specifically, the use of tracking eliminates information asymmetries, but in such a way that favors insurers exclusively. Furthermore, tracked behaviors and the ability to choose to behave safely are highly correlated with other variables such as income. Therefore, tracking-based insurance relies on and exacerbates existing inequalities and injustices, which undermines the benefits that tracking is supposed to introduce. (shrink)

In recent years, new forms of high-tech controlled environment agriculture (CEA) have received increased attention and investment. These systems integrate a suite of technologies – including automation, LED lighting, vertical plant stacking, and hydroponic fertilization – to allow for greater control of temperature, humidity, carbon dioxide, oxygen, and light in an enclosed growing environment. Proponents insist that CEA can produce sustainable, nutritious, and tasty local food, particularly for the cities of the future. At the same time, a variety of critics (...) raise concerns about its environmental impacts and energy use, high startup costs, and consumer accessibility challenges, among other issues. At this stage, however, relatively little research has explored actual consumer knowledge and attitudes related to CEA processes and products. Guided by theories of sense-making, this article draws from structured interviews with local food consumers in New York City to examine what people know and think about high-tech CEA. From there, it explores the extent to which CEA fits into consumer conceptualizations of what makes for “good food.” Key findings emphasize that significant gaps in public understanding of CEA remain, that CEA products’ success will depend on the ability of the industry to deliver on its environmental promises, and that concerns about “unnatural” aspects of CEA will need to be allayed. Given the price premium at which high-tech CEA products are currently sold, the industry’s expansion will depend in large part on its ability to convince value-oriented food consumers that the products meet the triple-bottom-line of economic, social, and environmental sustainability goals. (shrink)

In June 2021, an 1856 British Guiana 1c magenta stamp sold for US$8.3m. It is the only known specimen of its kind in existence and on a gram-for-gram basis the most valuable item in the world. Clearly, in some spheres of human engagement, rarity carries a premium. Should this logic be applied in healthcare? Magalhaes thinks not.1 They explore the topic of whether pricing and reimbursement systems should give a premium to orphan drugs for rare diseases. They argue (...) that rarity is irrelevant to pharmaceutical policy on ethical grounds, and instead drug incentives should be prioritised by disease severity. At a time when incentives for orphan medicines are being revisited globally, Magalhaes is provoking an important discussion. The author seeks to disentangle the interwoven concepts of rarity, severity and unmet need that factor into decisions on orphan drug policy. They perhaps overstate the emphasis on rarity within existing regulatory and P&R frameworks. Yes, this is one of the criteria for orphan drug designation, but in payer systems rarity is seldom explicitly referenced. For example, of the five largest European countries, only the United Kingdom formally adjusts willingness-to-pay thresholds by prevalence. In contrast, concepts of severity and unmet need feature widely in global regulatory processes (eg, Breakthrough Therapy designation from …. (shrink)

We provide the first comprehensive and robust evidence on the relationship between CSR disclosure quality and the costs of corporate bonds in China. We find that firms with high CSR disclosure quality are associated with lower costs of corporate bonds. Our findings are robust to endogeneity issues arising from reverse causality, omitted variable bias, and the interdependencies between price and non-price terms. The negative relationship between CSR disclosure quality and the costs of corporate bonds is stronger in weak corporate governance (...) firms and in firms located in regions with weak institutional environments. We also find that firms’ misconduct significantly mitigates the influence of CSR disclosure quality. In the additional analyses, we provide evidence that CSR disclosure can offer incremental information beyond the credit ratings. Regarding non-price terms, we conclude that firms with higher quality of CSR information are less likely to be subject to collateral terms, but they tend to include more restrictive covenants. Further analyses also show that compared with low-quality or mandatory CSR disclosure firms, bond investors perceive firms with CSR disclosures rated above “A” categories or voluntary CSR disclosure as less likely to cause asymmetric information problems and thus charge lower risk premiums. Overall, this study demonstrates that CSR disclosure quality is an important determinant that affects both price and non-price bond contract terms. (shrink)

Social and environmental ratings provided by social rating agencies are multidimensional. The first goal of our paper is to identify a small number of independent and relevant socially responsible (SR) dimensions reflecting a firms’ coherent posture toward social issues. We put forward that these dimensions are not exactly the same as the ESG ones (Environment, Social, and Governance). Using the six sub-ratings provided by the Vigeo rating agency, we perform a principal component analysis and we highlight three main independent SR (...) dimensions related to (1) business stakeholders (employees, customers, and suppliers), (2) societal stakeholders (environment and society), and (3) financial stakeholders (stockholders and debt holders). The second objective of our paper is to explore the link between stock returns and these three SR dimensions. Our most notable finding is that for each SR dimension, investors ask for an additional risk premium when they accept to hold non-socially responsible stocks. The cost of equity is thus lower for SR firms. The average premium over the period 2003–2010 is larger for the components “business stakeholders” and “financial stakeholders” than for the component “societal stakeholders.” The premium for this last component has only existed since the end of 2008. Since that time, environment and community involvement have become important risk factors strongly considered by investors. For the three dimensions, investors notably penalize large non-social firms and reward small social firms. (shrink)

The Real Food Challenge is a national student movement in the United States that aims to shift $1 billion—roughly 20%—of college and university food budgets across the country towards local, ecologically sound, fair, and humane food sources—what they call “real” food—by 2020. The University of Vermont was the fifth university in the U.S. to sign the Real Food Campus Commitment, pledging to shift at least 20% of its own food budget towards “real” food by 2020. In order to examine student (...) preference for “real” food on the UVM campus, we analyzed a survey of 904 undergraduate students that used contingent valuation to evaluate students’ willingness-to-pay for the “real” attribute. We found that a majority of students are willing to pay a positive premium for “real” food. Furthermore, we found that student characteristics and attitudes significantly influence WTP. Specifically, gender, residency, college, and attitudes about price and origin of food are significant predictors of WTP. (shrink)

We explore success drivers of reward-based crowdfunding for poverty alleviation in China. The results from our econometric modeling using data from 4375 reward-based crowdfunding campaigns suggest that poverty alleviation campaigns, as compared to ordinary ones, benefit from higher funded amounts, larger backer numbers, and greater success rates. The results also suggest that poverty alleviation campaigns perform better when the products sold originate from poorer (as compared to wealthier) regions and when price premiums are lower (as compared to higher). We corroborate (...) important findings from the field study with an experimental study, showing that the consumer’s feeling of warm glow accounts for the positive effects of poverty alleviation campaigns (as compared to ordinary) campaigns. We expand the applications of warm-glow theory into the context of reward-based crowdfunding campaigns for poverty alleviation and offer new insights into success drivers of such campaigns. (shrink)

On the basis of an interdisciplinary approach linking taxation, marketing, and corporate social responsibility, the present research investigates the effects of media reports on aggressive and responsible corporate tax strategies (CTSs) on corporate success with consumers. By means of two laboratory experiments (N = 150, 360), we analyze the effects of the CTSs on corporate reputation, consumer purchase intention, and the consumer’s willingness to pay. Our results suggest that aggressive CTSs diminish corporate success with consumers, whereas responsible CTSs enhance it. (...) Nevertheless, consumers are not willing to pay a price premium for products sold by responsible tax-planning companies, but rather punish aggressive tax-planning companies through a slightly lower willingness to pay. Finally, consumers’ tax morale and their attitude toward tax avoidance are important moderating variables. Given the growing level of media interest in taxation, our findings are crucial for assessing consumer-related non-tax costs and the benefits of different CTSs. (shrink)

Political decision-makers in the European Union are currently discussing the introduction of a mandatory uniform labelling scheme for meat and milk that provides information on husbandry systems similar to the already existent labelling scheme in the EU egg market. The objective of this paper was to assess whether such information is relevant to consumers when buying meat and milk. The paper was based on a systematic synthesis of 53 scientific journal articles on empirical consumer studies. The review revealed that consumers (...) perceived the aspects of outdoor access, stocking density and floor type as important factors influencing animal welfare. On average, consumers not only had a positive attitude towards more animal welfare-friendly husbandry systems with outdoor access and space allowance but were also willing to pay a price premium for products from such systems. All studies on consumer segmentation identified at least one consumer segment that placed great importance on animal welfare-friendly husbandry systems. Interestingly, many studies identified one or more other segments who still had a significant preference for animal welfare-friendly products even though other product attributes were more important to them. Based on the findings, the paper presents conclusions regarding the labelling of husbandry systems for meat and milk. (shrink)

It is undeniable that health care costs have been increasing at an alarming rate. During the ten-year period between 1983 and 1993, the medical care component of the Consumer Price Index rose at an average annual rate of 10 percent while the overall CPI increased by only 4.5 percent per year. These dramatic increases have obvious societal implications. For those without health insurance, a serious illness may mean personal bankruptcy. For those with health insurance coverage, premiums are rising while coverage (...) is shrinking. Employers are struggling to continue providing health insurance to their employees. Irrespective of whose fault it really is, much of the blame has been directed at health care providers.Faced with mounting criticism regarding the costs of delivering health care, the industry struck back. It claimed that collaboration—not competition—was necessary to reduce health care costs and improve efficiency, but that antitrust uncertainty deterred such collaborative efforts. (shrink)

Few issues in business ethics are as polarizing as the practice of risk classification and underwrit­ ing in the insurance industry. Theorists who approach the issue from a background in economics often start from the assumption that policy-holders should be charged a rate that reflects the ex­ pected loss that they bring to the insurance scheme. Yet theorists who approach the question from a background in philosophy or civil rights law often begin with a presumption against socalled “actuarially fair” premiums (...) and in favor of “community rating,” in which everyone is charged the same price. This paper begins by examining and rejecting the three primary argu­ ments that have been given to show that actuarially fair premiums are unjust. It then considers the two primary arguments that have been offered by those who wish to defend the practice of risk classification. These arguments overshoot their target, by requiring a “freedom to under­ write” that is much greater than the level of freedom enjoyed in most other commercial transac­ tions. The paper concludes by presenting a defense of a more limited right to underwrite, one that grants the legitimacy of the central principle of risk classification, but permits specific deviations from that ideal when other important social goods are at stake. (shrink)

Several studies on ethical and social food attributes have shown that consumers, especially in developed countries, are willing to pay a price premium for fair trade foods products. However, there is a scant literature on how consumers’ preferences and willingness to pay for fair trade products are affected by the presence of other ethical food attributes. To fill this gap, a choice experiment was conducted in Scotland, the Netherlands and France to assess consumers’ preferences and WTP for ethical attributes, (...) i.e., fairtrade, organic, and lower carbon footprint, of bananas and to find out whether this ethical food attributes are competing in real markets. The results showed that in the three countries consumers are willing to pay a price premium for the three ethical food attributes. The results showed that in the current market situation these ethical foods are not generally competing against each other. Nonetheless, they are likely to become competing for consumer’s money at least when: the price of organic foods is decreased significantly, the price for fairtrade food products is set higher than consumers’ WTP, and bananas labeled as having lower carbon footprint are made available in retail stores and sold at a price lower than consumers’ WTP. (shrink)

Reputation is a commercially valuable asset. This book focuses upon how enhanced reputation can contribute to commercial asset management through increased share price premium and competitive performance, while reputation loss can significantly erode the ability of the business to successfully retain market share, maximize shareholder value, raise finance, manage debt, and remain independent. It provides practical models and checklists designed to plan reputation management and risk communication strategies.

Refugee and poverty migration is one of the key challenges developed Western societies are facing. Due to the unstable political situation in many parts of the world and the lasting high differences in development between the economies, these migratory movements will continue to increase in the future. In order to channel immigrants, the authors suggest that migrants must pay an entry premium to obtain a permanent right of residence. We criticize this proposal from both an ethical and an economic (...) perspective. We argue that a pricing system is neither ethically legitimate nor economically sensible. In order to meet the chal- lenges of migration, a fundamental change in economic cooperation between developed and less developed economies is more appropriate. (shrink)

The purpose of this article is to examine empirically the impact of environmental certification on firm financial performance (FP). The main question is whether there is a "green premium" for certified firms, and, if so, for what kind of certification. We analyze the short-run and the long-run stock price performance using an event-study methodology on a sample of Canadian and U.S. firms. The results of short-run event abnormal returns indicate that forest certification does not have any significant impact on (...) firm FP regardless of the certification system carried out by firms. Unlike the short-run results, the long-run post-event abnormal returns suggest that forest certification has, on average, a negative impact on firm FP. However, the impact of forest certification on firm FP depends on who grants the certification, since only industry-led certification (Sustainable Forestry Initiative, Canadian Standards Association and ISO14001) are penalized by financial markets, whereas non-governmental organizations—led Forest Stewardship Council certification is not. (shrink)

The research purpose is to find out if signs of a real estate bubble are shown at the austrian real estate market right now. Lending rates are composed of different factors: the base rate is the price that the customer is willing to pay. The risk premium is given to compensate the lenders risk of full or partial failure of repayment. The inflation adjustment takes into account the impairment of money over the term of a loan. The liquidity (...) class='Hi'>premium increases with extension of the term of the loan. The European Central Bank influences the interest rate policy by varying the interest for money saved there by the banks. At the moment there are used negative interest rates, i.e. penalty interest. The methodology used was that recently the ECB lowered the interest rates which might cause real estate bubbles and, subsequently, banks and economic crises may follow, if interest rates were to be increased again sooner or later. Therefor the author studied the amount of sales and the connection to the interest rates and the interest rate policy of the banks right now. Summarizing it can be seen that in Kittsee, an Austrian area with a lot of real estate sales, as an example, 565 real estate properties were sold in the years 2005 to 2015, the median prices increased in relation to the buyers residence in Austria or non- Austrians at about 375% to 490%, this might indicate signs of change on the market. (shrink)

Fairtrade-certified products are sold through retailers to consumers who are willing to pay a premium in exchange for assurances that products were produced under acceptable working and environmental conditions, and that farmers were paid a fair market price. While touted as a positive social innovation, the Fairtrade movement has invited critical scrutiny and in its wake, suggestions for improvements in terms of sustainability, transparency, and tangible benefits for producers subsisting in Base of Pyramid markets. In this paper, we uncover (...) the debate swirling around Fairtrade and stipulate as to the theoretical reasoning for why the system should work and why it can fail. Focusing on the coffee industry, a case study of a socially responsible coffee roaster in Kansas City illustrates one of the alternative business models we discuss that seeks to solve the same problems addressed through Fairtrade, albeit through different producer-buyer relationships. (shrink)

The article regards the possibilities of implementing modern approaches to formation of development strategies of retail sale enterprises with account to influence of institutional environment which is oriented to use of marketing tools while elaborating the principles of retailers' adaptation to changing market conditions. It considers the essence of retail sale concept which is a consequence of transformation of consumer oriented marketing concept and consists of four elements - consumer orientation, coordinated activities, value orientation, aspiration to acquire the goals. Special (...) attention is accentuated to the fact that the concept is understood but not all the retail sellers: they do not perceive changes or simply copy the strategies used by their competitors; they do not aspire to investigate the advantages of consumers, study their opinions, and wishes, and completely rely on the suppliers' reports or their previous experience of sales. The conclusion is drawn that a retail company can rely on success if its competitive advantages correspond to the possibilities of environment where it has to act; if it manages to eliminate its weaknesses; if its plans are not only directed to the future and also take into account previous experience. Use of marketing concept in retail sale is possible with shifting of main accent to such notions as general impressions of consumers from the retail company, service to consumers and relationships oriented retail sale. Main trends of market development of Ukrainian retail sale are revealed, conclusion is made about presence of negative trends determining the strategies of retail sale operators. The reasons of decrease for different segments of retail sale market are determined: in the "premium" segment - fight for parts of market among competitors, in "medium" segment shift of 70% of consumers to the segment "medium minus". The conclusion is drawn that retail cooperative networks have to operatively change the assortment, price and distribution policy. Principles of work of new retail sale operators are described; entering the market as innovators they gradually shift to traditional "medium, typical" schemes of work. It is determined that retail companies presented at the Ukrainian market must aspire to create and sustain the long-term relationships with their clients, and not behave like each next purchase in their shop is performed by a completely alien person to them. The conclusion is draw about the necessity of value orientation of long-term strategies of retail sale enterprise development. It is established that only strict positioning of unique usefulness that will be found by a consumer in a given shop will become the basis of his long-term purchase loyalty and will provide sustainable functioning of a retail company even with negative tendencies at the market; and orientation exclusively towards price proposal will stimulate consumers to constant search of new "price temptations" in other retail points and will again launch the "wheel" of retail sale with other players. (shrink)

Insurance markets have always relied on large amounts of data to assess risks and price their products. New data-driven technologies, including wearable health trackers, smartphone sensors, predictive modelling and Big Data analytics, are challenging these established practices. In tracking insurance clients’ behaviour, these innovations promise the reduction of insurance costs and more accurate pricing through the personalisation of premiums and products. Building on insights from the sociology of markets and Science and Technology Studies, this article investigates the role of economic (...) experimentation in the making of data-driven personalisation markets in insurance. We document a case study of a car insurance experiment, launched by a Belgian direct insurance company in 2016 to set up an experiment of tracking driving style behavioural data of over 5000 participants over a one-year period. Based on interviews and document analysis, we outline how this in vivo experiment was set-up, which interventions and manipulations were imposed to make the experiment successful, and how the study was evaluated by the actors. Using JL Austin’s distinction between happy and unhappy statements, we argue how the experiment, despite its failure not to provide the desired evidence, could be considered a ‘happy’ event. We conclude by highlighting the role of economic experiments ‘in the wild’ for the making of future markets of data-driven personalisation. (shrink)

Employers must determine the types of health care plans to offer and also set employee premiums for each plan provided. Depending on the structure of the employee share of premiums across different health insurance plans, the incentives to choose one plan over another are altered. If employees know premiums do not fully reflect the risk differences among workers, such pricing can give rise to a so-called “death spiral” due to adverse selection. This paper uses longitudinal information from a natural experiment (...) in the management of health benefits for a large employer to explore the impact of moving from a fixed-dollar contribution policy to a partially risk-adjusted employer contribution policy. Our results show that implementing a significant risk adjustment had no discernable effect on adverse selection against the most generous indemnity insurance policy. This stands in stark contrast to previous studies, which have tended to estimate large impacts attributed to selection when employers move to a fixed-dollar policy from one with some risk adjustment. Further analysis suggests that previous studies, which appeared to detect plans in the throes of a death spiral, may instead have been reflecting an inexorable movement away from a non-preferred product, one that would have been inefficient for nearly all workers even in the absence of adverse selection. (shrink)

In lieu of an abstract, here is a brief excerpt of the content:Working on the Clinton Administration's Health Care Reform Task ForceNancy Neveloff Dubler (bio)This narrative is based on my understanding of the elements of the Health Security Act that may have ethical implications. I have reconstructed these elements from my experience on the Health Care Reform Task Force and they are part of the health care plan that the President presented to Congress. (At the time this article went to (...) press, the actual legislation, which should answer my remaining specific questions more clearly, had not yet been released.) I perceive the most important features of the plan to be:• The legislation will create a "right" to health care for all citizens—access to care will be universal;• The plan will involve some form of managed competition in which groups of providers (called Approved or Accredited Health Plans (AHPs)) will offer comparable benefit packages at slightly (or widely) different costs;• The AHPs will negotiate with the Health Alliance (HA) to determine the price that they will charge their consumer-patients;• There will be open enrollment with no barriers to coverage, such as exclusions for pre-existing conditions;• Community rating will be in effect in different localities and enrolled persons in any AHP will pay the same premium;• The coverage for any enrolled person will be portable;• The overall structure will be a cooperative federal/state enterprise in which the states will have quite extensive abilities to fashion variations of the basic plan to meet their particular needs;• Primary care will be encouraged and incentives for physicians to train in primary care specialties provided;• Non-physician providers will be central to the functioning of the health care plans;• Efforts will be made to develop a "person power" pool so that people with an abstract "right" to health care will have real access to providers, in their localities, who can fulfill the promise that the right creates; [End Page 421]• The goal of cost containment will be central to the organization and regulation of the system;• Administrative simplicity and quality protections will be central.Co-chairing the Bioethics Working Group (BWG) of the White House Task Force on Health Care Reform was a unique experience. Approximately 40 Task Force working groups were established by Hillary Rodham Clinton, the President, and the senior Task Force staff. Various members of the President's office and other knowledgeable members of the Executive Branch selected the participants. In our group, appointments were made largely on the recommendations of the co-chairs. The BWG, among the last of the groups formed, carried the official name "The Working Group on the Ethical Foundations of the New System" and was jointly led by me and Marion Gray Secundy, a Professor of Bioethics at Howard University. The fact that the leadership of the Task Force saw fit to establish such a group, thereby confirming that bioethics is a player in the arena of health care policy, was in itself significant and was made no less so by the lack of clarity regarding the group's aims and goals.The working groups of the Task Force were organized into clusters, determined by the relatedness of the somewhat distinct, but always overlapping, content of their investigations. Separate clusters and working groups, for example, looked at mental health, long term care, and the benefit package and coverage for low-income and non-working families. On this last issue there was also a working group that explored health policy initiatives for underserved populations. This multiple focus on related issues proved to be an excellent method for ensuring that the complexity of these topics was sufficiently explored. There was a published schedule for when these groups met together, and members of other groups who had similar or overlapping concerns were invited to attend and to participate.Every week or so, all of the working groups reported to the Task Force leadership, under the direction of Ira Magaziner, in a process called a "tollgate." Prior to the tollgate, the working groups were required to submit formal written analyses of the problems they had most recently been considering. Copies of these documents were placed in a special room so that those who were interested could review... (shrink)

Development and strengthening of private pension funds market is impossible without a thorough analysis of its current state, identify unresolved problems in operation. Given the results of the analysis of investment of a fund can be identified difficulties in development funds: - negative impact of the crisis on the financial system as a whole, so that was undermined public confidence in all financial institutions; - reduce solvency population as rising prices, utility costs, and wages almost "frozen", save for retirement (...) is becoming increasingly difficult; - coagulation participation of employers in pension programs for their employees, because in times of crisis, many companies find themselves in dire financial straits and limited amounts of pension contributions; - negative signal to the scheme as slowed down compared to the pre-crisis period of growth by pension funds; - need to improve pension schemes and improving the investment of pension funds; - data reporting of private pension funds show a decrease yields of most funds. Private pension funds should be able to use options, but only to hedge risks on stocks, as most other assets, placing the premiums of private pension funds - a fixed income. Application options would allow private pension funds to hedge against decline in the market value of the shares. Of course, the use of options will decrease the yield of pension funds, but they will be no significant damage. (shrink)

leaps and bounds, and some portion of the growth may already be spilling over; most of the immigrants to buffalo in re­ cent years were canadian. buffalo of­ fers urban living free of traffic jams and boasts one of the nation’s last under­ developed stretches of premium wa­ terfront. During its city of light heyday, when buffalo was the first electrified metropolis, Frank lloyd Wright, Fred­ erick law olmsted, and other fabled names designed homes and parks. in the lovely (...) Delaware Park area, magnifi­ cent beaux arts homes sell at exceed­ ingly low prices compared with homes in elite U.S. cities—or in toronto. So long as the bills keep a foot in the city, they keep alive the dream of a Su­ per bowl win—a hope that an infusion of loonies (canadian dollars) might sustain. and should the bills win the Super bowl, buffalo will return to na­ tional prominence. i don’t just think this will happen, i know it will. Gregg Easterbrook is an atlantic contributing editor. (shrink)

It is undeniable that health care costs have been increasing at an alarming rate. During the ten-year period between 1983 and 1993, the medical care component of the Consumer Price Index rose at an average annual rate of 10 percent while the overall CPI increased by only 4.5 percent per year. These dramatic increases have obvious societal implications. For those without health insurance, a serious illness may mean personal bankruptcy. For those with health insurance coverage, premiums are rising while coverage (...) is shrinking. Employers are struggling to continue providing health insurance to their employees. Irrespective of whose fault it really is, much of the blame has been directed at health care providers.Faced with mounting criticism regarding the costs of delivering health care, the industry struck back. It claimed that collaboration—not competition—was necessary to reduce health care costs and improve efficiency, but that antitrust uncertainty deterred such collaborative efforts. (shrink)

The purpose of this document is to consider possible industrial policy measures that could be contemplated by the South African Government to provide support for the export competitiveness of the country’s processed fruit products. It follows an earlier analysis by Don Ross, which argued for the conclusion that the industry meets key criteria for economically justifiable industrial policy assistance. That is, it offers a premium product that can be amplified in value by brand strengthening, can be positioned more advantageously (...) than at present in international value chains, and would benefit from an environment made more competitive by liberalization of international trade practices and reduction in management of input prices (chiefly tin plate and sugar). In short: the main factors now limiting the competitiveness of the industry’s exports derive neither from its product characteristics nor from independent market dynamics, but from exogenous constraints that are in principle correctible by policy. (shrink)

Much of the attention by social scientists to the rapidly growing organic agriculture sector focuses on the benefits it provides to consumers (in the form of pesticide-free foods) and to farmers (in the form of price premiums). By contrast, there has been little discussion or research about the implications of the boom in organic agriculture for farmworkers on organic farms. In this paper, we ask the question: From the perspective of organic farmers, does “certified organic” agriculture encompass a commitment to (...) “sustainability” that prioritizes social goals? Specifically, we aim to broaden our understanding of the relationship between social sustainability and organic agriculture by drawing attention to issues affecting farmworkers, whose labor and contribution tends to elude most discussions of organic agriculture. We present findings from a survey of organic farmers in California about the possible incorporation of social standards into organic certification criteria. Our findings suggest that, at best, lukewarm support for social certification within organic agriculture exists among certified organic farmers in California. They also question expectations that organic agriculture necessarily fosters social or even economic sustainability for most of the farmers and farmworkers involved. However, we also find exceptions to the patterns evidenced in our survey. In-depth interviews with select organic farmers demonstrate that there are individuals whose practices are atypical and demonstrate that, under some circumstances, an organic production system can be at once environmentally, economically, and socially sustainable. (shrink)

The new class of anti-inflammatory drugs, the COX-2 inhibitors, have been commercially successful to the point of market dominance within a short time of their launch. They attract a price premium on the basis that they are associated with fewer adverse gastric events than traditional anti-inflammatory drugs. This marketing continues even though a pivotal safety study with one of the COX-2 inhibitors, rofecoxib, showed a significant increase in myocardial infarction with rofecoxib use compared with a traditional anti-inflammatory drug. This (...) finding has led to a series of publications containing pooled analyses of existing data that both support and refute the possibility of increased cardiovascular risk with COX-2 inhibitors.These medical journal publications have served to obfuscate rather than provide guidance for medical practitioners. Consideration of a research ethics committee approach to this issue suggests that it would deal with the controversy in a straightforward manner—namely, it would simply inform research participants of the trial results with rofecoxib. The certainty of this research ethics committee approach raises the issue of whether it should be applied in normal medical practice outside of the research environment. A consideration of the legal tests for disclosure of information suggests that therapeutic medical practice should mirror that within the research environment, in this case. (shrink)

This article presents the results of a survey designed to test, with economically sophisticated participants, Ellsberg’s ambiguity aversion hypothesis, and Smithson’s conflict aversion hypothesis. Based on an original sample of 78 professional actuaries (all members of the French Institute of Actuaries), this article provides empirical evidence that ambiguity (i.e. uncertainty about the probability) affect insurers’ decision on pricing insurance. It first reveals that premiums are significantly higher for risks when there is ambiguity regarding the probability of the loss. Second, it (...) shows that insurers are sensitive to sources of ambiguity. The participants indeed, charged a higher premium when ambiguity came from conflict and disagreement regarding the probability of the loss than when ambiguity came from imprecision (imprecise forecast about the probability of the loss). This research thus documents the presence of both ambiguity aversion and conflict aversion in the field of insurance, and discuses economic and psychological rationales for the observed behaviours. (shrink)

Interest in purchasing local food from suppliers who follow sustainable practices is growing in Canada. Such suppliers wish to have their products recognized in the market so that price premiums might be received, and new markets developed. In response, the organization Local Food Plus (LFP) developed standards and a certification process to authenticate local and sustainable claims. LFP provides certification seals, and labeling provisions for qualifying producers and processors. However, given pre-existing national food labeling rules, it is not evident that (...) existing regulations permit such claims. Using LFP as a case, this study examined whether current federal labeling rules might impede the marketing of local and sustainable claims. Key findings include that the use of the terms natural, sustainable, and local in panel language and on shelf-talkers could be contested; and that the absence of specific regulation of numerous pertinent terms means they can only be assessed against general fraud prevention regulations, resulting in case-by-case determinations of compliance. Sustainability food label approvals in Canada, based on these general provisions, have not always been favorable to sustainable producers and firms. Existing regulation of these potentially contested terms appears to be out of step with other policy-related developments at the federal level and / or conceptual developments in the field. Proposals are made for amending existing rules to better support local and sustainable claims. (shrink)

A focus group study using four groups of food shoppers provides insights into consumers’ knowledge, beliefs, and behaviors regarding organic foods. Two focus groups consisted of shoppers who regularly bought organic foods and two focus groups of shoppers who predominantly purchased conventional foods. Participants in one of the conventional groups were all Caucasian; in the other they were all African-American. While familiarity with organic foods was much lower in the African-American group, its members were more receptive and positive towards organic (...) foods. Likewise, the African-American shoppers were more accepting of price premiums for organics foods. In comparing the two organic shopper groups with the two conventional shopper groups, it was found that the former were generally more knowledgeable about organic foods. They were also more likely to follow a special diet than conventional Caucasian shoppers. However, the behavior of organic shoppers varied widely. The research supports examining social justice and access as motivations for changing policies to support organic agriculture. (shrink)

The question of whether corporate social responsibility (CSR) has a positive impact on firm value has been almost exclusively analysed from the perspective of the stock market. We have therefore investigated the relationship between the valuation of Euro corporate bonds and the standards of CSR of mainly European companies for the first time in this article. Generally, the debt market exhibits a considerable weight for corporate finance, for which reason creditors should basically play a significant role in the transmission of (...) CSR into the valuation of financial instruments. Given that socially responsible firms are often regarded as economically more successful and less risky, they should have lower risk premia. The results of the empirical analysis, however, reveal that based on an extensive data panel the risk premium for socially responsible firms – according to the classification by SAM Group – was ceterius paribus higher than for non-socially responsible companies. However, only one case of the models investigated was weakly significant. Thus, largely the relationship has to be classified as marginal; so CSR has apparently not yet been incorporated into the pricing of corporate bonds. (shrink)

Most accounts of the effect of the global marketplace on deforestation in Africa, Asia, and Latin America emphasize the demand for timber used in industrial processes and the conversion of tropical forests to pastures for beef cattle. In recent years, numerous scholars and policymakers have suggested that developing a market for non-timber forest products (NTFPs) might slow the pace of habitat destruction. Although increased demand for NTFPs rarely results in massive deforestation, the depletion of the raw materials needed to make (...) particular products is common.Many rural households in the Mexican state of Oaxaca have prospered over the past three decades through the sale of brightly-painted, whimsical wood carvings (alebrijes) to international tourists and the owners of ethnic arts shops in the United States, Canada, and Europe. This paper examines a promising project aimed at providing Oaxacan alebrije-makers with a reliable, legal, and sustainable supply of wood. The ecologists, artisans, merchants, and forest owners involved in the project face formidable obstacles. Gaining permission to harvest wood from land belonging to Oaxacan communities requires the negotiation of a complex social, legal, economic, and political landscape. Artisans’ decisions about where to obtain wood rest largely on price, quality, and reliability of the supplier; they are willing to pay a premium for ecologically sustainable wood only if the additional cost can be passed on to consumers. Nonetheless, a group of carvers has begun to buy sustainably harvested wood. This arrangement has economic advantages for both the alebrije-makers and the owners of the forests where the wood is produced. (shrink)