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Focusing on managerial problems related to the measurement of intangibles, this paper develops and validates a hedonic-pricing methodology for the evaluation of the intangible resources of companies obtaining their shadow prices.

The paper adapts a hedonic-pricing methodology developed primarily for markets in real estate and secondhand cars to define how much intangibles may contribute to companies' market value. A certain calibration of the original tool has been developed to make this methodology appropriate for interpretation and practical use. The main advantage of this approach is that it allows for an evaluation of the shadow prices of intangible resources. These prices can be interpreted as the market value of the intangible resources which are not reflected on the balance sheet.

The results of this study demonstrate that hedonic pricing with a self-selection correction generates robust estimates. As one can see, the positive contribution of a high endowment of intangibles for all shadow prices is confirmed through estimations using two different techniques. Meanwhile, the negative effect of a low endowment is even more evident for the baseline model. This model shows consistent negative shadow prices for the majority of underinvested intangibles. Brands have the highest shadow prices in the introduced models; human capital, as measured by the qualification of top management and investments in employees, has likewise demonstrated high prices. However, most structural resources seem to be not reflected to a large degree in companies' market value.

This paper brings new opportunities to obtain the monetary value of intangible resources based on estimated market prices of a corporation's resource portfolio. These prices may be used for several purposes – for example, benchmarking for performance management, capital budgeting or knowledge-management practices. Moreover, by having methodological value, this study opens ways to evaluate any other intangibles which are not explicitly discussed in the empirical test of this particular study.

This study primarily contributes to the methodological advancement of evaluation of corporate intangible resources. It departs from the conventional hedonic-pricing mechanism to identify cogent estimates to intangibles in monetary terms. Importantly, this mechanism implies individual shadow prices for specific intangible resources which makes the contribution of this study unique for the existing literature, both within resource-based and value-based views.

The most recent and prestigious scientific research shows that nitrogen leaching caused by over-used nitrogen fertilizer rapidly acidifies all soil types in China, revolutionizing the basic understanding of the mechanism of soil acidification. The purpose of this paper is to study the impact of nitrogen on soil acidity over the long run, which is the shadow price of nitrogen.

In a discrete dynamic programming model, this paper compares the nitrogen application and soil pH between optimal nitrogen control that takes the shadow price of nitrogen into consideration and myopic nitrogen control that ignores that shadow price. Using a five-year panel experimental data on a rapeseed-rice rotation, this paper simulates and numerically solves the dynamic model.

Both theoretically and empirically, this paper shows that the over-use of nitrogen and the decline in soil pH are explained by ignorance of the shadow price of nitrogen. Compared with optimal nitrogen control, myopic nitrogen control applies more nitrogen in total, resulting in lower soil pH. In addition, over-use in the first season contributes to soil acidification and the carry-over effects mitigate that problem.

This paper enriches the literature by extending the study of the environmental impact of nitrogen leaching to its impact on the long-term loss in agricultural production, providing a new theoretical framework in which to study soil acidification rather than conventionally treating soil acidification as a secondary consequence of acid rain, and showing the possibility of using nitrogen control to mitigate soil acidification when lime applications are not feasible due to socio-economic constraints.

This paper proposes a scheme to estimate the technical efficiency of energy consumption and production and shadow prices of CO₂ emission in country‐level at Asia Pacific countries by Data Envelopment Analysis (DEA). The result of technical efficiency estimation shows that there exists an heterogeneity and a substantial opportunity for improvement in technical efficiency at energy consumption and production across countries, specially in the CO₂ emission, which implies that more pollutant are spread in air. Each country will have the different willingness to pay for the additional CO₂ emission right and this result enables us to predict the competition in international CO₂ emission right market.

The purpose of the research is to analyse the theoretical foundations of the balanced scorecard (BSC) with the aid of a microeconomic model and to illustrate the results in an empirical case.

The model includes demand, production, and objective functions. Demand is presented as a function of price and customer relationship management (CRM) costs. Production depends on labour, capital, and development and learning (D&L) costs. The strategy is depicted by objective function based on profit and net sales. The output variables are classified as four perspectives of BSC. Shadow prices and performance measures are analysed. The theoretical model is applied to the annual financial statement data from Nokia Corporation. Simulation is used to find appropriate estimates for the parameters of the model.

It is shown that a shift in the objective function (strategy) towards revenue maximization may alter the importance order of the BSC perspectives. Non‐financial and financial performance ratios may change into opposite directions, when the strategy is shifted. The figures extracted from the data of Nokia Corporation give support to these interpretations.

The theoretical model is based on the traditional assumptions of microeconomic analysis. Empirical analysis is only based on a naive estimation methods. The sensitivity of the results with respect to the assumptions should be analysed in further studies. The parameters should be estimated with more advanced statistical methods.

The focus of the BSC should be elastic and react to changes in the strategy. When evaluating the causal relationships between non‐financial and financial performance measures, attention should be paid to potential shifts in the strategy. The present model for example in a worksheet version would be useful in analysing the optimal behaviour of a firm and the causal relationships within the firm. It would be useful also in teaching the BSC and in general the behaviour of the firm to university students and managers. The model offers a platform for teaching and learning how the market (demand) and production (technology) environments affect the performance measures in the BSC.

There is a lack of theoretical modelling and analysis of the BSC. The present mathematical model is discussed earlier in Managerial Finance. However, this paper throws light to modelling the approach in a real‐life case of the Nokia Corporation and shows the value of the approach in interpreting the BSC in practice.

The purpose of this paper is to recognise and provide an approach to estimate the value of an institution that produces a public good to the wealth of a nation. Specifically, the authors value utilitarian justice.

The paper employs the classical economic theories of crime and shadow pricing to estimate the total economic value and shadow prices or social productivity of police and higher court deterrence. These measures are estimated using the definitions provided by Dasgupta and by re-engineering key deterrence elasticity estimates gleaned from Australian econometric studies.

The empirical findings suggest a relatively high social value for police and higher court deterrence. Notwithstanding, addressing socio-economic disadvantage is likely to prevent more subsequent offences than directing more resources to the operation of the criminal justice system.

The key limitations involve the sensitivity of the estimates to error. Further work is required on all the estimates in the model and in particular the social costs of the serious offences. The next step is to estimate the opportunity cost of supplying police and court deterrence. The cost estimate can then be combined with the estimates of social benefits to estimate a benefit-cost ratio. The model in broad terms demonstrates a way forward to estimating the economic value of and the social productivity of the criminal justice system. The provision of retributive justice is also ignored in this contribution. This requires a separate analysis.

The social implications are that there appears a way to both justify and evaluate the criminal justice system and this methodology may be applied to the operation of other public services.

The originality of this paper lies in suggesting a method to solve the valuation problem for the jointly produced public goods of the higher courts and police.

The paper aims to describe and compare multiple methods for estimating the technical efficiency of 113 US oil refineries in operation in 2006 and 2007, considering undesirable output in a production process.

A technology that satisfies weak disposability between desirable and undesirable outputs is constructed by allowing different abatement factors across all refineries. Several measures based on data envelopment analysis approaches are implemented and compared to study the impact of disposability assumptions and to investigate the effects of using non‐uniform abatement factors. A hyperbolic efficiency measure is used to analyze the potential output loss of each refinery due to environmental regulations.

The results indicate that domestic refineries can improve efficiencies regardless of the disposability assumptions and that environmental regulations reduce the amount of potentially desirable outputs produced by some facilities. However, refineries in the western USA appear to be the most affected by regulations. In general, efficient refineries are less likely to be affected.

Undesirable outputs are limited to toxic release. Undesirable outputs generated from refining crude oil, such as greenhouse gases, can be used when data are available. The desirable outputs in this paper do not include premium products, such as lubricants, which could raise the efficiency estimates of complex refineries.

To the authors' knowledge, this paper is the first implementation of the weakly disposable technology constructed by different uniform abatement factors. Further, the paper investigates the effects of various disposability assumptions on efficiency estimation. The result clearly identifies refineries that use their resources efficiently. The paper suggests that the data may be used to augment managerial decision‐making regarding benchmarking and best practices.

Ethiopia’s energy sector faces critical challenges to meeting steadily increasing energy demand given limited infrastructure, heavy reliance on hydroelectric power and underdevelopment of alternative energy resources. The purpose of this paper was to identify optimal least cost investment decisions for integrated energy source diversification. The authors seek to contribute to the relevant literature by paying particular attention to the role of public policy for promoting renewable energy investment and to better understand future energy security implications of various sources of uncertainty.

The authors created a dynamic linear programming model using General Algebraic Modelling System software to explore the national energy security implications of uncertainties associated with increasing technological advances and efficiency, and climate change scenarios.

To cope with the impacts of drought expected from future climate change on hydroelectric power production, Ethiopia would need to invest in the development of alternative energy resources. Such investment would not only enhance the sustainability and reliability of energy production but also increase costs. Greater rates of technological and efficiency innovations, however, were found to improve electricity diversification and reduce production costs and shadow prices or resource scarcity, and are thus key for enhancing energy security and reducing the risks posed by drought.

The dynamic linear programming model by the authors represents a flexible sector modelling tool for exploring the sustainability and efficiency of energy resource development pathways and evaluating the effects of different sources of uncertainty on the energy sector.

The purpose of this paper is to investigate the economic impacts of intra- and inter-regional water reallocation on sectoral transformation and economic growth.

A multi-sector, Ramsey-type growth model is fit to Chinese data and used to perform policy experiments.

An intra-regional water reallocation increases per capita gross domestic product (GDP) by about 1.5 percent per year over the period 2000-2060. The aggregate potential welfare gain due to this reallocation is 1002.51 billion RMB. Transferring water from southern to northern China via the South-North Water Transfer Project, on average, has a negligible impact on per capita GDP over the period 2000-2060, but aggregate welfare increases by 557.23 billion RMB. Combining intra-regional and inter-regional water reallocations, on average, increases per capita GDP by 0.38 percent per year over the period and the aggregate welfare gain from this combination is 1148.06 billion RMB. Each policy scenario has implications for long-run regional production patterns: In an intra-regional reallocation scenario, Southern China produces almost 70 percent of aggregate GDP, in the inter-regional transfer it produces 58 percent of aggregate GDP, while in a combined intra/inter-regional reallocation it produces 55 percent of aggregate GDP.

This analysis can serve as a template for developing a useful planning tool that one can fit to national or regional data and use to examine a variety of policy relevant questions.

Among the various factors influencing tourists to visit an overseas country is that of promotion/marketing activity by tourism operators and government tourist commissions in the destination country. The effects of tourism promotion have not previously been subjected to rigorous economic analysis however. The paper firstly shows how the standard economic justifications for government support of industry in circumstances of market failure, ie externalities/non appropriability of benefits, risk and uncertainty and indivisibilities, can be employed in the context of overseas tourism promotion to present a prima facie case for government support. It then provides an analysis of the benefits and costs of tourism promotion which is applicable to all countries. A model of tourism demand and supply is presented which enables consideration of the effects of tourism promotion in an economy with no distortions and an economy with distortions. The final section addresses issues in evaluating promotion and attempts to assess circumstances in which tourism promotion generates positive net benefits to an economy. Although the data apply to Australia, the results are generalizable. The framework of assessment can be used to assess the benefits and costs of tourism promotion in both developed and lesser developed countries.

The authors analyze the equilibrium effects of non-tradable assets on optimal policy portfolios. They study how the existence of non-tradable assets impacts optimal asset allocation decisions of investors who own such assets and of investors who do not have access to non-tradable assets.

In this theoretical analysis, the authors analyze a model with tradable and non-tradable asset classes whose cash flows are jointly normally distributed. There are two types of investors, with and without access to non-tradable assets. All investors have constant absolute risk aversion preferences. The authors derive closed form solutions for optimal investor demand and equilibrium asset prices. They calibrated the model using US data for listed equity, bonds and private equity. Further, the authors illustrate the sensitivities of quantities and prices with respect to the main parameters.

The study finds that the existence of non-tradable assets has a large impact on optimal asset allocation. Investors with (without) access to non-tradable assets tilt their portfolios of tradable assets away from (toward) assets to which non-tradable assets exhibit positive betas.

The model provides important insights not only for investors holding non-tradable assets such as private equity but also for investors who do not have access to non-tradable assets. Investors who ignore the effect of non-tradable assets when reverse-engineering risk premia from asset covariances and market capitalizations might severely underestimate the equity risk premium.

The authors provide the first comprehensive analysis of the equilibrium effects of non-tradability of some assets on optimal policy portfolios. Thus, this paper goes beyond analyzing the effects of market imperfections on individual portfolio choices.