Volume 35, Issue 1-2, 2005

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Articles:

  • Estimates of Capital Stocks for the States and Territories of Australia (S. Mikhailitchenko, D.T. Gfyen, C. Smith)
  • The Gains from the Microeconomic Reform of the Power Generation Industry in East-Coast Australia (Paul Simshauser)
  • Corporate Income Tax Reform: The Neglected Issue of Tax Incidence (John Ablett, Neil Hart)
  • The Economic Consequences of Droit De Suite in the European Union (Victor Ginsburgh)
  • The Asian Currency Crisis and Australian Exports to East Asia (Pemasiri Gunawardana)
  • The Optimal Access Price in a Vertically Related Industry (Partha Gangopadhyay)
  • On the Double Imputation Hedonic Price Index (Michael L. Kremmer, David Prentice)
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Estimates of Capital Stocks for the States and Territories of Australia

S. Mikhailitchenko, D.T. Gfyen, C. Smith

Pages: 1-22

Abstract:
Although capital stock data are potentially useful for a variety of reasoms, at present there are no official estimates of capital stocks at the state/territory level in Australia. This study contributes to filling this gap by providing estimates that are updated, extended and improved in comparison with those provided by previous (unofficial) research. The current study uses more information, including longer series of past data, to more satisfactorily derife estimates of the initial capital stocks into a number of categories, to better reflect the effects of different rates of depriciation.

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The Gains from the Microeconomic Reform of the Power Generation Industry in East-Coast Australia

Paul Simhauser

Pages: 1-12

Abstract:
Power generators in the east-Australian states of Queensland, New South Wales and Victoria comprise the dominant part of a 40,000 MW power system and operate at world benchmark efficient levels. But it has not always seem this way. During the late 1980s, the states were grossly over-supplied and the cost structure of the generation sector was spiralling out of control. Microeconomic reform has since corrected pricing practices and capital allocation. But electricity reforms need to be carefully orchestrated. While gains in productive and allocative efficiency will invariably occur, dynamic efficiency gains are harder to achieve. Inadequate restructuring or a supply-demand imbalance at the start of reforms may result in high prices, which in turn can drive an excess entry result, following which emerge systemic faults in signalling for new plant. Poor starting blocks can set off a chain reaction of events which may take a power system more than a decade to recover from.

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Corporate Income Tax Reform: The Neglected Issue of Tax Income

John Ablett, Neil Hart

Pages: 45-60

Abstract:
The 'double taxation' of corporate income is often used as an argument in support of the integration of company and shareholder taxes, as occurred with the introduction of tax imputation in 1987 in Australia. These arguments are based, often implicity, on the premise that the economic incidence of company taxes falls on shareholders receiving dividend income. However, a review of the available theoretical and empirical literature fails to provide an unambiguous answer to the corporate income tax incidence question. Empirical results presented in this paper suggest the existence of significant forward shifting of the tax in to consumers though higher prices in the case of Australian manufacturing corporations. A more informed discussion of tax reform must therefore consider more carefully the implications arising from the likely existence of significant forward shifting if the corporate income tax.

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The Economic Consequences of Droit De Suite in the European Union

Victor Ginsburgh

Pages: 61-71

Abstract:
In the EU the author of an original artwork enjoys 'Droit de suite', a right to an economic interest in successive commercial sales of that work. This is intended to insure that artists benefit from successive 'exploitations' of their artwork. The ensuring royalty is a percentage of the sale price. It is argued that it worsens the position of contemporary artists, but dimishes trade in the tertiary art market, is detrimental to their position on the international art market for those states introducing it and is severely anti-redistributive. It dimishes purchaser's property rights, reducing the price of artworks. This most severely affects early career artists who value the ensuing marginal decreases in income most highly, but whose work has not yet reached the secondary market.

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The Asian Currency Crisis and Australian Exports to East Asia

Pemasiri Gunawardana

Pages: 73-90

Abstract:
The determinants of and the impact of the Asian currency crisis on Australia's total merchandise exports to nine East Asian countries are analysed using a modified gravity model. The results show that real GDP and per capita real GDP of East Asian countries have positive and significant impacts, while real exchange depreciation and tariff rates of East Asian countries have negative and significant impacts on Australia's exports to East Asian countries. Australia's export to East Asian countries are significantly higher since these countries gained APEC membership. Australia's exports to all of the crisis-ravaged East Asian countries, except Thailand, were significantly higher in 1998 than in previous years. The analysis also shows that there is significant scope for Australia to expand its exports to China and Hong Kong, while there may be some opportunity for Australia to increase its exports to Indonesia, Malaysia, the Philippines, South Korea and Thailand.

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The Optimal Access Price in a Vertically Related Industry

Partha Gangopadhyay

Pages: 91-102

Abstract:
In important component of the National Competition Policy is the regulation of access prices for major infrastructure facilities. The primary goal of regulation is to protect rival firms from anti-competitive measures of the owners of such facilities. It is commonly held that the regulation of access price does not necessarily benefit the non-integrated downstream rivals, since the access price may act as a collusive device to restrict output in the downstream market that will enhance profits accruing to all competitors. We contest this important finding: we develop a sequential game to examine an industry characterised by naturally monopolistic and potentially competitive activities that are vertically related. We establish that in the perfect Nash equilibrium of the proposed game the intergraded firm has an incentive and an ability to use the access price in the upstream market to the detriment of its rivals. It is hence essential to regulate access prices in such markets to protect non-integrated rivals and to promote competition.

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On the Double Imputation Hedonic Price Index

Michael L. Kremmer, David Prentice

Pages: 103-112

Abstract:
In this short paper we present an empirical comparison of two price indexes: the 'consecutive two period chained time dummy double imputation hedonic price index' recently adopted by the ABS for their computer price index and the 'multi-period dummy variable hedonic price index' that is commonly used in academic research. The comparison is conducted using a publicity available data set and indicates this new index is far more suited to goods like computers where newly introduced models tend to dominate the data set.

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