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Highlights ∙ Review of evaluation methods for energy storage identifies need for new approaches. ∙ Formulation of new ‘market-potential method’ to identify value of storage. ∙ Pitfalls of cost approaches are identified in an European electricity system. ∙ Increasing storage design-freedom impacts technology value and system benefit. ∙ The ‘market-potential-method’ is useful for research and industry.

In an electricity market, a feed-in tariff promotes attainment of a so-called 'green quota' through a system of subsidies designed to ensure renewable energy investors a 'normal rate-of-return'. However, the subsidies should track technological advances closely with the expectation that they will be phased out when the renewable technology reaches an appropriate 'maturity threshold' (i.e., grid parity). Grid parity is typically defined as the point where the levelized cost of electricity equals the price of purchasing electricity from the grid. However, it has been recognized that this definition of grid parity is flawed due to the intermittent nature of many renewable resources. We propose a definition which allows us to distinguish between grid parity and least-cost grid parity. We demonstrate that under a green quota and an emissions cap, welfare may be higher if the policy maker forgoes least-cost grid parity and phases out the feed-in system sooner rather than later. We show that while green producer cost reduction incentives under the feed-in tariff are perverse, they can be restored by offering a 'menu' of values of the policy variables and allowing full discretion in terms of the decision to engage in cost-padding, pure waste, etc. Keywords Cost Efficiency * Feed-in Tariff * Green Quota * Grid Parity * Incentives JEL Classification L50 * P60 * Q00, Introduction Concerns about carbon emissions have led to a variety of policies designed to both reduce these emissions directly and promote the deployment of renewable energy (RE) resources. For example, [...]

Byline: S. Wolf (1), L. Leitritz (2), C. Rupp (1), D. Schlondorff (1), J.R. Bogner (1) Keywords: Key Words Infectious diseases; Cost; Reduction; Consultation Abstract: Background: In 1997 an infectious disease service (IDS) similar to those in the US was established at a university hospital in Munich, Germany. Patients and Methods: We assessed the economic impact of the new policy by performing a cost comparison analysis. Inpatients with pneumonia, skin infections/cellulitis, urinary tract infections (UTI) and bacteremia/sepsis were assigned to two groups: patients from a 6-month period after the establishment of the IDS (post-IDS group) were compared with similar patients before the implementation of the ID-servide (pre-IDS group). Costs of microbiological investigation (MB), antibiotic treatment (AB), clinical imaging (CI), total costs and length of antibiotic therapy were analyzed. Results: Patients with UTIs in the post IDS-group had 39% fewer MBs (p &lt 0.05) than patients in the pre-IDS group, resulting in a 33% decrease in average MB costs (p &lt 0.05). In the total group, in which subgroups with pneumonia, skin infection and UTI were summarized, the post-IDS group had 37% fewer MBs (p &lt 0.05) resulting in MB cost reductions of 34% (p &lt 0.05). There were no significant differences in expenditures for AB and CI and in the average length of antibiotic therapy. Conclusion: This study shows that continuous consultation by an IDS does not increase diagnostic and treatment costs, but results in significant cost reductions. Author Affiliation: (1) Medizinische Poliklinik, Ludwig Maximilians University of Munich Hospital, Pettenkoferstr. 8a, D-80336 Munich, Germany Phone (+49/89) 5160-3598, Fax: -3593, e-mail: jobogner@pk-i.med.uni-muenchen.de, DE (2) Max von Pettenkofer Institute of Hygiene and Medical Microbiology, Ludwig Maximilians University of Munich, Pettenkoferstr. 9a, D-80336 Munich, Germany, DE Article note: Received: March 13, 2000 * Revision accepted: July 28, 2000

Byline: Jim Jin (1), Michael Troge (2) Keywords: Keywords: public information, demand uncertainty, process innovation.; JEL classification: D43, D80, L13. Abstract: Author Affiliation: (1) Department of Economics, Queen's University of Belfast, Belfast BT/INN, Northern Ireland (e-mail: j.jin@qub.ac.uk), IE (2) Ecole Superieure de Commerce de Paris (ESCP-EAP), 79 av. de la Republique, F-75543 Paris Cedex 11, France (e-mail: troege@escp-eap.net), FR Article note: Received July 31, 2000 revised version received July 18, 2001

Byline: Domenico Campisi (1), Paolo Mancuso (1), Alberto Nastasi (2) Keywords: Noncooperative R&amp D; dynamic noncooperative feedback game; stock of technological knowledge; intra-industry spillovers; extra-industry R&amp D Abstract: This paper deals with a duopolistic industry where firms are engaged in cost-reducing R&amp D activity in order to maximize their market shares. Firms' R&amp D competition is characterized as a dynamic noncooperative feedback game where the optimal strategies are affected by the extra-industry R&amp D activity and the degree of intra-industry spillovers. Numerical simulations highlight the importance of the assumptions on the firms' absorptive capacity (to exploit external knowledge) in determining the optimal levels of firms R&amp D investrnents. Author Affiliation: (1) National Research Council, Institute of Systems Analysis and Computer Science, Viale Manzoni 30, 00185, Roma, Italy (2) Department of Production, Systems and Computer Science, University of Rome 'Tor Vergata', Via della Ricerca Scientifica, 00133, Roma, Italy Article History: Registration Date: 29/09/2004

The level of health care spending in the United States and other developed nations is rising at a disturbingly rapid rate. However, in the United States, these increases are not justified by superior performance. Rather, most other wealthy countries' inhabitants live longer and suffer from fewer medical problems than the average American. This paper demonstrates the continued abundance of opportunities for substantially reducing health care costs without decreasing the quality of care. In particular, it emphasizes the need to reduce the practice of defensive medicine and to enlarge the cadre of non-specialist physicians who educate future doctors. Such cost-saving opportunities are not rare phenomena but are widely available and offer the United States opportunities to move toward the markedly lower cost levels that have been achieved in other countries.

The already high and still rising cost of health care has become a matter of serious concern and a subject of political dispute. The problem has no magic cures but, as is shown here, there are a number of promising modifications in current practice that promise to reduce the required outlays without impairing appropriate health care. Continual reports of new medicines, new tests, and new procedures have created an urgent need for careful comparison and evaluation of the advantages and beneficial results that these innovations offer. The same is true for the growing knowledge of genetic variations, which affects the course of therapy for some patients. Costs also can be saved, in some instances, by utilization of medical therapy, rather than interventional procedures. Preventive medicine provides still more opportunities for cost savings. This paper provides an overview of promising potential approaches to reduce the cost of health care.

Objectives: To assess the impact of the pharmacist on cost through simple implementation of restriction policy on IV drug usage during pharmacy dispensing procedure., Setting: In-patient floors of a Hospital., Methods: All medication orders for IV esomeprazole, received at the pharmacy during a 24-month period, were reviewed for appropriate IV route of administration. Two separate time intervals, pre- and post- implementation of restriction dispensing policy, were used to determine cost impact of pharmacy intervention., Main Outcome Measure: The cost difference between pre- and post-restriction periods., Results: During the pre-restriction period, the majority of esomeprazole IV vials were dispensed to patients able to tolerate oral medications and who were admitted to non-intensive care units. The average monthly consumption of IV esomeprazole was 1,439 vials in the pre-restriction period as compared to 346 vials in the post-restriction period. Therefore, the associated cost was reduced by an average of $21,233 per month., Conclusion: Even though the clinical role of pharmacy practice in Middle Eastern countries is limited, this study highlighted the impact of the pharmacist on cost through the implementation of restriction policy during dispensing procedure, leading to a cost reduction by four folds.

The explosion of medical knowledge has deluged the medical community with a plethora of new medicines, new tests, and new procedures. This creates a serious need to carefully evaluate the definable benefits from these new developments, which promise to increase the quality of medical care beyond older, established, and usually less-costly methods. In addition, more recent information has clearly identified genetic variation in an individual's response to medications. As such, conventional wisdom may now prove to be wrong or subject to question. Examples of this, which we present, include situations where medication may more safely provide benefits to asymptomatic, stable patients than surgical interventions with high potential for complications that counteract predicted benefits. We argue that preventive medicine offers an unusual and comprehensive promise of disease prevention and treatment. The issues we cite may be effective in the future cost reduction of medical care.

Background: Increasing drug costs are an economic burden for the health insurance system., Aim: The regional drug prescription pattern for ACE inhibitors in the Austrian county Burgenland was compared for patients discharged from hospital and those in primary care. Furthermore, the potential cost reduction by voluntary prescription of cheaper generic drugs was estimated in the project "Bessere Therapie zum besseren Preis"., Methods: Following consensual analysis of the regional cross-sectional study, a cheaper generic of the most cost-intensive class of ACE-inhibitor drugs should be prescribed at internal medicine wards and in primary care. The number of prescriptions for patients from the largest health insurance company BGKK was studied and the costs were calculated., Results: Of the 1347 patients discharged during October 1999 from internal medicine departments of four different hospitals 879 patients received a total of 1440 cardiovascular drugs. The regional prescription pattern at hospitals matched that of physicians in primary care. Between the second quarter of 2000 and 2001, the prescription of ACE inhibitor drugs increased by project advertising from 23,627 packages by 13.1%, and drug costs in this group were reduced by [symbol: see text] 29,778 in this quarter (7.3% of costs). The number of Enalapril prescriptions increased by 33.4% with a percentual portion of generic Enalapril of 57.3%, and in the rest of Austria by 16.9% with 45.0% generics., Conclusion: Consensus based projects are appropriate pharmacoeconomic interventions to change prescription patterns, increase the use of drugs and reduce the increasing cost requirements.

This paper addresses the optimal control problem known as the linear quadratic regulator in the case when the dynamics are unknown. We propose a multistage procedure, called Coarse-ID control, that estimates a model from a few experimental trials, estimates the error in that model with respect to the truth, and then designs a controller using both the model and uncertainty estimate. Our technique uses contemporary tools from random matrix theory to bound the error in the estimation procedure. We also employ a recently developed approach to control synthesis called System Level Synthesis that enables robust control design by solving a quasi-convex optimization problem. We provide end-to-end bounds on the relative error in control cost that are optimal in the number of parameters and that highlight salient properties of the system to be controlled such as closed-loop sensitivity and optimal control magnitude. We show experimentally that the Coarse-ID approach enables efficient computation of a stabilizing controller in regimes where simple control schemes that do not take the model uncertainty into account fail to stabilize the true system., Author(s): Sarah Dean [sup.1], Horia Mania [sup.1], Nikolai Matni [sup.2], Benjamin Recht [sup.1], Stephen Tu [sup.1] Author Affiliations: (1) grid.47840.3f, 0000 0001 2181 7878, Department of Electrical Engineering and Computer [...]

Antibiotic cost information was added to the computerized print-out for each patient of microbiology culture results, next to the antibiotic susceptibility list. During the first six months of this addition, the average monthly cost of antibiotics decreased by 16.5% ($7636) compared to the 12 months period preceding the study period. The average antibiotic cost per admission decreased by 15.7% ($1.61) and the average antibiotic cost/hospital day decreased by 10.6% ($0.23). Antibiotic savings were highest in the Department of Obstetrics and Gynaecology (21.7%) and lowest in the Department of Paediatrics (10.8%). Two-thirds of the average savings were initiated by the house-staff and the remainder by infectious disease consultants. The effect of this system on the level of medical care remains to be studied.

Wafer fabrication is a complex and lengthy process that involves hundreds of process steps with monitoring numerous process parameters at the same time for yield enhancement. Big data is automatically collected during manufacturing processes in modern wafer fabrication facility. Thus, potential useful information can be extracted from big data to enhance decision quality and enhance operational effectiveness. This study aims to develop a data mining framework that integrates FDC and MES data to enhance the overall usage effectiveness (OUE) for cost reduction. We validated this approach with an empirical study in a semiconductor company in Taiwan. The results demonstrated the practical viability of this approach. The extracted information and knowledge is helpful to engineers for identifying the major tools factors affecting indirect material usage effectiveness and identify specific periods of time when a functional tool has abnormal usage of material.

In recent papers, models of human locomotion by means of optimal control problems have been proposed. In this paradigm, the trajectories are assumed to be solutions of an optimal control problem whose cost has to be determined. The purpose of the present paper is to analyze the class of optimal control problems defined in this way. We prove strong convergence results for their solutions, on the one hand, for perturbations of the initial and final points (stability), and, on the other hand, for perturbations of the cost (robustness)., UDC 517.977 CONTENTS 1. Introduction 2. Models and the Adjoint Equations 3. Existence and Stability of Optimal Solutions 4. Robustness 5. Conclusion References 1. Introduction An important question in the [...]

Byline: Gregory F. Nemet (1,2) Abstract: Safety valves, discretionary advisory boards, and other cost containment mechanisms enhance the political feasibility of stringent climate policy by limiting firms' and households' exposures to higher than anticipated costs associated with reducing greenhouse-gas emissions. However, cost containment comes at a price it increases the risk of climate-related damages and simultaneously discourages investments to develop low-carbon technologies. A stylized model of the cost of climate policy is used to estimate that proposed cost containment mechanisms will increase emissions by 11--70% by 2030. Because these clauses limit the payoffs to innovation, they reduce our societal capacity to affordably mitigate climate change through technology improvement. If cost containment measures are to be employed at levels discussed in recent policy debates, then complementary policies to fund technology development will be needed crucially, the two also need to be linked. One way to resolve the impasse between increased climatic damages and reduced incentives for innovation is to create a technology development fund with contributions indexed to the amount by which the market price for carbon exceeds the price cap. Author Affiliation: (1) La Follette School of Public Affairs, University of Wisconsin--Madison, 1225 Observatory Drive, Madison, WI, 53706, USA (2) Nelson Institute Center for Sustainability and the Global Environment (SAGE), University of Wisconsin--Madison, 1225 Observatory Drive, Madison, WI, 53706, USA Article History: Registration Date: 08/12/2009 Received Date: 23/07/2008 Accepted Date: 30/10/2009 Online Date: 13/01/2010 Article note: Electronic supplementary material The online version of this article (doi: 10.1007/s10584-009-9779-8) contains supplementary material, which is available to authorized users.

Byline: Nicholas Crew (1) Abstract: This paper analyzes the problem of determining allowable cost of a utility's inputs when the price of these inputs may be highly volatile and when hedging and long-term contracting are the norm in the supply of these inputs. In such an environment, benchmarks based upon the observable market price of an input are natural regulatory mechanisms to consider. This paper studies such incentive-based regulation. The first section uses contingent claims analysis to investigate a representative contract currently in place. The analysis indicates that this regulation may impose an important monitoring role on the regulator in order to prevent the utility from taking extremely risky positions in fuel markets. Further investigation of benchmark-based regulation is undertaken in a principal-agent framework in which the utility has the dual role of choosing a fuel portfolio and undertaking expenditures to reduce fuel costs. In this setting, it is shown that benchmark-based compensation is, at best, ineffective. Within the same setting, contracts based upon cost sharing are studied and found to be superior at obtaining a tradeoff between risks and cost reduction. Author Affiliation: (1) The Anderson School, UCLA, Los Angeles, CA, 90025-1481 Article History: Registration Date: 16/09/2004

Byline: Raouf Boucekkine (1), Ramon Ruiz-Tamarit (2) Keywords: Keywords:ainvestment theory, demand for maintenance services, capacity utilization, substitution vs complementarity.; JEL classification:aE22, E32, O40, C63. Abstract: This paper studies the properties of demand for capital maintenance services and its interaction with investment under variable capital utilization rate and adjustment costs. The depreciation rate varies with the maintenance effort and the utilization rate of capital. We show that the properties of the demand functions for maintenance services and capital goods depend closely on the sign of the cross derivative of the depreciation function, i.e., on whether the marginal efficiency of maintenance decreases or increases when the rate of capital utilization rises. In our model, it is impossible to reconcile some unquestionable empirical facts and some minimal regularity conditions on the demand function for maintenance services if this cross derivative is positive. In all cases, investment and maintenance are gross complements. Author Affiliation: (1) IRES and CORE, Department of Economics, Catholic University of Louvain, Place Montesquieu, 3, B-1348 Louvain-la-Neuve, Belgium (e-mail: boucekkine@ires.ucl.ac.be), BE (2) Faculty of Economics, University of Valencia, Av. dels Tarongers, S/Ndeg, E-46022 Valencia, Spain (e-mail: ramon.ruiz@uv.es), ES Article note: Received September 9, 2001 revised version received April 22, 2002 Published online: December 5, 2002 (c) Springer-Verlag 2002

Byline: Mei-Ying Huang (1), Cliff J. Huang (2), Tsu-Tan Fu (3) Keywords: stochastic frontier; cost efficiency; switching regression; cultivation arrangement; rice farming in Taiwan Abstract: In this paper, a switching regression model is developed to analyze farmers' choice behavior and cost efficiency in field plowing arrangement in Taiwan. We find that the decision on the choice of plowing arrangement is determined by a cost comparison between self-plowing and hired-service, and other non-cost considerations, such as the availability of family labor and machinery, education level, non-farm income, age, and regional effects. Across a spectrum of farmer characteristics, empirical results indicate a potentially substantial cost-savings by hiring service for field plowing than by self-plowing. Self-plowing farmers also subject to a significant level of cost inefficiency. Author Affiliation: (1) Department of Economics, National Chung-Hsing University, Taipei, Taiwan (2) Department of Economics, Vanderbilt University, Nashville, Tennessee, U.S.A. (3) Institute of Economics, Academia Sinica, Taipei, Taiwan Article History: Registration Date: 09/10/2004

Byline: M. Jegers (1), D. Edbrooke (2), C. Hibbert (3), D. Chalfin (4), H. Burchardi (5) Keywords: Intensive care medicine Cost definitions Cost categories Abstract: Objective. To define the different types of costs incurred in the care of critically ill patients and to describe some of the most commonly used methods for measuring and allocating these costs. Design. Literature review. Definitions for opportunity, direct and indirect, fixed, variable, marginal, and total costs are described and interpreted in the context of the critical care setting. Two main methods of costing are described: the 'top-down' and 'bottom-up' methods together with a number of cost proxies, such as the use of weighted hospital days, diagnosis-related groups, severity and activity scores, and effective costs per survivor. Conclusions. The assessment and allocation of costs to critically ill patients is complex and as a result of the different definitions and methods used, meaningful comparisons between studies are plagued with difficulty. When undertaking a study looking to measure costs, it is important to state: (a) the aim of the cost assessment study (b) the perspective (point of view) (c) the type of costs that need to be measured and (d) the time span of assessment. By being explicit about the rationale of the study and the methods used, it is hoped that the results of economic evaluations will be better understood, and hence implemented within the critical care setting. Author Affiliation: (1) Faculty of Economic, Social and Political Sciences, Microeconomics of the profit and non-profit sectors, Free University Brussels (VUB), Pleinlaan 2, 1050 Brussels, Belgium (2) Medical Economics and Research Centre, Sheffield (MERCS), Intensive Care Unit, Royal Hallamshire Hospital, Sheffield, UK (3) Sheffield Health Economics Group, School of Health and Related Research, University of Sheffield, UK (4) Department of Emergency Medicine, Maimonides Medical Center, New York, USA (5) Centre of Anaesthesiology, Emergency and Intensive Care Medicine, University Hospital, Gottingen, Germany Article History: Received Date: 22/08/2001 Accepted Date: 22/02/2002 Article note: Electronic Publication

Byline: Rolf Golombek (1), Espen R. Moen (2) Keywords: Keywords: environmental economics, emissions, negotiated agreements, cost efficiency.; JEL classification: I28. Abstract: Author Affiliation: (1) Ragnar Frisch Centre for Economic Research, Gaustadaleen 21, N-0349 Olso, Norway (e-mail: rolf.golombek@frisch.uio.no), NO (2) Norwegian School of Management and the Frisch Centre, Elias Smiths vei 15, Box 580, N-1301 Sandvika (e-mail: espen. moen@bi.no), NO Article note: Received October 16, 2000 revised version received August 2, 2001

Byline: Joseph P. Hughes (1), William Lang (2), Loretta J. Mester (3), Choon-Geol Moon (4) Keywords: banking; production; risk; efficiency; agency problems. Abstract: We present and estimate a model that shifts the focus of modeling production from the traditional assumptions of profit maximization and cost minimization to a more general assumption of managerial utility maximization that can incorporate risk incentives into the analysis of production and recover value-maximizing technologies. We implement the model using the almost ideal demand system. In addition, we use the model to measure efficiency in a more general way that can incorporate a concern for the market value of firms' assets and equity and identify value-maximizing firms. This shift in focus bridges the gap between the risk incentives literature in banking that ignores the microeconomics of production and the production literature that ignores the relationship between production decisions and risk. Our estimation of the model for a sample of U.S. commercial banks illustrates that results obtained from our generalized model can differ significantly from those obtained from the standard profit-maximization model, which ignores risk. Author Affiliation: (1) Rutgers University, USA (2) Office of the Comptroller of the Currency, USA (3) Federal Reserve Bank of Philadelphia and The Wharton School, University of Pennsylvania, USA (4) College of Business and Economics, Hanyang University, USA Article History: Registration Date: 09/10/2004

Byline: Pierre Ouellette (1), Stephane Vigeant (2) Abstract: Inthis paper we develop a new method, based on generalized inverse,to recover the first derivatives of the production function.This allows us to retrieve returns to scale, technological progressand, in a dynamic setting, a measure of the adjustment cost.The method is general and systematic and it applies in caseswhere the traditional method does not. It is especially relevantwhen examining dynamic models or regulated firms. Author Affiliation: (1) Departement des sciences economiques, Universite du Quebec, Montreal (2) Faculte Saint-Jean, University of Alberta, Canada Article History: Registration Date: 16/10/2004

Byline: Reza Espahbodi (1), Teresa A. John (2), Gopala Vasudevan (3) Keywords: downsizing; layoffs; operating performance; corporate reorganization; cost control Abstract: We examine the performance of 118 firms that downsized between 1989--1993. We find that downsizing firms experience declines in operating performance prior to the downsizing announcement. Operating performance improves significantly following the downsizing. These firms are able to reduce the cost of sales, labor cost, capital expenditures and R&amp D expenditures. We also find that firms that perform poorly in their industries prior to the downsizing and have increases in assets following the downsizing have larger improvements in performance. There is some evidence that the improvements are greater for firms that increase their focus. Author Affiliation: (1) Indiana University South Bend, South Bend, Indiana (2) New York University, New York, New York, 10003 (3) Northeastern University, Boston, Massachusetts Article History: Registration Date: 08/10/2004

Byline: P. Blanc (1), B. E. Von Elm (2), A. Geissler (1), I. Granier (1), A. Boussuges (1), J. Durand Gasselin (1) Keywords: Key words Quality of health care; Financial management; Drug costs; Cost control; Intensive care; Antibiotics Abstract: Objective: To evaluate the economic impact of a rational policy in antibiotic treatment. Design: Comparative study with a retrospective and a prospective part. Setting: An 11-bed intensive care unit (ICU) in a general hospital. Patients: All patients admitted to the unit in 1994, 1995 and 1996. Interventions: In 1995, a program of cost control was started and a contract of agreed objectives signed with the director of the hospital. This contract included a commitment to refund the eventual savings in order to improve the quality of care. Prescribing protocols were established by consensus as guidelines for a rational policy in antibiotic therapy. Measurements and results: The cost of antibiotic therapy, the patients' characteristics and the incidence of nosocomial infection were compared prior to and during the program. The expenses for antibiotic drugs decreased by 19 % in 1995 and by 22 % in 1996. Most of the savings were refunded to the ICU and contributed to the employment of an additional nurse and the purchase of new material. In number of patients, type of disease, mean age, Simplified Acute Physiology Score, occupancy rate, length of stay, omega score, artificial ventilation, readmission within 7 days, mortality and incidence of nosocomial infection, no significant difference was found. Conclusions: We proved a positive economic impact of a rational policy in antibiotic therapy realized with a contract of agreed objectives. The savings made while applying our program of cost control were used to improve the quality of care. Author Affiliation: (1) Intensive Care Unit, Font Pre Hospital, Toulon, France e-mail: ph-blanc@-fguyon.fr Tel.: + 33(2)62 90 56 90 Fax: + 33-(2)62 90 77 36, FR (2) Faculty of Medicine, University of Tubingen, Germany, DE Article note: Received: 26 March 1999 Final revision received: 9 August 1999 Accepted: 16 September 1999

Byline: Pierre Lasserre (1), Pierre Ouellette (2) Keywords: Dynamic duality; Investment; Expectations; Expected future cost function; Factor demands; Returns to scale; Technological change Abstract: We present a dynamic model of factor demands based on expected discounted costs minimization. While making only very mild assumptions on expectations and technology, we are able to establish a duality relationship between contemporary factor demands and the technology, and we provide formula for easily recovering marginal products, returns to scale, and technological change from estimated factor demands. Parametrization and implementation are illustrated in a detailed example. Author Affiliation: (1) Departement des sciences economiques, Universite du Quebec a Montreal, GREQAM, Universite d'Aix-Marseille II and CIRANO, Montreal, Canada (2) Departement des sciences economiques, Universite du Quebec a Montreal, Canada Article History: Registration Date: 19/10/2004

Byline: Hao Li (1) Keywords: JEL classification:D23, D70, D83; Key words:Network, strategy, efficiency Abstract: This paper analyzes organizational structures that minimize information processing costs for a specific organizational task. Organizations consist of agents of limited ability connected in a network. These agents collect and process information, and make decisions. Organizations implement strategies -- mappings from environmental circumstances to decisions. The strategies are exogenously given from a class of 'pie' problems to be defined in this paper. The notion of efficiency is lexicographic: the primary criterion is minimizing the number of agents, and the secondary criterion is minimizing the number of connections between the agents. In this modeling framework, efficient organizations are not hierarchical for a large number of problems. Hierarchies often fail to exploit fully the information processing capabilities of the agents because in a hierarchy, subordinates have a single superior. Author Affiliation: (1) School of Economics and Finance, The University of Hong Kong, Pokfulam Road, Hong Kong (e-mail: haoli@econ.hku.hk) , HK Article note: Received: 1 December 1995 / Accepted: 11 October 1998

Byline: Gary M. Fournier (1), Jean M. Mitchell (2) Keywords: Multihospital systems; organizational efficiency; cost functions Abstract: This study analyzes the performance effects of proprietary, multihospital systems. It is shown that the organizational structure of these systems may affect the operating costs of member hospitals. Estimating a cost function for Florida hospitals and controlling for other factors, the average costs of HUMANA hospitals are empirically about 17 percent lower, while the costs of other leading chains are about 12 percent lower than not-for-profit institutions. These results contrast with earlier studies that found no such differences. Furthermore, the cost differential that exists between system and non-system hospitals can be largely attributed to technical efficiencies arising from chain ownership. Author Affiliation: (1) Department of Economics, Florida State University, Tallahassee, Fl (2) Graduate Public Policy Program, Georgetown University, 3600 N St., N.W, Washington, U.S.A Article History: Registration Date: 29/09/2004