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Working Papers | 1991

The Nash-Bargaining Solution for Public Sector Pricing Problems

Lahiri Somdeb

In this paper e study some issues in positive second-best theory, specifically the theory of optimal pricing of private goods produced by public firms; that is, firms whose objective departs from profit maximization. The approach in this paper differs from earlier analysis of the so-called Ramsey pricing problem, in that we embed our problem in a bargaining theory framework.

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Working Papers | 1991

Computer Based Itinerary Planning on Transportation Systems

G. Raghuram and Shobana R

Customers seek to know the best way of getting from an origin to a destination on a transportation system. Knowing the best way, i.e., itinerary planning, becomes all the more important when there are varied choices depending on the desired starting day and time at the origin or a required arrival day and time at the destination. Other considerations like cost, number of connections, etc., also play a role in the planning of an itinerary. A computer based system could enhance a customer's ability to make better choices in itinerary planning. No such system exists in either the Airlines, Railways, or Road Transport Corporations in India. This paper describes an interactive PC – based computer system developed by the authors, for itinerary planning on airlines (Indian Airlines and Vayudoot). The paper is supplemented by four annexures to facilitate further development covering system flow charts, structure of the database for maintenance and the implementation of the shortest and the k-shortest path algorithms. A users manual for the package is also provided.

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Working Papers | 1991

Implementation of Large Computer-Communication Projects in a Developing Country - A Case Study

Rekha Jain and G. Raghuram

The implementation of geographically dispersed computer-communication projects involving large financial outlays is a complex task, more so in a developing country context. This paper is focused around a case study which highlights some of the issues in the context of Indian Railways decision to implement a large computer-communication network for the management of it's freight operations. The case study is followed by a case analysis which first analyses the causes of project delay; then issues specific to this being a computer communication project, as well as issues which are of general nature and which we believe will be applicable to high technology projects involving large investments in a developing country context are discussed.

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Working Papers | 1991

European Economic Community Review of Literature Reactions in India: Part I: 1960-80

Gaikwad V R

This is our forth working paper (WP) on the EC. The first paper (WP 841, Jan.1990) analysed the basic motives underlying the formation of the EC as reflected in the writings of Jean Monnet-“The Father of the Common Market”. The paper discussed the gigantic changes of great historical significance taking place in Europe. Following the Common Market strategy EC is relentlessly moving towards its ultimate political objectives, i.e., a United States of Europe. Recent events in Eastern Europe and USSR are not spontaneous but result of the long-term strategy for uniting 'People of European Origin'. Gorbachov's perestroika and glanost are strategies to provide “freedom” to East Europeans and European (white) Russia to ultimately become members of a Unites States of Europe. Both Monnet's and Gorbachov's strategies have been and are being executed with great finesse, shrewdness and top level diplomacy to develop a sense of complacency among the non-European communities. Today, EC leaders talk about “a broader, Helsinki-type Europe, from San Francisco to Vladivostock”. Our analysis indicates that the driving force behind the 'Unity of Europe' and of “People of European Origin” is genetic-ethnic-racial. It indicates that Europe's march from nationalism to supra-nationalism leads to supra-Euracialism. EC-1992 is of great symbolic significance for non-European communities. It is exactly 500 years after Columbus reached North America in 11492; the beginning of ruthless exploitation of non-European communities since then. EC-1992 is a landmark, a symbol of consolidation of European power and Euracial fundamentalism. It can also be a prelude to War of Races. Against the United Europe and 'People of European Origin” where do non-European communities stand? Have they realised in time the long-term implications of European unification processes and taken timely steps so safeguard their future? Have they asked themselves the question, whether by cooperating with EC with an eye on short-term commercial gains, are they further strengthening Europe's drive towards its politico-racial objective? In our second paper (WP 854, Mar,1990) we have sought answers to these and related questions in the writings of western writers. In our third paper (WP872, July 1990) we have discussed twelve sets of questions which try to look at EC from our perspective, i.e., non-European perspective. In this paper we shall see whether Indian thinking on EC has been in any way different from that of the western writers. Did it go beyond the traditional, stereotype ways of looking a European Community? What basic issues and concerns dominated Indian thinking? What was their analysis of events and reading of the future? What strategies and actions they recommended? And so on. The paper reviews ICSSR's survey of research (trend reports) in various disciplines, especially, in Public Administration (Khilnani and Sinai, “Administration of External Affairs”), Macroeconomic (Manmohan Singh, “International Trade and Payments”), Management (C.P.Rao, “Marketing”), Political Science: International Studies (Prasad and Phadnis, “Area Studies”; Mahendra Kumar, “Foreign Policy”; K.Subrahmanyam. “Defence Policy and Analysis”). In addition, the paper reviews in detail the writings of eleven other Indian scholars from various disciplines. This review is an eye-opener. It tells us about our scholars', top political leaders' and bureaucrats' world view, their orientation towards EC, and their reading of the events and perceptions about the future. Readers can themselves check the validity of these writers' assumptions and conclusions and their perceptions against the current realities.

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Working Papers | 1991

Development of Food-Processing Industries

Desai B M and Nambudiri C N S

The paper has analysed development and financial, with special reference to working capital management, performance of the selected food-processing industries. It prioritizes these industries for their development based on these performance criteria. It also discusses strategy for accelerated development of these industries. Food-processing industries selected for the study are foodgrains milling, edible oilseeds processing, sugarcane processing, and milk processing. The paper also discusses the rationale for selection of these industries.

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Working Papers | 1991

Option Trading: A Primer and a Proposal

Gupta Ramesh

The option industry has witnessed explosive growth since 1973 when the first organized option exchange opened in Chicago. Moreover, this growth is continuing into the 1990s as entirely new types of options are created and as more of the traditional options on securities are listed and traded. Options on commodities, options on financial indices and options on future contracts are all exciting new products. Understanding these new products well enough to sell them has been straining the capacity of the world security industry. At present, instruments prevalent in India are meant primarily to raise resources from public for corporate sector. We hardly have any mechanism or instruments which would help the investors in managing the risk commensurate with their preferences. It is high time that option trading is launched in Indian stock exchanges. This paper provides a primer on option trading and a preliminary proposal for its implementation in India. For successful launching of option trading in India we would require the following: 1 The standardization of the terms of option contracts. 2 The careful selection of underlying security. 3 The appointment of a number of market makers with adequate financial resources. 4 The creation of an Option Clearing House as the single guarantor of every exchange traded option. 5 The creation of an active secondary market. 6 The creation of a central market place with its attendant regulatory, surveillance and price dissemination capabilities. 7 The creation of paperless trading and book-entry transfer system.

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Working Papers | 1991

Mastershares: Market Prices Divorced From Fundamentals

Samir K. Barua and Jayanth R. Varma

The shares of a closed-end Mutual Fund may be regarded as derived securities because their value depends entirely on the prices of securities that comprise the fund portfolio. Therefore, the Net Asset Value (NAV) of these shares, after adjustments for winding up costs, can be regarded as their fundamental value. In an efficient market, the prices of these shares would move in line with the changes in their NAV. This paper examines the relationship between the price and the NAV of Mastershares, the first closed-end fund in India. The investigations revealed that there is excessive volatility in prices, not justified by the fluctuations in the NAV. The price also show a mean reverting behaviour. These observations are in line with recent works on irrationality in pricing of securities and emphasize the doubts raised about efficacy of standard test for market efficiency.

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Working Papers | 1991

Biodiversity and Poverty Vis-à-vis Biotechnology and Prosperity

Anil K. Gupta

The debate on intellectual property rights of third world farmers, pastoralists and artisans has almost always been guided by the fear that the industry in the developing countries (particularly drug industry) would be wiped out if patent rights demanded by the western companies were granted. This position, I contend, stems from inability of the elite scientists and policy planners in these countries to recognise the strength of the indigenous knowledge systems. It is assumed that there is no knowledge reserve in these developing countries which can provide a bargaining strength to these countries. I argue that this is neither a very sensible position nor very useful one while negotiating on this subject. There is a tremendous richness in the knowledge systems of the developing society much of which is in great demand. Unfortunately we have not realised its importance. The results is our excessive dependence on imported technologies and lack of development of indigenous capacities. I also share the dilemma of a third world researcher who by documenting such richness of local knowledge tries to make the farmers' wisdom a common property. Whether this tactical effort would make third world planners shift their stand, agree to sign the convention, patent all the land races, file cases for royalty from companies using any of these plants and refuse the concept of biodiversity as a common heritage remains to be seen. DNA finger printing as a biotechnological tool can be a means of establishing the relationship between patented land races and any new plant variety. The paper also argues that biodiveristy is rich in the regions of high environmental risks such as drought, floods, hailstorm etc. Without protecting the knowledge resources of the people in these regions, extraction of their knowledge poses serious ethical and professional dilemma.

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Working Papers | 1991

Gantt Chart Colouring

V. Venkata Rao and Prasad C Syam

This paper presents three rules for colouring of a Grant Chart that displays the machine and job schedules of a job shop. These rules have been used on the job schedules of a real job shop and the performance of the proposed rules has been measured with respect to four different data sets of the above job shop. Of the three rules the rule based on the jobs using the critical machines performed most satisfactorily according to the measure of performance used. This measure of performance is based on the principle of proper colouring according to which operations of the same job should receive the same colour, while neighbouring operations of a machine should receive different colours. The paper also proposed the concept of degree of neighbourliness which may form the basis for new heuristics for colouring.

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Working Papers | 1991

Market Valuation Model Under Differential Taxes, Inflation, Recurring Investments and Flotation Costs

Ragunathan V and Jayanth R. Varma

The extent literature on valuation identifies several important variables affecting the value of a firm. These include, corporate and personal taxes, reinvestments, leverage, dividend policy, and inflation. But, most of the papers have focussed only on a small number of these variables at a time and constructed comparatively simple valuation models designed to answer relatively limited questions in valuation theory. However, the fact remains that the above variables interact in quite complex ways, and it is necessary to have a comprehensive valuation model which captures most of the complexities and subtleties of real world corporate finance. This paper is an attempt at developing such a model. The model is capable of supporting both the Gordon and MM type assumptions about the investment policy of the firm. It allows for personal taxes with differential tax rates for dividends, interest and capital gains. The model also takes into account flotation costs on debt and equity. Further, unlike other models which define capital gains as the increase in the book value which in turn equals retained earnings, this model interprets capital gains as the increase in the market value of the share. Finally, the model is modified to take into account Lintner's concern about inflation eroding the real value of the firm's assets, particularly, net monetary working capital. The paper also numerically depicts the impact of manifold taxes on valuation and the complex interactions of different variables in influencing the firm value.

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