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on Business Economics |
| By: | Marco Cornia; Kristopher S. Gerardi, Adam Hale Shapiro; Adam Hale Shapiro (Bureau of Economic Analysis) |
| Abstract: | We analyze price dispersion in the airline industry in order to determine the e®ects of the business cycle on markup variations. We ¯nd that the cycle can a®ect the degree to which airlines can price discriminate between di®erent consumer types, ultimately a®ecting the degree of price dispersion. Performing a ¯xed-e®ects panel analysis on 17 years of data covering two business cycles, we ¯nd that price dispersion is highly procyclical. Estimates show that a rise in the output gap of one percentage point increases the interquartile range by 1.6 percent. These results suggest that markups move procyclically in the airline industry, such that during booms in the cycle, the ¯rm can signi¯cantly raise the markup charged to those with high willingness to pay. Our analysis suggests that this impact on the ¯rm's ability to price discriminate imposes extra pro¯t risk to the ¯rm over and above cost variations. |
| JEL: | E60 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:bea:wpaper:0056&r=bec |
| By: | Georges Dionne |
| Abstract: | The book proposes an original contribution to the economics and finance literature by developing the foundations of corporate finance. It also covers in detail various corporate governance issues faced by organizations. The common treatment of corporate finance and corporate governance started with the contribution of Williamson (Journal of Finance, 1988), who argued that corporate finance and corporate governance must be treated simultaneously because they are complementary. This book fills this gap in the literature. |
| Keywords: | Corporate finance, corporate governance, ownership and control, managerial incentive, outsider incentie, stakeholder society |
| JEL: | D80 G14 G33 G34 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1120&r=bec |
| By: | Jie (Jack) He; Jun 'QJ' Qian; Philip E. Strahan |
| Abstract: | We examine whether rating agencies (Moody’s, S&P, and Fitch) reward large issuers of mortgage-backed securities, who bring substantial business, by granting them unduly favorable ratings. The initial yield on both AAA-rated and non-AAA rated tranches sold by large issuers is higher than that on similar tranches sold by small issuers during the market boom years of 2004-2006. Moreover, the prices of MBS sold by large issuers drop more than those sold by small issuers, and the differences are concentrated among tranches issued during 2004-2006. We conclude that large issuers receive more favorable ratings and that the market prices the risk of inflated ratings, especially during booming periods. |
| JEL: | G2 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17238&r=bec |
| By: | Zheng Liu; Pengfei Wang; Tao Zha |
| Abstract: | We argue that positive comovements between land prices and business investment are a driving force behind the broad impact of land-price dynamics on the macroeconomy. We develop an economic mechanism that captures the comovements by incorporating two key features into a DSGE model: we introduce land as a collateral asset in firms' credit constraints, and we identify a shock that drives most of the observed fluctuations in land prices. Our estimates imply that these two features combine to generate an empirically important mechanism that amplifies and propagates macroeconomic fluctuations through the joint dynamics of land prices and business investment. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2011-11&r=bec |
| By: | Ramon Marimon; Juan Pablo Nicolini; Pedro Teles |
| Abstract: | We study the interplay between competition and trust as efficiency enhancing mechanisms in the private provision of money. With commitment, trust is automatically achieved and competition ensures efficiency. Without commitment, competition plays no role. Trust does play a role but requires a bound on efficiency. Stationary inflation must be non-negative and, therefore, the Friedman rule cannot be achieved.<br>The quality of money can only be observed after its purchasing capacity is realized. In that sense money is an experience good. |
| JEL: | E40 E50 E58 E60 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w201118&r=bec |
| By: | Jaehyung Choi |
| Abstract: | We introduce the concept of spontaneous symmetry breaking to arbitrage modeling. In the model, the arbitrage strategy is considered as being in the symmetry breaking phase and the phase transition between arbitrage mode and no-arbitrage mode is triggered by a control parameter. We estimate the control parameter for momentum strategy with real historical data. The momentum strategy aided by symmetry breaking shows stronger performance and has better risk measure than the naive momentum strategy in U.S. and South Korea markets. |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1107.5122&r=bec |
| By: | Beck, T.H.L.; De Jonghe, O.G.; Schepens, G. (Tilburg University, Center for Economic Research) |
| Abstract: | This paper documents a large cross-country variation in the relationship between bank competition and stability and explores market, regulatory and institutional features that can explain this heterogeneity. Combining insights from the competition-stability and regulation-stability literatures, we develop a unified framework to assess how regulation, supervision and other institutional factors may make it more likely that the data favor the charter-value paradigm or the risk-shifting paradigm. We show that an increase in competition will have a larger impact on banks’ risk taking incentives in countries with stricter activity restrictions, more homogenous market structures, more generous deposit insurance and more effective systems of credit information sharing. |
| Keywords: | Competition;Stability;Banking;Herding;Deposit Insurance;Information Sharing;Risk Shifting. |
| JEL: | G21 G28 L51 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2011080&r=bec |
| By: | Alicia H. Munnell; Jean-Pierre Aubry; Josh Hurwitz; Laura Quinby |
| Abstract: | State and local pensions have been headline news since the 2008 financial collapse reduced the value of their assets, leaving a substantial unfunded liability. The deterioration in the funded status of these plans raised pension costs at the same time that the ensuing recession wreaked havoc with state and local budgets. Legislatures across the country have responded by reducing pension benefits – primarily for new employees – and increasing employer and employee contributions. As part of that process, governors in several states have launched initiatives to curb collective bargaining in the public sector. One possible implication is that governors view unions as responsible for pushing up state and local pension benefits. This brief identifies the impact of public sector unions and other factors on benefit levels, wages, and employment. The brief is organized as follows. The first section summarizes what is known about pensions, wages, workers, and unionization in the public sector. The second section reports on a series of empirical exercises to determine the role of unions in explaining public pensions and wages. The results show that unions have no measurable effect on plan generosity or rate of growth in pension benefits, but do have a quantifiable impact on wage levels and perhaps number of workers. The third section presents a possible reason for this outcome. Public sector pensions are legislated, not bargained, so the articulateness and acumen of the lobbyists may be more important than the number of union members; in contrast, wages are bargained and union strength could have a more direct effect. The final section concludes that this area is ripe for further research because the results appear to contradict the general perception of commentators and politicians. |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ibslp19&r=bec |
| By: | Ajello, Andrea |
| Abstract: | How important are financial friction shocks in business cycles fluctuations? To answer this question, I use micro data to quantify key features of US financial markets. I then construct a dynamic equilibrium model that is consistent with these features and fit the model to business cycle data using Bayesian methods. In my micro data analysis, I establish facts that may be of independent interest. For example, I find that a substantial 33% of firm investment is funded using financial markets. The dynamic model introduces price and wage rigidities and a financial intermediation shock into Kiyotaki and Moore (2008). According to the estimated model, the financial intermediation shock explains around 40% of GDP and 55% of investment volatility. The estimation assigns such a large role to the financial shock for two reasons: (i) the shock is closely related to the interest rate spread, and this spread is strongly countercyclical and (ii) according to the model, the response in consumption, investment, employment and asset prices to a financial shock resembles the behavior of these variables over the business cycle. |
| Keywords: | DSGE model; Bayesian estimation; Financial frictions; Financial Shocks; Great Recession |
| JEL: | D53 C68 B22 E44 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:32447&r=bec |
| By: | Maxime Merli (LaRGE Research Center, Université de Strasbourg); Tristan Roger (EUROFIDAI-CERAG, Université de Grenoble) |
| Abstract: | This article intends to provide answers concerning what drives individual investor herding behavior. Our empirical study uses transaction records of 87,373 French individual investors for the period 1999-2006. In a ?first part, we show - using both the traditional Lakonishok et al. (1992) and the more recent Frey et al. (2007) measures - that herding is prevalent and strong among French individual investors. We then show that herding is persistent: stocks on which investors concentrate their trades at time t are more likely to be the stocks on which investors herd at time t+1. In a second part, we focus on the motivations of individual herding behavior. We introduce an investor specific measure of herding which allows us to track the persistence in herding of individual investors. Our results highlight that this behavior is influenced by investor-specifi?c characteristics. We also reveal the fact that individual herding behavior is strongly and negatively linked with investors own past performance. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:lar:wpaper:2011-03&r=bec |
| By: | Bert WILLEMS; Joris MORBEE |
| Abstract: | In this paper we show that free entry decisions may be socially inefficient, even in a perfectly competitive homogeneous goods market with non-lumpy investments. In our model, inefficient entry decisions are the result of risk-aversion of incumbent producers and consumers, combined with incomplete financial markets which limit risk-sharing between market actors. Investments in productive assets affect the distribution of equilibrium prices and quantities, and create risk spillovers. From a societal perspective, entrants underinvest in technologies that would reduce systemic sector risk, and may overinvest in risk-increasing technologies. The inefficiency is shown to disappear when a complete financial market of tradable risk-sharing instruments is available, although the introduction of any individual tradable instrument may actually decrease efficiency. We therefore believe that sectors without well-developed financial markets will benefit from sector-specific regulation of investment decisions. |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces11.17&r=bec |
| By: | Lin, Xiaoji (OH State University); Zhang, Lu (OH State University) |
| Abstract: | We question a deep-ingrained doctrine in asset pricing: If an empirical characteristic-return relation is consistent with investor "rationality," the relation must be "explained" by a risk factor model. The investment approach changes the big picture of asset pricing. Factors formed on characteristics are not necessarily risk factors: Characteristics-based factor models are linear approximations of firm-level investment returns. That characteristics dominate covariances in horse races does not necessarily mean mispricing: Measurement errors in covariances are more likely to blame. Most important, the investment approach completes the consumption approach in general equilibrium, especially for cross-sectional asset pricing. |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2011-15&r=bec |
| By: | Balsmeier, Benjamin; Buchwald, Achim; Peters, Heiko |
| Abstract: | We investigate whether outside board memberships of CEOs signal expertise or entrenchment. The analysis is based on panel data of the largest German companies covering the period from 1996 to 2008. Supporting the entrenchment hypothesis, our analysis reveals that firms having a CEO with one or more outside mandates suffer from significantly weaker firm performance compared with firms having a CEO without any outside board mandates. Moreover, disciplinary CEO turnovers become less likely and turnover-performance sensitivity declines with rising board memberships of the top manager. We conclude that outside mandates enhance managerial power at the expense of the home firm's shareholders. -- |
| Keywords: | Corporate Governance,Entrenchment,Outside Board Memberships,CEO turnover |
| JEL: | J24 J63 L25 M50 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:26&r=bec |
| By: | Gordon M. Phillips; Giorgo Sertsios |
| Abstract: | We analyze the interaction of firm product quality and pricing decisions with financial distress and bankruptcy in the airline industry. We consider an airline's choices of quality and price as dynamic decisions that trade off current cash flows for future revenue. We examine how airline mishandled baggage, on-time performance and pricing are related to financial distress and bankruptcy, controlling for the endogeneity of financial distress and bankruptcy. We find that an airline's quality decisions are differentially affected by financial distress and bankruptcy. Product quality decreases when airlines are in financial distress, consistent with financial distress reducing a firm's incentive to invest in quality. In contrast, in bankruptcy product quality increases relative to financial distress. In addition, we find that firms price more aggressively when in financial distress consistent with firms trying to increase short-term market share and revenues. |
| JEL: | G33 L1 L21 L22 L93 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17233&r=bec |
| By: | Robinson, David T. (Duke University); Sensoy, Berk A. (OH State University) |
| Abstract: | Using a new database of the compensation terms, ownership structures (capital commitments), and quarterly cash flows for a large sample of buyout and venture capital private equity funds from 1984-2010, we investigate the determinants of manager compensation and ownership and how these contract terms relate to the funds' cash flow performance. Market conditions during fundraising are an important driver of compensation, as pay rises and shifts to fixed components during fundraising booms. We find no evidence that higher compensation or lower managerial ownership are associated with worse net-of-fee performance, in stark contrast to other asset management settings. Instead, compensation is largely unrelated to net cash flow performance. Our evidence is most consistent with an equilibrium in which compensation terms reflect agency concerns and the productivity of manager skills, and in which managers with higher compensation earn back their pay by delivering higher gross performance. |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2011-14&r=bec |
| By: | JINJI Naoto; ZHANG Xingyuan; HARUNA Shoji |
| Abstract: | In this paper, we investigate empirically how firms' choices of globalization mode differ according to their productivity and Tobin's q using firm-level data of Japanese firms. Our findings support predictions by Helpman, Melitz, and Yeaple (2004) and by Chen, Horstmann, and Markusen (2008). That is, we find that firms with higher productivity tend to choose more foreign direct investment (FDI) and less exporting. We also find that firms with higher Tobin's q tend to choose more FDI and less foreign outsourcing of production. The difference in productivity is relatively less important for the choice between FDI and foreign outsourcing, and the difference in Tobin's q is relatively less important for the choice between exporting and FDI. Because the indexes of globalization activities have a strong negatively skewed distribution, our results indicate that quantile regression would be appropriate to analyze the relationship between firm characteristics and choice of globalization mode. |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:11061&r=bec |
| By: | Nour, Samia (UNU-MERIT, Maastricht University, and Khartoum University) |
| Abstract: | This paper examines the industrial performance indicators and the relationships between skill indicators; between skill, upskilling, technology and input-output indicators in Sudan. Our findings are consistent with the stylized facts in the new growth literature, concerning the correlation between skill indicators: education, experience and wages and also concerning the positive complementary relationships between technology, skill and upskilling. Different from the Sudanese literature, a novel element in our analysis is that we use a new primary data from the firm survey (2010) and we provide a new contribution and fill the gap in the Sudanese literature by examining the industrial performance indicators defined by three different sets of economic and productivity indicators, activity indicators and profitability indicators in Sudan. One advantage and interesting element in our analysis in this paper is that we confirm three hypotheses on the relationships between skill indicators; between skill, upskilling, technology and input-output indicators and industrial performance indicators using new primary data from the firm survey (2010) in Sudan. We verify our first hypothesis that irrespective of the observed differences across the industrial firms, the low skill levels - due to high share of unskilled workers - lead to skills mismatch and most probably contribute to decline of labour productivity and industrial performance indicators. We confirm our second hypothesis that an increase in skill levels and firm size lead to improved relationships between actual and required education and experience; between actual education, experience and wages; and between skill, upskilling and technology (ICT) and also improved industrial performance indicators. We also support our third hypothesis concerning the inconclusive relationships between new technology (the use of ICT) and input-output indicators at the micro/firm level. Finally, we provide a new contribution to the Sudanese literature, since we explain that the performance of the industrial firms is most probably immensely undermined by the shortage of skilled workers and also by the lack of entrepreneur perspective. We recommend further efforts to be made to improve adequate availability of skilled workers and commitment to entrepreneur perspective for improvement of labour productivity, industrial performance and therefore, economic growth and development in Sudan. |
| Keywords: | Industrial performance, skill, technology, input-output, firm size, industry, Sudan |
| JEL: | J24 L10 L20 L25 L60 O12 O15 O30 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2011030&r=bec |
| By: | Özlem Bedre-Defolie (ESMT European School of Management and Technology) |
| Abstract: | This paper analyzes the strategic use of bilateral supply contracts in sequential negotiations between one manufacturer and two differentiated retailers. Allowing for general contracts and retail bargaining power, I show that the first contracting parties have incentives to manipulate their contract to shift rent from the second contracting retailer and these incentives distort the industry profit away from the fully integrated monopoly outcome. To avoid such distortion, the first contracting parties may prefer to sign a contract which has no commitment power and can be renegotiated from scratch should the manufacturer fail in its subsequent negotiation with the second retailer. Renegotiation from scratch induces the first contracting parties to implement the monopoly prices and might enable them to capture the maximized industry profit. A slotting fee, an up-front fee paid by the manufacturer to the first retailer, and a menu of tariff-quantity pairs are sufficient contracts to implement the monopoly outcome. These results do not depend on the type of retail competition, the level of differentiation between the retailers, the order of sequential negotiations, the level of asymmetry between the retailers in terms of their bargaining power vis-à-vis the manufacturer or their profitability in exclusive dealing. |
| Keywords: | vertical contracts, rent shifting, renegotiation, buyer power |
| Date: | 2011–07–25 |
| URL: | http://d.repec.org/n?u=RePEc:esm:wpaper:esmt-11-08&r=bec |
| By: | Delfgaauw, Josse; Dur, Robert; Propper, Carol; Smith, Sarah L. |
| Abstract: | Recent studies have demonstrated the importance of good management for firm performance. Here, we focus on management in not-for-profits (NFPs). We present a model predicting that management quality will be lower in NFPs compared to for-profits (FPs), but that outputs may not be worse if managers are altruistic. Using a tried and tested survey of management practices, we find that NFPs score lower than FPs but also that, while the relationship between management scores and outputs holds for FPs, the same is not true for NFPs. One implication is that management practices that work for FPs may be less effective in driving performance in NFPs. |
| Keywords: | impure altruism; management; not-for-profits |
| JEL: | H8 J24 J45 L33 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8498&r=bec |
| By: | Theo Driessen (Department of Applied Mathematics [Twente] - University of Twente); Dongshuang Hou (Department of Applied Mathematics [Twente] - University of Twente); Aymeric Lardon (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure de Lyon) |
| Abstract: | In this article we consider Stackelberg oligopoly TU-games in gamma-characteristic function form (Chander and Tulkens 1997) in which any deviating coalition produces an output at a first period as a leader and outsiders simultaneously and independently play a quantity at a second period as followers. We assume that the inverse demand function is linear and that firms operate at constant but possibly distinct marginal costs. Generally speaking, for any TU-game we show that the 1-concavity property of its dual game is a necessary and sufficient condition under which the core of the initial game is non-empty and coincides with the set of imputations. The dual game of a Stackelberg oligopoly TU-game is of great interest since it describes the marginal contribution of followers to join the grand coalition by turning leaders. The aim is to provide a necessary and sufficient condition which ensures that the dual game of a Stackelberg oligopoly TU-game satisfies the 1-concavity property. Moreover, we prove that this condition depends on the heterogeneity of firms' marginal costs, i.e., the dual game is 1-concave if and only if firms' marginal costs are not too heterogeneous. This last result extends Marini and Currarini's core non-emptiness result (2003) for oligopoly situations. |
| Keywords: | Stackelberg oligopoly TU-game; Dual game; 1-concavity |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00610840&r=bec |
| By: | Benjamin Bridgman (Bureau of Economic Analysis) |
| Abstract: | The world trade collapsed in the most recent recession. Some analysts have suggested the increasing offshoring of the supply chain, or vertical specialization (VS) trade, can explain the apparent increase in volatility of trade over the business cycle. This paper develops a model of VS trade to examine its impact on the volatility of trade. The model features increased trade volatility as VS trade increases when goods production is more volatile than services production. While the simulated model generates the observed increase in relative volatility of trade to GDP from 1967 to 2002, most of the increase is due to GDP’s shift to less volatile services production. VS trade only accounts for a third of the increase. Counterintuitively, VS trade can moderate trade volatility. |
| JEL: | E60 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:bea:wpaper:0059&r=bec |
| By: | Schlippenbach, Vanessa von; Wey, Christian |
| Abstract: | We analyze how consumer preferences for one-stop shopping affect the bargaining relationship between a retailer and its suppliers. One-stop shopping preferences create demand complementarities among otherwise independent products which lead to two opposing effects on upstream merger incentives: first a standard double mark-up problem and second a bargaining effect. The former creates merger incentives while the later induce suppliers to bargain separately. When buyer power becomes large enough, then suppliers stay separated which raises final good prices. Such an outcome is more likely when one-stop shopping is pronounced. -- |
| Keywords: | One-stop shopping,buyer power,supplier merger |
| JEL: | L22 L42 Q13 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:27&r=bec |
| By: | Carol E. Moylan (Bureau of Economic Analysis) |
| Abstract: | Paper presented at the Third International Seminar on Early Warning and Business Cycle Indicators |
| JEL: | E60 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:bea:papers:0099&r=bec |
| By: | Stephanie Barrientos |
| Abstract: | Third party labour contractors are increasingly prevalent in Global Production Networks (GPNs), and are a potential channel for ‘new forms of slavery’. Our review of case study evidence from South African and UK horticulture suggests unfree labour often emerges off-site through labour intermediaries. We examine analytical approaches to labour in GPNs and value chains. We argue that labour contracting is a logical extension of global outsourcing, helping to offset risk and enhance flexibility. A ‘cascade system’ allows unscrupulous intermediaries to exploit and coerce vulnerable workers. We examine strategies of civil society alliances, and regulatory reform, and argue for extending liability across global boundaries. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:15311&r=bec |
| By: | Matthew J Osborne; Nathan H. Miller (Bureau of Economic Analysis) |
| Abstract: | We develop an estimator for models of competition among spatially differentiated firms. In contrast to existing methods (e.g., Houde (2009)), the estimator has flexible data requirements and is implementable with data that are observed at any level of aggregation. Further, the estimator is the first to be applicable to models in which firms price discriminate among consumers based on location. We apply the estimator to the portland cement industry in the U.S. Southwest over 1983-2003. We estimate transportation costs to be $0.30 per tonne-mile and show that, given the topology of the U.S. Southwest, these transportation costs permit more geographically isolated plants to discriminate among consumers. We conduct a counterfactual experiment and determine that disallowing this spatial price discrimination would increase consumer surplus by $12 million annually, relative to a volume of commerce of $1.3 billion. Heretofore it has not been possible examine the surplus implications of spatial price discrimination in specific, real-world settings; these implications have been known to be ambiguous theoretically since at least Gronberg and Meyer (1982) and Katz (1984). Additionally, our methodology can be used to construct transportation margins, which are an important component of input-output tables. |
| JEL: | E60 C51 L11 L40 L61 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:bea:wpaper:0072&r=bec |
| By: | A. Blasco; P. Pin; F. Sobbrio |
| Abstract: | This paper analyzes a two-sided market for news where advertisers may pay a media outlet to conceal negative information about the quality of their own product (paying positive to avoid negative) and/or to disclose negative information about the quality of their competitors' products (paying positive to go negative). We show that whether advertisers have negative consequences on the accuracy of news reports or not ultimately depends on the extent of correlation among advertisers' products. Specifically, the lower the correlation among the qualities of the advertisers' products, the (weakly) higher the accuracy of the media outlet' reports. Moreover, when advertisers' products are correlated, a higher degree of competition in the market of the advertisers' products may decrease the accuracy of the media outlet's reports. |
| JEL: | L82 D82 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp772&r=bec |
| By: | Bloom, Nicholas; Schweiger, Helena; Van Reenen, John |
| Abstract: | We have conducted the first survey on management practices in transition countries. We found that Central Asian transition countries, such as Uzbekistan and Kazakhstan, have on average very poor management practices. Their average scores are below emerging countries such as Brazil, China and India. In contrast, the central European transition countries such as Poland and Lithuania operate with management practices that are only moderately worse than those of western European countries such as Germany. Since we find these practices are strongly linked to firm performance, this suggests poor management practices may be impeding the development of Central Asian transition countries. We find that competition, multinational ownership, private ownership and human capital are all strongly correlated with better management. This implies that the continued opening of markets to domestic and foreign competition, privatisation of state-owned firms and increased levels of workforce education should promote better management, and ultimately faster economic growth. |
| Keywords: | firm performance; management; transition economies |
| JEL: | L2 M2 P21 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8493&r=bec |
| By: | Raymond Mattaloni Jr. (Bureau of Economic Analysis) |
| Abstract: | This paper examines whether the productivity of U.S. business es- tablishments is related to the extent to which their parent rms are globally engaged{from being an exporter to being a edgling multi- national that has taken a few cautious forays into foreign markets to being a seasoned multinational with extensive foreign operations. |
| JEL: | E60 F14 D24 F23 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:bea:wpaper:0070&r=bec |
| By: | Ron Alquist; Lutz Kilian; Robert J. Vigfusson |
| Abstract: | We address some of the key questions that arise in forecasting the price of crude oil. What do applied forecasters need to know about the choice of sample period and about the tradeoffs between alternative oil price series and model specifications? Are real or nominal oil prices predictable based on macroeconomic aggregates? Does this predictability translate into gains in out-of-sample forecast accuracy compared with conventional no-change forecasts? How useful are oil futures markets in forecasting the price of oil? How useful are survey forecasts? How does one evaluate the sensitivity of a baseline oil price forecast to alternative assumptions about future demand and supply conditions? How does one quantify risks associated with oil price forecasts? Can joint forecasts of the price of oil and of U.S. real GDP growth be improved upon by allowing for asymmetries? |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1022&r=bec |
| By: | Sapi, Geza; Suleymanova, Irina |
| Abstract: | We develop a duopoly model with advertising supported platforms and analyze incentives of a superior firm to license its advanced technologies to an inferior rival. We highlight the role of two technologies characteristic for media platforms: The technology to produce content and to place advertisements. Licensing incentives are driven solely by indirect network effects arising fromthe aversion of users to advertising. We establish a relationship between licensing incentives and the nature of technology, the decision variable on the advertiser side, and the structure of platforms' revenues. Only the technology to place advertisements is licensed. If users are charged for access, licensing incentives vanish. Licensing increases the advertising intensity, benefits advertisers and harms users. Our model provides a rationale for technology-based cooperations between competing platforms, such as the planned Yahoo-Google advertising agreement in 2008. -- |
| Keywords: | Technology Licensing,Two-Sided Market,Advertising |
| JEL: | L13 L24 L86 M37 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:23&r=bec |
| By: | Ulrike Malmendier (UC Berkeley, and NBER); Enrico Moretti (UC Berkeley, and NBER); Florian Peters (Duisenberg school of finance, and University of Amsterdam) |
| Abstract: | Do shareholders of acquiring companies profit from acquisitions, or do acquiring CEOs overbid and destroy shareholder value? Answering this question is difficult since the hypothetical counterfactual is hard to determine. We exploit merger contests to address the identification issue. In those cases where, ex ante, at least two bidders had a significant chance at winning the contest, the post-merger performance of the loser allows calculating the counterfactual performance of the winner without the merger. In a novel data set of merger contests since 1985, we find that the returns of bidders are closely aligned before the merger contest, but diverge afterwards. In the sample where the loser had a significant chance to win, winners underperform losers by 48 percent over the following three years. Our results also imply that announcement returns fail to provide an informative estimate of the causal effect of mergers in our sample. Existing measures of long-run abnormal returns tend to underestimate the negative return implications. |
| Keywords: | Mergers; Acquisitions; Misvaluation; Counterfactual |
| JEL: | G34 G14 |
| Date: | 2011–07–25 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20110101&r=bec |
| By: | Dongshuang Hou (Department of Applied Mathematics [Twente] - University of Twente); Theo Driessen (Department of Applied Mathematics [Twente] - University of Twente); Aymeric Lardon (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure de Lyon) |
| Abstract: | The Bertrand Oligopoly situation with Shubik's demand functions is modelled as a cooperative TU game. For that purpose two optimization problems are solved to arrive at the description of the worth of any coalition in the so-called Bertrand Oligopoly Game. Under certain circumstances, this Bertrand oligopoly game has clear affinities with the well-known notion in statistics called variance with respect to the distinct marginal costs. This Bertrand Oligopoly Game is shown to be totally balanced, but fails to be convex unless all the firms have the same marginal costs. Under the complementary circumstances, the Bertrand Oligopoly Game is shown to be convex and in addition, its Shapley value is fully determined on the basis of linearity applied to an appealing decomposition of the Bertrand Oligopoly Game into the difference between two convex games, besides two nonessential games. One of these two essential games concerns the square of one non- essential game. |
| Keywords: | Bertrand Oligopoly situation, Bertrand Oligopoly Game, Convexity, Shapley Value, Total Balancedness. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00610838&r=bec |