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on Business Economics |
| By: | Argandoña, Antonio (IESE Business School) |
| Abstract: | Can Corporate Social Responsibility (CSR) provide new arguments to "humanize" the theory of the firm and the management profession? Several arguments (the legal, ethical, social and business cases) have contributed to the discussion of why companies should be socially responsible. In this paper I discuss each of these arguments from the point of view of the manager who asks himself why he should be socially responsible. And I add a set of new reasons that make up the "management case" for CSR. In exploring why CSR is good management, this paper explains why ethics and CSR make the firm more human and humanize the task of the manager. |
| Keywords: | Corporate social responsibility; Ethics; Management; |
| Date: | 2011–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0930&r=bec |
| By: | Humphreys, Brad (University of Alberta, Department of Economics); Paul, Rodney (Syracure University); Weinbach, Andrew (Coastal Carolina University) |
| Abstract: | Previous research on CEO turnover indicates that a number of factors, including age, firm performance, and expected firm performance affect CEO turnover. Measurement of expected performance in these studies is typically based on investment analysts’ forecasts of earnings; these expectations potentially suffer from a number of problems, including the tendency for CEOs to “manage” analysts’ expectations. We examine the relationship between performance expectations and CEO turnover using data from NCAA Division I-A college football using a market-determined measure of expected performance, winning percentage against point spreads; this expected performance measure does not suffer from many of the problems that plague analysts’ earnings forecasts. We find that performance expectations, actual expectations, and tenure affect CEO turnover in NCAA Division I-A college football, based on performance data from 102 Division I-A football programs over the period 1980-2004. |
| Keywords: | CEO turnover; performance expectations; betting markets |
| JEL: | D84 J44 J63 |
| Date: | 2011–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2011_014&r=bec |
| By: | Marc Bassoni (IRSIC - Institut de recherche en Sciences de l'information et de la communication (Mediasic EA 4262) - Université de la Méditerranée - Aix-Marseille II : EA4262); Félix Weygand (IRSIC - Institut de recherche en Sciences de l'information et de la communication (Mediasic EA 4262) - Université de la Méditerranée - Aix-Marseille II : EA4262, EUROMED MANAGEMENT - Euromed Management - Euromed Management) |
| Abstract: | Depuis quelques années, les réseaux sociaux et les usages qu'ils nourrissent ont pris une place significative au sein de la galaxie Internet. Parmi ces réseaux, ceux qui pratiquent la gratuité pour les utilisateurs finals n'ont pas encore stabilisé leur modèle économique et ce, malgré les audiences dont ils bénéficient (Facebook, par exemple). Pour ces réseaux, le défi est désormais de convertir leur succès d'estime en espèces sonnantes et trébuchantes ; en d'autres termes, de mettre leurs capacités de ciblage et de filtrage des internautes, et des communautés que ces derniers forment, au service d'annonceurs solvables. Comme le montre l'exemple de aka'aki, réseau social géolocalisé sur l'Internet mobile, la voie est étroite et le succès non encore garanti. La défiance croissante des internautes à l'endroit de la " marchandisation " des données privées constitue la limite principale du " business model " en gestation. |
| Keywords: | Multi-sided market ; Network externalities ; Social networks ; Geo-localization |
| Date: | 2011–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00625988&r=bec |
| By: | Asli M. Arikan; René M. Stulz |
| Abstract: | Lifecycle theories of mergers and diversification predict that firms make acquisitions and diversify when their internal growth opportunities become exhausted. Free cash flow theories make similar predictions. In contrast to these theories, we find that the acquisition rate of firms (defined as the number of acquisitions in an IPO cohort-year divided by the number of firms in that cohort-year) follows a u-shape through their lifecycle as public firms, with young and mature firms being equally acquisitive but more so than middle-aged firms. Firms that go public during the merger/IPO wave of the 1990s are significantly more acquisitive early in their public life than firms that go public at other times. Young public firms have a lower acquisition rate of public firms than mature firms, but the opposite is true for acquisitions of private firms and subsidiaries. Strikingly, firms diversify early in their life and there is a 41% chance that a firm’s first acquisition is a diversifying acquisition. The stock market reacts more favorably to acquisitions by young firms than to acquisitions by mature firms except for acquisitions of public firms paid for with stock. There is no evidence that the market reacts more adversely to diversifying acquisitions by young firms than to other acquisitions. |
| JEL: | G3 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17463&r=bec |
| By: | Cécile Carpentier; Jean-Marc Suret |
| Abstract: | <P>Dans cet article, les auteurs montrent pourquoi et comment de très nombreux gouvernements ont mis en place des incitatifs fiscaux dédiés aux anges investisseurs, qui financent des entreprises émergentes avec lesquelles ils n’ont pas de lien de dépendance. Les auteurs étudient également les conditions qui devraient être remplies pour que de tels programmes soient efficaces. Ils utilisent ces conditions comme une grille d’analyse de programmes types américains, européens, asiatiques et canadiens. Ils tirent enfin les leçons de cet exercice. Ces enseignements pourront être utiles au Canada, où de tels programmes existent déjà dans plusieurs provinces et sont à l’étude dans plusieurs autres. Le document est complété par des annexes qui décrivent sommairement la cinquantaine de programmes mis en place au cours des années récentes. |
| Keywords: | , Anges investisseurs, aide au financement, incitatifs fiscaux |
| Date: | 2011–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2011s-58&r=bec |
| By: | Alessio Bonetti; Silvia Bortot; Mario Fedrizzi; Silvio Giove; Ricardo Alberto Marques Pereira; Andrea Molinari |
| Abstract: | We investigate the group processes involved in effort estimation in the context of Project Management. The groups considered are formed by “experts†(people with specific technical competence) and “non-experts†(people with less specific technical competence, usually experts in related fields), because the typically complementary bias of the two classes contribute to a more balanced estimate. In this paper we exploit further the synergies between experts and non-experts in an MCDM framework, aggregating the individual estimates by means of non-additive Choquet integration, and representing the complementary bias by the multiagent interaction structure underlying the capacity. We present some examples and computer simulations whose aggregation results outperform those of the classical weighted mean (additive case), showing lower MMRE (mean magnitude of the relative error between the central estimate and the actual value) and higher HitRate (at which the interval estimate contains the actual value). |
| Keywords: | Group decisions and multi-agent systems, multiple criteria analysis and criteria interaction, aggregation functions, Choquet integration, Project Management, effort estimation. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:trt:disawp:2011/12&r=bec |
| By: | Edith Ginglinger (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris Dauphine - Paris IX); William Megginson (Oklahoma University - Oklahoma University); Timothee Waxin (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris Dauphine - Paris IX) |
| Abstract: | French law mandates that employees of publicly listed companies can elect two types of directors to represent employees. Privatized companies must reserve board seats for directors elected by employees by right of employment, while employee-shareholders can elect a director whenever they hold at least 3% of outstanding shares. Using a comprehensive sample of firms in the Société des Bourses Françaises (SBF) 120 Index from 1998 to 2008, we examine the impact of employee-directors on corporate valuation, payout policy, and internal board organization and performance. We find that directors elected by employee shareholders increase firm valuation and profitability, but do not significantly impact corporate payout policy. Directors elected by employees by right significantly reduce payout ratios, but do not impact firm value or profitability. Employee representation on corporate boards thus appears to be at least value-neutral, and perhaps value-enhancing in the case of directors elected by employee shareholders. |
| Keywords: | Employee ownership ; Payout policy ; Privatization ; Corporate boards |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00626310&r=bec |
| By: | Ronny Nilsson; Gyorgy Gyomai |
| Abstract: | This paper reports on revision properties of different de-trending and smoothing methods (cycle estimation methods), including PAT with MCD smoothing, a double Hodrick-Prescott (HP) filter and the Christiano-Fitzgerald (CF) filter. The different cycle estimation methods are rated on their revision performance in a simulated real time experiment. Our goal is to find a robust method that gives early turning point signals and steady turning point signals. The revision performance of the methods has been evaluated according to bias, overall revision size and signal stability measures. In a second phase, we investigate if revision performance is improved using stabilizing forecasts or by changing the cycle estimation window from the baseline 6 and 96 months (i.e. filtering out high frequency noise with a cycle length shorter than 6 months and removing trend components with cycle length longer than 96 months) to 12 and 120 months. The results show that, for all tested time series, the PAT de-trending method is outperformed by both the HP or CF filter. In addition, the results indicate that the HP filter outperforms the CF filter in turning point signal stability but has a weaker performance in absolute numerical precision. Short horizon stabilizing forecasts tend to improve revision characteristics of both methods and the changed filter window also delivers more robust turning point estimates.<BR>Ce document présente l’impact des révisions dû à différentes méthodes de lissage et de correction de la tendance (méthodes d'estimation du cycle), comme la méthode PAT avec lissage en utilisant le mois de dominance cyclique (MCD), le double filtre de Hodrick-Prescott (HP) et le filtre Christiano-Fitzgerald (CF). Les différentes méthodes d'estimation du cycle sont évaluées sur leur performance de révision faite à partir d’une simulation en temps réel. Notre objectif est de trouver une méthode robuste qui donne des signaux de point de retournement tôt et stable á la fois. La performance de révisions de ces méthodes a été évaluée en fonction du biais, de la grandeur de la révision et de la stabilité du signal. Nous examinerons ensuite si la performance de la révision peut être améliorée en utilisant des prévisions de stabilisation ou en changeant la fenêtre d'estimation du cycle de base de 6 et 96 mois à une fenêtre de 12 et 120 mois. La fenêtre d’estimation de base correspond à un filtre pour éliminer le bruit (hautes fréquences) avec une longueur de cycle de moins de 6 mois et supprimer la tendance avec une longueur de cycle supérieure à 96 mois. Les résultats montrent que, pour toutes les séries testées, la méthode PAT est moins performante que les deux filtres HP ou CF. En outre, les résultats indiquent que le filtre HP surpasse le filtre CF du point de vue de la stabilité du signal du point de retournement mais sa performance est plus faible quant à la précision numérique absolue. Des prévisions à court terme ont la tendance à améliorer les caractéristiques des révisions des deux méthodes et la modification de la fenêtre de base offre aussi des estimations plus robustes des points de retournement. |
| Date: | 2011–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stdaaa:2011/4-en&r=bec |
| By: | Hess, Dieter; Immenkötter, Philipp |
| Abstract: | We study the effect of the business cycle on optimal capital structure choice and the benefit to leverage. We propose a regime switching model with a state-dependent cash flow process to capture macroeconomic risk in a firm's cash flow. Our model is parsimonious but still realistic and allows for a wide range of analysis. We find pro-cyclical optimal leverage ratios, benefits to leverage, and costs of operating at a non-optimal leverage. If macroeconomic risk decreases, i.e. earnings become more stable and growth rates less volatile, optimal leverage and its benefits increase due to lower default risk. The regime switching property of EBIT traces observed EBIT paths closely and is applicable to a wide range of corporate valuation models. Our model offers novel empirically testable implications, such as higher tax benefits after the change in macroeconomic risk since the late 1980s and common capital structure adjustments in recessions and around turning points. -- |
| Keywords: | capital structure,macroeconomic risk,regime switching,benefit to leverage |
| JEL: | E44 G12 G32 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cfrwps:1112&r=bec |
| By: | William M. Fonta; Hyacinth E. Ichoku; Emmanuel Nwosu |
| Abstract: | The study examined the usefulness and relevance of the contingent valuation method (CVM) in community-based (CB) project planning and implementation. To elicit willingness to pay (WTP) values for the restocking of Lake Bamendjim with Tilapia nilotica and Heterotis niloticus fish species, the study used pre-tested questionnaires interviewer-administered to 1,000 randomly selected households in the Bambalang Region of Cameroon.The datawere elicitedwith the conventional referendumdesign and analysed using a referendum model. Empirical findings indicated that about 85% of the sampled households were willing to pay about CFAF1,054 (US$2.1) for the restocking project. This amount was found to be significantly related to the starting price used in the referendum design, household income, the gender of the respondent, the age of the respondent, household poverty status, and previous participation of a household in a community development project.The findings prompted the following recommendations. Firstly, in order to reduce community burden due to cash constraints, it is advisable for the mean estimate obtained for the scheme to be split into four instalments over a year. Secondly, since the success of the scheme largely depends on the governing roles of the scheme, it is further advisable for the community to allowthemanagement of the scheme to be handled by the elderly community members. Finally, it will be important during the financing of the scheme, to levy wealthier household heads an amount sufficient to subsidize poorer household heads who cannot afford to pay the threshold price. |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:aer:rpaper:rp_210&r=bec |
| By: | Fanti, Luciano; Gori, Luca |
| Abstract: | The present study analyses the dynamics of a Cournot duopoly with managerial sales delegation and bounded rational players. We find that when firms’ owners hire a manager and delegate the output decisions to him, the unique Cournot-Nash equilibrium is more likely to be destabilised (through a flip bifurcation) than when firms maximise profits. Moreover, highly periodicity and deterministic chaos can also occur as the managers’ bonus increases. |
| Keywords: | Bifurcation; Chaos; Cournot; Duopoly; Managerial incentive contracts |
| JEL: | L13 D43 C62 |
| Date: | 2011–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33828&r=bec |
| By: | Paul E. Carrillo (Department of Economics/Institute for International Economic Policy, George Washington University); M. Shahe Emran (Department of Economics/Institute for International Economic Policy, George Washington University and IPD, Columbia University); Gabriela Aparicio (Department of Economics, George Washington University) |
| Abstract: | This paper takes advantage of a rich firm level data set from Ecuador to analyze the effects of a reform in 2007 that introduced imprisonment for tax evasion and made a firm’s CFO liable for tax-crimes. Our dataset contains actual tax-return and financial-statement information for the universe of corporations in Ecuador from 2003 to 2007. We study the effects of higher punishment both at the intensive and extensive margins. We combine a difference-in-difference-in-difference approach with the DiNardo, Fortin and Lemieux decomposition method. This allows us to estimate the heterogeneous effects of the reform across the distribution of firms. We find that, at the intensive margin the reform led to an average 10% increase in real corporate tax payments. However, positive effects are only found at the right tail of the tax distribution (above the 75th percentile). At the extensive margin, the probability of entry into the tax-net increased, but most of the firms that entered the tax net claimed zero taxes. |
| Keywords: | Tax evasion, corporate tax compliance, tax reform, developing country, punishment, Ecuador |
| JEL: | H26 H32 O12 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:gwi:wpaper:2011-02&r=bec |
| By: | Jakub Growiec; Fabio Pammolli; Massimo Riccaboni |
| Abstract: | We provide a detailed analysis of a model of innovation and corporate dynamics that encompasses the Gibrat’s Law of Proportionate Effect and the Simon growth process as particular instances. The predictions of the model are derived in terms of (i) firm size distribution, (ii) the distribution of firm growth rates, and (iii-iv) the relationships between firm size and the mean and variance of firm growth rates. We test the model against data from the worldwide pharmaceutical industry and find its predictions to be in good agreement with empirical evidence on all four dimensions. |
| Keywords: | Business firm size; firm growth distribution; Gibrat's Law; Pareto distribution; lognormal distribution, size-variance relationship. |
| JEL: | C49 L11 L25 L65 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:trt:disawp:2011/8&r=bec |
| By: | Marco Corsino; Roberto Gabriele; Sandro Trento |
| Abstract: | This paper empirically investigates gross job flows and the growth patterns of continuing limited liability companies in Italy over the period 1996-2004, using original data on work forces and other characteristics of the firm. The descriptive analysis reveals that the magnitude of gross job flows among small and medium-sized companies in Italy is lower than what observed in Anglo-Saxon countries, but it is consistent with evidence for the Euro area. Alongside, the magnitude of job flows significantly shrunk in the aftermath of the economic downturn in 2001: firms fared worse than in the late nineties and the labour market became less efficient in allocating job opportunities. The econometric analysis shows that size negatively affects firms’ net employment growth, even though the negative correlation vanishes among companies with more than 24 employees. The impact of age on growth is complex: new ventures and firms that are at most 14 years old outperform the average firm in the sample. On the contrary, age does not have any bearing on the growth of units aged 15 years and more, and it even represents a burden among the oldest firms in the sample. |
| Keywords: | Gross job flows, firm growth, firm size, firm age |
| JEL: | J62 L25 L60 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:trt:disawp:2011/5&r=bec |
| By: | Balsmeier, Benjamin; Bermig, Andreas; Dilger, Alexander; Geyer, Hannah |
| Abstract: | The discussion about employee representation on supervisory boards has received much attention from scholars and politicians around the world. We provide new insights to this ongoing debate by employing power indices from game theory to examine the real power of employees on boards and its effect on firm performance. Based on unique panel data of the largest listed companies in Germany, we find an inversely U-shaped relationship between labour power and Tobin's Q with a value-maximising labour power of approximately 43 %. Our results are robust to different game theoretical calculations of labour power, as well as various econometric models. -- Die Diskussion über Arbeitnehmermitbestimmung in Aufsichtsräten hat erhebliche Aufmerksamkeit von Wissenschaftlern und Politiker in vielen Ländern erfahren. Wir tragen neue Einsichten zu dieser fortdauernden Debatte bei, indem wir spieltheoretische Machtindices verwenden, um die Macht von Beschäftigten und deren Beitrag zum Unternehmenserfolg zu bestimmen. Mit originären Paneldaten der größten deutschen gelisteten Unternehmen finden wir eine umgekehrt U-förmige Beziehung zwischen Arbeitnehmermacht und Tobin's Q, wobei die wertmaximierende Arbeitnehmermacht bei rund 43 % liegt. Unsere Ergebnisse sind robust sowohl hinsichtlich unterschiedlicher spieltheoretischer Berechnungen der Arbeitnehmermacht als auch verschiedener ökonometrischer Modellierungen. |
| JEL: | C71 D72 J53 K22 K31 L21 L25 M21 M54 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:umiodp:92011&r=bec |
| By: | Moraga-Gonzalez, Jose L. (IESE Business School); Petrikaite, Vaiva (University of Groningen) |
| Abstract: | This paper studies the incentives to merge in a Bertrand competition model where firms sell differentiated products and consumers search the market for satisfactory deals. In the pre-merger market equilibrium, all firms look alike and so the probability a firm is next in the queue consumers follow when visiting firms is equal across non-visited firms. However, after a merger, insiders raise their prices more than the outsiders, so consumers search for good deals first at the non-merging stores and only then, if they do not find any product satisfactory enough, at the merging stores. When search cost are negligible, the results of Deneckere and Davidson (1985) hold. However, as search costs increase, the merging firms receive fewer customers, so mergers become unprofitable for sufficiently large search costs. This new merger paradox is more likely the higher the number of non-merging firms. |
| Keywords: | mergers; search; insiders; outsiders; order of search; |
| JEL: | D40 D83 L13 |
| Date: | 2011–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0934&r=bec |
| By: | FUKAO Kyoji; IKEUCHI Kenta; KIM YoungGak; KWON Hyeog Ug |
| Abstract: | Using a Melitz-style model of heterogeneous firms, Baldwin and Okubo (2006) recently presented a theoretical model in which self-sorting occurs and more productive factories choose to locate in more productive areas. The model suggests that firm-specific factors and regional factors affect each other through the endogeneity of location decisions. However, to date there have been few studies empirically testing this issue. Against this background, our aim is to examine the relationship between firms and location-specific factors in location decisions using factory-level panel data from Japan's Census of Manufactures. We begin by estimating how much of the differences in factories' TFP levels can be explained by both firm and location effects. The estimation results show that both effects have a significant impact on the productivity level of a factory, and that the firm effects are more important than the location effects. We also find a statistically significant negative correlation between firm effects and location effects, and investigate what causes this relationship. One potential explanation is that more productive firms may tend to set up new factories in less productive locations such as rural areas, where factor prices such as land prices and wage rates are usually low, in order to benefit from low factor prices. To examine this issue, we estimate a mixed logit model of location choice. The results indicate that more productive firms indeed tend to set up new factories in low-productivity locations, which is consistent with our hypothesis. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:11068&r=bec |
| By: | Roldan, Flavia (IESE Business School) |
| Abstract: | This paper studies the effectiveness of two different antitrust policies by characterizing the network structure of market-sharing agreements that arises under those settings. Market-sharing agreements prevent firms from entering each other's market. The set of these agreements defines a collusive network, which is pursued by antitrust authorities. This article shows that under a constant probability of inspection and a penalty equal to a firm's limited liability, firms form collusive alliances where all of them are interconnected. In contrast, when the antitrust policy reacts to prices in both dimensions - probability of inspection and penalty - firms form collusive cartels where they are not necessarily fully interconnected. This implies that more competitive structures can be sustained in the second case than in the first case. Notwithstanding, antitrust laws may have a pro-competitive effect in both scenarios, as they give firms in large alliances more incentives to cut their agreements at once. |
| Keywords: | market-sharing; economic networks; antitrust authority; oligopoly; |
| JEL: | D43 K21 L41 |
| Date: | 2011–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0932&r=bec |
| By: | Sangho KIM (Department of International Trade, Honam University, Gwangju 506-714, KOREA); Donghyun PARK (Economics and Research Department, Asian Development Bank, 6 ADB Avenue, Mandaluyong City, Metro Manila, PHILIPPINES 1550) |
| Abstract: | The central objective of our paper is to empirically examine the relationship between the ownership structure of firms and their export performance using data from Korea. Due to growing globalization, export performance has become a highly influential determinant of firm performance. While a large and growing empirical literature investigates the relationship between the ownership structure and overall performance of firms, there are almost no studies which delve into the issue of whether the concentration of ownership has a positive or negative effect on export performance. The primary contribution of our study is to help remedy this serious gap in the empirical literature on ownership and performance. Our empirical results indicate that firms with more concentrated ownership are more likely to be exporters and export more. |
| Keywords: | Exports, ownership structure, logit analysis, Tobit regression, Korea |
| JEL: | F10 G30 D80 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:nan:wpaper:1101&r=bec |
| By: | Ceja, Lucia (IESE Business School); Tapies, Josep (IESE Business School) |
| Abstract: | The present research study is intended to provide further insights into the psychological ownership experienced by next-generation members in relation to their family firms. As this is still a very young area of research, explorative research is needed. Therefore, a mixed-methods qualitative investigation, using a sample of 20 next-generation members of family-owned firms of different sizes, generational stages and business sectors, was performed. Through interpretative phenomenological and ethnographic analyses, the origin, transmission and manifestations of psychological ownership towards the family business were studied. The study also explored the factors that foster or undermine the development of a healthy and fulfilling relationship between next-generation members and the family business. Our findings suggest that next-generation members generally experience strong levels of psychological ownership. The development of positive psychological ownership is associated with factors including shared experiences, well-functioning governance bodies, structured and planned entry to the business, psychological empowerment, and share ownership, among others. |
| Keywords: | next generation; psychological ownership; family-owned firms; qualitative research; |
| Date: | 2011–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0929&r=bec |
| By: | Argandoña, Antonio (IESE Business School) |
| Abstract: | Traditionally, the Social Doctrine of the Church was founded on principles and virtues. Then, the Encyclical Letter Caritas in veritate introduced the "logic of gift" and the "principle of gratuitousness" as essential ingredients of economic life. In contrast, the traditional theory of the firm, based on contracts, has no place for love; and likewise, the economics of altruism and gift is inspired in self-interest, a paradigm that is alien to behavior ruled by love. This paper discusses the relationship between Benedict XVI's ideas on love and gift and the "logic of virtues", which has already been incorporated into the theory of the firm. Following an analysis of the concepts of love, gift and gratuitousness and of the role of virtues in management, a parallel is developed between acting in a virtuous way and "donating goods", material or otherwise, including developing virtues and "giving love". This argument is developed in three areas: the market (exchange of equivalents), the State (duty), and civil society (fraternity). The Encyclical underlines that the "logic of gift" should be present in all three, not only in the third sector. |
| Keywords: | Love; gift; gratuity/gratuitousness; virtue; theory firm; |
| Date: | 2011–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0936&r=bec |
| By: | Moraga-Gonzalez, Jose L. (IESE Business School); Wildenbeest, Matthijs R. (Indiana University) |
| Abstract: | Web search technologies are fundamental tools for navigating the Internet. One particular type of search technology is "shopbots", or comparison sites. The emergence of Internet shopbots and their implications for price competition and market efficiency are the focus of this paper. We develop a simple model where a price comparison site tries to attract (possibly vertically and horizontally differentiated) online retailers, on the one hand, and consumers, on the other. Analysis of the model reveals that differentiation among the products of the retailers and their ability to price discriminate between on- and off-comparison-site consumers play a critical role. When products are homogeneous, if online retailers cannot charge different on- and off-the-comparison-site prices, then the comparison site has incentives to charge fees so high that some firms are excluded, which generates price dispersion and an inefficient outcome. By contrast, when on- and off-comparison-site prices can be different, the comparison site attracts all the players to the platform and the allocation is efficient. A similar result obtains when products are horizontally differentiated. In that case, the comparison site becomes an aggregator of product information and no matter whether firms can price discriminate or not, the comparison site attracts all the players to the platform and an efficient outcome ensues. We argue that the lack of vertical product differentiation may also be critical for this efficiency result. In fact, we show that when quality differences are large, the comparison site may find it profitable to charge fees that effectively exclude low quality producers, thereby inducing an inefficient outcome. |
| Keywords: | shopbots; two-sided market; intermediation; price discrimination; product differentiation; |
| Date: | 2011–07–09 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0933&r=bec |