nep-bec New Economics Papers
on Business Economics
Issue of 2012‒02‒20
48 papers chosen by
Christian Calmes
Universite du Quebec en Outaouais

  1. Firm Dynamics: Firm Entry and Exit in Canada, 2000 to 2008 By Ciobanu, Oana<br/> Wang, Weimin
  2. Ownership and control in a competitive industry By Karle, Heiko; Klein, Tobias J.; Stahl, Konrad O.
  3. The Firm-Level Credit Multiplier By Murillo Campello; Dirk Hackbarth
  4. Plant-level Productivity and Imputation of Missing Data in U.S. Census Manufacturing Data By T. Kirk White; Jerome P. Reiter; Amil Petrin
  5. The risk of growing fast By Jan de Kok; Haibo Zhou; Chantal Hartog
  6. Free to grow? Assessing the barriers faced by actual and potential high growth firms By Lee, Neil
  7. Trade Costs, FDI incentives, and the Intensity of Price Competition By G. F. Gori; L. Lambertini; A. Tampieri
  8. A new perspective on the firm size-growth relationship: Shape of profits, investment and heterogeneous credit constraints By Florian MAYNERIS
  9. Competition and trust: Evidence from German car manufacturers By Felli, Leonardo; Koenen, Johannes; Stahl, Konrad O.
  10. Time-Varying Effects of Oil Supply Shocks on the U.S. Economy By Christiane Baumeister; Gert Peersman
  11. Competition Among the Big and the Small By Ken-Ichi Shimomura; Jacques-François Thisse
  12. Productivity growth and ownership change in China: 1998-2007 By Liu, Jing; Cao, Shutao
  13. Cartel detection in procurement markets By Hüschelrath, Kai; Veith, Tobias
  14. Is Labor Supply Important for Business Cycles? By Per Krusell; Toshihiko Mukoyama; Richard Rogerson; Ayşegül Şahin
  15. Can Naked Exclusion Be Procompetitive? By Gratz, Linda; Reisinger, Markus
  16. Do Small Businesses Create More Jobs? By Jan de Kok; Gerrit de Wit
  17. Evidence on a DSGE Business Cycle model subject to Neutral and Investment-Specific Technology Shocks using Bayesian Model Averaging By Rodney W. Strachan; Herman K. van Dijk
  18. Uncertainty, Task Environment, and Organization Design: An Empirical Investigation By Avner Ben-Ner; Fanmin Kong; Stéphanie Lluis
  19. Bertrand Competition with an Asymmetric No-Discrimination Constraint By Bouckaert, J.M.C.; Degryse, H.A.; Dijk, T. van
  20. Time-Varying Oil Price Volatility and Macroeconomic Aggregates By Michael Plante; Nora Traum
  21. Fat-tail Distributions and Business-Cycle Models By Guido Ascari; Giorgio Fagiolo; Andrea Roventini
  22. Market structure and market performance in e-commerce By Hackl, Franz; Kummer, Michael E.; Winter-Ebmer, Rudolf; Zulehner, Christine
  23. Output contingent securities and efficient investment by firms By Luis H.B. Braido; V. Filipe Martins-da-Rocha
  24. Almost periodically correlated time series in business fluctuations analysis By Łukasz Lenart; Mateusz Pipień
  25. The intraindustry effects of going concern audit reports By Luís M.S. Coelho; Ruben M.T. Peixinho; Siri Terjensen
  26. Corporate balance sheet adjustment: stylized facts, causes and consequences By Guntram B. Wolff; Eric Ruscher
  27. Verti-zontal Differentiation in Monopolistic Competition By Francesco DI COMITE; Jacques-François THISSE; Hylke VANDENBUSSCHE
  28. U.S. International Equity Investment By John Ammer; Sara B. Holland; David C. Smith; Francis E. Warnock
  29. Why are Some Regions More Innovative than Others? The Role of Firm Size Diversity By Ajay K. Agrawal; Iain M. Cockburn; Alberto Galasso; Alexander Oettl
  30. Workers cooperation within the firm: an analysis using small and medium size firms By Flores-Fillol, Ricardo; Iranzo, Susana; Mañé Vernet, Ferran
  31. Impact of local knowledge endowment on employment growth in nanotechnology By Schimke, Antje; Teichert, Nina; Ott, Ingrid
  32. Reverse Globalization: Does High Oil Price Volatility Discourage International Trade? By Chen, Shiu-Sheng; Hsu, Kai-Wei
  33. Evidence of Market Power in the Atlantic Steam Coal Market Using Oligopoly Models with a Competitive Fringe By Clemens Haftendorn
  34. Collusion and downstream entry in a vertically integrated industry By Éric Avenel, University of Rennes 1 - CREM-CNRS, France; Stéphane Caprice, Toulouse School of Economics (GREMAQ, INRA)
  35. High Growth Firms and Innovation: an empirical analysis for Spanish firms By Segarra Blasco, Agustí; Teruel Carrizosa, Mercedes
  36. Multifactor Productivity Growth Cycles at the Industry Level By P, Barnes
  37. Business models for the Web: an analysis of top successful web sites By Roberto Garigliano; Luisa Mich; Pier Luigi Novi Inverardi
  38. Standards and Incentives under Moral Hazard with Limited Liability By Reinshagen, Felix
  39. Do private equity owners increase risk of financial distress and bankruptcy? By Tykvová, Tereza; Borell, Mariela
  40. The Effect of Marketing Spending on Sales in the Premium Car Segment: New Evidence from Germany By Crespo Cuaresma, Jesus; Stöckl, Matthias
  41. Does institutional diversity account for pay rules in Germany and Belgium? By Stephan K. S. Kampelmann; François Rycx
  42. What Does Human Capital Do? A Review of Goldin and Katz's The Race between Education and Technology By Daron Acemoglu; David Autor
  43. Cross-divisional innovation in large, multi-divisional firms: Economic relevance and managerial actions By Grote, Markus; Herstatt, Cornelius; Gemünden, Hans-Georg
  44. Quantifying the qualitative responses of the output purchasing managers index in the US and the Euro area By Philip Vermeulen
  45. E new era in retail: Private-label production by national-brand manufacturers and premium-quality private labels. By Braak, A.M. ter
  46. The Households Effects of Government Consumption By Francesco Giavazzi; Michael McMahon
  47. When is it Optimal to Delegate: The Theory of Fast-track Authority By Levent Celik; Bilgehan Karabay; John McLaren
  48. Are the self-employed really jacks-of-all-trades? Testing the assumptions and implications of Lazear's theory of entrepreneurship with German data By Lechmann, Daniel S. J.; Schnabel, Claus

  1. By: Ciobanu, Oana<br/> Wang, Weimin
    Abstract: This paper examines firm entry and exit patterns in the Canadian business sector by using the Longitudinal Employment Analysis Program database developed by Statistics Canada. Our primary purpose is to present stylized facts and provide descriptive analysis of the entry and exit patterns in the Canadian economy in order to form a solid foundation for future in-depth theoretical and empirical studies of firm dynamics. In particular, this paper focuses on the relative importance of entrants and exiters in terms of both number and employment, the persistence of entry and exit patterns over time, and the correlation between industry entry and exit rates.
    Keywords: Business performance and ownership, Entry, exit, mergers and growth
    Date: 2012–01–25
  2. By: Karle, Heiko; Klein, Tobias J.; Stahl, Konrad O.
    Abstract: We study a differentiated product market in which an investor initially owns a controlling stake in one of two competing firms and may acquire a non-controlling or a controlling stake in a competitor, either directly using her own assets, or indirectly via the controlled firm. While industry profits are maximized within a symmetric two product monopoly, the investor attains this only in exceptional cases. Instead, she sometimes acquires a noncontrolling stake. Or she invests asymmetrically rather than pursuing a full takeover if she acquires a controlling one. Generally, she invests indirectly if she only wants to affect the product market outcome, and directly if acquiring shares is profitable per se. --
    Keywords: differentiated products,separation of ownership and control,private benefits of control
    JEL: L13 L41
    Date: 2011
  3. By: Murillo Campello; Dirk Hackbarth
    Abstract: We study the effect of asset tangibility on corporate financing and investment decisions. Financially constrained firms benefit the most from investing in tangible assets because those assets help relax constraints, allowing for further investment. Using a dynamic model, we characterize this effect – which we call firm-level credit multiplier – and show how asset tangibility increases the sensitivity of investment to Tobin’s Q for financially constrained firms. Examining a large sample of manufacturers over the 1971-2005 period as well as simulated data, we find support for our theory’s tangibility–investment channel. We further verify that our findings are driven by firms’ debt issuance activities. Consistent with our empirical identification strategy, the firm-level credit multiplier is absent from samples of financially unconstrained firms and samples of financially constrained firms with low spare debt capacity.
    JEL: G31 G32
    Date: 2012–02
  4. By: T. Kirk White; Jerome P. Reiter; Amil Petrin
    Abstract: Within-industry differences in measured plant-level productivity are large. A large literature has been devoted to explaining these differences. In the U.S. Census Bureau's manufacturing data, the Bureau imputes for missing values using methods known to result in underestimation of variability and potential bias in multivariate inferences. We present an alternative strategy for handling the missing data based on multiple imputation via sequences of classification and regression trees. We use our imputations and the Bureau's imputations to estimate within-industry productivity dispersions. The results suggest that there may be more within-industry productivity dispersion than previous research has indicated.
    JEL: C80 L11 L60
    Date: 2012–02
  5. By: Jan de Kok; Haibo Zhou; Chantal Hartog
    Abstract: Are firm growth and firm survival related to each other? This paper tests the hypothesis that the relationship between firm growth and firm survival can be characterised by an inverted U-shaped relation. This hypothesis is confirmed by our estimations. At the same time, the results indicate that the top of the inverted U-shaped relation occurs at very high growth rates. This suggests that for the large majority of enterprises, the relationship between firm growth and firm survival can be better described by a positive relationship rather than an inverted U-shaped relationship. Although these results are preliminary, they suggest that policies that aim to increase the number of fast-growing firms have no negative effects on the rate of firm deaths.
    Date: 2012–02–02
  6. By: Lee, Neil
    Abstract: A small proportion of high growth firms create the majority of all new jobs. For policymakers, it is important to know (1) the obstacles faced by high growth firms are and (2) the obstacles faced by firms with the potential to achieve high growth, but which are yet to achieve this. This investigates these issues using the UK Small Business Survey. It highlights six areas where high growth firms experience problems: obtaining finance, cash flow, recruiting staff, skill shortages, managerial skills and the availability and cost of premises. Potential high growth firms argue that cash flow, recruiting, the availability and cost of premises and managerial skills are important. They also argue that competition is a significant obstacle to their growth, perhaps implying their business strategy is problematic.
    Keywords: High growth firms; Barriers; gazelles; SMEs; Firm growth
    JEL: L0 D21 L2 L10
    Date: 2011–11–01
  7. By: G. F. Gori; L. Lambertini; A. Tampieri
    Abstract: Empirical evidence shows that an increase in trade liberalisation causes an increase in foreign direct investments (FDIs). Here we propose an explanation to this apparent puzzle by exploiting the intensity of competition in a Bertrand duopoly with convex costs where the two firms enter in a new market. We adopt Dastidar's (1995) approach, delivering a continuum of Bertrand-Nash equilibria ranging above marginal cost pricing, to show that softening competition may indeed more than offset the standard effect generated by trade costs, thereby leading to a positive relationship between trade liberalisation and FDIs.
    JEL: F12 F13 F23
    Date: 2012–02
  8. By: Florian MAYNERIS (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Center for Operations Research and Econometrics (CORE))
    Abstract: This paper shows that the diverging results obtained in the literature on the firm size-growth relationship can be reconciled in a very general theoretical framework featuring firm-level heterogeneity and investment decision. Three main elements determine the nature and the intensity of the relationship between firm-level size and investment: the shape of operating profits with respect to size, the shape of marginal returns to investment (in terms of size) with respect to initial size and the shape of marginal cost of investment with respect to size. Any difference across countries, industries or periods in one of these three dimensions can modify the sign and the intensity of the firm size-investment and the firm size-growth relationship at equilibrium. As an example, I show that in France, heterogeneous credit constraints, which affect the shape of the marginal cost of investment, can explain cross-sectoral variations in the firm size-investment and firm size-growth relationship over the 1996-2002 period. As a consequence, from a macroeconomic view point, firm size distribution is, all else equal, more right-skewed in sectors where small firms are disproportionately credit constrained and small firms participate less to sectorial growth in these sectors. The analytical framework proposed in this paper is general enough to apply to the analysis of any heterogeneous response of economic agents.
    Keywords: Investment, size, firm size-growth relationship, financial constraints
    JEL: D21 D22 L11 L25
    Date: 2011–11–29
  9. By: Felli, Leonardo; Koenen, Johannes; Stahl, Konrad O.
    Abstract: We explore the determinants and effects of trust relationships between upstream suppliers and downstream producers. Using unique survey data on individual supplier-buyer relationships in the German automotive industry, we show, by means of different measures of supplier-buyer trust, that higher levels of trust mitigate relationship-specific underinvestment in a classical hold-up situation. Moreover, contrary to the extant literature, we show that higher levels of supplier's trust are reflected in the buyer's choice of a more competitive procurement strategy among potential suppliers. --
    Keywords: trust,hold-up problem,competition,specific investment,suppliers,car manufacturers,German automotive industry
    JEL: D86 D22 L22 L62
    Date: 2011
  10. By: Christiane Baumeister; Gert Peersman
    Abstract: We use vector autoregressions with drifting coefficients and stochastic volatility to investigate how the dynamic effects of oil supply shocks on the U.S. economy have changed over time. We find a substantial decline in the short-run price elasticity of oil demand since the mid-eighties. This finding helps explain why an oil production shortfall of the same magnitude is associated with a stronger response of oil prices and more severe macroeconomic consequences over time, while an oil price increase of the same magnitude is associated with a smaller decline in oil production and smaller losses in U.S. output in more recent years. We also show that oil supply shocks more recently account for a smaller fraction of the variability of the real price of oil, implying a greater role for oil demand shocks. Notwithstanding this time variation, the overall cumulative effect of oil supply disruptions on the U.S. economy has been modest. Oil supply shocks contributed to some extent to the 1991 recession and slowed the economic boom of 1999-2000, but they do not explain other U.S. recessions nor do they help explain the "Great Inflation" of the 1970s and early 1980s.
    Keywords: Econometric and statistical methods; International topics
    JEL: E31 E32 Q43
    Date: 2012
  11. By: Ken-Ichi Shimomura (Research Institute for Economics and Business Administration, Kobe University, Nada-ku, Kobe, Japan); Jacques-François Thisse (CORE-Université catholique de Louvain (Belgium), CREA-Université du Luxembourg and CEPR)
    Abstract: Many industries are made of a few big firms, which are able to manipulate the market outcome, and of a host of small businesses, each of which has a negligible impact on the market. We provide a general equilibrium framework that encapsulates both market structures. Due to the higher toughness of competition, the entry of big firms leads them to sell more through a market expansion effect generated by the shrinking of the monopolistically competitive fringe. Furthermore, social welfare increases with the number of big firms because the pro-competitive effect associated with entry dominates the resulting decrease in product diversity.
    Keywords: oligopoly, monopolistic competition, product differentiation, welfare
    JEL: L13 L40
    Date: 2012–02
  12. By: Liu, Jing; Cao, Shutao
    Abstract: This paper studies the industry productivity dynamics in China’s manufacturing sector from 1998 to 2007, and in particular, explores to what extent the privatization of state-owned enterprises (SOEs) contributes to the aggregate productivity growth. Our results show that, though non-SOEs on average are more productive than SOEs, the average productivity growth among SOEs is greater than the privately-owned firms. Industry concentration, taxation, and credit market all account for this difference in growth between SOEs and non-SOEs. In addition, industry productivity growth is mainly attributed to the growth of non-SOEs, entry of non-SOE firms, and the exit of SOEs. However, non-SOE firms that are transformed directly from SOEs make a small but negative contribution to industry productivity growth.
    Keywords: Productivity Growth, Industry Dynamics, Ownership Change, Reallocation
    JEL: E6 D24 O4
    Date: 2011–04–15
  13. By: Hüschelrath, Kai; Veith, Tobias
    Abstract: Cartel detection is usually viewed as a key task of either competition authorities or compliance officials in firms with an elevated risk of cartelization. We argue that customers of hard core cartels can have both incentives and possibilities to detect such agreements on their own initiative through the use of market-specific data sets. We apply a unique data set of about 340,000 market transactions from 36 smaller and larger customers of German cement producers and show that a price screen would have allowed particularly larger customers to detect the upstream cement cartel before the competition authority. The results not only suggest that monitoring procurement markets through screening tools has the potential of substantial cost reductions - thereby improving the competitive position of the respective user firms - but also allow the conclusion that competition authorities should view customers of potentially cartelized industries as important allies in their endeavour to fight hard core cartels. --
    Keywords: business economics,procurement,antitrust policy,cartels,detection,screening
    JEL: D24 L41 L61 M11 M21 K21
    Date: 2011
  14. By: Per Krusell; Toshihiko Mukoyama; Richard Rogerson; Ayşegül Şahin
    Abstract: We build a general equilibrium model that features uninsurable idiosyncratic shocks, search frictions and an operative labor supply choice along the extensive margin. The model is calibrated to match the average levels of gross flows across the three labor market states: employment, unemployment, and non-participation. We use it to study the implications of two kinds of aggregate shocks for the cyclical behavior of labor market aggregates and flows: shocks to search frictions (the rates of job finding and job loss) and shocks to the return on the market activity (any factors affecting aggregate productivity). We find that both kinds of shocks are needed to explain the labor market data, and that an active labor supply channel is key. A model with friction shocks only, calibrated to match unemployment fluctuations, accounts for only a small fraction of employment fluctuations and has counterfactual cyclical predictions for participation.
    JEL: E24 J22 J64
    Date: 2012–01
  15. By: Gratz, Linda; Reisinger, Markus
    Abstract: Antitrust scholars have argued that exclusive contracts have anticompetitive, or at best neutral effects, if no efficiencies are generated. In contrast, this paper shows that exclusive contracts can have procompetitive effects, provided buyers are imperfect downstream competitors and contract breach is feasible. In that case an efficient entrant is not necessarily foreclosed through exclusive contracting but induces buyers to breach. Because breaching buyers have to pay expectation damages to the incumbent, the downstream profits they obtain when breaching must be large enough. Therefore, the entrant needs to set a lower wholesale price than absent exclusive contracting, leading to lower final consumer prices and higher welfare.
    Keywords: Exclusive Contracting; Naked Exclusion; Contract Breach; Antitrust Policy
    JEL: D43 K21 L12 L42
    Date: 2012–02
  16. By: Jan de Kok; Gerrit de Wit
    Abstract: In this paper we give partly new arguments why in our view the so-called dynamic classification method should be favored when determining the contribution of small businesses to job creation. To begin with, it is the only method that attributes consistently job creation or loss to the size class in which it actually takes place. On top of this, dynamic classification has two further advantages: (i) it is not viable to the so-called regression to the mean bias, and (ii) no micro data are needed to apply it. Using dynamic classification we analyze the job creation of different size classes for the 27 Member States of the European Union. Our major findings are: - For the EU as a whole, smaller firms contribute more to job creation than larger firms. Net job creation rates decrease with each firm size class. - This pattern occurs in most industries but not in all: the manufacturing industry and trade industry show different patterns. - At the level of individual countries, the net job creation rate also tends to decrease with each firm size class, but this relationship is not perfect. In only 8 Member States does the net job creation rate decrease with each firm size class.  
    Date: 2012–02–06
  17. By: Rodney W. Strachan; Herman K. van Dijk
    Abstract: The empirical support for a DSGE type of real business cycle model with two technology shocks is evaluated using a Bayesian model averaging procedure that makes use of a finite mixture of many models within the class of vector autoregressive (VAR) processes. The linear VAR model is extended to permit equilibrium restrictions and restrictions on long-run responses to technology shocks apart from having a range of lag structures and deterministic processes. These model features are weighted as posterior probabilites and computed using MCMC and analytical methods. Uncertainty exists as to the most appropriate model for our data, with five models receiving significant support. The model set used has substantial implications for the results obtained. We do find support for a number of features implied by the real business cycle model. Business cycle volatility seems more due to investment specific technology shocks than neutral technology shocks and this result is robust to model specification. These techonolgy schocks appear to account for all stochastic trends in our system after 1984. we provide evidence on the uncertainty bands associated with these results.
    JEL: C11 C32 C52
    Date: 2012–02
  18. By: Avner Ben-Ner (Industrial Relations Center, Carlson School of Management, University of Minnesota); Fanmin Kong (Guanghua School of Management, Peking University); Stéphanie Lluis (Department of Economics, University of Waterloo)
    Abstract: The paper addresses two broad research questions: 1. How do internal uncertainty associated with the task environment and external uncertainty arising from market volatility impact organization design? 2. What are the relationships among various elements of organization design: delegation of decision-making, incentives, monitoring, and internal labor market practices (promotion, training, employment security)? We expand on Prendergast (2002a), who challenged the conventional view of a tradeoff between risk and incentives, and build a single unified framework for answering our two research questions. Using a uniquely rich dataset that contains detailed information about the task environment of core employees and organization design at the individual, group and firms levels in 530 Minnesota firms in the mid 1990s, we first find support for Prendergast's key argument that internal uncertainty (over which employees have control) affects directly the allocation of decision-making and only indirectly incentives (via allocation of decision-making). This confirms similar findings by Foss and Laursen (2005), DeVaro and Kurtulus (2010) and Shi (2011). We also find that internal uncertainty has much impact on organization design through the choice of delegation of decision-making at the employee level, less so at the group level, and very little at the firm level, whereas external (market) uncertainty has little effect on organization design, especially at the individual and group level. Decision-making, monitoring, various internal labor market practices and incentives are strongly related to each other through substitution and complementarity.
    JEL: L20
    Date: 2011–12
  19. By: Bouckaert, J.M.C.; Degryse, H.A.; Dijk, T. van (Tilburg University, Center for Economic Research)
    Abstract: Abstract: We study the competitive and welfare consequences when only one firm must commit to uniform pricing while the competitor’s pricing policy is left unconstrained. The asymmetric no-discrimination constraint prohibits both behaviour-based price discrimination within the competitive segment and third-degree price discrimination across the monopolistic and competitive segments. We find that an asymmetric no-discrimination constraint only leads to higher profits for the unconstrained firm if the monopolistic segment is large enough. Therefore, a regulatory policy objective of encouraging entry is not served by an asymmetric no-discrimination constraint if the monopolistic segment is small. Only when the monopolistic segment is small and rivalry exists in the competitive segment does the asymmetric no-discrimination constraint enhance welfare.
    Keywords: Dominant firms;price discrimination;competition policy;regulation.
    JEL: D11
    Date: 2012
  20. By: Michael Plante (Federal Reserve Bank of Dallas); Nora Traum (North Carolina State University)
    Abstract: We illustrate the theoretical relation among output, consumption, investment, and oil price volatility in a real business cycle model. The model incorporates demand for oil by a firm, as an intermediate input, and by a household, used in conjunction with a durable good. We estimate a stochastic volatility process for the real price of oil over the period 1986-2011 and utilize the estimated process in a non-linear approximation of the model. For realistic calibrations, an increase in oil price volatility produces a temporary decrease in durable spending, while precautionary savings motives lead in- vestment and real GDP to rise. Irreversible capital and durable investment decisions do not overturn this result.
    Date: 2012–02
  21. By: Guido Ascari (University of Pavia); Giorgio Fagiolo (Sant'Anna School of Advanced Studies); Andrea Roventini (OFCE-Sciences-po,Sant'Anna School of Advanced Studies)
    Abstract: Recent empirical findings suggest that macroeconomic variables are seldom normally dis- tributed. For example, the distributions of aggregate output growth-rate time series of many OECD countries are well approximated by symmetric exponential-power (EP) den- sities, with Laplace fat tails. In this work, we assess whether Real Business Cycle (RBC) and standard medium-scale New-Keynesian (NK) models are able to replicate this sta- tistical regularity. We simulate both models drawing Gaussian- vs Laplace-distributed shocks and we explore the statistical properties of simulated time series. Our results cast doubts on whether RBC and NK models are able to provide a satisfactory representation of the transmission mechanisms linking exogenous shocks to macroeconomic dynamics.
    Keywords: Growth-Rate Distributions, Normality, Fat Tails, Time Series, Exponential- Power Distributions, Laplace Distributions, DSGE Models, RBC Models.
    JEL: C1 E3
    Date: 2012–01
  22. By: Hackl, Franz; Kummer, Michael E.; Winter-Ebmer, Rudolf; Zulehner, Christine
    Abstract: We investigate the effect of market structure on market performance in the market for consumer electronics. This research is novel, because we exploit product life cycle information to build an instrumental variable for the number of firms in a market, a variable which hitherto had to be treated as exogenous in comparable studies on seller-behavior in e-commerce. We combine data from Austria's largest online site for price comparisons with retail-data on whole sale prices provided by a major hardware producer for consumer electronics. We observe input prices of firms, and all their moves in the entry and the pricing game. Using this information for 80 digital cameras, we generate instrumental variables based on the shops' entry decisions in the past. We find that instrumenting is particularly important for estimating the effect of competition on the markup of the price-leader. --
    Keywords: retailing,product life cycle,market structure,market performance,markup,price dispersion
    JEL: L11 L13 L81 D43
    Date: 2011
  23. By: Luis H.B. Braido; V. Filipe Martins-da-Rocha
    Date: 2012–02–02
  24. By: Łukasz Lenart (Economic Institute in National Bank of Poland, Department of Mathematics in Cracow University of Economics); Mateusz Pipień (Economic Institute in National Bank of Poland, Department of Econometrics and Operations Research in Cracow University of Economics)
    Abstract: We propose a non-standard subsampling procedure to make formal statistical inference about the business cycle, one of the most important unobserved feature characterising fluctuations of economic growth. We show that some characteristics of business cycle can be modelled in a non-parametric way by discrete spectrum of the Almost Periodically Correlated (APC) time series. On the basis of estimated characteristics of this spectrum business cycle is extracted by filtering. As an illustration we characterise the man properties of business cycles in industrial production index for Polish economy.
    Keywords: business cycle, industrial production index, almost periodically correlated time series, subsampling procedure
    JEL: C01 C02 C14
    Date: 2012
  25. By: Luís M.S. Coelho (School of Economics University of the Algarve and CEFAGE); Ruben M.T. Peixinho (School of Economics University of the Algarve and CEFAGE); Siri Terjensen (Kelley School of Business University of Indiana)
    Abstract: This paper investigates the effect of a going concern opinion (GCO) on the equity value of the announcing firm’s competitors. On average, GCOs increase the value of a value-weighted portfolio of rivals by 0.37% at the event date. This positive effect is significantly larger when the announcing firm is relatively more profitable, the industry is more concentrated, and when rivals and event firms have distinct assets in place and growth opportunities. Additional tests reveal that such competitive effect is not a mere short-term phenomenon as investors can earn up to 1.54% on a risk-adjusted basis over the first postGCO month. This finding is especially interesting as we show that for the industry rivals the one-year and six-month preGCO riskadjusted equity returns are, on average, strongly negative. Our results highlight the impact of mandatory accounting information on market prices at both the firm and industry levels.
    Keywords: Audit reports; Going concern; Competitive effect; Contagion effect.
    Date: 2011
  26. By: Guntram B. Wolff; Eric Ruscher
    Abstract: We analyse corporate balance sheet adjustment episodes in Germany and Japan, as well as a sample of 30 countries, using national account data. Corporate balance sheet adjustment tends to be long lasting and associated with a strong impact on current accounts, wages and investment. Adjustment episodes lead to significant changes in corporate balance sheet ratios with a buildup of liquidity and a reduction of leverage. The adjustment is generally achieved by reducing investment and increasing savings on the back of a falling wage share. A panel econometric exercise shows that balance sheet adjustment periods are triggered by macroeconomic downturns as well as balance sheet stress due to high debt, low liquidity and negative equity price shocks.
    Date: 2012–02
  27. By: Francesco DI COMITE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and European Commission ,DGECFIN); Jacques-François THISSE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE)); Hylke VANDENBUSSCHE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Center for Operations Research and Econometrics (CORE), National Bank of Belgium and KULeuven,Licos)
    Abstract: The pattern of trade observed from firm-product-country data calls for a new generation of models. To address the unexplained variation in the data, we propose a new model of monopolistic competition where varieties enter preferences non-symmetrically, capturing both horizontal and vertical differentiation in an unprecedented way. Together with a variable elasticity of substitution, competition effects, varying markups and prices across countries, this results in a tractable model whose predictions differ from existing ones. Using the population of Belgian exporters, our model succeeds in explaining the hitherto unexplained variation. The implications call for a re-thinking of earlier results and measurement practices.
    Keywords: Heterogeneous firms, Horizontal differentiation, Vertical differentiation, Monopolistic competition, Non-symmetric varieties
    JEL: D43 F12 F14 L16
    Date: 2011–12–06
  28. By: John Ammer; Sara B. Holland; David C. Smith; Francis E. Warnock
    Abstract: U.S. investors are the largest group of international equity investors in the world, but to date conclusive evidence on which types of foreign firms are able to attract U.S. investment is not available. Using a comprehensive dataset of all U.S. investment in foreign equities, we find that the single most important determinant of the amount of U.S. investment a foreign firm receives is whether the firm cross-lists on a U.S. exchange. Correcting for selection biases, cross-listing leads to a doubling (or more) in U.S. investment, an impact greater than all other factors combined. We also show that our firm-level analysis has implications for country-level studies, suggesting that research investigating equity investment patterns at the country-level should include cross-listing as an endogenous control variable. We describe easy-to-implement methods for including the importance of cross-listing at the country level.
    JEL: F3 G11
    Date: 2012–02
  29. By: Ajay K. Agrawal; Iain M. Cockburn; Alberto Galasso; Alexander Oettl
    Abstract: Large labs may spawn spin-outs caused by innovations deemed unrelated to the firm's overall business. Small labs generate demand for specialized services that lower entry costs for others. We develop a theoretical framework to study the interplay of these two localized externalities and their impact on regional innovation. We examine MSA-level patent data during the period 1975-2000 and find that innovation output is higher where large and small labs coexist. The finding is robust to across-region as well as within-region analysis, IV analysis, and the effect is stronger in certain subsamples consistent with our explanation but not the plausible alternatives.
    JEL: O31 R11
    Date: 2012–01
  30. By: Flores-Fillol, Ricardo; Iranzo, Susana; Mañé Vernet, Ferran
    Abstract: We investigate the determinants of teamwork and workers cooperation within the firm. Up to now the literature has almost exclusively focused on workers incentives as the main determinants for workers cooperation. We take a broader look at the firm's organizational design and analyze the impact that different aspects of it might have on cooperation. In particular, we consider the way in which the degree of decentralization of decisions and the use of complementary HRM practices (what we call the .rm.s vertical organizational design) can affect workers'collaboration with each other. We test the model's predictions on a unique dataset on Spanish small and medium size firms containing a rich set of variables that allows us to use sensible proxies for workers cooperation. We find that the decentralization of labor decisions (and to a less extent that of task planning) has a positive impact on workers cooperation. Likewise, cooperation is positively correlated to many of the HRM practices that seem to favor workers'interaction the most. We also confirm the previous finding that collaborative efforts respond positively to pay incentives, and particularly, to group or company incentives.
    Keywords: Treball en equip, Incentius laborals, 331 - Treball. Relacions laborals. Ocupació. Organització del treball,
    Date: 2011
  31. By: Schimke, Antje; Teichert, Nina; Ott, Ingrid
    Abstract: This paper investigates the contribution of local knowledge endowment to employment growth in nanotechnology firms. We exploit a unique data set focusing on firms operating in fields that apply nanotechnology. Our findings suggest that regions that offer knowledge can stimulate employment growth in smaller and younger firms. By contrast, being embedded into specialised regions might be counterproductive, especially for firms belonging to a particularly knowledge intensive sector and older firms. --
    Keywords: employment growth,local knowledge endowment,general purpose technology,specialisation,nanotechnology,spillover
    JEL: D83 L25 O31 R11
    Date: 2012
  32. By: Chen, Shiu-Sheng; Hsu, Kai-Wei
    Abstract: This paper examines whether higher oil price volatility causes a reversal in globalization. Using a large annual panel data set covering 84 countries all over the world from 1984 to 2008, we investigate the impacts of oil price fluctuations on international trade, namely exports and imports. We present strong and robust evidence that international trade flows will be lower when oil prices fluctuate significantly. We therefore conclude that oil price volatility hurts globalization.
    Keywords: oil price shocks; oil price volatility; international trade; reverse globalization
    JEL: F40 Q40
    Date: 2012–01–25
  33. By: Clemens Haftendorn
    Abstract: Before 2004 South Africa was the dominant steam coal exporter to the European market. However a new market situation with rising global demand and prices makes room for a new entrant: Russia. The hypothesis investigated in this paper is that the three incumbent dominant firms located in South Africa and Colombia reacted to that new situation by exerting market power and withheld quantities from the market in 2004 and 2005. Three market structure scenarios of oligopoly with a competitive fringe are developed to investigate this hypothesis: a Stackelberg model with a cartel, a Stackelberg model with a Cournot-oligopoly as leader and a Nash-bargaining model. The model with a Cournot oligopoly as leader delivers the best reproduction of the actual market situation meaning that the dominant players exert market power in a non-cooperative way without profit sharing. Furthermore some methodological clarifications regarding the modeling of markets with dominant players and a competitive fringe are made. In particular we show that the use of mixed aggregated conjectural variations can lead to outcomes that are inconsistent with the actions of rational profit-maximizing players.
    Keywords: Atlantic coal market, partial equilibrium modeling, market power
    JEL: L13 L72 C69 C72
    Date: 2012
  34. By: Éric Avenel, University of Rennes 1 - CREM-CNRS, France; Stéphane Caprice, Toulouse School of Economics (GREMAQ, INRA)
    Abstract: We analyse the impact of an entry threat at the downstream level on the ability of a pair of vertically integrated incumbents to collude. We present an original model of horizontal product differentiation on the final market and characterize the structures of this market for which an entry threat facilitates collusion between incumbents. While the entry threat leaves collusion and deviation profits unchanged, it lowers profits in punishment periods. Consequently, an entry threat discourages deviations and facilitates collusion, thus benefiting incumbents.
    Keywords: collusion, foreclosure, entry, vertical integration
    JEL: D43 L13 L23 L40
    Date: 2012–01
  35. By: Segarra Blasco, Agustí; Teruel Carrizosa, Mercedes
    Abstract: This paper analyzes the effect of firms’ innovation activities on their growth performance. In particular, we observe how important innovation is for high-growth firms (HGFs) for an extensive sample of Spanish manufacturing and services firms. The panel data used comprises diverse waves of Spanish CIS over the the period 2004-2008. First, a probit analysis determines whether innovation affects the probability of being a high-growth firm. And second, a quantile regression technique is applied to explore the determinants and characteristics of specific groups of firms (manufacturing versus service firms and high-tech versus low-tech firms). It is revealed that R&D plays a significant role in the probability of becoming a HGF. Investment in internal and external R&D per employee has a positive impact on firm growth (although internal R&D presents a significant impact in the last quantiles, external R&D is significant up to the median). Furthermore, we show evidence that there is a positive impact of employment (sales) growth on the sales (employment) growth. Keywords: high-growth firms, firm growth, innovation activity JEL Classifications: L11, L25, O30
    Keywords: Empreses -- Innovacions tecnològiques -- Espanya, Empreses -- Creixement, 33 - Economia, 65 - Gestió i organització. Administració i direcció d'empreses. Publicitat. Relacions públiques. Mitjans de comunicació de masses,
    Date: 2011
  36. By: P, Barnes (Productivity Commission)
    Abstract: This staff working paper (by Paula Barnes) examines multifactor productivity growth cycles at the industry level in Australia. There is considerable variation in industry-specific cycles across industries and the market sector. Moreover, the cycles chosen to examine industry MFP growth can have a considerable effect on the interpretation of industry productivity performance over time.<p> Growth in productivity is a key determinant of long-term economic growth and hence income growth. As Australia’s prospective productivity performance will affect its future prosperity, recent significant declines in productivity growth understandably have been of concern.<p> Closer analysis of industry productivity is key to understanding aggregate productivity performance and to providing policy-relevant insights into how to influence it. The industry-specific cycles presented in this paper, and the methodology for identifying them, are tools that can assist in understanding industry productivity performance. This initial set of cycles, while not intended to be definitive, provides the basis for more refined examinations of productivity in individual industries. The methodology outlined provides a generic approach to the identification of industry cycles, but the results also flag the scope for further refinement of the cycles where more detailed industry-specific information is available.<p> The views expressed in this paper are those of the staff involved and do not necessarily reflect those of the Productivity Commission.
    Keywords: productivity; long-term economic growth; industry level; multifactor productivity; income growth; productivity performance; industry-cycles; MFP
    JEL: D24 E32 O49
    Date: 2011–07
  37. By: Roberto Garigliano; Luisa Mich; Pier Luigi Novi Inverardi
    Abstract: To investigate successful web business models, an original multidimensional framework is defined and applied to a large number of web sites. The frameworkâ named BM*Webâ combines issues already present in existing schema describing business models, with innovative aspects that have not previously been taken into account in those combinations or which are now viewed in a new light. Results of the application of BM*Web to the 500 top list of Alexa (at a speficic time) highlight an articulated picture where more than one success profile exists and not all of them include a web community, although a strong relationship exists between community and success under some conditions. The identification of features that characterize the most successful business models for the Web could be used to define guidelines for company management, once the appropriate profile for a company has been recognised.
    Date: 2011–10
  38. By: Reinshagen, Felix
    Abstract: We consider a model of moral hazard with limited liability of the agent and effort that is two-dimensional. One dimension of the agent’s effort is observable and the other is not. The principal can thusmake the contract conditional not only on outcome but also on observable effort. The principal’s optimal contract gives the agent no rent and – in contrast to the first-best allocation – uses toomuch observable effort and too little unobservable effort. This distortion in the relative use of the two kinds of effort increases if the agent’s liability becomes more limited.
    Keywords: moral hazard; two-dimensional effort; regulation
    JEL: D82 D86 K32
    Date: 2012–02
  39. By: Tykvová, Tereza; Borell, Mariela
    Abstract: There is some controversy on the key sources of success in the private equity model and on how this business model affects the portfolio companies. We investigate financial distress risks of European companies around the buyout event in the period between 2000 and 2008. In addition, we analyze whether buyout companies go bankrupt more often than comparable non-buyout companies. Our paper suggests that private equity investors select companies which are less financially distressed than comparable companies and that the distress risk increases after the buyout. Despite this increase, private equity-backed companies do not suffer from higher bankruptcy rates than non-buyout companies. In fact, when companies are backed by experienced private equity funds, their bankruptcy rates are even lower. Experienced investors seem to be better able to manage distress risks than their inexperienced counterparts. --
    Keywords: private equity,buyout,financial distress,bankruptcy
    JEL: G20 G24 G34
    Date: 2011
  40. By: Crespo Cuaresma, Jesus (Vienna University of Economics and Business); Stöckl, Matthias (University of Salzburg)
    Abstract: This paper assesses empirically the relationship between marketing expenditures and sales in the premium car segment in Germany. We employ a new data-set which contains model-specific data on sales (i.e. registrations), restyling activities and marketing expenditures at a monthly basis for the years 1998 to 2007. The richness of our data in the time dimension allows for a systematic modeling of product life cycle effects which have been partly ignored in the existing empirical literature. We find a robust positive marketing-sales relationship, even after common characteristics of the product life cycle have been taken into account. Furthermore, our results indicate that the launching of a new model, face lifts and customized packages appear to exert a positive and sizeable effect on sales in the German premium car segment.
    Keywords: Marketing expenditure; panel data models; automobile industry; premium car segment; automotive restyling
    JEL: D43 M31 M37
    Date: 2012–02–14
  41. By: Stephan K. S. Kampelmann; François Rycx
    Abstract: This paper examines the relationship between institutions and the remuneration of different jobs by comparing the German and Belgian labour markets with respect to a typology of institutions (social representations, norms, conventions, legislation, and organisations). The observed institutional differences between the two countries lead to the hypotheses of (I) higher overall pay inequality in Germany; (II) higher pay inequalities between employees and workers in Belgium; and (III) higher (lower) impact of educational credentials (work-post tenure) on earnings in Germany. We provide survey-based empirical evidence supporting hypotheses I and III, but find no evidence for hypothesis II. These results underline the importance of institutional details: although Germany and Belgium belong to the same "variety of capitalism", we provide evidence that small institutional disparities within Continental-European capitalism account for distinct structures of pay.
    Keywords: Labour productivity; wages; occupations; production function; matched employer-employ
    JEL: J31 J51 J52 J53
    Date: 2011–09–29
  42. By: Daron Acemoglu; David Autor
    Abstract: Goldin and Katz’s <i>The Race between Education and Technology</i> is a monumental achievement that supplies a unified framework for interpreting how the demand and supply of human capital have shaped the distribution of earnings in the U.S. labor market over the 20th century. This essay reviews the theoretical and conceptual underpinnings of this work and documents the success of Goldin and Katz’s framework in accounting for numerous broad labor market trends. The essay also considers areas where the framework falls short in explaining several key labor market puzzles of recent decades and argues that these shortcomings can potentially be overcome by relaxing the implicit equivalence drawn between workers’ skills and their job tasks in the conceptual framework on which Goldin and Katz build. The essay argues that allowing for a richer set of interactions between skills and technologies in accomplishing job tasks both augments and refines the predictions of Goldin and Katz’s approach and suggests an even more important role for human capital in economic growth than indicated by their analysis.
    JEL: J30 J31 O14 O31 O33
    Date: 2012–02
  43. By: Grote, Markus; Herstatt, Cornelius; Gemünden, Hans-Georg
    Abstract: --
    Date: 2012
  44. By: Philip Vermeulen (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany and CEPR.)
    Abstract: The survey based monthly US ISM production index and Eurozone manufacturing PMI output index provide early information on industrial output growth before the release of the official industrial production index. I use the Carlson and Parkin probability method to construct monthly growth estimates from the qualitative responses of the US ISM production index and the Eurozone manufacturing PMI output index. I apply the method under different assumptions on the cross-sectional distribution of output growth using the uniform, logistic and Laplace distribution. I show that alternative distribution assumptions lead to very similar estimates. I also test the performance of the different growth estimates in an out of sample forecasting exercise of actual industrial production growth. All growth estimates beat a simple autoregressive model of output growth. Distribution assumptions again matter little most of the time except during the financial crisis when the estimates constructed using the Laplace distributional assumption perform the best. My findings are consistent with recent findings of Bottazzi and Sechi (2006) that the distribution of firm growth rates has a Laplace distribution. JEL Classification: C18, E27.
    Keywords: Diffusion index, forecasting, purchasing managers’ surveys, ISM, PMI, qualitative response data, Carlson-Parkin method
    Date: 2012–02
  45. By: Braak, A.M. ter (Tilburg University)
    Abstract: Private labels have witnessed considerable growth in grocery retailing. While existing academic studies have provided valuable insights concerning the evolution of private labels, several issues remain largely unexplored. First, in the face of these large private-label volumes, private-label production opportunities arise. Due to increased private-label competition, national-brand manufacturers increasingly pursue a dual-branding strategy and engage in private-label production next to their national-brand activities. In chapter two of this dissertation, a major motivation for national-brand manufacturers to engage in private-label production, namely whether it creates retailer goodwill, is investigated. It shows that private-label production is indeed rewarded: national-brand manufacturers involved in private-label production for a discounter have a higher likelihood of obtaining national-brand shelf presence at that discounter. The third chapter focuses on one of the main reasons why retailers push private labels, i.e. because they generate high margins, and considers how a retailer’s private-label margins vary within categories. It demonstrates that a retailer’s private-label margins depend on the nature of the private-label supplier-retailer relationship, that they differ across quality tiers and package sizes, and that they are affected by a supplier’s extent of national-brand focus next to its private-label production for the retailer. Finally, this dissertation concentrates on the recent premium private-label trend. Even though premium private labels are seen as “one of the hottest trends in retailing,” retailers are selective in picking their battles with top-quality national brands and do not feel the need to extend their standard private label with a premium private label in every category. The fourth chapter provides insight into why retailers offer premium private labels in some categories, but not in others. The research presented in this dissertation is among the first to empirically investigate the phenomenon of private-label production, and to shed light on the recent trend of premium private labels.
    Date: 2012
  46. By: Francesco Giavazzi; Michael McMahon
    Abstract: This paper provides new evidence on the effects of fiscal policy by studying, using household-level data, how households respond to shifts in government spending. Our identification strategy allows us to control for time-specific aggregate effects, such as the stance of monetary policy or the U.S.-wide business cycle. However, it potentially prevents us from estimating the wealth effects associated with a shift in spending. We find significant heterogeneity in households' response to a spending shock; the effects appear vary over time depending, among other factors, on the state of business cycle and, at a lower frequency, on the composition of employment (such as the share of workers in part-time jobs). Shifts in spending could also have important distributional effects that are lost when estimating an aggregate multiplier. Heads of households working relatively few (weekly) hours, for instance, suffer from a spending shock of the type we analyzed: their consumption falls, their hours increase and their real wages fall.
    JEL: D12 E21 E24 E62
    Date: 2012–02
  47. By: Levent Celik; Bilgehan Karabay; John McLaren
    Abstract: With fast-track authority (FTA), the US Congress delegates trade-policy authority to the President by committing not to amend a trade agreement. We suggest an interpretation in which Congress uses FTA to forestall destructive competition between its members for protectionist rents. We show that FTA is never granted if an industry is operating in the majority of districts. Second, the more equally distributed are the industries across districts and the more similar are the industries' sizes, the more likely it is that FTA is granted. This is true since competition over rents is most punishing when bargaining power is symmetrically distributed, and in that case the ex ante expected welfare of each district is lower without FTA. Third, if existing levels of protection are very different across industries, even if FTA is granted, it may not lead to free trade because a majority of industries may prefer the status quo to free trade.
    JEL: C72 C78 D72 F13
    Date: 2012–02
  48. By: Lechmann, Daniel S. J.; Schnabel, Claus
    Abstract: Using a large representative German data set and various concepts of self-employment, this paper tests the 'jack-of-all-trades' view of entrepreneurship by Lazear (AER 2004). Consistent with its theoretical assumptions we find that self-employed individuals perform more tasks and that their work requires more skills than that of paid employees. In contrast to Lazear's assumptions, however, self-employed individuals do not just need more basic but also more expert skills than employees. Our results also provide only very limited support for the idea that human capital investment patterns differ between those who become self-employed and those ending up in paid employment. -- Unter Verwendung eines großen, repräsentativen Datensatzes für Deutschland und verschiedener Abgrenzungen der Selbständigkeit überprüft diese Arbeit die 'jack-of-all-trades'-Sicht des Unternehmertums von Lazear (AER 2004). In Übereinstimmung mit ihren theoretischen Annahmen finden wir, dass Selbständige mehr verschiedene Tätigkeiten ausüben und Kenntnisse aus mehr verschiedenen Gebieten benötigen als nicht-selbständige Arbeitnehmer. Im Gegensatz zu Lazear's Annahmen benötigen Selbständige allerdings nicht nur mehr Grundkenntnisse sondern auch mehr Fachkenntnisse als Nicht-Selbständige. Unsere Ergebnisse liefern zudem nur wenig Unterstützung für die Behauptung, dass sich die Muster der Humankapitalaneignung zwischen Selbstständigen und abhängig beschäftigten Arbeitnehmern sichtbar unterscheiden.
    Keywords: entrepreneurship,self-employed,Germany
    JEL: J23 J24
    Date: 2011

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