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on Business Economics |
| By: | Kouroche Vafaï (Université Paris Descartes - Sorbonne Cité et Centre d'Economie de la Sorbonne - Paris School of Economics) |
| Abstract: | To control, evaluate, and motivate their agents, firms employ supervisors. As shown by empirical investigations, biased evaluation by supervisors linked to collusion is a persistent feature of firms. This paper studies how deceptive supervision affects agency relationships. We consider a three-level firm where a supervisor is in charge of producing a verifiable report on an agent's output. Depending on the output he has observed, the supervisor may either collude with the agent or with the principal, and make an uniformative report. We show that the proliferation of collusive activities in firms : modifies the configuration of the optimal preventive policy, may increase the expected cost of preventing each type collusion, is beneficial to the supervisor and detrimental to the agent, and is not always harmful. |
| Keywords: | Firm, group decision, control, biased supervision. |
| JEL: | D20 D73 L20 M50 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:12084&r=bec |
| By: | Langenmayr, Dominika; Haufler, Andreas; Bauer, Christian J. |
| Abstract: | Heterogeneous firm productivity seems to provide an argument for governments to pursue 'pick-the-winner' strategies by subsidizing highly productive firms more, or taxing them less, than their less productive counterparts. We appraise this argument by studying the optimal choice of effective tax rates in an oligopolistic industry with heterogeneous firms. We show that the optimal structure of tax differentiation depends critically on the feasible level of corporate profit taxes, which in turn depends on the degree of international tax competition. When tax competition is moderate and profit taxes are high, favoring high-productivity firms is indeed the optimal policy. When tax competition is aggressive and profit taxes are low, however, the optimal tax policy is reversed and low-productivity firms are tax-favored. |
| Keywords: | business taxation; firm heterogeneity; tax competition |
| JEL: | H25 H87 F15 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:14277&r=bec |
| By: | Horst Raff (University of Kiel, Germany); Joachim Wagner (Leuphana University Lueneburg, Germany) |
| Abstract: | Feenstra and Ma (2008) develop a monopolistic competition model where firms choose their optimal product scope by balancing the profits from a new variety against the costs of “cannibalizing” sales of existing varieties. While more productive firms always have a higher market share, there is no monotonic relationship between firms’ productivity level and their choices of product scope. In the model having a higher market share means that firms are hurt more by the “cannibalization effect”. Therefore, the incentive to add more products weakens as productivity rises. This leads to Lemma 3 in Feenstra and Ma (2008): There is an inverted U-shaped relationship between firms’ productivities and the range of varieties they choose to produce. This empirical note takes this Lemma to the data for firms from German manufacturing industries. Empirical evidence is in line with the results from the theoretical model. |
| Keywords: | Multi-product firms, productivity, optimal product scope, Germany |
| JEL: | L1 L6 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:257&r=bec |
| By: | Joshua Sherman; Avi Weiss (Bar-Ilan University) |
| Abstract: | We compare predictions from a theoretical model based on the structure of the main outdoor retail market in Jerusalem with the results of an empirical analysis of price response to changes in cost. We find that firms without adjacent competition exhibit both upward and downward price rigidity, an outcome we ascribe to asymmetric information between the consumer and the firm. Given that previous studies have focused on downward price rigidities of firms with market power, our findings highlight the importance of accounting for transitory information asymmetries between the consumer and the firm when studying price rigidity. |
| Keywords: | price response, price rigidity, information asymmetry, market power |
| JEL: | L11 L13 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:biu:wpaper:2012-13&r=bec |
| By: | Ana Rincon; Michela VECCHI; Francesco VENTURINI |
| Abstract: | We analyse the impact of ICT spillovers on productivity in the uptake of the new technology using company data for the U.S. We account for inter- and intra-industry spillovers and assess the role played by firm’s absorptive capacity. Our results show that intra-industry ICT spillovers have a contemporaneous negative effect that turns positive 5 years after the initial investment. By contrast, inter-industry spillovers are important both in the short and in the long run. In the short run, companies’ innovative effort is complementary to ICT spillovers, but such complementarity disappears with the more pervasive adoption and diffusion of the technology. |
| JEL: | D22 D24 D62 O33 |
| Date: | 2012–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:pia:wpaper:103/2012&r=bec |
| By: | Giulio Bottazzi; Marco Duenas |
| Abstract: | This paper performs an empirical analysis of the international cross sectional distribution of gross domestic product (GDP) growth rates and business cycles. We consider a balanced panel of 91 countries in the period 1960-2010 and two different measures of GDP fluctuations: the logarithmic growth rates and the Hodrick-Prescott cycles. Both measures are characterized by fat-tailed distributions and strong heteroscedasticity. The latter is the result of a scale relation between the variance of the fluctuations and the size of the country. The analysis of the time evolution of these properties shows that distribution tails become asymmetrically fatter during the period of study, suggesting an increased probability of finding high amplitude fluctuations in more recent years. Moreover, we observe significant changes in the scale parameter characterizing the relation between volatility and country size. These findings enrich the discussion about robust properties of business cycles and reveal more evidence about scaling-law relations in economic systems. |
| Keywords: | Growth Rates Distribution; International Business Cycles; Scaling-laws in Economics |
| Date: | 2012–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2012/22&r=bec |
| By: | Wenya Cheng; John Morrow; Kitjawat Tacharoen |
| Abstract: | Optimal production decisions depend on local market characteristics. This paper develops a model to explain firm labor demand and firm density across regions. Firms vary in their technology to combine imperfectly substitutable worker types, and locate across regions with distinct distributions of workers and wages. Firm technologies which best match regional labor markets explain both productivity differences and firm density. Estimating structural model parameters is simple and relies on a two stage OLS procedure. The first stage estimates local market conditions using firm employment and regional data, while the second incorporates regional costs into production function estimation. The method is applied to Chinese manufacturing, population census and geographic data to estimate local market costs and production technologies. In line with the model, we find that labor markets which provide cost advantages explain substantial differences in firm productivity. Furthermore, regions which have lower optimal hiring costs attract more firms per capita. |
| Keywords: | Structural estimation, productivity, firm location, China |
| JEL: | D22 D24 J24 J30 O15 R11 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1181&r=bec |
| By: | Commander, Simon (EBRD, London); Denisova, Irina (CEFIR, New Economic School, Moscow) |
| Abstract: | The paper uses a unique survey of recruitment firms to look at how Russian firms perceive the supply of skills in the labour market and how well those skills match to their demand for labour. Firms invest significant amounts of time in search to fill vacancies and search time is unambiguously increasing in skills. These skill gaps are associated with significant wage premia and are perceived to have negative consequences for the output mix and productivity. A small job postings experiment also finds that search time increased yet further for activities considered relatively innovative. Further, using Russian Ministry of Labour data for all legal migrant applications in 2010 and matching the migrant to the sponsoring firm, we find that there is some – albeit limited - evidence of firms using migrants to address high skill shortages. However, the overwhelming majority of migrants are skilled or unskilled workers; a reflection of the low underlying rates of innovation and associated demand for high skill jobs. |
| Keywords: | job search, vacancies, skills |
| JEL: | J31 J61 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7041&r=bec |