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on Business Economics |
| By: | Christos Constantatos (Department of Economics, University of Macedonia); Ioannis Pinopoulos (Department of Economics, University of Macedonia) |
| Abstract: | We consider a two-tier industry where a vertically integrated firm sells input to, and competes against a downstream rival. We show that when the upstream divi- sion of the integrated firm uses a two-part tari¤ contract, the downstream division will behave less agressively despite common presumption that Cournot conjectures preclude such behavior. By limiting its quantity, the downstream division increases rival's profits that can be recouped by the upstream division via a fixed fee. This ac- commodation e¤ect allows the integrated firm to achieve full decisions-coordination between its divisions, and Stackelberg-leader profits, even though downstream deci- sions are taken simultaneously. |
| Keywords: | Vertical integration, accommodation effect, two-part tariffs, product differentiation, Cournot competition. |
| JEL: | L4 L22 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:mcd:mcddps:2015_03&r=bec |
| By: | Wright, Melissa A; Beatty, Timothy K.M.; Chouinard, Hayley H. |
| Keywords: | Food Consumption/Nutrition/Food Safety, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea15:205817&r=bec |
| By: | Ichiro Iwasaki (Institute of Economic Research, Hitotsubashi University) |
| Abstract: | In this paper, using panel data of industrial firms obtained from unique questionnaire surveys conducted all over the Russian Federation in 2005 and 2009, we trace structural change in corporate governance systems before and after the global financial crisis and empirically examine their determinants. We found that, during this period, Russian firms improved the quality of corporate governance across the entire industrial sector. Furthermore, our empirical evidence strongly supports a hypothesis regarding the relationship between outside ownership and board composition as well as that concerning the impact of outside directorship on the audit system. Meanwhile, our estimation results also indicate the possibility that the global financial crisis has brought about asymmetric changes, in the sense that it enhanced the independence of corporate boards, while it deteriorated the independence of the audit system, thus, partially rejecting our prediction with respect to the disciplinary effect of the crisis on the corporate governance system. |
| Keywords: | global financial crisis, ownership change, evolution of corporate governance, board composition, audit system, Russia |
| JEL: | D22 G01 G34 M42 P34 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:925&r=bec |
| By: | Mundaca, Gabriela |
| Abstract: | Bulgaria follows a currency board tied to the euro. The analysis of the effects that adopting the euro might have on its export sector is crucial for Bulgaria and other similar Eastern European countries. Bulgaria, a middle-income country has now more multi-product firms (MPFs) than single-product firms (SPFs). Thus, MPFs is not only a characteristic of only high-income countries. The contribution of adding and dropping products within a single firm is important to the export sector and the aggregate economy. MPFs benefit from exporting to EU markets by becoming more productive and encouraged to exporting more product varieties while beating down the costs of producing these new varieties and the cannibalization effect. These MPFs might be in advantage as a result of facing lower exchange rate costs and being better exposed to the acquisition of know-how and technology from participating in EU markets. MPFs cut their product diversity only to non-EU countries to keep core competence and in response to adverse changes in the exchange rate. |
| Keywords: | exchange rate, exports, MPFs, cannibalization, core competence |
| JEL: | F12 F14 F31 F33 F41 |
| Date: | 2015–07–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65751&r=bec |
| By: | Zhang, Yu Yvette; Palma, Marco A.; Jin, Shaosheng |
| Abstract: | In this study, we explore how the acquisition of Smithfield, the world’s larger pork producer, by a Chinese firm Shuanghui, on consumers’ WTP to meat product using experimental auctions. Our results indicate that the acquisition benefits Shuanghui in particular and other Chinese firms in general in terms of consumer’s willingness to pay. On the other firms, the general impacts on US firms might be negative, probably due to expected lower price or reduced perceived difference between domestic and imported meat products. |
| Keywords: | Merging & Acquisition, Multinational business, Consumer Willingness to Pay, Experiments, Auctions, Agribusiness, Consumer/Household Economics, Marketing, JEL Codes: C91, D44, D12, F23, Q13, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea15:205811&r=bec |
| By: | Wang, Sun Ling; Newton, Doris J. |
| Keywords: | Agricultural Resource Management Survey (ARMS), productivity, technical efficiency, stochastic input distance function, U.S. field crop farm, Agricultural and Food Policy, Crop Production/Industries, Farm Management, Productivity Analysis, Q12, Q16, |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea15:205344&r=bec |
| By: | Sanchez, Leonardo; Ng, Desmond |
| Keywords: | Innovation, Coherence, Industry Structure, Agribusiness, Industrial Organization, |
| Date: | 2015–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea15:205389&r=bec |
| By: | Roberto Fattal Jaef (The World Bank); Francisco Buera (Federal Reserve Bank of Chicago) |
| Abstract: | Development dynamics are characterized by sustained improvements in TFP, protracted increases in investment rates, and a broad transformation in the struc- ture of production. Low income countries are characterized by small average firm size, slow firm growth over the life-cycle, and significant dispersion of marginal products. In this paper we present a quantitative theory that jointly matches the behavior of firms in under-developed economies and key properties of develop- ment paths. We work with a model that features endogenous innovation decisions by entrepreneurs, reallocation of factors due to idiosyncratic productivity shocks, and selection in and out of entrepreneurship. We construct a low-TFP stationary equilibrium with dispersion in marginal products that is driven by idiosyncratic distortions. We then trigger development through a reform that liberalizes the economy from all frictions. Our quantitative theory can account well for cross- sectional and life-cycle patterns in distorted economies, and can generate develop- ment paths with rising TFP and investment dynamics, consistent with the data. Ignoring either endogenous innovation or selection in and out of entrepreneurship would lead to counter-factual transition paths, similar to those of the standard neoclassical growth model. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed015:274&r=bec |
| By: | Kovacs, Kent; Mancini, Mattia; West, Grant |
| Keywords: | Irrigation system, Efficiency frontiers, Landscape optimization, Reservoirs, Farm Management, Resource /Energy Economics and Policy, |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea15:205111&r=bec |
| By: | Ang, Frederic; Mortimer, Simon; Areal, Francisco; Tiffin, Richard |
| Abstract: | Using a nonparametric framework, we analyse the impact of dynamic profit maximization on biodiversity for a sample of UK cereal farms for the year 2007. Recognizing the drawbacks of directly implementing biodiversity as an output or input in a distance function framework, we only consider inputs and outputs that are clear choice variables from the firm’s perspective. We use a dynamic, intertemporal profit function to take into account adjustment costs. We assess how dynamic profit maximization may shift land use allocation and, as a consequence, the Shannon index for crop diversification. Doing so allows us to calculate the shadow prices of crop diversification in a novel way that is consistent with the dynamic theory of the firm. |
| Keywords: | biodiversity, Shannon index, network DEA, dynamic optimisation, shadow value, United Kingdom, Environmental Economics and Policy, Land Economics/Use, Production Economics, D22, D24, D92, Q15, Q51, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea15:205857&r=bec |
| By: | Liliana Varela (University of Houston) |
| Abstract: | This paper studies the impact of capital market distortions on misallocation, competition and aggregate productivity. Focusing on distortions in the access to international borrowing across firms, I show that a reduction in these distortions leads to an increase in aggregate productivity through two different channels. First, previously credit-constrained firms respond to better financing terms by increasing their investments in technology, a reallocation effect. Second, non-constrained firms also expand their investments in technology due to increased competition, a pro-competitive effect. I provide evidence for these two channels using firm-level census data around the deregulation of international financial flows in Hungary. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed015:225&r=bec |
| By: | Hirsch, Stefan; Gschwandtner, Adelina |
| Abstract: | This article analyzes profit persistence as well as the drivers of profitability in the US and EU food industry using GMM estimations. Due to different structures in firm size comparable samples of US and EU food processors are derived using Propensity Score Matching. The results indicate that the persistence of profitability in the food industry is lower compared to other manufacturing sectors. Firm specific drivers of profitability turn out to be firm size and growth as well as financial risk. Interestingly, while long-term risk has a negative impact on profit persistence in the EU, it has a positive one in the US. Regarding industry characteristics the growth rate measured by the growth in industry sales has a significant impact on profitability. While this impact is positive in the EU, it is negative in the US. |
| Keywords: | Firm profit, food industry, GMM panel estimation, propensity score matching, Financial Economics, Industrial Organization, L12, L66, M21, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea15:206035&r=bec |
| By: | Mikkola, Minna |
| Abstract: | The paper deals with a new competition situation between a large consumer co-operative and a very small local food shop as its rival. While both businesses are selling food, their business concepts look very different. These concepts are analysed as ideology, identity and shopkeeper/retailer speech. The results show the deep cutting change in trade introduced by the small food shop as concern for sustainable food system and social relations as resources for new community building, suggesting conditional possibilities for further business growth. The large retailer has problems in answering the challenge as its concept seems to exclude concern for food system, the trade includes economic interests and rather negligible social relations. In principle, the small contester could succeed in expanding its business model through staying small and proliferating, supporting small farms’ economic viability. The large retailer could succeed by investing in launching more local and organic produce and thereby developing both primary production and processing capacity in a lagging rural region. The study shows the importance of the business concept as a condition and limitation for further growth. |
| Keywords: | Agribusiness, |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iefi15:206208&r=bec |
| By: | Russell Hillberry (The World Bank); Thibault Fally (University of California Berkeley) |
| Abstract: | International supply chains require coordination of numerous activities across multiple countries and firms. We develop a theoretical model in which the optimal organization of a supply chain involves a series of linked decisions that equate, at the margin, (domestic or international) transaction costs and the costs of coordinating more tasks within the firm. The parameters that govern the two types of costs explain variation in supply chain length as well as cross-country variation in gross output-to-value added ratios. Comparative advantage within chains depends solely on the coordination cost parameter. Conditional on participation in a chain, countries with lower coordination costs locate downstream. Within a chain, domestic transaction costs only aect countries' absolute advantage, but a country with large transaction costs tends to specialize in those chains for which its coordination costs are especially low. We provide an analytical treatment of trade and welfare responses to trade cost change in a simple two-country model. To explore the model's implications in a richer setting we calibrate the model to match key observables in East Asia, and evaluate implications of changes in model parameters for trade, welfare, the length of supply chains and countries' relative position within them. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed015:282&r=bec |