nep-cul New Economics Papers
on Cultural Economics
Issue of 2015‒06‒05
three papers chosen by
Roberto Zanola
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Culture and Global Sourcing By Gorodnichenko, Yuriy; Kukharskyy, Bohdan; Roland, Gérard
  2. Local versus Foreign: A Microeconomic Analysis of Cultural Preferences By Maria Masood; ;
  3. Professional Sports Facilities, Teams and Property Values: Evidence from Seattle's Key Arena By Brad R. Humphreys; Adam Nowak

  1. By: Gorodnichenko, Yuriy; Kukharskyy, Bohdan; Roland, Gérard
    Abstract: This paper develops a model of global sourcing with culturally dissimilar countries. Production of final goods requires the coordination of decisions between the headquarter of a multinational firm and managers of their component suppliers. Managers of both units are assumed to have strong beliefs about the right course of action and are reluctant to adjust their decisions. We characterize the optimal allocation of decision rights across firms when contracts are incomplete. Our theoretical model delivers two key predictions: the incentive of a firm to integrate (rather than outsource) its input supply is decreasing in the cultural distance between the home and the host country and decreasing in trade costs between the two countries. Combining data from the U.S. Census Bureau's Related Party Trade with various measures for cultural distance and trade cost, we find empirical evidence strongly supportive of these two predictions.
    Keywords: cultural distance; global sourcing; organization of multinational firms; property rights; vertical integration
    JEL: F14 F23 P14 Z1
    Date: 2015–05
  2. By: Maria Masood; ;
    Abstract: In spite of the growing evidence about the bipolarization of cinema markets around national and American movies, little is known about the formation of preferences at the individual level. No microeconomic analysis has investigated the determinants explaining why a consumer might prefer watching a foreign movie rather than a local one, supposedly closer to his sociocultural context. Relying on an augmented social interaction model, the present study investigates the influence of two, usually separated, determinants of preference for a given origin of a movie: a liking by consuming capital and the preferences of other individuals through social interactions. More specifically, prior exposure to the different varieties, comprised in the liking by consuming capital, is a crucial ingredient when it comes to movie preferences: through its direct impact but also because it dampens the social interaction effect.
    Keywords: Addictive goods, Social Interactions, Determinants of preferences, Cultural diversity
    Date: 2015–05
  3. By: Brad R. Humphreys (West Virginia University, College of Business and Economics); Adam Nowak (West Virginia University, College of Business and Economics)
    Abstract: Professional sports teams and facilities can generate negative or positive amenities to be capitalized into nearby property prices. We investigate the effect of the departure of a National Basketball Association team, the Seattle SuperSonics, from Key Arena in Seattle in 2008 on nearby residential property values. The arena continued to operate after the team left, so this departure represents a natural experiment to identify the net effects of a sports team from the effect of a facility and other events that take place in the facility. Results from a repeat sale regression model indicate that the departure of the SuperSonics was associated with excess appreciation of condo prices near Key Arena, suggesting that the team generated disamenities in this market.
    Keywords: repeat sales regression model, property values, professional sports
    JEL: R13 R58 H71 L83
    Date: 2015–05

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