nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2013‒11‒02
eleven papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. Monopoly and Dominant Firms: Antitrust Economics and Policy Approaches By Lawrence J. White
  2. Equilibrium versus Process: A Confrontation between Mainstream and Austrian Ontology By Sandye Gloria-Palermo
  3. Survey evidence on price and wage rigidities in Portugal By Fernando Martins
  4. Financialization and the nonfinancial corporation: an investigation of firmlevel investment behavior in the U.S., 1971-2011 By Leila E. Davis
  5. An evolutionary view on social innovation and the process of economic change By Andreas Reinstaller
  6. Deceptive data? The New Survey of London Life and Labour 1928 – 31 By Simon T Abernethy
  7. Processes of firm growth and diversification: theory and evidence By Alex Coad; Christina Guenther
  8. New Firms and New Forms of Work By Andreas Koch; Daniel Pastuh; Jochen Späth
  9. Work histories of Older People - Evidence from Mixed Method Occupational History Calendars By Fiona Carmichael; Claire Hulme; Lorna Porcellato
  10. The Dragon awakes: Is Chinese competition policy a cause for concern? By Mario Mariniello
  11. Explicit Evidence of an Implicit Contract By Andrew T. Young; Daniel Levy

  1. By: Lawrence J. White
    Date: 2013
  2. By: Sandye Gloria-Palermo (GREDEG CNRS; University of Nice-Sophia Antipolis, France)
    Abstract: We confront mainstream and Austrian economics from a history of economic analysis point of view in order to identify the main reasons of their divergent interests on the concepts of, respectively, equilibrium and processes. The result of this confrontation attributes a decisive role to ontological considerations: mainstream central focus on equilibrium is the consequence of the adoption of specific mathematical tools. But the claim for a mathematical approach to economics is a doctrine that is independent from any study on the nature of the underlying economic system and real phenomena that are non-tractable are either reinterpreted in an amenable to reason form or are simply ignored. The choice of the tools determine the orthodox vision of the economic world as a closed system of interacting autonomous atoms. Austrians proceed exactly the other way round: ontological investigations are the starting point and as a consequence, they choose the relevant tools so to be coherent with their ontology where social reality is apprehended along an open processual view.
    Keywords: Mainstream, mathematical formalism, Austrian school, social ontology, mathematical constructivism
    JEL: B13 B53 C18
    Date: 2013–10
  3. By: Fernando Martins
    Abstract: This paper exploits the information collected from a survey conducted on a sample of Portuguese firms to study the patterns of firms’ price and wage adjustments and the extent of nominal price and wage rigidities. The evidence shows that the frequency of price changes varies substantially across sectors and depends on a number of factors such as the intensity of competition, the share of labour costs and firms’ price reviewing behaviour. The results also show that wages are more flexible in those firms where the fraction of permanent and high-skilled workers is lower and where the share of flexible pay components is higher.
    JEL: D21 E30 J31
    Date: 2013
  4. By: Leila E. Davis (University of Massachusetts Amherst)
    Abstract: Changes in the portfolio and financing behavior of nonfinancial corporations (NFCs) over the post- 1970 period point to the financialization of the nonfinancial corporation and raise the question of accompanying changes in fixed investment behavior. Using a firm-level panel, this paper econometrically investigates the relationship between financialization and investment, exploring the implications of changes in financing behavior, increasingly entrenched shareholder value norms, and rising firm-level demand volatility for investment by NFCs in the U.S. between 1971 and 2011. Shareholder value norms and firm-level volatility are, in particular, identified as characteristics of the post-1970 U.S. economy that are associated with a significant decline in NFC investment rates. The analysis also highlights key differences by firm size. In particular, shareholder value norms are found to primarily influence the investment behavior of large NFCs, while rising volatility most substantially impacts small firms.
    Date: 2013
  5. By: Andreas Reinstaller
    Abstract: The concepts social innovation and social entrepreneurship have gained considerable attention both in different fields of academic research and in the context of the development of economic and social policies. However, despite its wide-spread use there does not exist a unique or at least widely accepted agreement among scholars on its relevance and meaning. The principal aim of this paper is to work out a general framework for the analysis of social innovations borrowing key concepts from institutional economics, evolutionary (game) theory and the capabilities approach to welfare economics. Using these approaches we specify the elements that are core for the analysis of social innovation as well as secondary elements that are in the context of this concept and specific to particular manifestations of the phenomenon. While this attempt to clarify the concept of social innovation it is necessarily incomplete, we consider it to be a first necessary step to make them more operational for empirical research in social sciences but also for the design, implementation and assessment of policies to support social innovation. The final part of the paper discusses then how social innovation contributes to social and economic progress in general, and its potential contribution to industrial change more specifically.
    Keywords: Social innovation, instiutional change, economic development, industrial policy
    JEL: D02 O17 O43
    Date: 2013–10
  6. By: Simon T Abernethy (Faculty of History, University of Cambridge)
    Abstract: This paper examines the New Survey of London Life and Labour, a social survey conducted within Greater London in the late 1920s and early 1930s. Relatively unknown compared to Charles Booth’s more famous survey of London some forty years before, the New Survey is perhaps the most detailed study of the lives of everyday Londoners in the inter-war period. This paper explains the background of the New Survey and examines the processes that were used to collect household information. It then examines how reliable the data is, especially given that doubts have been raised over the conduct of one interviewer in particular, who was responsible for collecting almost a fifth of the total information.
    Keywords: New Survey of London Life and Labour, Life and Labour of the people in London, Greater London, Social Survey, inter-war, Arthur Lyon Bowley, Hubert Llewellyn Smith.
    JEL: N34
    Date: 2013–09–10
  7. By: Alex Coad (SPRU, University of Sussex, UK); Christina Guenther (WHU - Otto Beisheim school of Management, Germany)
    Keywords: Diversification, firm growth, Penrose, Machine tools, Growth process
    JEL: L6 L11 L20 L25
  8. By: Andreas Koch; Daniel Pastuh; Jochen Späth
    Abstract: The present contribution examines whether and how young firms and incumbents differ with regard to selected aspects of work forms and work organization in order to assess their roles for the qualitative changes of work in industrialized countries. Conceptually, we emanate from the approach of negotiated order and we empirically ground our research upon guided interviews conducted with employers and employees in about 50 firms in four distinct industries in Germany. According to our results, new forms of work are particularly widespread in new firms. Most of the young companies in our sample practice autonomous work forms like working on one’s own responsibility and team working more frequently than incumbents, they are more prone to revert to functional flexibility (e.g. changing tasks and duties) and their working time arrangements tend to be more flexible. Altogether, firm age turns out to be an important parameter of new work forms and organization, though it is not the only one. Our results show that also the general and industry-specific framework conditions, a firm’s internal characteristics (e.g. innovation intensity, hierarchies and routines), the relevant actors (management, workforce) and particularly the coaction of these elements are important drivers shaping the overall feature of a firm.
    Keywords: Young firms, Negotiated Order, Quality of Work, Working Time, Autonomy, Work Organization, Germany, Guided Interviews
    JEL: J21 L23 L26
    Date: 2013–10
  9. By: Fiona Carmichael (Department of Management, Birmingham Business School, University of Birmingham); Claire Hulme (Academic Unit of Health Economics, Leeds Institute of Health Sciences, University of Leeds); Lorna Porcellato (Faculty of Health and Applied Social Sciences, Liverpool John Moores University)
    Date: 2013
  10. By: Mario Mariniello
    Abstract: Chinaâ??s Anti-Monopoly Law, adopted in 2007, is largely compatible with antitrust law in the European Union, the United States and other jurisdictions. Enforcement activity by the Chinese authorities is also approaching the level seen in the EU. The Chinese law, however, leaves significant room for the use of competition policy to further industrial policy objectives. The data presented in this Policy Contribution indicates that Chinese merger control might have asymmetrically targeted foreign companies, while favouring domestic companies. However, there are no indications that antitrust control has been used to favour domestic players. A strategy to achieve convergence in global antitrust enforcement should include support for Chinese competition authorities to develop the institutional tools they already have, and to improve merger control by promoting the adoption of a consumer-oriented test and enforcing M&A notification rules.
    Date: 2013–10
  11. By: Andrew T. Young; Daniel Levy
    Abstract: We offer the first direct evidence of an implicit contract in a goods market. The evidence comes from the market for Coca-Cola. We demonstrate that the Coca-Cola Company left written evidence of its implicit contract with its consumers - a very explicit form of an implicit contract. The contract promised a 5 cent price and adherence to the "Secret Formula." Because implicit contracts are unobservable, we adopt a narrative approach. Analyzing a large number of historical documents, we offer evidence of the Company both acknowledging and acting on this implicit contract. We explore quality as a margin of adjustment available to Coca-Cola. The implicit contract included a promise not only of a constant price but also a constant quality (the "real thing"). During a period of over 70 years, we find evidence of only a single case of true quality change. We demonstrate that the perceived costs of breaking the implicit contract were large.
    Date: 2013–08

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