1,721,366 research outputs found
Partnership and Hold-Up in Early America
Get PDFWilliamson (1985) argues that individuals form firms with specific internal governance structures to mitigate certain types of opportunistic behavior that may inhibit efficient contracting between independent contractors. But once firms are established, the individuals that comprise them may still act opportunistically. This paper investigates a specific historical case: the partnership in early America. Partnerships grappled with information-based problems, such as adverse selection, moral hazard, as well as ex ante and ex post contractual opportunism, including hold-up. Asset specificity and imperfect contracts made partnerships vulnerable to hold-up, especially when one partner invested in a sunk asset that enhanced the productivity of all other partners. This was a particular problem facing existing partners when they invited a new partner into their firm. Empirical evidence from the mid-nineteenth century suggests that individuals mitigated the effects of pre- and post-contractual opportunism by forming partnerships with others of similar age, productivity, and capital. This finding brings the traditional interpretation of partnerships as mentor-prot‚g‚ relationships into question.
The Political Economy of Finance
Get PDFIf the private benefits of control are high and management owns a small equity stake, managers and workers are natural allies. There are two forces at play. First, managers effectively transform employees into a “poison pill’’ by signing generous long-term labor contracts and thereby reducing the firm’s attractiveness to a raider. Second, employees act as “white squires’’ for the incumbent managers, lobbying against hostile takeovers to protect the high wages enjoyed under incumbent management. Our model is consistent with available empirical findings, and yields new predictions as well.political economy, shareholder protection, corporate governance, bankruptcy law, credit market regulation, financial development, privatization
Strategic Supply Function Competition with Private Information
Get PDFA finite number of sellers (n) compete in schedules to supply an elastic demand. The costs of the sellers have uncertain common and private value components and there is no exogenous noise in the system. A Bayesian supply function equilibrium is characterized; the equilibrium is privately revealing and the incentives to acquire information are preserved. Price-cost margins and bid shading are affected by the parameters of the information structure: supply functions are steeper with more noise in the private signals or more correlation among the costs parameters. In fact, for large values of noise or correlation supply functions are downward sloping, margins are larger than the Cournot ones, and as we approach the common value case they tend to the collusive level. Private information coupled with strategic behavior induces additional distortionary market power above full information levels and welfare losses which can be counteracted by subsidies. As the market grows large the equilibrium becomes price-taking, bid shading is of the order of 1/ n , and the order of magnitude of welfare losses is 1/ n2 . The results extend to demand schedule competition and a range of applications in product and financial markets are presented.reverse auction, demand schedule competition, market power, adverse selection, competitiveness, rational expectations, collusion, welfare
Legal structure, financial structure, and the monetary policy transmission mechanism
Get PDFAmong the many challenges facing the new Eurosystem - the European Central Bank and the central banks of the eleven members of the European Monetary Union - is the possibility that participating countries will respond differently to interest rate changes. This paper provides evidence that differences in financial structure are the proximate cause for these national asymmetries in monetary policy transmission and that these differences in financial structure are a result of differences in legal structure. The author concludes that unless legal structures are harmonized across Europe, the financial structures and monetary transmission mechanisms of the European Union countries will remain diverseEuropean Central Bank ; European Monetary System (Organization) ; Monetary policy - Europe ; Europe
When Shopbots Meet Emails: Implications for Price Competition on the Internet
Get PDFThe Internet has dramatically reduced search costs for customers through tools such as shopbots. The conventional wisdom is that this reduction in search costs will increase price competition leading to a decline in prices and profits for online firms. In this paper, we provide an argument for why in contrast to conventional wisdom, competition may be reduced and prices may rise as consumer search costs for prices fall. Our argument has particular appeal in the context of the Internet, where email targeting and the ability to track and record customer behavior are institutional features that facilitate cost effective targeted pricing by firms. We show that such targeted pricing can serve as an effective counterweight to keep average prices high despite the downward pressure on prices due to low search costs. Surprisingly, we find that the effectiveness of targeting itself improves as search costs fall; therefore prices and profits can increase as search costs fall. The intuition for our argument is as follows: Consider a market where consumers are heterogeneous in their loyalty as well as their cost per unit time to search. In the brick and mortar world, it takes consumers a very large amount of time to search across multiple firms. Therefore few customers will search in equilibrium because the gains from search will be relatively small compared to the cost of search. In such a market, a firm will not be able to distinguish whether its customers bought from it due to their high loyalty or due to their unwillingness to search for low prices because of the high search cost. On the Internet, the amount of time to search across multiple stores is minimal (say zero). Now irrespective of their opportunity cost of time, all consumers can search because the time to search is negligible. If in spite of this, a consumer does not search in this environment, she is revealing that her loyalty to the firm that she buys from is very high. The key insight is that as search becomes easy for everyone, then lack of search indicates strong customer loyalty and thus can be used as a proxy to segment the market into loyal and price sensitive segments. Thanks to email technology, firms can selectively set differential prices to different customers, i.e. a high price to the loyal segment and a low price to the price sensitive segment, at relatively low cost. The increased competition due to price transparency caused by low search costs can thus be offset by the ability of firms to price discriminate between their loyal (price insensitive) customers and their price sensitive customers. In fact, we find that it can reduce the extent of competition among the firms and raise their profits. Most surprisingly, the positive effect of targeting on prices improves when search costs fall, because firms can learn more about the differences in customer loyalty, thus improving the effectiveness of targeted pricing. The effectiveness of targeted pricing however is moderated by the extent of opt-in by customers who give their permission for firms to contact them directly by email. Our analysis offers interesting strategic insights for managers about how to address the competitive problems associated with low search costs on the Internet: (1) It suggests that firms should invest in better technologies for personalization and targeted pricing so as to prevent the Internet from becoming a competitive minefield that destroys firm profitability. In fact we show that low search costs can facilitate better price personalization and can thus aid in improving the effectiveness of targeted pricing efforts. (2) The analysis also offers guidelines for online customer acquisition efforts. The critical issue for competitive advantage is not in increasing market share per se, but in increasing the loyalty of customers. While a larger share of very loyal customers reduces competitive intensity, surprisingly a larger share of customers who are not very loyal can be a competitive disadvantage. In order for customer acquisition to be profitable, it should be accompanied by a superior product or service that can ensure high loyalty. (3) Investing in online privacy initiatives that assures consumers that their private information will not be abused other than to offer them "deals" is worthwhile. Such assurances will encourage consumers to opt into firm mailing lists. This facilitates successful targeting which in turn ameliorates the competitive threats due to low search costs on the Internet. (4) When the overwhelming majority of customers are satisfied with online privacy, the remaining privacy conscious customers who are not willing to pay a higher price to maintain their privacy will be left out of the market. While this may be of some concern to privacy advocates, it is interesting that total consumer welfare can be higher even if some consumers are left out of the market. Our analysis captures the competitive implications of the interaction between two institutions facilitated by the Internet: Shopbots and Emails. But the research question addressed is more fundamental: What is the nature of competition in an environment with low costs for both consumer search and firm-to-consumer personalized communications? The strategic insights obtained in the paper may be beneficially applied even to offline businesses that can replicate such an environment. For example, offline firms could have websites on which they post prices allowing for easy price comparisons. They could also use tools such as frequency programs to create addressable databases that enable them to communicate with customers by direct mail and email (as many airlines and stores do).
Going Beyond Counting First Authors in Author Co-citation Analysis
Get PDFThe present study examines one of the fundamental aspects of author co-citation analysis (ACA) - the way co-citation
counts are defined. Co-citation counting provides the data on which all subsequent statistical analyses and mappings
are based, and we compare ACA results based on two different types of co-citation counting - the traditional type that
only counts the first one among a cited work's authors on the one hand and a non-traditional type that takes into
account the first 5 authors of a cited work on the other hand. Results indicate that the picture produced through this non-traditional author co-citation counting contains more coherent author groups and is therefore considerably clearer. However, this picture represents fewer specialties in the research field being studied than that produced through the traditional first-author co-citation counting when the same number of top-ranked authors is selected and analyzed. Reasons for these effects are discussed
Strategic Supply Function Competition with Private Information
Get PDFA Bayesian supply function equilibrium is characterized in a market where firms have private information about their uncertain costs. It is found that with supply function competition, and in contrast to Bayesian Cournot competition, competitiveness is affected by the parameters of the information structure: supply functions are steeper with more noise in the private signals or more correlation among the costs parameters. In fact, for large values of noise or correlation supply functions are downward sloping, margins are larger than the Cournot ones, and as we approach the common value case they tend to the collusive level. Furthermore, competition in supply functions aggregates the dispersed information of firms (the equilibrium is privately revealing) while Cournot competition does not. The implication is that with the former the only source of deadweight loss is market power while with the latter we have to add private information. As the market grows large the equilibrium becomes competitive and we obtain an approximation to how many competitors are needed to have a certain degree of competitiveness.imperfect competition, adverse selection, competitiveness, rational expectations, collusion, welfare
Variations on the Author
Get PDF“Variations on the Author” discusses two of Eduardo Coutinho’s recent films (Um Dia na Vida, from 2010, and Últimas Conversas, posthumously released in 2015) and their contribution to the general question of documentary authorship. The director’s filmography is characterized by a consistent yet self-effacing form of authorial self-inscription: Coutinho often features as an interviewer that rather than express opinions propels discourses; an interviewer that is good at listening. This mode of self-inscription characterizes him as an author who is not expressive but who is nonetheless markedly present on the screen. In Um Dia na Vida, however, Coutinho is completely absent form the image, while Últimas Conversas, on the contrary, includes a confessional prologue that moves the director from the margins to the center of his films. This article examines the ways in which these works stand out in the filmography of a director who offers new insights into the notion of cinematic authorship
Appropriate Similarity Measures for Author Cocitation Analysis
Get PDFWe provide a number of new insights into the methodological discussion about author cocitation analysis. We first argue that the use of the Pearson correlation for measuring the similarity between authors’ cocitation profiles is not very satisfactory. We then discuss what kind of similarity measures may be used as an alternative to the Pearson correlation. We consider three similarity measures in particular. One is the well-known cosine. The other two similarity measures have not been used before in the bibliometric literature. Finally, we show by means of an example that our findings have a high practical relevance.information science;Pearson correlation;cosine;similarity measure;author cocitation analysis
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