partnerships lemons and efficient trade we analyze the possibility of efficient trade with informationally interdependent valuations and with a dispersed ownership a crucial role is played by the sign of the derivatives that measure how valuation functions depend on others signals if valuations are increasing functions of other agents signals it is more difficult to achieve efficient trade with interdependent values than with private values where the respective derivatives are zero in contrast if valuations are decreasing functions of other agents signals it is easier to achieve efficient trade with interdependent values our results unify and generalize the insights of cramton et al 1987 myerson and satterthwaite 1983 and akerlof 1970

technology adoption under production uncertainty theory and application to irrigation technology we propose a theoretical framework to analyze the conditions under which a farmer facing production uncertainty due to a possible water shortage and incomplete information will adopt a more efficient irrigation technology a reduced form of this model is empirically estimated using a sample of 265 farms located in crete greece the empirical results suggest that farmers choose to adopt the new technology in order to hedge against production risk in addition we show that the farmer s human capital also plays a significant role in the decision to adopt modern more efficient irrigation equipment

contracts as a barrier to entry it is shown that an incumbent seller who faces a threat of entry into his or her market will sign long term contracts that prevent the entry of some lower cost producers even though they do not preclude entry completely moreover when a seller possesses superior information about the likelihood of entry it is shown that the length of the contract may act as a signal of the true probability of entry

incomplete contracts and strategic ambiguity why are observed contracts so often incomplete in the sense that they leave contracting parties obligations vague or unspecified traditional answers to this question invoke transaction costs or bounded rationality in contrast the authors argue that such incompleteness is often an essential feature of a well designed contract specifically once some aspects of performance are unverifiable it is often optimal to leave other verifiable aspects of performance unspecified the authors explore the conditions under which this occurs and investigate the structure of optimal contracts when these conditions are satisfied copyright 1998 by american economic association

the impact of perception and other factors on the adoption of agricultural technology in the moret and jiru woreda district of ethiopia the objectives of this study are to examine both the significance of the impact of farmers perceptions regarding new technology for the adoption decision and how perceptions themselves are influenced by the decision to adopt new technology the study is based on data from 96 wheat farms in the moret and jiru woreda district of ethiopia the probit approach is used to analyse the adoption decision while the variables relevant to farmers perceptions are modelled using the ordered probit methodology a simultaneous equations model combining the probit and ordered probit approaches provides a useful approach to modelling the two way relationship between perception and adoption variables such as farm size farm income and soil type have a key role to play in the model perception is measured by eight different components and as there is a strong collinearity among these various measures a principal components analysis is attempted to draw the best possible linear combination of variables

on the organization of cooperative research and development theory and evidence abstract it has become increasingly prevalent that business firms often rival firms join forces in cooperative r and d to develop new technologies that they can use in their downstream business equity research joint ventures and non equity co development are the two major modes of organization and they differ in how ownership rights over newly developed technologies are assigned this paper addresses the question of when cooperative r and d should be carried out in a research joint venture as opposed to a co development program in a setting of contractual incompleteness the nature of the downstream business of participating firms is shown to determine the organization of cooperative r and d empirical evidence that is consistent with the theoretical analysis is also presented

foundations of dynamic monopoly and the coase conjecture subgame perfect equilibria are characterized for a market in which the seller quotes a price each period assume zero costs positive interest rate continuum of buyers and some technical conditions if buyers valuations are positive then equilibrium is unique buyers strategies are stationary and the price sequence is determinant along the equilibrium path but possibly randomized elsewhere otherwise a continuum of stationary equilibria can exist but at most one with analytic strategies coase s conjecture is verified for stationary strategies reducing the period length drives all prices to zero or the least valuation connections to bargaining models are described journal qf economic literature classification

adoption of agricultural innovations in developing countries a survey this paper reviews various studies which have provided a description and possible explanation to patterns of innovation adoption in the agricultural sector the survey points out that the tendency of many studies to consider innovation adoption in dichotomous terms adoption nonadoption may not be appropriate in many cases where the actual decisions are defined over a more continuous range more attention needs to be given to the socio cultural and institutional environment in area studies so that their interrelation with economic factors affecting adoption can be inferred the presence of several interrelated innovations is another aspect that needs to be considered more carefully in future research since a number of simultaneous decisions may be involved furthermore the possibility of regular sequential patterns in adopting components of a new technological package should be specifically addressed in future studies finally the impact of differential adoption rates on land holding distribution merits attention in future research

seniority and maturity of debt contracts abstract this paper provides a model of how borrowers with private information about their credit prospects choose seniority and maturity of debt increased short term debt leads lenders to liquidate too often it also increases the sensitivity of financing costs to new information although better than average borrowers desire information sensitivity the model implies that short term debt will be senior to long term debt and that long term debt will allow the issue of additional future senior debt the model also has implications on the structure of leveraged buyouts and on how various types of lenders respond to potential defaults

disclosure of know how in research joint ventures abstract research joint ventures rjvs usually face technical uncertainty their expected cost typically depending on the know how disclosed by the partners however the partners have little incentive to share their know how when they are simultaneously competitors in other markets in this setting we show that sometimes profitable rjvs do not start when the disclosure of know how is not contractible and characterize the incentive contracts when they exist we also analyze rjvs as an alternative to licensing contracts for the transmission of know how finally we show that the eec s technology policy based on cost subsidies has negative consequences on firms incentives to share know how

optimal secession rules abstract should the constitution of a federation allow for peaceful secession constitutionally defined secession rules are optimal ex post if the federation breaks down however they may be suboptimal ex ante if the member countries receive a benefit from the perceived long term stability of the federation and constitutionally defined secession rules increase the probability of a break up the optimal social contract trades off ex ante benefits and ex post losses and it may avoid explicit secession rules if transfers are costly the trade off is present even if ex post renegotiation is allowed finally we show that under asymmetric information it is more difficult to keep the federation together and that a secession war may occur

moral hazard and optimal contract form for r d cooperation abstract this paper aims to explain the use of different governance modes for r d cooperation we argue that ex ante cross licensing agreements are preferred to r d joint ventures if potential synergy effects are negligible and the double moral hazard problem caused by unobservable r d effort can be solved by an appropriate royalty scheme it is shown that the first best effort decisions are implementable by a cross licensing agreement if royalty payments are based on r d success however if the payments have to be based on actual know how transfer because r d success is not verifiable there are cases where joint ventures are necessary to induce optimal r d effort

the stability of joint ventures reciprocity and competitive rivalry the focus of the following empirical analysis is the influence of reciprocity and long term relationships on the stability of joint ventures these cooperative incentives are offset by industry structural conditions which may promote competitive rivalry among the partners to separate these effects on joint venture survival the hypothesized relationships are proxied by variables drawn from industry and questionnaire data and estimated under a hazard model specification a theoretical implication of the findings is to suggest a shift of attention from the transaction to the economic relationship as the unit of analysis copyright 1989 by blackwell publishing ltd

agroindustrialization through institutional innovation transaction costs cooperatives and milk market development in the east african highlands abstract some small holders are able to generate reliable and substantial income flows through small scale dairy production for the local market for others a set of unique transaction costs hinders participation cooperative selling institutions are potential catalysts for mitigating these costs stimulating entry into the market and promoting growth in rural communities trends in cooperative organization in east african dairy are evaluated empirical work focuses on alternative techniques for effecting participation among a representative sample of peri urban milk producers in the ethiopian highlands the variables considered are a modern production practice cross bred cow use a traditional production practice indigenous cow use three intellectual capital forming variables experience education and extension and the provision of infrastructure as measured by time to transport milk to market a tobit analysis of marketable surplus generates precise estimates of non participants distances to market and their reservation levels of the covariates measures of the inputs necessary to sustain and enhance the market policy implications focus on the availability of cross bred stock and the level of market infrastructure both of which have marked effects on participation the velocity of transactions in the local community and inevitably the social returns to agroindustrialization

do friends and relatives really help in getting a good job informal contacts are extensively used by both firms and workers to find jobs and fill vacancies the common wisdom in the economic literature is that jobs created through this channel are of better quality and pay higher wages than jobs created through formal methods this paper explores the empirical evidence for european countries using the european community household panel echp and discovers a large cross country as well as cross industry variation in the wage differentials between jobs found through informal and formal methods across countries and industries wage premiums and wage penalties to finding jobs through personal contacts are equally frequent this paper argues that such variation can be explained by looking at firms recruitment strategies in labour markets where employers invest largely in formal recruitment activities matches created through this channel are likely to be of average better quality than those created through informal networks a simple theoretical model is used to show that employers invest more in recruitment for high productivity jobs and for positions that require considerable training the empirical predictions of the theory are successfully tested using industry level data on recruitment costs

termination clauses in partnerships abstract we show that when designing a partnership agreement partner firms may prefer not to specify how to allocate the commonly owned assets should there be an early termination of the contract by not including such a clause firms induce litigation before a court with positive probability firms create this ex post inefficiency in order to increase the levels of non contractible investments i e increase the ex ante efficiency the absence of an asset allocation clause works as a discipline device that mitigates the hold up problem within the partnership in our set up no other contract but that without an asset allocation clause can credibly create an ex post inefficiency

demand supply and willingness to pay for extension services in an emerging market setting although it may be wholly inappropriate to generalize the most important resource available to a subsistence household is the total amount of time that its members have available to spend in productive enterprises in this context services that minimize the time that it takes to perform productive activities are valuable to the household consequently the household is willing to relinquish quantities of other resources in exchange for quantities of the time saving service these simple observations motivate a search for the values that subsistence households place on time saving services this search is especially important when it is realized that extension services promote productivity enhance the surplus generating potential of the household and can as a consequence promote immersion into markets that are currently constrained by thinness and instability in this capacity extension visitation has the potential to overcome one of the principal impediments to economic development namely lack of density of market participation in this article we consider this issue in the context of a rich data set on milk market participation by small holder dairy producers in the ethiopian highlands

pretrial bargaining and the design of fee shifting rules legal rules for allocating the private costs of civil litigation or fee shifting rules provide powerful incentives for settlement within the context of a direct revelation mechanism the fee shifting rule that generates the highest probability of settlement bases the allocation of costs upon the proximity of the court s award to the pretrial announcements this mechanism resembles rule 68 of the federal rules of civil procedure and other offer based rules in a simple extensive form game if the litigants have asymmetric information about the level of damages probability of prevailing then rule 68 increases decreases the settlement rate

research joint ventures vs cross licensing agreements an agency approach abstract in this paper two broad categories of organizing a cooperative r d project are compared a research joint venture rjv and a cross licensing agreement cla in a non deterministic r d setting including asymmetric information we show that an rjv is more efficient in providing incentives it allows to capture existing synergies and facilitates the dissemination of the partners know how which is socially desirable however contrary to a cla an rjv faces the risk of opportunistic behavior by the partners regarding the provision of their know how to the venture which could lead a cla to perform more efficiently and in some cases this organization turns out to be superior

on price risk and the inverse farm size productivity relationship abstract the oft observed inverse relationship between farm size and productivity has elicited several explanations having important policy and theoretical implications using advances in the analysis of price risk effects on producer behavior and a simple two period model of an agricultural household that both produces and consumes under price uncertainty at the time labor allocation decisions are made this paper demonstrates analytically that a non degenerate land distribution and price risk can together produce an inverse relationship even absent any of the more common explanations empirical evidence from madagascar confirms the plausibility of this intuitive explanation for the phenomenon

efficient reliance and damage measures for breach of contract this article considers a situation where the buyer or the seller of a good must engage in expenditures on specific capital before the exchange either to prepare to use the product or to prepare to sell it it is assumed that postbreach bargaining is possible and carried out in a cooperative fashion and that buyers and sellers form expectations about the outcome of such bargaining in a specific way without enforceable contracts the potential appropriability of specific rents results in inefficiently low levels of investment three damage measures commonly used to enforce contracts are shown to produce inefficiently high levels of investment and to be pareto ranked from best to worst as follows specific performance expectation damages and reliance damages

unobservable investment and the hold up problem we study a two person bargaining problem in which the buyer may invest and increase his valuation of the object before bargaining we show that if all offers are made by the seller and the time between offers is small then the buyer invests efficiently and the seller extracts all of the surplus hence bargaining with frequently repeated offers remedies the hold up problem even when the agent who makes the relation specific investment has no bargaining power and contracting is not possible we consider alternative formulations with uncertain gains from trade or two sided investment

determinants of the adoption of information technology a case study of electrical and electronic goods manufacturing firms in india abstract this study measures the intensity of adoption of information technology it and identifies its determinants in this paper it is argued that the degree of it adoption will be determined by the variables such as entrepreneurship skill intensity government policy openness of economy competitive environment and other firm specific factors the results of ordered probit model suggest that the qualification and information base of entrepreneurs and their attitude towards innovative activities and market share are significant determinants of the degree of it adoption the results also indicate that size of operations and skill intensity of the firms influenced the extent of it use

explaining u shape of the referral hiring pattern in a search model with heterogeneous workers this paper presents a search model with heterogeneous workers social networks and endogenous search intensity there are three job search channels costly formal applications and two costless informal channels through family and professional networks our model explains a u shape referral hiring pattern observed in empirical studies and a strong selection of workers on productivity across the three channels moreover combining family and professional referrals into one informal channel may generate a spurious result of wage premiums penalties if high low productivity workers are dominating in the empirical data and their productivity is not fully observable to the econometrician

information and bargaining in the hold up problem this article incorporates an information structure with partial information into the canonical hold up problem the optimal information structure balances the tradeoff between ex ante efficiency the information rent effect and ex post efficiency the bargaining disagreement effect with one shot bargaining it occurs at an intermediate level of information asymmetry when there is repeated bargaining it is attained with perfect asymmetry asymmetric information the parameter that is frequently ignored in the literature turns out to be an important welfare instrument for the hold up problem our results therefore provide a basis for institutional design regarding the optimal control of information flow

crossbred cow adoption and its correlates countable adoption specification search in sri lanka s small holder dairy sector considerable specification choice confronts countable adoption investigations and there is need to measure formally the evidence in favor of competing formulations this article presents alternative countable adoption specifications hitherto neglected in the agricultural economics literature and assesses formally their usefulness to practitioners reference to the left side of de finetti s 1937 famous representation theorem motivates bayesian unification of agricultural adoption studies and facilitates comparisons with conventional binary choice specifications such comparisons have not previously been considered the various formulations and the specific techniques are highlighted in an application to crossbred cow adoption in sri lanka s small holder dairy sector

old boy networks as screening mechanisms this paper studies a fulfilled expectations equilibrium in situations in which intermediaries provide personal opinions on the likelihood of success of personnel projects or investments each referee must recommend some candidates from a group of people about whom he has private information the employer uses the recommendations to choose the workers using his expectations about the quality of the recommended and the nonrecommended applicants although the referees use their information strategically the competition among them produces optimal use of the information in the sense that employers make the same choices in equilibrium as they would if they had the same information as the referees

the diffusion of new agricultural technologies the case of crossbred cow technology in tanzania the recent literature on agricultural technology adoption shows that diffusion of new technologies varies significantly across space and time furthermore puzzles exist about why some seemingly profitable technologies are not adopted especially in livestock production we employ a hazard or duration function to explain diffusion of crossbred cow technology in a unique sample of tanzania farmers a farmer s adoption of crossbred technology depends positively on the proximity of his farm to other users on his schooling and on his access to credit and contact with extension agents

job search and network composition implications of the strength of weak ties hypothesis workers find jobs through personal contacts weak and strong ties and formal sources alternative formulations of the strength of weak ties hypothesis suggest 1 weak ties relay job offers more frequently than strong ties or 2 weak tie offers are drawn from a better distribution a formal model shows that both formulations imply a correlation between network composition and a job seeker s minimum acceptable wage however the use of a weak tie is never associated with higher expected wages under the firstformulation and is only sometimes associated with higher expected wages under the secondformulation these results suggest that researchers shouldfocus on job seekers network structures

bayes estimates of distance to market transactions costs cooperatives and milk market development in the ethiopian highlands rationalizing non participation as a resource deficiency in the household this paper identifies strategies for milk market development in the ethiopian highlands the additional amounts of covariates required for positive marketable surplus distances to market are computed from a model in which production and sales are correlated sales are left censored at some unobserved threshold production efficiencies are heterogeneous and the data are in the form of a panel incorporating these features into the modeling exercise is important because they are fundamental to the data generating environment there are four reasons first because production and sales decisions are enacted within the same household both decisions are affected by the same exogenous shocks and production and sales are therefore likely to be correlated second because selling involves time and time is arguably the most important resource available to a subsistence household the minimum sales amount is not zero but rather some unobserved threshold that lies beyond zero third the potential existence of heterogeneous abilities in management ones that lie latent from the econometrician s perspective suggest that production efficiencies should be permitted to vary across households fourth we observe a single set of households during multiple visits in a single production year the results convey clearly that institutional and production innovations alone are insufficient to encourage participation market precipitating innovation requires complementary inputs especially improvements in human capital and reductions in risk copyright 2008 john wiley sons ltd

incomplete contracts and signaling this article presents a principal agent model in which asymmetric information leads to contractual incompleteness i show that in the presence of transactions costs incompleteness may act as a signal of the principal s type two types of transactions costs are considered those incurred ex ante drafting costs and those incurred ex post enforcement or verification costs i prove that in the presence of either of these costs asymmetric information leads to more contractual incompleteness than full information does

amicable divorce dissolving a partnership with simple mechanisms abstract this paper considers mechanisms for allocating the assets of a dissolving partnership that can be specified without information on the distribution of valuations of the asset or the level of risk aversion of the participants for the case of a single asset and risk averse agents three simple mechanisms are considered these mechanisms can be ranked in terms of ex post efficiency and partially ranked in terms of interim expected utility the efficiency of the alternating selection mechanism is considered for environments when there are many items to be allocated agents are risk neutral and transfers are prohibited conditions are given when a myopic strategy of picking the most preferred abailable item forms an equilibrium and these conditions are satisfied under independence under the further assumption of identical distributions of valuations it is shown that the total expected efficiency loss is at most 1 2 of the maximal value of a single item regardless of how many items are to be allocated

economics of paid extension lessons from experience in nicaragua public agricultural extension extension faces major changes and challenges resulting from less available public resources and from changes in demand for extension structural changes in extension provision and financing alternatives have been one type of response to the changes in conditions under which extension operates some new mechanisms all modifications to traditional public extension include private extension commercialized extension and co financed extension will be called hereafter paid extension several experiences of paid extension around the world are reported in the literature see keynan olin and dinar for details most of them provide information on the structure and operation of the different paidextension arrangements and in some cases some anecdotal results on the costs and benefits associated with these operations this article offers in the next section a framework to evaluate economic performance of paid extension and demonstrates its application in the third and fourth sections using two types of paid extension programs in nicaragua the article is concluded with a discussion on policy implications

at will relationships how an option to walk away affects cooperation and efficiency abstract we theoretically and experimentally examine the effects from adding a simple empirically relevant action to a repeated partnership the option to walk away manipulating both the value of the outside option and its relative distribution among the partners we examine the behavior of human subjects in a repeated prisoners dilemma in particular we examine the degree of cooperation and the form of punishments used our findings indicate that cooperation rates are broadly unaffected by the value of the common outside option but that the selection of supporting punishments in relationship defections or walking away are dictated by individual rationality in contrast to the symmetric results when outside options for partners are asymmetric we find stark selection effects over cooperation with the potential for very high and very low efficiency dependent on the precise division rule

understanding the determinants of information technology adoption evidence from italian manufacturing firms our empirical study aims at identifying the determinants of information technology it adoption by small and medium sized italian manufacturing firms an ordered probit analysis is conducted on a sample of about 17 000 firms surveyed by the italian statistical institute using as a dependent variable an index of it adoption our results show that firm size geographical location functional composition of the workforce r d activity subcontracting exports and collaboration between firms are all highly significant determinants of it adoption such results are consistent with most of the predictions advanced in the few studies existing on this topic