putting free riding to work a partnership solution to the common property problem the common property problem results in excessive mining hunting and extraction of oil and water the same phenomenon is also responsible for excessive investment in r d and excessive outlays in rent seeking contests we propose a partnership solution to eliminate or at least mitigate these excesses each of n players joins a partnership in the first stage and chooses his effort in the second stage under the rules of a partnership each member must pay his own cost of effort but receives an equal share of the partnership s revenue the incentive to free ride created by such partnerships turns out to be beneficial since it naturally offsets the excessive effort inherent in such problems in our two stage game this institutional arrangement can under specified circumstances induce the social optimum in a subgame perfect equilibrium no one has a unilateral incentive 1 to switch to another partnership or create a new partnership in the first stage or 2 to deviate from socially optimal actions in the second stage the game may have other subgame perfect equilibria but the one associated with the partnership solution is strictly preferred by every player we also propose a modification of the first stage which generates a unique subgame perfect equilibrium antitrust authorities should recognize that partnerships can have a less benign use by organizing as competing partnerships an industry can reduce the excessive output of cournot oligopoly to the monopoly level since no partner has any incentive to overproduce in the current period there is no need to deter cheating with threats of future punishments

growth paths and survival chances an application of gambler s ruin theory this paper links new firm survival with growth with a focus on the patterns in firms growth paths we theorise a gambler s ruin framework by arguing that new firm performance is best modelled as a random walk process but that survival is nonrandom and depends primarily on the stock of accumulated resources a firm s resources are either there when the business begins or are generated by successful periods wins the empirical section tracks over six years the sales and survival non survival of 6247 uk start ups which all began trading in the same quarter of 2004 we do not find strong evidence in favour of a taxonomy of growth paths because we observe that every possible growth path seems to occur with roughly equal probability however we observe that growth paths influence subsequent survival controlling for lagged size we observe that longer lags of growth and even start up size have significant effects on survival

lone inventors as sources of breakthroughs myth or reality are lone inventors more or less likely to invent breakthroughs recent research has attempted to resolve this question by considering the variance of creative outcome distributions it has implicitly assumed a symmetric thickening or thinning of both tails i e that a greater probability of breakthroughs comes at the cost of a greater probability of failures in contrast we propose that collaboration can have opposite effects at the two extremes it reduces the probability of very poor outcomes because of more rigorous selection processes while simultaneously increasing the probability of extremely successful outcomes because of greater recombinant opportunity in creative search analysis of over half a million patented inventions supports these arguments individuals working alone especially those without affiliation to organizations are less likely to achieve breakthroughs and more likely to invent particularly poor outcomes quantile regressions demonstrate that the effect is more than an upward mean shift we find partial mediation of the effect of collaboration on extreme outcomes by the diversity of technical experience of team members and by the size of team members external collaboration networks supporting our meta argument for the importance of examining each tail of the distribution separately experience diversity helps trim poor outcomes significantly more than it helps create breakthroughs relative to the effect of external networks

cartel quotas under majority rule the authors examine the choice of quotas by legal volume restricting organizations cartels commodity agreements agricultural marketing boards and prorationing boards unlike their illegal counterparts legal cartels have published regulations and broader enforcement capabilities however differences in costs and size among cartel members still make quota selection contentious conflicts over quotas are typically resolved by voting side payments to influence votes are prohibited the authors examine the predicted effects of this real world voting institution on prices and welfare they also deduce the economic consequences of exogenous political changes such as alterations in the voting weights or in the identity of the voters copyright 1995 by american economic association

bridging the gap between laboratory experiments and naturally occurring markets an inferred valuation method abstract several recent studies have found important differences between behavior in the laboratory and the field we explore two possible causes for the divergence social concerns and unfamiliarity with the traded good consistent with our conceptual model we find that people overstated their preferences for relatively familiar goods with normative attributes and understated their preferences for a relatively unfamiliar good with low normative motivations in the laboratory as compared to the field we also find that for goods with a normative dimension a new method we refer to as inferred valuation has the potential to narrow the lab field gap in some cases willingness to pay obtained from a conventional valuation elicitation method is more than twice the value from the new inferred valuation approach

on the operations of the international coffee agreement next to oil coffee is the most valuable commodity traded in world markets it is produced in the developing world and consumed within the developed nations moreover the international coffee agreement is the major successful international commodity agreement in this research note we analyze the allocation of quotas to export coffee in 1982 under the terms of the agreement the way in which entitlements to export are allocated offers insights into significant features of the international political economy

business group affiliation and firm search behavior in india responsiveness and focus of attention this paper investigates the effects of organizational form on problemistic search we contrast how indian firms affiliated with business groups and unaffiliated firms evaluate performance and react by adjusting their internal technology search and external market search we propose that compared with unaffiliated firms business group affiliated bg affiliated firms are more externally oriented in setting aspiration levels and more likely to respond to low performance in the market domain we find support for an external orientation of bg affiliated firms and find that group affiliation determines the responsiveness to performance feedback in different search domains the findings suggest a need to add considerations of organizational form and governance to the theory of organizational search

collective choice in the commons experimental results on proposed allocation rules and votes we analyse and empirically examine a multi level common pool resource cpr game consisting of a collective choice level game and an operational level game in the collective choice game participants anonymously propose allocation rules to be used in the operational game and vote anonymously on the proposed rules majority and unanimity rules are investigated our major finding is that both types of voting rules substantially increase efficiency relative to a baseline with no opportunity for collective choice but the distributional consequences of the rules differ to understand the process by which efficiency is improved better we examine four predictive theories related to proposals votes and outcomes

persistence survival and growth a closer look at 20 years of fast growing firms in austria for survival persistence and growth hifs show a much higher persistence than hgfs the average growth rate after the high growth episode is quite modest for both hifs and hgfs policy implications of the ndings are discussed

gender differences in firm performance evidence from new ventures in the united states abstract prior studies examining the performance of female and male owned firms have generally reported that female owned firms underperform male owned firms however it is conceivable that the performance measures used by previous studies and or their inability to control for key demographic differences may have contributed to this finding for example few studies use size adjusted performance measures and yet we know that female owned firms tend to be smaller than their male counterparts similarly risk is typically not considered even though evidence suggests that women tend to be more risk averse than men we use a longitudinal five year database of more than 4000 new ventures that began operations in the u s in 2004 to determine whether potential differences in the performances of female and male owned firms disappear when appropriate performance measures are used and important demographic differences are controlled for in the models the performance measures we examine include 4 year closure rates return on assets roa and a risk adjusted measure sharpe ratio univariate test results confirm our expectation based on both liberal and social feminist theory that there is no difference in the performance of female and male owned new ventures provided performance is appropriately measured further these results are supported by our multivariate analyses which control for demographic differences such as industry experience and hours worked our findings should be of interest to researchers financiers advisors and policy makers perhaps more importantly our findings should also ensure that women who are contemplating starting a new venture are not discouraged from doing so by a false belief that new ventures initiated by women are less likely to succeed than those initiated by men

are high growth firms one hit wonders evidence from sweden most firms do not grow and a small number of high growth firms seem to create most new jobs these firms have therefore received increasing attention among policymakers the question is whether high growth tends to persist we investigate this question using firm level data from sweden during 1997 2008 we find that high growth firms had declining growth rates in the previous 3 year period and their probability of repeating high growth rates was very low thus these are essentially one hit wonders and it is doubtful whether policymakers can improve economic outcomes by targeting them

valuing non market goods using contingent valuation abstract contingent valuation is a technique being developed by economists for the valuation of environmental commodities not traded in markets this paper discusses the major problem areas associated with this method of value estimation these comprise bias strategic hypothetical and design biases the discrepancy between willingness to pay and compensation demanded the aggregation procedure the choice of question format and non use values some evidence from comparative studies is reported and comments made on the accuracy of contingent valuation answers finally the conditions under which contingent valuation seems to operate best are set out

variable risk preferences in new firm growth and survival we outline and test a decision making theory of new venture growth and survival building upon research in entrepreneurship and decision making under risk we hypothesize that entrepreneurs attention to survival and aspiration reference points changes based on venture age experience based learning size differences in decision complexity and performance decision domain examining a panel of 14 760 new ventures in the professional services sector our findings show how risk preferences change as a venture ages and increases in size this approach offers a more nuanced view of decision making under risk and provides a theoretical explanation for the common patterns of new ventures probability of exit and growth diminishing with age and size

a definition of more systematic risk with some welfare implications producers are subject to similar production risks and so their outputs are likely correlated using the entire data set rather than summary statistics we study an ordinal definition of systematic risk for risk neutral producers in perfect competition we trace the effects of an increase in systematic risk through to impacts on welfare measures and production decisions expected welfare falls under more systematic risk but either of expected producer surplus or expected consumer surplus may rise our definition of systematic risk also has relevance for the incentive to incur r d expenditures the benefits of diversity and the gains from risksharing

a dynamic model of oligopoly in the coffee export market a linear quadratic dynamic feedback oligopoly model that nests various market structures is used to estimate the degree of competitiveness and the adjustment paths of the two largest coffee exporters brazil and colombia their estimated behavior is relatively competitive this subgame perfect dynamic model is compared to a standard static oligopoly model and the open loop model the dynamic generalization of the standard static model both classical and bayesian tests of open loop and feedback dynamic models are reported

do regimes matter epistemic communities and mediterranean pollution control international regimes have received increasing attention in the literature on international relations however little attention has been systematically paid to how compliance with them has been achieved an analysis of the mediterranean action plan a coordinated effort to protect the mediterranean sea from pollution shows that this regime actually served to empower a group of experts members of an epistemic community who were then able to redirect their governments toward the pursuit of new objectives acting in an effective transnational coalition these new actors contributed to the development of convergent state policies in compliance with the regime and were also effective in promoting stronger and broader rules for pollution control this suggests that in addition to providing a form of order in an anarchic international political system regimes may also contribute to governmental learning and influence patterns of behavior by empowering new groups who are able to direct their governments toward new ends

firm growth and liquidity constraints a dynamic analysis using a large unbalanced panel data set of portuguese manufacturing firms surviving over the period from 1990 to 2001 the purpose of this paper is to examine whether liquidity constraints faced by business firms affect firm growth we use a gmm system to estimate a dynamic panel data model of firm growth that incorporates cash flow as a measure of liquidity constraints and persistence of growth the model is estimated for all size classes including micro firms our findings reveal that smaller and younger firms have higher growth cash flow sensitivities than larger and more mature firms this is consistent with the suggestion that financial constraints on firm growth may be relatively more severe for small and young firms nevertheless the same finding can be interpreted in a different way if we consider the more recent literature which interpret the higher investment cash flow sensitivity of younger and smaller firm in absence of financial market imperfection as the outcome of these firms reaction to the fact that realisation of their cash flows reveals them the direction to go in presence of uncertainty of their growth prospect besides firms that were small and young at the beginning of the sample period exhibited more persistent growth than those that were large and old finally these results have significant policy implications

corporate growth and industrial structures some evidence from the italian manufacturing industry this work analyses the properties of corporate growth in a large longitudinal sample of italian manufacturing firms in particular it focuses on the statistical properties of growth rates and on the influence of proxies for relative efficiency upon relative growth in line with previous work the emergence of fat tails in growth rate distributions and the idiosyncratic nature of autocorrelation coefficients confirm the existence of a structure in the growth process richer than the one normally assumed by the gibrat law hypothesis and suggest the presence of firm specific drivers of growth at the same time there is a remarkable puzzle concerning the absence of any negative relationship between size and growth variance and only weak influences of relative efficiencies upon growth dynamics

on quota violations of opec members abstract over the last decades quota violations have become a norm for opec countries however the academic literature on opec focuses more on its production behavior than on analyzing the quota allocation process or characterizing quota violation patterns this paper offers a theoretical model with empirical evidence to explain opec members incentives for abiding or violating quotas we first offer a cartel model with a quota allocation rule and an endogenous capacity choice the model highlights the trade off between building spare capacity to bargain for a higher legitimate quota versus risking quota violation punishment using the quarterly data from 1995 to 2007 we empirically support the main results and intuitions for the model our empirical evidence is consistent with a theoretical framing in which capacity constraints work as an enforcement mechanism in good times and opec s quota system disciplining its members in bad times

a note on cost arrangement and market performance in a multi product cournot oligopoly abstract model invariances have been used extensively to understand welfare and conduct consequences of firm heterogeneity in a one product cournot oligopoly nothing is known about the richer and more realistic context of firm heterogeneity in multi product cournot oligopoly in this note welfare in a two product cournot oligopoly is shown to increase decrease with an increase in correlation between unit costs when the outputs complement substitute in demand a more qualified correlation structure is required for the result to apply in a three product cournot oligopoly when products complement in demand

an introduction to vote counting schemes t he design of an electoral system is fundamental to any democracy motivation for understanding how electoral system design matters comes from many directions the creation of new constitutions in eastern europe the recent trauma of a three way presidential election in the united states the ongoing debate over u s redistricting and gerrymandering the furor caused by lani guinier s call for a more representative voting system the status quo adds another incentive plurality rule is pervasive even though it is a flawed system fortunately there is no lack of suitable alternatives one of the purposes of this symposium and this paper in particular is to help illustrate and motivate the remarkable variety of alternative mechanisms that aggregate individual preferences to decide an election this overview offers a summary of sixteen distinct methods and demonstrates by example how some of the more complex systems work the shorter papers that follow focus on some of the more popular alternatives including approval voting single transferable vote the maximum likelihood rule and more one can speculate on why alternatives to plurality rule have had such a difficult time being adopted part of the cause may be arrow s general possibility theorem arrow 1951 demonstrates that any voting system applied to an unrestricted collection of voter preferences must have some serious defect we must always choose between flawed alternatives with conflicting theoretical guidance to help select the least flawed option people evaluate a system by its likely effect on the status quo outcome since those in power tend to want to

aggregate homothetic separability this paper develops necessary and sufficient conditions for an aggregate sector cost function derived from industry cost functions to exhibit homothetic separability

predicting new venture survival and growth does the fog lift this paper investigates whether new venture performance becomes easier to predict as the venture ages does the fog lift to address this question we primarily draw upon a theoretical framework initially formulated in a managerial context by levinthal adm sci q 36 3 397 420 1991 that sees new venture sales as a random walk but survival being determined by the stock of available resources proxied by size we derive theoretical predictions that are tested with a 10 year cohort of 6579 uk new ventures in the uk we observe that our ability to predict firm growth deteriorates in the years after entry in terms of the selection environment the fog seems to thicken however our survival predictions improve with time implying that the fog does lift

endogeneity and the dynamics of internal corporate governance abstract we use a well developed dynamic panel generalized method of moments gmm estimator to alleviate endogeneity concerns in two aspects of corporate governance research the effect of board structure on firm performance and the determinants of board structure the estimator incorporates the dynamic nature of internal governance choices to provide valid and powerful instruments that address unobserved heterogeneity and simultaneity we re examine the relation between board structure and performance using the gmm estimator in a panel of 6 000 firms over a period from 1991 to 2003 and find no causal relation between board structure and current firm performance we illustrate why other commonly used estimators that ignore the dynamic relationship between current governance and past firm performance may be biased we discuss where it may be appropriate to consider the dynamic panel gmm estimator in corporate governance research as well as caveats to its use

competition for scarce resources we model a downstream industry where firms compete to buy capacity in an upstream market which allocates capacity efficiently although downstream firms have symmetric production technologies we show that industry structure is symmetric only if capacity is sufficiently scarce otherwise it is asymmetric with one large fat capacity hoarding firm and a fringe of smaller lean capacity constrained firms as demand varies the industry switches between symmetric and asymmetric phases generating predictions for firm size and costs across the business cycle surprisingly increasing available capacity can cause a reduction in output and consumer surplus by resulting in such a switch

a time to grow and a time to die growth and mortality of credit unions in new york city 1914 1990 one vision of organizational evolution suggests that old and large organizations become increasingly dominant over their environment a second suggests that as organizations age they become less able to respond to new challenges in this article the authors investigate which of these visions best characterizes the evolution of state chartered credit unions in new york city from 1914 through 1990 by analyzing the effects of organizational age size and population density on rates of organizational failure and growth the authors find evidence that old and small institutions are more likely to fail while young and small organizations have the highest growth rates

how closely do hypothetical surveys and laboratory experiments predict field behavior we compare the ability of three preference elicitation methods hypothetical choices nonhypothetical choices and nonhypothetical rankings and three discrete choice econometric models the multinomial logit mnl the independent availability logit ial and the random parameter logit rpl to predict actual retail shopping behavior in three different product categories ground beef wheat flour and dishwashing liquid overall we find a high level of external validity our specific results suggest that the nonhypothetical elicitation approaches especially the nonhypothetical ranking method outperformed the hypothetical choice experiment in predicting retail sales we also find that the rpl can have superior predictive performance but that the mnl predicts equally well in some circumstances experiment

separation and hedging results with state contingent production a state contingent model of production under uncertainty is developed and compared with more traditional models of production under uncertainty producer behaviour with both production and price risk in the presence and in the absence of futures and forward markets is analysed in this state contingent framework conditions for the optimal hedge to be positive or negative are derived we also show that under plausible conditions a risk averse producer facing price uncertainty and the ability to hedge price risk will never willingly adopt a nonstochastic technology new separation results which hold in the presence of both price and production risk are then developed these separation results generalize townsend s spanning results by reducing the number of necessary forward markets by one

auctioning risky conservation contracts conservation auctions have the potential to increase the efficiency of payments to farmers to adopt conservation friendly management practices by fostering competition among them the literature considers bidders that have complete information about the costs of adoption and optimal bidding behavior reflects this information advantage farmers seek information rents and bids decrease when risk aversion increases because farmers are more averse to losing the auction we contribute to the literature by allowing for cost risk our paper shows that farmers must balance the risk of losing the auction thus foregoing information rent with the risk of submitting a bid that is not high enough to pay the costs of adopting conservation practices thus incurring losses we design an experiment to trade off these two risks and examine how risk aversion affects bidding behavior when participants face different sources and levels of risk our experiment contributes to a small literature on experimental auctions with risky product valuations we find that participants decrease their bids as risk aversion increases even in auctions with cost risk suggesting that the risk of losing the auction dominates these findings uncover new challenges for the practical implementation of conservation auctions as an efficient policy instrument

swinging a double edged sword the effect of slack on entrepreneurial management and growth resource slack represents a double edged sword simultaneously fueling and hindering growth drawing on penrose s growth theory and stevenson s entrepreneurial management theory we have developed and tested a conceptual model that provides a more nuanced account of the resource slack growth relationship using a large dataset spanning six years we have found that slack has a positive direct effect on growth but a negative effect on entrepreneurial management and that entrepreneurial management has a positive effect on growth our empirical and conceptual findings are important to the development of firm growth theory and explicate causal mechanisms transforming slack into firm level outcomes

legislative bargaining under weighted voting organizations often distribute resources through weighted voting we analyze this setting using a non cooperative bargaining game based on the baron ferejohn 1989 model unlike analyses derived from cooperative game theory we find that each voter s expected payoff is proportional to her voting weight an exception occurs when many high weight voters exist as low weight voters may expect disproportionately high payoffs due to proposal power the model also predicts that ex post the coalition formateur the party chosen to form a coalition will receive a disproportionately high payoff using data from coalition governments from 1946 to 2001 we find strong evidence ofsuch formateur effects

the inefficiency of interest rate subsidies in commodity price stabilization interest rate subsidies have been used to stimulate commodity stockholding with the intention of stabilizing prices however reductions in price variability can be achieved at less government cost using a direct storage subsidy and it is possible that an interest rate subsidy will increase price variability even though the interest subsidy increases mean stocks held these results are demonstrated using a stochastic dynamic programming model of optimal private storage with parameter values relevant to agricultural commodity markets and with particular reference to the u s soybean market

new directions in entrepreneurship research with the kauffman firm survey data is a fundamental impediment to a better understanding of the multifaceted process of new firm creation with better data we can form a better understanding of the causes constraints and outcomes associated with the decision to launch a new business towards this end the kauffman foundation commissioned an eight wave panel of businesses that were formed in 2004 chronicling a single cohort s evolution from birth through important business milestones this issue of small business economics focuses on papers that use the kauffman firm survey to examine new research questions in entrepreneurship articles in this issue analyze new research topics in entrepreneurship as well as shed light on enduring questions in the literature

the persistence and dynamics of new venture growth extensive research has suggested that new ventures growth rates lack persistence however existing studies tend not to differentiate between positive and negative growth rates or examine their respective persistence and dynamics building on performance feedback theory we show that positive and negative growth rates exhibit different dynamics over time especially negative growth rates are less likely to persist and more likely to reverse than positive ones furthermore firm size and team size influence the persistence or the lack of thereof of both positive and negative growth rates specifically new ventures that are smaller as well as those managed by larger teams are more likely to maintain positive growth and reverse negative growth relative to their respective counterparts overall this study suggests that positive and negative growth rates differ in their persistence and that new ventures can shape the dynamics of both positive and negative growth

is the french mobile phone cartel really a cartel abstract france telecom ft sfr and bouygues telecom bt have been fined by france s conseil de la concurrence cc for organizing a mobile phone cartel with stable market shares one half one third and one sixth respectively and for directly exchanging commercial information while not contesting the legal decision it is argued here that the economic reasoning is flawed 1 as the cc made much of the firms stable market shares we have first followed this line of reasoning by considering that the market shares are quotas under uniform costs even if there is a general incentive to form a monopolistic cartel bt was too small for it to be worth its while to join it it is not necessary to exchange information directly to coordinate market shares and prices effectively all partial cartels are unlikely 2 we then departed from the cc by considering that the non uniform market shares are explained by the costs in cournot competition this allows costs to be deduced from the observed market shares by assuming that they are kept the same when switching from cournot competition to any form of cartel we deduced that market shares cannot be other than stable and non uniform any monopoly is unlikely to come about because ft has negative incentives to form a monopolistic cartel no partial cartels of two operators are viable because at least one member would lose out the paper also shows that stackelberg competition is unlikely as well as bertrand edgeworth competition in conclusion cournot competition is the only arrangement that guarantees no losses to all operators

power law distributions in entrepreneurship implications for theory and research a long held assumption in entrepreneurship research is that normal i e gaussian distributions characterize variables of interest for both theory and practice we challenge this assumption by examining more than 12 000 nascent young and hyper growth firms results reveal that variables which play central roles in resource cognition action and environment based entrepreneurship theories exhibit highly skewed power law distributions where a few outliers account for a disproportionate amount of the distribution s total output our results call for the development of new theory to explain and predict the mechanisms that generate these distributions and the outliers therein we offer a research agenda including a description of non traditional methodological approaches to answer this call

testing theories of capital structure and estimating the speed of adjustment this paper examines time series patterns of external financing decisions and shows that publicly traded u s firms fund a much larger proportion of their financing deficit with external equity when the cost of equity capital is low the historical values of the cost of equity capital have long lasting effects on firms capital structures through their influence on firms historical financing decisions we also introduce a new econometric technique to deal with biases in estimates of the speed of adjustment toward target leverage we find that firms adjust toward target leverage at a moderate speed with a half life of 3 7 years for book leverage even after controlling for the traditional determinants of capital structure and firm fixed effects

performance feedback and firm risk taking the moderating effects of ceo and outside director stock options we contribute to the behavioral theory of the firm and the behavioral agency model by developing a theoretical framework that predicts the differential interaction effects of performance feedback and values of stock option grants of multiple agents on firm risk taking we explain how chief executive officers ceos versus outside directors awarded with stock option grants perceive negative or positive deviations from prior performance we argue that in a negative attainment discrepancy context high values of option grants will increase the risk aversion of ceos who already bear excessive employment and compensation risks resulting in less risk taking however it will enhance the risk taking propensity of influential outside directors who increase monitoring and support for risky projects because their risk preferences are better aligned with those of shareholders in a positive attainment discrepancy context high values of option grants will amplify risk aversion in both ceos and outside directors who

when is gibrat s law a law the purpose of this article is to investigate if the industry context matters for whether gibrat s law is rejected or not using a dataset that consists of all limited firms in five digit nace industries in sweden during 1998 2004 the results reject gibrat s law on an aggregate level since small firms grow faster than large firms however gibrat s law is confirmed about as often as it is rejected when industry specific regressions are estimated it is also found that the industry context e g minimum efficient scale market concentration rate and number of young firms in the industry matters for whether gibrat s law is rejected or not

viewpoint on the generalizability of lab behaviour to the field abstract we can think of no question more fundamental to experimental economics than understanding whether and under what circumstances laboratory results generalize to naturally occurring environments in this paper we extend levitt and list 2006 to the class of games in which financial payoffs and doing the right thing are not necessarily in conflict we argue that behaviour is crucially linked to not only the preferences of people but also the properties of the situation by doing so we are able to provide a road map of the psychological and economic properties of people and situations that might interfere with generalizability of laboratory result from a broad class of games

the external validity of experimental economics techniques analysis of demand behavior this paper examines the parallelism which exists between demand behavior determined from the sale of a private good in an actual real world field setting and in a laboratory auction setting the demand behavior observed in the two settings is significantly the same leading to the corroboration of the thesis that there is often correspondence between laboratory and real world behavior

initial human and financial capital as predictors of new venture performance abstract this research seeks to predict the performance of new ventures based on factors that can be observed at the time of start up indicators of initial human and financial capital are considered to determine how they bear upon the probability of three possible performance outcomes 1 failure 2 marginal survival or 3 high growth four categories of initial human and financial capital are examined general human capital represented here by the entrepreneur s education gender and race may reflect the extent to which the entrepreneur has had the opportunity to develop relevant skills and contacts management know how embodied in the entrepreneur or available through advisors or partners reflects management specific skills and knowledge without regard to the kind of business industry specific know how reflects specific experience in similar businesses financial capital is one of the most visible resources it can create a buffer against random shocks and allow the pursuit of more capital intensive strategies which are better protected from imitation the study utilizes a longitudinal study of 1053 new ventures representative of all industry sectors and geographical regions the research departs from most previous studies in considering different measures of performance marginal survival and growth and in considering explicitly whether the factors contributing to marginal survival differ from those contributing to high growth it was found that measures of general human capital influenced both survival and growth except for gender with women owned ventures being less likely to grow but just as likely to survive management know how variables had more limited impact having parents who had owned a business contributed to marginal survival but not to growth number of partners contributed to growth but not to survival management level prior employment in non profit organizations or not having been in the labor force and the use of professional advisors did not have significant effects industry specific know how contributed to both survival and growth amount of initial financial capital also contributed to both the usefulness of the model is enhanced by the fact that the resource variables considered are relatively easy to assess and all can be considered at the time of start up although some of the human capital variables cannot easily be changed the benefits or risks associated with each can be assessed in some cases potential problems can be identified so that plans can be modified to improve prospects overall it appears that using a model based upon the initial human and financial capital of the venture it is possible to predict the performance of new ventures with some degree of confidence

on the external validity of laboratory tax compliance experiments i introduction laboratory methods are now widely accepted as a methodological approach in economics and increasingly they have been used to examine specific public policy issues there is much to be gained from careful laboratory experiments they offer a low cost means of testing and replicating policy innovations and they generate precise data on individual behavior thereby allowing estimation of behavioral responses importantly they allow many policy innovations to be introduced singly and exogenously in a controlled environment and as a result laboratory experiments are typically seen as having a high degree of internal validity brewer 2000 campbell and stanley 1966 shadish cook and campbell 2002 because the causal relation between variables can be properly demonstrated however as emphasized by plott 1987 using laboratory experiments can allow more general inferences regarding human behavior only when the setting implemented in the laboratory parallels what is observed in the naturally occurring world even beyond this requirement of parallelism is the need for generalizing behavioral observations from the laboratory to the field or external validity internal validity can be demonstrated through the evaluation of the design however external validity can only be verified empirically and only with respect to the specific setting being investigated this paper investigates the external validity of laboratory experiments and does so in the context of experiments on tax compliance behavior tax evasion is central to many important policy questions current estimates report the tax gap or difference between taxes owed and taxes paid in the united states to be 450 billion annually internal revenue service 2012 beyond these massive revenue losses evasion creates major misallocations in resource use when individuals alter their behavior to cheat on their taxes its presence requires that government expend resources to detect noncompliance to measure its magnitude and to penalize tax evasion evasion alters the distribution of income in arbitrary unpredictable and unfair ways and it may contribute to feelings of unjust treatment and disrespect for the law more broadly it is not possible to understand the true impact of taxation without recognizing the existence and the effects of tax evasion laboratory methods have been used to examine a wide range of policies that may affect the compliance decision policies that have not always proven amenable to either theoretical analyses or empirical analyses with field data however laboratory studies of compliance are sometimes viewed with skepticism the most common criticism is that the student subjects typically used in experiments may not be representative of taxpayers undergraduates may have little experience with filing tax returns and their economic and demographic backgrounds may differ from those of taxpayers another criticism is that the context of laboratory compliance experiments does not closely enough resemble the context in which actual compliance decisions are made as a result there is a concern that experimental results on policy innovations that rely upon student subjects in laboratory compliance experiments cannot be generalized to the population it is this issue that we examine here building on previous research we present several types of evidence on the external validity of experiments on individual compliance decisions a first question examines whether behavior of laboratory participants is replicated by behavior of individuals making a similar decision in the naturally occurring world that is do participants in laboratory experiments exhibit different patterns of behavior than individuals in a similar naturally occurring setting to answer this question we utilize a special data set from the u s internal revenue service irs assembled as part of its national research program nrp

the procompetitive effect of demand enhancing check off programs this article explores demand enhancing check off programs and how such programs may influence both private programs as well as industry market structure under duopoly a firm may increase its sales through privately funding product quality improvements however such endogenous sunk costs may also be used to exclude a rival industry funded check off programs affect firms strategies and can be procompetitive the rationale lies not only in how the check off enhancement is perceived by consumers but also in the way the check off s crowding out effect reduces the ability of a firm to use its private expenditures to bar a rival s market access

on the existence of persistently outperforming firms this study analyses persistence in growth rates for a data set of manufacturing firms of all sizes previous quantile autoregressions of firm growth rates show that extreme growth events are likely to be negatively correlated over time thus questioning the existence of persistent outperformers by supplementing the quantile regression analyses with transition probability matrices our study shows that bouncing firms coexist with persistent outperformers this result is shown to be robust for all size classes as well as for the exclusion of firms who experienced acquisitions or spin offs

co managing common pool resources do formal rules have to be adapted to traditional ecological norms abstract we examine the effectiveness of three democratically chosen rules that alleviate the coordination and cooperation problems inherent in collectively managed common pool resources in particular we investigate how rule effectiveness and rule compliance depend on the prevailing local norms and ecological values held by resource users for this purpose we employ a framed field experiment that is based on a rangeland model for semi arid regions and carried out with communal farmers in namibia and south africa participants could vote for three best practice management rules found in many places around the world that are discussed for implementation in the study area temporary private property rights rotational grazing or limitation of livestock numbers all rules were designed in a way that facilitated cooperation or coordination of actions the focus of this study lies on the interactions between these rules and prevalent ecological norms exhibited in the rounds prior to rule implementation in contrast to previous lab experimental studies we find that democratic voting of rules is not sufficient for high rule compliance and an overall enhancement in cooperation rules turned out to be inefficient if they were in conflict with the prevalent ecological norm

aggregation and imperfect competition on the existence of equilibrium we present a new approach to the theory of imperfect competition and apply it to study price competition among differentiated products the central result provides general conditions under which there exists a pure strategy price equilibrium for any number of firms producing any set of products this includes products with multi dimen sional attributes in addition to the proof of existence we provide conditions for uniqueness our analysis covers location models the characteristics approach and probabilistic choice together in a unified framework to prove existence we employ aggregation theorems due to prekopa 1971 and borell 1975 our companion paper caplin and nalebuff 1991 introduces these theorems and develops the application to super majority voting rules we present a new approach to the theory of imperfect competition and apply it to study price competition among differentiated products the central result is that there exists a pure strategy price equilibrium for any number of firms producing any set of products in addition to the proof of existence we provide conditions for uniqueness our model both unites diverse strands of the earlier literature and opens up uncharted areas for future analysis in particular we expand the traditional one dimensional framework to allow for multi dimen sional product differentiation our approach involves twin restrictions on consumer preferences one on individuals preferences the other on the distribution of preferences across society these are generalizations of the restrictions supporting 64 majority rule presented in caplin and nalebuff 1988 to prove existence we apply a new technique of aggregation this technique is valuable in a variety of other problems in the companion paper we use the aggregation result to generalize our earlier work on 64 majority rule and to characterize the relationship between the distribution of human capital and the distribution of income caplin and nalebuff 1991 there are additional applications in statistics and in search theory we begin with a brief review of the early literature on imperfect competition describing in more detail the existence problem and previous solutions section 3 presents our twin assumptions and shows that they cover many standard cases in section 4 we introduce the aggregation theorem and use it in the analysis of demand functions the proof of existence of equilibrium is in section

collective marketing arrangements for geographically differentiated agricultural products welfare impacts and policy implications this paper examines the incentive of atomistic agricultural producers within a specific geographical region to differentiate and collectively market products we develop a model that allows us to analyze the market and welfare effects of the main types of real world producer organizations using it to derive economic insights regarding the circumstances under which these organizations will evolve and describing implications of the results obtained in the context of an ongoing debate between the european union and united states as the anticipated fixed costs of development and marketing increase and the anticipated size of the market falls it becomes essential to increase the ability of the producer organization to control supply in order to ensure the coverage of fixed costs whenever a collective organization allows a market with a new product to exist that otherwise would not have existed there is an increase in societal welfare counterintuitively stronger property right protection for producer organizations may be welfare enhancing even after a differentiated product has been developed the reason for this somewhat paradoxical result is that legislation aimed at curtailing the market power of producer organizations may induce large technological distortions

the expected consumer s surplus as a welfare measure abstract the expected consumer s surplus ecs is often used as a monetary measure of consumer welfare examples include the theory of regulation competition policy and price stabilization this paper shows that in general the ecs does not convey any information about the consumer s ranking of price distributions if these differ in risk moreover the ecs provides rigorous monetary assessments of consumer welfare if and only if the consumer is risk neutral and has zero income elasticity of demand since empirical estimates suggest that these conditions are violated the paper serves as a warning to the continued use of the ecs

testing a causal model of corporate risk taking and performance the determinants of organizational risk taking and its impact on economic performance are critical issues in strategic management using a model that included risk performance performance expecta