tracing the dynamics of competition evidence from company profits this article proposes a simple approach to analyzing profit dynamics which allows for time varying persistence of profits the time series model is a simple autoregressive process where the dynamics of the persistence parameter follow an autoregressive process using the longest time series available on profits for more than a hundred u s firms we find that there is ample evidence of time variation in the persistence parameter jel l00 c22

penny wise and pound foolish the left digit effect in price cognition through five experiments we provide a cognitive account of when and why nine ending prices are perceived to be smaller than a price one cent higher first this occurs only when the leftmost digits of the prices differ e g 2 99 vs 3 00 second the left digit effect also depends on the numerical and psychological distances between the target price and a competing product s price the closer the two prices being compared the more likely is the left digit effect third the left digit effect is not restricted to the domain of prices it also manifests with other multidigit numbers

do subjects from high and low context cultures attribute different meanings to tourism services with 9 ending prices abstract four symbolic meanings have been associated with 9 ending prices discount price enhanced value low quality and misleading action scales were developed to measure each meaning and the relative strength of these meanings in influencing tourists purchases among samples from the u s korea and china was investigated the analyses found no differences in the likelihood of tourists selecting 9 ending rather than even ending prices when purchasing a sandwich a pizza or show tickets in their relative importance across cultures or in the influence on purchase decisions of different symbolic meanings associated with 9 endings however a 9 ending discount was perceived to be more effective when compared to even ended price discounts in the context of a hotel room again however its effectiveness could not be explained by the different symbolic meanings associated with 9 ending prices

the competitive environment hypothesis revisited non linearity nonstationarity and profit persistence much empirical literature dealing with the competitive environment hypothesis tends to find nonstationary behaviour and very high persistence in time series of company profits profit time series is modelled using a simple threshold autoregressive model that allows for nonstationary behaviour over subsamples using a new dataset consisting of profits for more than 150 us companies over a time period of 50 years statistical evidence is presented that the high persistence observed in profits when using linear autoregressive models is often due to the misspecification of the data generating process

testing for unit roots in panel data are wages on different bargaining levels cointegrated theoritical considerations suggest that spillover forces equalize wages for similar jobs thus it is expected that firm wages are cointegrated with the corresponding wage rates on an industrial level in this paper we apply various unit root tests to a panel of wage data we show that the familiar techniques can be adopted to this type of data allowing for unobserved heterogeneity and common time effects our results suggest that firm and industry wages both possess a unit root in the autoregressive representation however ther is only weak evidence for a cointegration realtionship

the persistence of profit differentials in indian industry the competitive process in a market economy is expected to work to eliminate profit differentials between firms industries in the long run in the indian case we note that quite a large number of industries experience above average profits that persist over time our analysis show that such persistence is higher in fast growing industries with high strategic barriers on the other hand government controls seem to be very effective in discouraging such persistence

when more seems like less differential price framing increases the choice share of higher priced options four experiments supported by six supplemental studies show that premium but higher priced products e g direct flights larger capacity data storage devices are more popular when the additional

the persistence of profit a new empirical interpretation abstract inferences are drawn about the true coefficients which correspond to sample estimates of a persistence of profit model fitted over a large number of firms this is done by generating simulated sampling distributions for the estimators over various distributional assumptions profits seem to be stationary for all firms with an average short run persistence coefficient of 0 59 higher than most previous estimates long run profit rates differ between firms although by less than is suggested by direct observation of variations in mean profit rates calculated over time short run persistence appears to be inversely related to unsystematic variation in profit

tests of the expectations hypothesis resolving the anomalies when the short term rate is the federal funds rate abstract the expectations hypothesis eh of the term structure plays an important role in the analysis of monetary policy where shorter term rates are assumed to be determined by the market s expectation for the overnight federal funds rate with two exceptions tests using the effective federal funds rate as the short term rate easily reject the eh these exceptions are when the eh is tested over the nonborrowed reserve targeting period and when the test is performed only using data for settlement wednesdays the last day of bank reserve maintenance period this paper argues that these exceptions are anomalous in the former case the failure to reject the eh occurs when economic analysis suggests that the market should be less able to forecast the federal funds rate in the latter case it occurs when there are sharp spikes in the funds rate that cannot improve materially the market s ability to forecast the funds rate additional analysis shows that these anomalous results are a consequence of the procedure used to test the eh

successful in the long run a meta regression analysis of persistent firm profits we study the profit persistence literature by applying meta regression analysis mra to a set of 36 empirical papers which analyze the persistence of abnormal firm profits over time the analyzed literature provides evidence for a mediocre degree of persistence in abnormal profits an initial analysis of the distribution of reported profit persistence estimates reveals some degree of excess variation this points toward publication bias that favors significant results independent of their algebraic sign the mra however reveals that publication bias is particularly favoring results that indicate profit persistence and thus contradict the neoclassical model of perfect competition moreover the mra enables to control for heterogeneity driven by the study design we find that the analyzed country developing vs developed the applied econometric approach as well as the analyzed period of time are significant drivers of heterogeneity in reported persistence estimates

the term structure spread and future changes in long and short rates in the g7 countries abstract according to the expectations hypothesis when the spread between long and short rates widens next quarter s long rate should rise in the united states however long rates decline instead of rising this anomaly is also present in canada the uk germany and japan four of the additional six g7 countries nevertheless in contrast to the us where long rates appear to overreact to expected future developments the anomalous short run movement of long rates in these other g7 countries is caused by an additive white noise error on long rates that does not materially affect the information in their term structure

price endings left digit effects and choice past research has found that changes in price endings can result in left digit effects whereby the magnitude of an item s price relative to the price of a reference product is influenced by the leftmost digits of both prices we extend this work by investigating the impact of changes in price endings and associated leftmost price digits on choice findings indicate that assigning different combinations of price endings to two products e g 2 00 and 2 99 vs 1 99 and 3 00 vs 2 00 and 3 00 can shift choice share toward the lower or higher priced alternative we also find that changes between just below e g 29 99 and 39 99 and round e g 30 00 and 40 00 pricing affect choice with just below pricing shifting share toward lower priced alternatives the latter effects are found to be moderated by price level and shopping goals a three path mediation model reveals the processes underlying the influence of price endings on choice

market price variation perceived price variation and consumers price search decisions for durable goods previous studies have consistently found that most consumers undertake relatively little prepurchase search for durable goods and do even less price comparison shopping despite the reported importance of price to consumers purchase decisions this article proposes and tests two possible explanations for why consumers willingness to engage in price search does not increase concomitantly with the price variation of durable goods the first potential explanation that consumers simply underestimate the market price variation was not supported the second possible explanation which builds upon weber s law of psychophysics and thaler s transaction utility theory was supported the data indicate that the psychological utility that a consumer derives from saving a fixed amount of money is inversely related to the price of the item in this case even if consumers believe that the price variation of more expensive items tends to be greater their motivation to spend time in price comparison shopping for these items may not increase as much as expected

prices for cash and cash for prices theory and evidence on convenient pricing a transaction between a seller and a buyer incurs a payment cost the payment cost is borne by the seller depending on the payment instrument the buyer chooses cash or card card payment is more costly than cash payment so the seller prefers that the buyer pays cash in this article we study the strategy of the seller setting a convenient price which simplifies transactions and pushes the buyer to pay cash the theoretical analysis which models both the seller and the buyer in a game setting derives two propositions 1 the seller is more likely to set a more convenient price and 2 the buyer is more likely to pay cash a more convenient price the empirical analysis supports both propositions thus sellers adopt a convenience pricing strategy prices for cash and this strategy pushes buyers to pay cash cash for prices

an empirical analysis of price endings with scanner data several consumer behavior theories have been offered to explain the preponderance of prices that end in the digit 9 this study attempts to incorporate these proposed behaviors into the implicit utility function of consumer choice models resulting in both a more accurate tool for managerial decision making and additional insights into how consumers actually behave toward price endings an attempt is made to compensate for both level effects those effects in which consumers may underestimate the value of a price and image effects those effects in which consumers may infer meaning from the right hand digits the models are estimated using scanner panel data for two frequently purchased products tuna and yogurt the results support the importance of accounting for the digits in consumer choice models providing evidence for both image effects and level effects

do firm sizes and profit rates converge evidence on gibrat s law and the persistence of profits in the long run three panel unit root tests are applied to a 31 year firm size growth and profit rate data set for 96 large quoted uk firms all tests reject the unit root null for log size if the augmented dickey fuller autoregressions exclude a linear time trend if a linear trend is included the results are more ambiguous and appear to differ systematically between tests the view that firm growth is either random or near random does not receive unequivocal support in all tests there is however strong and consistent evidence of mean reversion in profit rates

persistence of profitability and competition in emerging markets abstract this paper reports on time series analyses of the persistence of profitability of firms in emerging markets its central result is that there is less persistence in developing than in advanced economies the implications for the intensity of competition in emerging markets are examined

estimating the performance effects of business groups in emerging markets business groups confederations of legally independent firms are ubiquitous in emerging economies yet very little is known about their effects on the performance of affiliated firms we conceive of business groups as responses to market failures and high transaction costs in doing so we develop hypotheses about the effects of group affiliation on firm profitability affiliation could either boost or depress firm profitability and members of a group are likely to earn rates of return similar to other members of the same group using a unique data set compiled largely from local sources we test for these effects in 14 emerging markets argentina brazil chile india indonesia israel mexico peru the philippines south africa south korea taiwan thailand and turkey we find evidence that business groups indeed affect the broad patterns of economic performance in 12 of the markets we examine group affiliation appears to have as profound an effect on profitability as does industry membership yet strategy scholars have a much clearer grasp of industries than of groups moreover membership in a group raises the profitability of the average group member in several of the markets we examine this runs contrary to the wisdom conventional in advanced economies that unrelated diversification depresses profitability overall our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts conclusions drawn in one context may well not apply to another copyright 2001 john wiley sons ltd

does the persistence of profits persist a study of company profits in japan 1964 97 abstract earlier in a time series study of the profit rates of japanese manufacturing firms odagiri and yamawaki concluded that profits persist with the addition of 15 more years of data up to 1997 this conclusion is shown to stand the test of time in particular those firms estimated to earn higher than average long run profit rates in the early study were again estimated to earn higher than average long run profit rates the force of convergence was also found to be at work for instance the firms most profitable in period 1 1964 82 were most likely to face a decline in estimated long run profit rates from period 1 to period 2 1983 97 with the use of two sets of data the firm s profit performance was found to be positively related to measures of market share first among a smaller sample of firms for which reliable market share data could be matched market share was estimated to have a significant positive effect on long run profit rate in either period secondly among the entire sample of 357 firms the long run profit rate in either period was estimated to be positively associated with firm sales relative to industry sales which presumably is a crude measure of market share

is there a causal effect of concentration on persistent profitability differentials this article searches for a causal effect of industry concentration on estimates of persistent profitability differentials i offer solutions to identification problems that plague related analyses by applying an iv and a natural experiment this is the first study that explains estimates of persistent profit differentials using business segments data allowing to match micro and industry level data more consistently testing linear relations critical concentration levels and interactions with mobility barriers i find no evidence that concentration has any positive effect on long run profitability differences results rather tend to point to a statistically and economically significant negative causal effect

term structure evidence on interest rate smoothing and monetary policy inertia abstract numerous studies have used quarterly data to estimate monetary policy rules or reaction functions that appear to exhibit a very slow partial adjustment of the policy interest rate the conventional wisdom asserts that this gradual adjustment reflects a policy inertia or interest rate smoothing behavior by central banks however such quarterly monetary policy inertia would imply a large amount of forecastable variation in interest rates at horizons of more than 3 months which is contradicted by evidence from the term structure of interest rates the illusion of monetary policy inertia evident in the estimated policy rules likely reflects the persistent shocks that central banks face

profit persistence in the very long run evidence from survivors and exiters one of the main shortcomings of the profit persistence literature is the fact that it looks only at surviving companies this paper uses a unique dataset to analyse profit persistence in two different samples of stationary series 85 surviving us companies from 1950 1999 and 72 exiters while the exiters perform more competitively than the survivors there is still significant evidence for profit persistence in both samples concentration and growth of the industry as well as size and volatility of profits seem to play an important role in explaining persistence

the influence of preciseness of price information on the travel option choice abstract 159 99 159 38 or 160 00 the phenomenon of pricing around a rounded number with apparent preciseness is commonly observed in the marketplace much research has been conducted in the general area and has established that the use of precise prices those without a zero ending tends to lead to increased sales and to a more positive customer attitude to date the best explanation offered is that most people read from left to right so the last numbers of a price may be less salient than the leading numbers in an endeavor to establish a better understanding of the phenomenon this research consists of five experiments in a tourism context to first clarify the phenomenon and account for possible alternative explanations and then to provide empirical evidence that different representations of price can imply different construal levels and thus influence consumers choice preference in tourism marketing

patterns of rightmost digits used in advertised prices implications for nine ending effects analysis of the rightmost digits of selling prices in a sample of retail price advertisements confirmed past findings indicating the overrepresentation of the digits 0 5 and 9 the high cognitive accessibility of round numbers can account for the overrepresentation of 0 and 5 ending prices and suggests the existence of two effects that could account for the overrepresentation of 9 ending prices 1 a tendency of consumers to perceive a 9 ending price as a round number price with a small amount given back and 2 a tendency of consumers to underestimate a 9 ending price by encoding it as the first round number evoked during incomplete left to right processing analysis of the patterns of rightmost digits observed in the sample provides supportive evidence particularly for the second of these two 9 ending effects

persistence of firm level profitability in turkey the dynamics of company profits for 172 of the largest manufacturing firms in turkey are studied a time series analysis is used to estimate the long run projected profits and firm specific speed of adjustment parameters that measures the rate at which short run rents are eroded while persistent profitability differences across firms are observed there is also a moderately quick erosion of rents except for the most highly profitable firms firm characteristics rather than industry effects account for the differences in permanent profits contrary to the widespread view that developing countries suffer from uncompetitive markets the results in this paper suggest that the intensity of competition in turkey is no less than in developed countries and similar to other developing countries

the dynamics of company profits an international comparison 1 profits and the process of competition dennis c mueller 2 modelling persistent profitability paul a geroski 3 the persistence of profits in the united states dennis c mueller 4 the persistence of profits in us manufacturing industries ioannis kessides 5 the persistence of profitability in canada r shyam khemani and d m shapiro 6 persistence of corporate profits in the federal republic of germany joachim schwalbach and talat mahmood 7 the persistence of profits in france frederic jenny and andre paul weber 8 the persistence of profits in japan hiroyuki odagiri and hideki yamawaki 9 the persistence of profits in the uk john cubbin and paul a geroski 10 the persistence of profits international comparison hiroyuki odagiri and hideki yamawaki 11 the persistence of profits in perspective paul a geroski and dennis c mueller