economic hysteresis in hog production german hog production only responds in a very limited way to price fluctuations in the pork market the hog production concentrates on a few regions though it is not bound to special natural conditions such as soil quality furthermore the volume of production does not vary over time relatively high market risks sunk costs and the flexibility of the decision maker to defer investments characterize decision problems in hog production thus the real option approach is chosen to explain the inertia in production capacity by the use of panel data of specialized hog farms from the german farm accountancy data network an empirical investment model is estimated formally the model has the structure of a generalized ordered probit model this approach allows to test for economic hysteresis in the adjustment of hog production capacity the results confirm that uncertainty and flexibility widen the optimal range of inaction

the structure of licensing contracts industrial organization theory has explored several issues related to licensing but empirical analyses are extremely rare we amass a new and detailed dataset on licensing contracts and use it to present some simple facts concerning licensing behavior our analysis reveals robust cross industries differences in several contractual features such as exclusivity cross licensing ex ante versus ex post technology transfers and licensing to related versus unrelated parties we offer an interpretation of these facts based on cross industry variation in the strength of intellectual property rights

balancing exploration and exploitation in alliance formation do firms balance exploration and exploitation in their alliance formation decisions and if so why and how we argue that absorptive capacity and organizational inertia impose conflicting pressure

the impact of price floors on farmland investments a real options based experimental analysis price floors are a common instrument for market intervention to stimulate investments in some cases it can be observed that a price floor does not have the stimulating effect we experimentally analyse the investment behaviour of students who take the role of farmers the experiment considers an investment problem under uncertainty in a with price floor and a no price floor treatment stylizing a decision to take an ongoing farmland investment option we compare the actual investment behaviour with normative benchmarks of the net present value and the real options approach furthermore we look at order and learning effects the results show that the price floor has no significant impact on the willingness to invest whereas the effects of order were statistically significant the investment reluctance arising from an abolishment is stronger than the investment stimulation arising from the introduction of a price floor furthermore neither the net present value nor the real options approach is appr

understanding corporate coherence theory and evidence abstract multiproduct firms are perceived to be coherent in their scope yet there is no strong theoretical foundations to explain coherence in modern industrial organization theory this paper shows that as u s manufacturing firms grow more diverse they maintain a constant level of coherence between neighboring activities this finding runs counter to the idea that firms with many activities are generally more incoherent a framework is then presented which appeals to the nature of enterprise learning path dependencies and the nature of the selection environment to explain the ubiquity of coherent diversifiers

balancing search and stability interdependencies among elements of organizational design we examine how and why elements of organizational design depend on one another an agent based simulation allows us to model three design elements and two contextual variables that have rarely been analyzed jointly a vertical hierarchy that reviews proposals from subordinates an incentive system that rewards subordinates for departmental or firm wide performance the decomposition of an organization s many decisions into departments the underlying pattern of interactions among decisions and limits on the ability of managers to process information interdependencies arise among these features because of a basic general tension to be successful an organization must broadly search for good sets of decisions but it must also stabilize around good decisions once discovered an effective organization balances search and stability we identify sets of design elements that encourage broad search and others that promote stability the adoption of elements that encourage broad search typically raises the marginal benefit of other elements that provide offsetting stability hence the need to balance search and stability generates interdependencies among the design elements we pay special attention to interdependencies that involve the vertical hierarchy our findings confirm many aspects of conventional wisdom about vertical hierarchies but challenge or put boundary conditions on others we place limits for instance on the received wisdom that firm wide incentives and capable subordinates make top level oversight less valuable we also identify circumstances in which vertical hierarchies can lead to inferior long term performance

equality and responsibility this paper analyses the concept of responsibility and the way it appears in economic theory and in egalitarian theories of justice it identifies two general principles natural reward and compensation which inspire many arguments and axioms in theories based on responsibility the main results obtained in models where responsibility plays a central part are summed up and presented in the light of the two principles the main criteria put forth by philosophers who combine an egalitarian concern with the idea of personal responsibility are also mentioned and their performance w r t the two principles can be compared

holding on for too long an experimental study on inertia in entrepreneurs and non entrepreneurs disinvestment choices abstract disinvestment in the sense of project termination and liquidation of assets including the cession of a venture is an important realm of entrepreneurial decision making this study presents the results of an experimental investigation modeling the choice to disinvest as a dynamic problem of optimal stopping in which the patterns of decisions are analyzed with entrepreneurs and non entrepreneurs our experimental results reject the standard net present value approach as an account of observed behavior instead most individuals seem to understand the value of waiting their choices are weakly related to the disinvestment triggers derived from a formal optimal stopping benchmark consistent with real options reasoning we also observe a pronounced psychological inertia i e most individuals hold on to a losing project for even longer than real options reasoning would predict the study provides evidence for entrepreneurs and non entrepreneurs being quite similar in their behavior

the social welfare function and individual responsibility some theoretical issues and empirical evidence the literature on income distribution has attempted to evaluate different degrees of inequality using a social welfare function swf approach however it has largely ignored the source of such inequalities and has thus failed to consider different degrees of inequity the literature on egalitarianism has addressed issues of equity largely in relation to individual responsibility this paper builds upon these two literatures and introduces individual responsibility into the swf results from a small scale study of people s preferences in relation to the distribution of health benefits are presented to illustrate how the parameter values of a swf might be determined

interorganizational alliances and the performance of firms a study of growth and innovation rates in a high technology industry this paper investigates the relationship between intercorporate technology alliances and firm performance it argues that alliances are access relationships and therefore that the advantages which a focal firm derives from a portfolio of strategic coalitions depend upon the resource profiles of its alliance partners in particular large firms and those that possess leading edge technological resources are posited to be the most valuable associates the paper also argues that alliances are both pathways for the exchange of resources and signals that convey social status and recognition particularly when one of the firms in an alliance is a young or small organization or more generally an organization of equivocal quality alliances can act as endorsements they build public confidence in the value of an organization s products and services and thereby facilitate the firm s efforts to attract customers and other corporate partners the findings from models of sales growth and innovation rates in a large sample of semiconductor producers confirm that organizations with large and innovative alliance partners perform better than otherwise comparable firms that lack such partners consistent with the status transfer arguments the findings also demonstrate that young and small firms benefit more from large and innovative strategic alliance partners than do old and large organizations copyright 2000 john wiley sons ltd

sharing the cost of global warming due to meteorological factors the distribution of the environmental damage due to climate change bears no relationship to that of global emissions we argue in favor of osetting this discrepancy and propose a global insurance scheme to be ncanced according to countries respon sibility for climate change because ghg decay very slowly we argue that the actual burden of global warming should be shared on the basis of cumulated emissions raher than sharing the expected costs of actual emissions as in a pigovian taxation scheme we characterize new versions of two well known cost sharing schemes by adapting the responsibility theory of bossert and fleurbaey 1996 to a context with externalities j e l classi cation d62 d63 q54

organizational inertia and momentum a dynamic model of strategic change this study provides an empirical test of hannan and freeman s theory of structural inertia we examined the changes organizations undertook in response to a major environmental change in addition

do firms learn to create value the case of alliances we investigate whether firms learn to manage interfirm alliances as experience accumulates we use contract specific experience measures in a data set of over 2000 joint ventures and licensing agreements and value creation measures derived from the abnormal stock returns surrounding alliance announcements learning effects are identified from the effects of unobserved heterogeneity in alliance capabilities we find evidence of large learning effects in managing joint ventures but no such evidence for licensing contracts the effects of learning on value creation are strongest for research joint ventures and weakest for marketing joint ventures these results are consistent with the view that learning effects are more important in situations characterized by greater contractual ambiguity copyright 2000 john wiley sons ltd

options uncertainty and sunk costs an empirical analysis of land use change abstract in a real option model of land conversion incorporating return uncertainty and sunk costs optimal conversion thresholds are significantly higher than those from expected net present value models not accounting for these factors empirical tests of conversion from agriculture to forest suggest that landowners value the option to convert when making conversion decisions higher uncertainty in returns to all potential uses and lower correlation between shocks to agricultural and forest returns decreases the likelihood of conversion estimates indicate a significant impact on conversion decisions with approximations of option values ranging from 7 to 81 of the expected value of the land asset

domestic alliance networks and regional strategies of mnes a structural embeddedness perspective we draw on a social network perspective to explain multinational enterprises mnes propensity to distribute their operations unevenly across various regions of the world we focus on how the positioning of mnes in their domestic network of strategic alliances affects their geographic scope i e whether they concentrate on their home region or expand beyond it we theorize that embeddedness in alliance networks constitutes a double edged sword to the geographic scope of mnes strong embeddedness in domestic alliance networks drives the development of location bound firm specific advantages fsas which may narrow down mnes geographic scope in contrast moderate embeddedness leads to more non location bound fsas which reduce liability of foreignness and hence motivate mnes to widen their geographical scope we thus predict a non linear relationship between domestic alliance network embeddedness and mne geographic scope furthermore the impact of the domestic alliance network on mne geographic scope hinges on the organizational ability to efficiently and effectively absorb resources stemming from the network we test our hypotheses using fdi data from 302 us mnes in the information and communication technology industry for the period of 2001 2008 and generally find robust support for the hypothesized relationships

investment under uncertainty and dynamic adjustment in the finnish pork industry bykyosti s pietola and robert j myersmay 1998paper prepared for a selected paper session at the annual meeting of the american agriculturaleconomics association salt lake city utah august 1998 this research was financed jointly byagricultural economics research institute in finland the academy of finland and the finnishcultural foundation we also knowledge the michigan agricultural experiment station for itssupport of this research authors are agricultural economist agricultural economics research institute helsinki finland and associate professor department of agricultural economics michigan state university eastlansing copyright 1998 by kyosti s pietola and robert j myers all rights reserved readers may makeverbatim copies of this document for non commercial purposes by any means provided that thiscopyright notice appears on all such copies

structural versus reduced form estimation of optimal stopping problems in this paper i examine several statistical interpretive and policy implications of reduced form probit or logit estimation of optimal stopping problems the discussion proceeds in the context of an examination of the timber harvest decision of nonindustrial private forest nipf owners for a large class of optimal stopping problems a reduced form model which closely approximates the statistical performance of its structural counterpart is readily found still failure to properly interpret the relationship between the reduced form model and the underlying optimal stopping problem invites flawed econometric analysis and inappropriate interpretation of reduced form coefficients

he came he saw and he waited an empirical analysis of inertia in technology adoption the innovation adoption literature has focused primarily on a producer s decision of whether and how much to adopt an equally pertinent question is when to adopt because in the case of new techno

to each the same and to each his own a proposal to measure responsibility sensitive income inequality this paper deals with the question of how to incorporate modern responsibility catering egalitarianism into economic theory on the measurement of income inequality i present a particular axiomatic expression of the main aspects of such egalitarianism then to measure offensive inequality separately i construct a norm or reference income distribution based upon the axiomatic model to replace the perfectly equal income distribution that is used as norm by all common inequality measures i defend the use of a particular measure of distributional change to determine the degree of offensive inequality and apply the method to belgian income data

complementarity status similarity and social capital as drivers of alliance formation using data on u s investment banking firms syndication in underwriting corporate stock offerings during the 1980s this study explores the factors that drive alliance formation between two specific firms we compare resource complementarity status similarity and social capital as a basis of alliance formation the findings indicate that the likelihood of investment banks alliance formation is positively related to the complementarity of their capabilities as well as their status similarity social capital arising from banks direct and indirect collaborative experiences also plays a very important role in alliance formation the number of deals given by a lead bank to a potential partner over the past three years has an inverted u shaped relationship to the probability that the lead bank will invite the potential partner to form an alliance our findings indicate that status similarity and social capital have a stronger effect on alliance formation in initial public offering deals than in secondary offering deals as the former are more uncertain than the latter using these findings we discuss the role of complementarity status similarity and social capital in alliance formation copyright 2000 john wiley sons ltd

the planting real option in cash rent valuation after entering into a farmland cash rent contract in the fall a tenant farmer has flexibility over the spring crop choice and the input application level failure to account for these options will bias estimates of what farmers should pay to rent land applying monte carlo simulation methods this study investigates the option values for these choices a multivariate gaussian copula mgc is employed to account for dependence among yields and prices results show that the average cash rent valuation for the real option approach is 33 6 higher than that for the conventional net present value npv method in which the input intensity option is 0 9 crop planting sequence is shown to impact the real option value

from income inequality to economic inequality i begin by recounting a true story a rather trivial and innocuous story as it happens but one with something of a lesson some years ago when i went to give a lecture at another campus i chose economic inequality as the title of my talk on arrival i found the campus covered with posters announcing that i was speaking on income inequality when i grumbled about it slightly i encountered gentle but genuine amazement that i wanted to fuss about such an insignificant difference indeed the identification of economic inequality with income inequality is fairly standard and the two are often seen as effectively synonymous in the economic literature if you tell someone that you are working on economic inequality it is quite commonly assumed that you are studying income distribution this implicit identification can be found in the philosophical literature as well for example in his interesting and important paper equality as a moral ideal harry frankfurt 1987 the distinguished philosopher provides a closely reasoned critique of what he calls economic egalitarianism defining it as the doctrine that there should be no inequalities in the distribution of money p 21 the distinction however is important many of the criticisms of economic egalitarianism as a value or a goal applies much more readily to the narrow concept of income inequality than it does to the broader notions of economic inequality for example giving a larger share of income to a person with more needs say due to a disability can be seen as militating against the principle of equalizing incomes but it does not go against the broader precepts of economic equality since the greater need for economic resources due to the disability must be taken into account in judging the requirements of economic equality well the subject of this paper is precisely the difference between economic inequality and income inequality it will be argued that we ought to pay much more attention than we conventionally do to economic inequality in an appropriately broad sense taking note of the fact that income inequality on which economic analysis of inequality so often concentrates gives

the choice between mergers acquisitions and joint ventures the case of japanese investors in the united states this paper investigates the determinants of the choice between two alternative methods of pooling similar and complementary assets the merger acquisition and the greenfield equity joint venture two theories of the determinants of that choice are tested on a sample of japanese investments in the united states the results show that equity joint ventures are preferred over acquisitions when the desired assets are linked to nondesired assets because the u s firm owning them is large and not divisionalized when the japanese investor has little previous experience of the american market and hence seeks to avoid postmerger integration problems when the japanese investor and the u s partner manufacture the same product and when the industry entered is growing neither very rapidly nor very slowly

optimal redistribution with unobservable disability welfarist versus non welfarist social objectives this paper examines the optimal non linear income and commodity tax when the same labor disutility can receive two alternative interpretations taste for leisure and disability but the disability is not readily observable we compare the optimal policy under alternative social objectives welfarist and non welfarist and conclude that the non welfarist objective in which the planner gives a higher weight to the disutility of labour of the disabled individuals is the only reasonable specification it has some foundation in the theory of responsability further unlike the other specifications it yields an optimal solution that may involve a lower labour supply requirement from disabled individuals

is redistribution through indirect taxes equitable abstract a move towards a non uniform indirect tax structure may result in some vertical redistribution it will also lead to a different treatment of households with the same total expenditures but with different preferences to evaluate the social desirability of such rate differentiation we introduce a distinction between needs for which individuals are not responsible and tastes for which they are we show some empirical results for belgium obtained with the microsimulation program aster in these calculations we compare the actual belgian system of indirect taxes with a simpler structure with only two rates

measuring unfair in equality abstract this paper shows one way of generalizing the standard framework of inequality measurement to allow for a distinction between fair and unfair inequalities we introduce the unfairness lorenz curve and the unfairness gini which are generalizations of the standard versions of the lorenz curve and the gini with this more general framework in place we study the implications of responsibility sensitive theories of justice for the evaluation of the income distribution in norway from 1986 to 2005 we find that both the pre tax and the post tax income distributions have become less fair in norway even though the standard gini for the pre tax income distribution has decreased in the same period two trends explain this development the increase in income share of the top percentile and the change in the situation of females in the labor market the concentration of income at the top of the distribution contributes both to increased unfairness and increased inequality whereas the increase in females working hours and level of education primarily contributes to a reduction in inequality thus the latter effect dominates for the standard gini and the former effect for the unfairness gini furthermore we find that the increase in post tax unfairness is even larger than the increase in pre tax unfairness which shows that the tax system in norway contributes less to eliminating unfairness in 2005 than in 1986

capital market imperfections in economic transition empirical evidence from ukrainian agriculture this article investigates the link between financing and investment in ukrainian agriculture during economic transition the main contribution of the study is to provide empirical evidence for the coexistence of financial constraints and soft budget constraints sbcs this is of particular importance because credit constraints and sbcs have completely different economic effects the lack of differentiation between these forms of capital market imperfections yields overlapping effects of financing on investment and may therefore cause a misinterpretation of econometric results our empirical analyses are based on an econometric estimation of the euler investment equations for 529 large farms from three ukrainian regions between 2001 and 2005 the results confirm that financial variables significantly influence farms investment providing empirical evidence of an imperfect capital market in ukrainian agriculture it turns out that credit constraints in the ukrainian agricultural sector are more important than sbcs we show that the estimated level of financial constraints for profitable farms with access to loans is higher if both types of capital market imperfections are appropriately distinguished

gender race pay and promotion in the british nursing profession estimation of a generalized ordered probit model we analyse job grading within the uk national health service nursing profession using 1994 survey data we start from the ordered probit model for which we develop and apply appropriate specification tests threshold constancy and covariate exogeneity are rejected with important consequences for estimates of the influence of gender ethnicity training and career interruptions we find little evidence of disadvantage for females relative to males but significant differences in speed of promotion between ethnic groups implying non negligible differences in lifetime earnings copyright 2000 john wiley sons ltd

being efficiently fickle a dynamic theory of organizational choice a central proposition in organization theory is that discrete organizational forms are matched to environmental conditions market strategies or exchange conditions this paper develops a contrary theoretical proposition we argue that efficiency may dictate modulating between discrete governance modes i e structural modulation in response to a stable set of exchange conditions if governance choices are discrete as much of organization theory argues then the consequent steady state functionality delivered by these organizational forms is itself discrete however if the desired functionality lies in between the steady state functionality delivered by two discrete choices then efficiency gains may be available by modulating between modes we develop an analytical model of structural modulation and examine factors that influence when modulation is ef ficiency enhancing as well as the optimal rate of modulation we conclude that under certain conditions structural modulation is efficiency enhancing further contrary to theories that highlight the potentially destructive consequences of inertia on organizational survival we identify important efficiencyyielding benefits of inertia

investment decisions in hog finishing an application of the real options approach in this paper option pricing theory is applied to an investment problem in hog production a stochastic simulation model capable of pricing american type options is developed this is achieved by recursive calculation of the exercise frontier the model is used to determine the investment trigger and the disinvestment trigger for a pig fattening barn under german market conditions it turns out that the investment trigger taking into account the value of waiting in an uncertain environment can be considerably higher compared to classical investment criteria such as the net present value this offers an explanation as to why farmers are indeed reluctant to invest in hog production another finding is the sensitivity of the option prices with respect to the stochastic process that is assumed for revenues and variable costs of the production activity

equality of opportunity policy and measurement paradigms abstract equality of opportunity is a widely accepted principle of distributive justice and it is the leading idea of most political platforms in several countries according to this principle a society might institute policies that secure an equal distribution of the means to reach a valuable outcome among its members once the set of opportunities have been equalized which particular opportunity the individual chooses from those open to her is outside the scope of justice ex ante inequalities and only those inequalities should be eliminated or compensated for by public intervention the recent literature on the opportunity egalitarianism often merges these questions introducing two different economic issues on one side the design of a public policy intended to implement the equality of opportunity view and on the other side the problem of measuring the degree of opportunity inequality in a society we describe the basic setting and assumptions of some different approaches derived by roemer s algorithm for public policy and then we discuss some theoretical and empirical studies to separate and test alternative paradigms on the measurement of inequality of opportunity accordingly an extended critique on the causality issue on policies and measurements is taken into account