the effect of agglomeration economies on firm deaths a comparison of firm and regional based approaches this paper compares the merits of regional and firm based approaches for analysing the effect of agglomeration economies on firm deaths in ireland we aggregate a comprehensive data set on irish fi

human fallibility and economic organization doctrines concerning what is a good way to organize a society have influenced human societies more deeply than any other set of doctrines specifically beliefs that one way of organizing production and exchange is better than others have inspired a number of socioeconomic experiments leading to modern capitalist and socialist societies with far reaching implications yet surprisingly the central doctrines though a source of continuing ideological debate have been the subject of only limited scientific enquiry the major proposition the so called langelerner taylor theorem asserting the equivalence between competitive capitalist economies and decentralized socialist economies which make use of the price system made a point in stressing that the issue of the ownership of the means of production might not be central in the comparison of economic systems the theorem however was based on models both of capitalism and of market socialism in which the most important differences between the two systems were suppressed this paper describes a research program attempting to delineate some of the critical differences among alternative forms of economic organization we contend that central to an understanding of these differences is an understanding of differences in the organization of decision making of who gathers what information how it gets communicated and to whom and how decisions get made both concerning what actions to take and who should fill decision making positions this view should be contrasted with the traditional economic paradigm in which decision making plays no role the manager for instance simply looks up in a book of blueprints what the appropriate technique of production is for the given set of factor prices in the conventional paradigm moreover mistakes are never made either in gathering or transmitting information or in making decisions and indeed there are no costs associated with these activities by contrast the view we take here is that to err is human and that different organizational systems differ not only in what kinds of errors individuals make in them but also in how the systems aggregate errors as a result organizations differ systematically in the kinds of errors they make and thus in their overall economic performance organizations also differ in the costs associated with information collection with information communication and processing and with decision making indeed as we discuss below perfect decision making can be achieved by arranging enough decision makers in an appropriate manner no matter how fallible the decision makers are provided their decisions are not purely random or worse what prevents perfect decision making is the cost we refer to the specification of the structure of information gathering communication and decision making as an organization s architecture the objective of our research program has been to construct stylized models of an economic organization within which the consequences of alternative organizational architectures can be examined using these models not only can we compare the performance of particular organizational forms but we can also ask given a particular set of objectives and circumstances what is the optimal structure within tdiscussants david kreps stanford university paul milgrom yale university

paper or plastic how we pay influences post transaction connection does the way that individuals pay for a good or service influence the amount of connection they feel after the purchase has occurred employing a multi method approach across four studies individuals who pay using a relatively more painful form of payment e g cash or check increase their post transaction connection to the product they purchased and or the organization their purchase supports in comparison to those who pay with less painful forms of payment e g debit or credit card specifically individuals who pay with more painful forms of payment increase their emotional attachment to a product decrease their commitment to nonchosen alternatives are more likely to publicly signal their commitment to an organization and are more likely to make a repeat transaction moreover the form of payment influences post transaction connection even when the objective monetary cost remains constant and when the psychological cost is indirect i e donating someone else s money increasing the psychological pain of payment appears to have beneficial consequences with respect to increasing downstream product and brand connection

the democratic political economy of progressive income taxation why do both left and right political parties typically propose progressive income taxation schemes in political competition analysis of this problem has been hindered by the two dimensionality of the issue space to give parties a choice over a domain that contains both progressive and regressive income tax policies requires an issue space that is at least two dimensional nash equilibrium in pure strategies of the standard two party game whose players have complete preferences over a two dimensional policy space generically fails to exist i introduce a new equilibrium concept for political games based on the fact of factional conflict within parties each party is supposed to consist of reformists militants and opportunists each faction has a complete preference order on policy space but together they can only agree on a partial order nash equilibria of the two party game where the policy space consists of all quadratic income tax functions and each party is represented by its partial order exist and it is shown that in such equilibria both parties propose progressive income taxation

fairness self interest and the politics of the progressive income tax all advanced democracies have adopted income taxes with considerable progression in marginal tax rates to explain this we examine the nature of individual and collective preferences over alternative tax schedules in the context of a simple two sector model we first consider the case of altruistic or sociotropic citizens who view the income tax as a means of achieving a fairer or more egalitarian distribution of income we show that greater marginal rate progressivity may well be less fair that a fairest tax however defined is always a linear or flat rate schedule in which all incomes are taxed at the same marginal rate and that with a purely sociotropic electorate there exists a flat rate schedule which is a majority equilibrium we then show that with self interested voters who seek to minimize their own tax burdens greater marginal rate progression may well be preferred by middle and upper income voters that for middle income citizens the optimal schedule is a sharply progressive one and that within the set of individually optimal schedules there exists a majority equilibrium which is a progressive schedule which minimizes the burden on median income or middle class citizens at the expense of lower and upper income taxpayers

representative democracy and marginal rate progressive income taxation abstract this paper develops a political economy model that is consistent with the fact that democracies have a preference for increasing marginal tax rates on income we present a model in which there is an exogenous set of political parties with preferences over the set of admissible tax schedules this set contains virtually any increasing and piecewise linear continuous function each party decides whether or not to present a candidate for election there is a fixed cost of running the elected candidate implements one of her preferred tax policies our main results provide conditions under which a strong nash equilibrium exists and a tax schedule with increasing marginal tax rates is implemented in some nash equilibria and in any strong nash equilibrium

is there a demand for income tax progressivity recently marhuenda and ortuno ortin economics letters 48 1995 319 have provided a popular support for progressivity theorem that says that a marginal progressive tax always defeats a marginal regressive tax as long as individuals vote for the tax scheme minimizing their tax liabilities and the median income is less than the mean income in this paper we provide under similar circumstances a popular support for regressivity theorem according to which for any existing tax scheme there is always a majority support for a regressive reform reducing marginal progressivity or increasing marginal regressivity this regressive reform is supported by both extremes of the income distribution combining this result with marhuenda and ortuno ortin s result implies that vote cycling between regressive and progressive tax reform is inevitable and thus that the demand for progressivity cannot be established in the standard downsian framework with self interested voters

is success hereditary evidence on the performance of spawned ventures a common phenomenon in entrepreneurship is that employees turn away from employment to found their own businesses prior literature discusses the former employers characteristics that influence the creation of entrepreneurial ventures an investigation of whether these characteristics also affect the success of the spawned ventures is missing so far this paper contributes to the literature by showing that entrepreneurial ventures spawned by well performing firms are financially more successful than ventures stemming from poorly performing firms this suggests that spawned entrepreneurs are able to exploit valuable knowledge from their previous employers which impacts their ventures performance positively the analysis is based on a linked employee employer data set for the netherlands for the period 1999 2004

innovation diversity and diffusion a self organisation model a number of features of innovation diffusion are identified appropriability diversity expectations selection learning and spillover externalities a dynamic model is formul ated to embed the diffusion question into a more general framework of disequilibrium competition the model incorporates distinct vintage structures reflecting a change in technological trajectory learning by using a nd expectations driven investment rules of thumb simulation studies reveal robust quasi logistic curves but a complicated pattern of net market share gains and losses uncertainty regarding the rationality of early or late adoption it is argued ensures that the requisite behavioral variety is present to generate these diffusion patterns copyright 1988 by royal economic society

some stabilizing and destabilizing effects of foreign debt accumulation in developing countries abstract recent research indicates that current account imbalances in the three largest industrial countries germany japan and the united states are self correcting a long run equilibrium relationship exists between the cumulated current account which is the net stock of these countries foreign assets or liabilities and other economic factors the situation appears to be different in a sample of 26 developing countries examined here this paper attempts to explain why it examines the effects on the current account of government and government guaranteed foreign debt on the one hand and net foreign liabilities or the cumulated current account deficit on the other while the cumulated current account deficit does generate stabilizing forces possibly through wealth effects large amounts of government and government guaranteed debt create destabilizing effects by stimulating capital flight

home field advantage location decisions of portuguese entrepreneurs an investor s home bias in industrial location decisions may stem from personal factors social capital other non transferable assets and imperfect information about the urban and regional environment this paper explores the distinction between home base and non home location decisions in portugal we reach two important conclusions first the introduction of a variable accounting for prior base of economic activity significantly improves the statistical results second we find that the weighting of distinct location attributes differs between home and non home locations notably non home location choices are strongly governed by agglomeration economies and proximity to major urban centers possibly replicating prior location decisions to economize on search costs the results also enable us to quantify the investor s willingness to opt for a possible home field advantage for example entrepreneurs accept over three times higher labor costs to compete in their resident area of business 2002 elsevier science usa all rights reserved

competitiveness of regions from an evolutionary perspective boschma r a 2004 competitiveness of regions from an evolutionary perspective regional studies38 993 1006 do regions compete as firms do how does one deal with the fact that regions unlike organizations are entities that do not act does it make sense to talk about the ability of regions to generate new variety this paper aims to address these questions from an evolutionary perspective it is meaningful to talk about regional competitiveness when the region affects the performances of local firms to a considerable degree this is especially true when the competitiveness of a region depends on intangible non tradable assets based on a knowledge and competence base embedded in a particular institutional setting that are reproduced and modified through the actions and repeated interactions of actors although regions are increasingly becoming collective players actively responding to an increasing exposure to extra regional competition the paper explains why there are serious limits in enhancin

path dependence research in regional economic development cacophony or knowledge accumulation henning m stam e and wenting r path dependence research in regional economic development cacophony or knowledge accumulation regional studies the concept of path dependence has gained momentum in the social sciences particularly in economic geography this paper explores the empirical literature on path dependence and path creation in regional economic development it offers a critical reflection on these studies and outlines commonalities and problems in research designs and empirical testing the review suggests that the popularity of the path dependence concept in regional studies has led to a cacophony of studies rather than to a purposeful accumulation of knowledge around the concept gaps are identified and guidelines are suggested for future research on path creation and path dependence in regional development henning m stam e and wenting r

effects of ancestral populations on entrepreneurial founding and failure private liquor stores in alberta 1994 2003 until 1993 all liquor stores in the canadian province of alberta were government owned and run in the fall of 1993 the provincial government exited liquor retailing all government stores were shut down and entrepreneurs were allowed to open private liquor stores in this article we take advantage of this abrupt regulatory change in the alberta liquor retailing industry to address two related issues that have received little empirical attention first we investigate how an ancestral population affects processes of legitimation and competition while density dependence theory predicts that legitimation effects outweigh competitive effects at low levels of density will this be the case when a new population replaces a similar ancestral one second beyond density dependence we investigate how ancestral populations affect the locations of new entrepreneurial ventures will entrepreneurs follow ancestral location patterns and will these ancestral locations confer survival advantages to answer these questions we map all private liquor stores on the street map of calgary alberta s largest city from 1994 to 2003 and analyze store founding and failure we use our results to draw implications for theories of density dependence entrepreneurial behavior and industry spatial structure copyright 2011 the author 2011 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

clusters entrepreneurial ecosystem co creation and appropriability a conceptual framework extant literature on clusters underplays the role of entrepreneurs and entrepreneurial management in creating and co creating organizations markets and supporting ecosystems we employ transaction costs resource knowledge capabilities and power control based theories to provide a comparative static governance based perspective on clusters we embed this into a more general co evolutionary entrepreneurial theory of the emergence evolution and co evolution of markets ecosystems and clusters we suggest that clusters can involve advantages that help engender superior appropriation of co created value as compared to alternatives entrepreneurial managers faced with a degree of choice will help co create clusters and be part of them for as long as they can appropriate more value in this way than through alternatives

firm survival and the evolution of oligopoly after their commercial introduction the number of producers of autos tires televisions and penicillin initially grew and then experienced a sharp decline or shakeout guided by an evolutionary model of entry and exit firm survival patterns in the four products are examined to determine whether there were common forces governing their distinctive evolution predictions concerning the effects of pre and post entry experience and the timing of entry on firm survival are tested the findings are used to reflect on why industries experience shakeouts and evolve to be oligopolies

disequilibrium economic dynamics a post schumpeterian contribution abstract adaptive economizing in a decentralized economy with alternative technologies and scarce resources leads to various kinds of locally unstable behavior economic disequilibrium is the rule in such a world and requires the presence of market mechanisms that make possible continued viability if in addition to local instability economies are also globally unstable as considerable evidence suggests then the discovery and application of new structure is essential a complete dynamic theory of economic change must therefore be based not only on conventional rationality and routinely adapting behavior but on a superior faculty which may perhaps best be called creative intelligence

an evaluation of competitive industrial structure and regional manufacturing employment change drucker j an evaluation of competitive industrial structure and regional manufacturing employment change regional studies this paper examines the relationship between regional industrial structure and employment change in the manufacturing sector and nineteen subsectors in the united states from 1987 to 1997 the relative associations of economic diversity industrial specialization and competitive structure with economic performance are assessed using a non causal regression framework multiple facets of industrial structure at the regional scale including competitive structure are considered together by exploiting confidential microdata to construct and evaluate detailed metrics across broad geographic and industrial ranges the findings suggest the importance of industrial competitive structure for understanding regional employment change economic performance and industrial development

do spinoff dynamics or agglomeration externalities drive industry clustering a reappraisal of steven klepper s work steven klepper s theory of industry clustering based on organizational reproduction and inheritance through spinoffs challenged the marshallian view on industry clustering this article provides an assessment of klepper s theoretical and empirical work on industry clustering we explore how new his spinoff theory on industry clustering was and we investigate the impact of klepper s theory on the economic geography community klepper s work has inspired especially recent literature on regional branching that argues that new industries grow out of and recombine capabilities from local related industries finally the article discusses what questions on industry location are still left open or in need of more evidence in the context of klepper s theory less

on the optimal income taxation some further numerical results abstract using numerical calculations we show in the optimal income tax model that a realistic value for the elasticity of substitution between consumption and leisure 0 5 leads to conclusions different from some of those drawn by mirrlees 1971 and atkinson 1973 the marginal tax rates are not so low and the shape of the tax schedule is for a great majority of the population substantially nonlinear a new feature in our calculations is that both results come out without going to maximin as done by atkinson 1973 we study in special cases the locality of the zero limit of the marginal tax rate at the upper end of the ability distribution and we achieve a very definite conclusion this result is really very local we also present an interesting approximation result concerning the relationship between the level of the government revenue and the marginal tax rate for individuals with high ability an important methodological remark analogous to sen s critique on the ethical measures of inequality is made on the interpretation of optimal income tax calculations

dominance by birthright entry of prior radio producers and competitive ramifications in the u s television receiver industry the u s television receiver industry evolved to be an oligopoly dominated by firms that produced radios prior to tvs data on the experience of all u s radio manufacturers and on the length of survival and rate of innovation of all u s tv entrants are collected to analyze how radio experience influenced entry firm performance and the evolution of market structure in the tv industry consistent with a model of the evolution of an oligopolistic industry more experienced radio firms were more likely to enter tv manufacturing had higher innovation rates and in turn had greater market shares and longer survival suggesting that firm capabilities and the evolution of the tv industry s market structure were critically shaped by firms experience prior to entry copyright 2000 john wiley sons ltd

capital market information and industrial performance the role of west german banks in orthodox theory external capital markets play a dual role supplying various forms of investment finance and disciplining firms which are inefficient or fail to pursue profit goals an extensive literature speaks of the efficiency of external capital markets meaning that firms can make production investment decisions and investors can choose among the securities that represent ownership of firms activities under the assumption that security prices at any time fully reflect all available information fama i970 1 however this concept of efficiency is purely technical it depends critically on what information is available and we know there are problems of appropriability and failure in information markets deriving ultimately from certain peculiarities of information as a commodity arrow i962 thus another growing literature focusses on problems of achieving equilibrium in markets where agents are imperfectly or asymmetrically informed amongst other things this literature shows that informational failures of the kind in question can lead to capital rationing in loan and credit markets and the use of strict collateral requirements as screening devices jaffee and russell i976 stiglitz and weiss i98i cable and turner i983 these may then be expected to affect the efficiency of individual firms and the system as a whole capital shortage implies that some profitable investment opportunities are foregone and production choices may also be distorted by the need to satisfy additional financial constraints contrived to elicit signals of creditworthiness of the firms undertaking them similarly the disciplining role of external capital markets can be impaired by information impactedness williamson i975 and the costs of mobilising and giving effect to shareholders preferences thus in the principal agent framework developed by jensen and meckling i976 and fama i980 the degree of constraint on managerial pursuit of non profit goals as posited by managerial theorists depends on the transactions costs of stock owner intervention the result is an optimal degree of departure from cost minimising profit maximising behaviour determined by the level of transactions costs institutional factors which affect the way information is distributed amongst agents can therefore have an important bearing on allocative and technical efficiency and the west german system of industrial finance provides an in

majority support for progressive income taxation with corner preferences this paper studies voting over quadratic taxation when incomeis fixed and taxation non distortionary the set of feasibletaxes is compact and self interested voters have cornerpreferences we first show that if a majority winning taxpolicy exists it involves maximum progressivity we then givea necessary and sufficient condition on the incomedistribution for a majority winner to exist this conditionappears to be satisfied for a large class of distributionfunctions

schumpeterian dynamics an evolutionary model of innovation and imitation abstract this paper develops a simple evolutionary model of innovation and imitation it analyzes how dynamic interactions between equilibrating force of imitation and disequilibrating force of innovation mold the evolutionary pattern of an industry s state of technology and shows that in this schumpeterian world the industry will never approach a neoclassical equilibrium with perfect knowlwdge even in the long run the paper also examines the steady state efficiency distribution of firms that characterizes the industry s long run and obtains some comparative dynamics results

institutions and diversification related versus unrelated diversification in a varieties of capitalism framework the varieties of capitalism literature has drawn little attention to industrial renewal and diversification while the related diversification literature has neglected the institutional dimension of industrial change bringing together both literatures the paper proposes that institutions have an impact on the direction of the diversification process in particular on whether countries gain a comparative advantage in new sectors that are close or far from what is already part of their existing industrial structure we investigate the diversification process in 23 developed countries by means of detailed product trade data in the period 1995 2010 our results show that relatedness is a stronger driver of diversification into new products in coordinated market economies while liberal market economies show a higher probability to move in more unrelated industries their overarching institutional framework gives countries more freedom to make a jump in their industrial evolution in particular we found that the role of relatedness as driver of diversification into new sectors is stronger in the presence of institutions that focus more on non market coordination in the domains of labor relations corporate governance relations product market relations and inter firm relations c 2015 elsevier b v all rights reserved less

the spatial evolution of the british automobile industry does location matter this article aims to describe and explain the spatial evolution of the automobile sector in great britain from an evolutionary perspective this analysis is based on a unique database of all entries and exits in this sector during the period 1895 1968 collected by the authors cox regressions show that spinoff dynamics agglomeration economies and time of entry have had a significant effect on the survival rate of automobile firms during the period 1895 1968

credit markets and the control of capital traditional discussions of the role of capital markets have identified a number of distinct functions which they perforrn they allocate scarce capital among competing users and uses l and they provide signals to guide managers in making their investment decisions 2 in this lecture i wish to focus on a rather different function of the capital market what i shall refer to as the control of capital 3 conventional theory treats the typical firrn in an anthropomorphic manner it acts as a single rational individual doing what it is supposed to be doing maximizing stock market value that may have been well and good in those nostalgic bygone days of small firrns each run tightly by their owners who were single mindedly pursuing their lust for wealth but today a majority of production occurs in large corporations in which no shareholder owns more than a small fraction of the shares in which the separation of ownership and control that frank knight was so concerned with in his writings some sixty five years ago has become a reality those

interest rates official lending and the debt crisis a reassessment the authors document and try to explain the sizable cross country differences in interest rates on external debt paid by a group of highly indebted developing countries in 1973 89 they find that indonesia and turkey which are often praised for not rescheduling in the 1980s paid interest rates substantially below libor and avoided the interest rate shock of the early 1980s differences in the default risk premium explain some of the variation among countries but different degrees of access to official loans carrying highly subsidized interest rates played the major role in the sample they studied they found no evidence that debt at floating interest rates was more expensive than debt at fixed rates for the period 1981 89 it is possible to control for differences in the currency composition of debt and the results are essentially unchanged these results suggest that studies of economic performance among the highly indebted countries during the debt crisis should control for cross country differences in the burden of interest payments

disagreements spinoffs and the evolution of detroit as the capital of the u s automobile industry the agglomeration of the automobile industry around detroit michigan is explained using a theory in which disagreements lead employees of incumbent firms to found spinoffs in the same industry predictions of the theory concerning entry and firm survival are tested using data on the origin location and years of production of every entrant into the industry from 1895 to 1966 the geographic concentration of the industry is attributed to four early successful entrants and the many successful spinoffs they spawned in the detroit area and not to conventional agglomeration economies benefiting co located firms as featured in modern theories of agglomeration implications of the findings regarding firm strategy are discussed

integrating finance into the multi level perspective technology niche finance regime interactions and financial policy interventions abstract any major socio technical transition requires a fundamental re direction of financial capital from incumbent to new technologies and practices while the transitions literature conceptually covers financial markets the role of finance is marginalized and has scarcely been analysed empirically to address this gap here we build on the multi level perspective mlp which considers financial markets as part of the existing regime we argue that the role of finance is highly relevant for the niche regime interaction redirecting finance towards new niche technologies requires that either the niche is fit for and conforms to the financial regime s expectations or the financial regime is stretched and transformed in order to accept and finance niche technologies based on 56 interviews we identify factors that determine interactions between the financial regime and technology niches these include acceptable risk and transaction size an abundance of knowledge and heuristics in both the regime and niche and an extensive existing industry network we further analyse how state investment bank sib interventions in germany the uk and australia aimed to mobilise private finance into low carbon project development affect the interaction between the technology niche and financial regime i e whether they resulted in fitting and conforming the technological niche for the financial regime or stretching and transforming the financial regime our results point to several important effects of sib interventions with most effects fitting the niche to the regime however we also detect effects that stretch and transform the financial regime through evolutionary processes importantly some effects occur as a consequence of the primary effects based on our findings we discuss policy implications on how to accelerate transitions through policies aiming at finance as well as theoretical insights gained through our analysis

popular support for progressive taxation and the relative income hypothesis abstract we show that a marginal rate progressive tax always defeats a marginal rate regressive tax under pairwise majority voting so long as the latter collects at least as much revenue as the former one irrespective of whether the voters care at all about their relative incomes or not

voting over selfishly optimal nonlinear income tax schedules abstract majority voting over selfishly optimal nonlinear income tax schedules proposed by a continuum of individuals who have quasilinear in consumption preferences is considered roell 2012 has shown that individual preferences over these schedules are single peaked in this article a complete characterization of selfishly optimal schedules is provided each selfishly optimal schedule has a bunching region in a neighborhood of the proposer s skill type coincides with the maxi max schedule below this region and coincides with the maxi min schedule above it using techniques introduced by vincent and mason 1967 the bunching region is identified by solving an unconstrained optimization problem information about the optimal schedules is used to provide a relatively simple proof of single peakedness the condorcet winning tax schedule features marginal tax rates that are negative resp positive on the maxi max resp maxi min part of the schedule except at the endpoints of the skill distribution where they are zero

the politics of progressive income taxation with incentive effects this paper studies majority voting over quadratic taxation and investigates under which conditions marginal progressivity emerges as a voting outcome in our model with endogenous income there is no majority condorcet winning tax schedule we then investigate less demanding political equilibrium concepts in order to see under which conditions the set of equilibria is composed only of progressive tax functions we follow three strategies i reduction of the policy space to the tax functions that are ideal for some voter ii elimination of weakly dominated strategies and the use of mixed strategies in a standard downsian two party competition game iii assumption that political parties interact repeatedly and care about the size of their majority although each approach captures a different aspect of political behavior they point to the same simulation based conclusion that progressivity is more likely to emerge for most distributions of abilities and that it is actually the only possible voting outcome if the distribution is sufficiently concentrated at the middle

finance innovation and industrial change abstract this paper investigates the impact financial structures upon industrial dynamics whenever the system is permanently characterized by unexploited opportunities for innovation highly bounded rationality and trial and error search processes in these circumstances it is argued specific financial set ups such as market based vs credit based mechanisms of allocation control and ownership transfer are likely to exert different influences on the rates and modes of industrial innovation relatedly one suggests some hypotheses on the links between financial systems and features of industrial evolution and some tentative taxonomies

popular support for progressive taxation abstract the popular support obtained by two parties who propose two qualitatively different tax schemes is analyzed we show that if the median voter is below the mean then any progressive proposal wins over a regressive one

income taxation uncertainty and stability abstract this paper develops a political model to analyze the stability of income tax schedules it is assumed that agents perceive any proposed alternative tax policy as more uncertain than the status quo a tax policy is stable if it is a condorcet winner it is well known that in a model without uncertainty the existence of such a policy is very rare we show however that in real cases this might not be a serious problem since small amounts of uncertainty can bring stability to the status quo it is also shown that linear tax functions can only be stable in economies with very egalitarian income distributions and high taxation levels

time should tell more evolutionary economic geography and the challenge of history abstractevolutionary economic geography theory stresses the importance of time and history to explain the evolution of regional economies yet consistent empirical treatment of longitudinal patter

do agglomeration externalities affect firm survival abstractdo agglomeration externalities affect firm survival regional studies this paper analyses the impact of spatial agglomeration externalities on italian start up firms survival italy represents a relevant case study given the well known role of firm clusters in the country s economic development results obtained support the hypothesis that industry variety reduces the likelihood of firm exit specifically related variety which contributes to the generation and diffusion of new knowledge has a positive effect on firm survival in manufacturing sectors while unrelated variety which may work as a portfolio strategy plays a positive role in services sectors localization economies positively influence firm survival only in services sectors finally urban density is not robust to the control for firm characteristics

no place like home relocation capabilities and firm survival in the german machine tool industry after world war ii we explore the extent to which organizational capabilities are location specific by studying the location choices and longevity of east german machine tool producers that relocated to west germany after world war ii relocating firms were similar in performance to experienced west german incumbents they outperformed new entrants without prewar industry experience this suggests they were able to build on capabilities acquired before the war even though relocating firms tended lo locate in industry agglomerations and in urbanized regions we find no evidence suggesting that firm performance benefited from agglomeration economies copyright 2011 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

information and economic analysis a perspective ten years ago i delivered a paper before this group with the title information and economic analysis i chose the title deliberately i did not call the subject on which i was speaking the economics of information because to do so would have been to suggest that my topic like the economics of agriculture or the economics of industry or the economics of labour represented another branch of specialisation within economics i wanted to suggest that informational considerations were in fact central to the analysis of a wide variety of phenomena that they constituted a central part of the foundations of economic analysis at the time though economists had long paid lip service to the importance of information there was little formal literature the last decade has seen a burgeoning of the literature it has become to the late 7o s and early 8o s what growth theory was to the early 6o s and it has been greeted with some of the same scepticism there seems to be a myriad ofspecial cases and few general principles the little examples are often contrasted unfavourably with the generality of general equilibrium theory what have we learned have diminishing returns set in are there fruitful directions for future research and if so what are they these are the questions which i wish to address here the work of the past decade has made i think a fundamental and lasting contribution to economic analysis the contributions have been both negative and positive we have learned that much of what we believed before is of only limited validity that the traditional competitive equilibrium analysis though having the superficial appearance of generality in terms of superscripts and subscripts is indeed not very general the theory is not robust to slight alterations in the informational assumptions it is but a special and not very plausible example among the possible set of informational assumptions which can be employed to characterise an economy at the same time the theory has been able to provide insights into phenomena about which the traditional model had nothing to say or which seemed inconsistent or inexplicable within the competitive paradigm it has provided some of the micro foundations for macro economics it has provided the basis of a new theory of the firm of a new new welfare economics and of a theory of economic organisation including a comparison of economic

capital market myopia abstract the purpose in writing this article is to focus attention on a phenomenon we call capital market myopia a situation in which participants in the capital markets ignore the logical implications of their individual investment decisions viewed in isolation each decision seems to make sense when taken together however they are a prescription for disaster capital market myopia leads to overfunding of industries and unsustainable levels of valuation in the stock market we use the winchester disk drive industry to elucidate the phenomenon we argue that capital market participants should have seen the problem coming they should have known that valuation levels were absurd based in large part on the greater fool theory the data necessary to anticipate the problem were readily available before the industry shakeout began and stock prices collapsed there are several lessons which we believe can be learned by careful examination of the disk drive experience in the period under study these include taking the broad view of the industry is the key to profitable investment the investment mania visited on the hard disk industry contained inherent assumptions about long run industry size and profitability and about the future growth profitability and access to capital for each individual company these assumptions had they been stated explicitly would not have been acceptable to the rational investor certainly there are valuations which arise which cannot be justified under any circumstance these are the times for the manager to raise money from the public capital markets those managers who took advantage of unsustainable valuation levels now have a chance to survive the shakeout growth is not equivalent to profitability the high growth rate in the industry made it the focus of considerable managerial investor and technological attention the industry attracted so many resources that the growth had high probability of being unprofitable excesses in the capital market turned an opportunity into a disaster profits for some are not equivalent to a good business many players made high profits by investing in the hard disk drive business including the investment bankers and certain of the venture capital groups which invested early enough to catch the wave of euphoria in the stock market and still sell under rule 144 many others rode the cycle up and down without liquidity for many buyers of disk drive stocks in 1983 losses were massive short term successes of some gave the illusion of long term profitability for all investors should not be fooled by such invevitably ephemeral successes market instability can be all bad news very rapid change often creates entrepreneurial opportunity it also creates risk analysis of the hard disk drive industry reveals the dark side of rapid technological evolution and of customer instability early players are often preempted by changes in technology and in customer needs early birds are not always winners in product markets but late comers are almost always losers recognizing the chain one of the more important lessons to be learned from the tale of the disk drive industry is that all players entreprenuers venture capitalists investment bankers industry analysts and investors must recognize the chains involved in such a process first there was a technological chain a series of bets on technological advances in disk drive components disk drive designs and end user designs then there was a financial chain a series of related bets on the internal financial health of each player in the technological chain and on the nature of access to capital in the private and public markets the likelihood that any player in the disk drive industry would prosper without a serious setback due to a weak link was effectively zero indeed weaknesses in the chain were created by exactly the same people whose financial success depended on an unbroken series of favorable outcomes during this same period the public capital markets were also a large supplier of funds to the disk drive industry the total amount of money raised in public offerings of common stocks for participants in the industry was over 800 million during the middle part of 1983 the capital markets assigned a value in excess of 5 billion to 12 publicly traded venture capital backed hard disk drive manufacturers the strong market valuation of these companies paralleled the boom in other high technology stocks and rising valuation levels in the stock market in general table 2 contains data on stock prices and valuation levels for some disk drive manufacturers and table 3 provides general data on the economy and capital markets

toward a construct of liability of origin in this paper we advance a novel concept of liability of origin to explicate the mechanisms through which location can be become either a liability or an advantage our analysis sheds light on how firms ability to compete and gain legitimacy can be derailed or enhanced by their geographical location we illustrate our theoretical analysis using multiple cases in the airline industry in africa four distinct phases that explicate how liability of origin manifests in firms legitimacy quest are indicated our work highlights how actions and inactions of rival firms can make the geographical origin of a firm geographicalness to shift from being a strategic asset to become a liability we outline a number of implications for practice and fruitful avenues for future research

industry evolution in varieties of capitalism a comparison of the danish and us wind turbine industries in this study we combine klepper s framework on the evolution of industries with the varieties of capitalism approach to argue that industry evolution is mediated by institutional differences we expect that new industries will evolve with a stronger connection to established industries in coordinated marked economies than in liberal market economies our assumptions are supported by the survival analysis of us and danish wind turbine manufacturers from 1974 to 2014

debt management objectives for a small open economy in this paper the authors examine the consequences of using cost minimization as the goal of public debt management in a small open economy soe authorities are assumed to minimize interest costs subject to constraints on their ability to refinance at different maturities and the information conditioning expectations of future interest rates a numerical simulation model and a highly disaggregated canadian data set for the period 1967 87 are used in the analysis the results presented indicate that conditional on the soe assumption savings do result from following a cost minimizing strategy savings decline as authorities are increasingly constrained in their refinancing choices however even the gains in moderately constrained cases suggest that cost minimization is worthy of serious consideration by authorities copyright 1992 by ohio state university press

dynamic capabilities and sustained innovation strategic control and financial commitment at rolls royce plc rolls royce plc is currently a powerful competitor in the turbofan engine industry notwithstanding its own troubled history and the relative lack of international success of british companies in high technology manufacturing over the past halfcentury this paper seeks to contribute to the development of a theory of innovative enterprise by analyzing the roles of strategy and finance in sustaining the innovation process at rolls royce over four decades from the mid 1960s through an analysis of strategic control and financial commitment as conditions of innovative enterprise at different stages in rolls royce s evolution we adduce evidence that innovation depends in part on who strategic managers are and how they gain control over financial resources

revisiting marshall s agglomeration economies technological relatedness and the evolution of the sheffield metals cluster potter a and watts h d revisiting marshall s agglomeration economies technological relatedness and the evolution of the sheffield metals cluster regional studies according to alfred marshall firms receive increasing returns from a trinity of agglomeration economies a local pool of skilled labour local supplier linkages and local knowledge spillovers this article re examines the mechanisms underlying marshall s agglomeration economies in the sheffield metals cluster wherein marshall discovered them despite the cluster s decline empirical evidence is found that the mechanisms underlying marshallian agglomeration economies continue to occur within the surviving metals industry however upon closer examination marshallian agglomeration economies have evolved to become more prevalent amongst plants that use related metals technology the results highlight the importance of technological relatedness to cluster survival

co evolution of firms industries and networks in space ter wal a l j and boschma r co evolution of firms industries and networks in space regional studies the cluster literature suffers from a number of shortcomings 1 it often neglects that cluster firms are heterogeneous in terms of capabilities 2 it tends to overemphasize the importance of geographical proximity and underestimates the role of networks and 3 it hardly addresses the origins and evolution of clusters the authors propose a theoretical framework that brings together the literature on clusters industrial dynamics the evolutionary theory of the firm and network theory it is described how clusters co evolve with 1 the industry with to they adhere 2 the capabilities of the firms they contain and 3 the industry wide knowledge network of which they are part ter wal a l j et boschma r la coevolution geographique des entreprises des industries et des reseaux regional studies la documentation sur les clusters souffre d un nombre de points faibles 1 elle ne tient c

the capabilities of new firms and the evolution of the us automobile industry firms that diversify into new and existing industries typically outperform de novo entrants but in some new industries diversifying firms are displaced by later entering de novo firms little is known about when and how new firms can overcome the advantages of diversifying firms this is investigated for one industry automobiles where new firms had considerable success all the entrants into the industry from its inception in 1895 through 1966 are identified the heritage of every entrant into the industry is traced including the founders of de novo entrants to explore how time of entry and pre entry experience affected firm survival while diversifying firms on average outperformed de novo entrants de novo entrants founded by individuals that worked for the leading automobile firms outperformed all firms and dominated the industry this is attributed to the novel organizational challenges faced by automobile firms which made the leading firms ideal training grounds for new entrants the implications of these findings for firm capabilities industry competition and regional economic development are discussed copyright 2002 oxford university press

is foreign debt portfolio management efficient in emerging economies abstract this paper develops a simple model of foreign debt portfolio management the model suggests that under mild conditions the currency composition of a country s foreign debt portfolio is responsive to exchange rate movements empirical evidence is provided for a panel of 14 emerging economies in the period 1970 1998 attention is focused on the stocks of foreign liabilities denominated in us dollars deutschemarks dm japanese yen and swiss francs the results of the empirical analysis show that foreign debt portfolio management has been sub optimal in the countries under examination in these countries the currency composition of foreign debt has not reflected a substitution effect away from the currencies that have appreciated over time vis a vis the us dollar

the varieties of capitalism and hybrid success denmark in the global economy the varieties of capitalism literature maintains that advanced capitalist countries whose institutions best fit either the liberal or coordinated market economy types will perform better than countries whose institutions are mixed this is because hybrids are less likely to yield functionally beneficial institutional complementarities the authors challenge this assertion denmark has performed as well as many purer cases during the 1990s and denmark has recently developed a more hybrid form than is generally recognized by a increasing the exposure of actors to market forces and b decentralizing collective learning and decision making the institutional complementarities associated with such hybridization have contributed to its success however these complementarities are based on institutional heterogeneity rather than homogeneity this is demonstrated by analyses of three cases danish labor markets vocational training and industrial policy the implication of the authors argument is that the

sectoral systems of innovation and production the concept sectoral system of innovation and production provides a multidimensional integrated and dynamic view of sectors it is proposed that a sectoral system is a set of products and the set of agents carrying out market and non market interactions for the creation production and sale of those products a sectoral systems has a specific knowledge base technologies inputs and demand agents are individuals and organizations at various levels of aggregation they interact through processes of communication exchange co operation competition and command and these interactions are shaped by institutions a sectoral system undergoes change and transformation through the co evolution of its various elements 2002 elsevier science b v all rights reserved

public provision of private goods government may provide a good that can if legally permitted be supplemented by private purchases policy is determined by majority rule under standard assumptions on preferences a majority voting equilibrium exists a regime of positive government provision with no restriction on private supplements is shown to be majority preferred to a regime of either only market provision or only government provision combined public and private expenditure on the good is higher under this dual provision regime than under either of the alternatives under some preference configurations the median income voter is pivotal under others a voter with income below the median is pivotal

the optimal currency composition of external debt theory and applications to mexico and brazil the changes in exchange rates interest rates and commodity prices during the past decades have had large impacts on developing countries many developing countries have limited access to already incomplete international long term hedging markets thus the question arises whether the currency composition of external debt can be used to minimize exposures to external price risk using a utility maximizing framework this article shows that by choosing the optimal currency composition a country can indeed manage its external exposure the optimal risk minimizing currency composition depends on the relation between export receipts and the costs of borrowings in each currency and on the relations among the costs of borrowings in different currencies a simple methodology can be used to derive the optimal shares of individual currencies and is applied to mexico and brazil the results show that mexico and brazil could have lowered their external exposure to a limited degree by continuously alternating the currency composition of their debts the low correlations between the costs of borrowings and export and import prices make the currency composition of debt a very imperfect hedging tool and it is likely that hedging instruments directly linked to prices are preferable

the approach of institutional economics this paper assesses the old institutional economics it emphasizes the importance of key old institutionalist themes concerning the necessity of habits and rules and the role of institutions a problem in the alternative theoretical program of the new institutionalism is the untenability of its assumption of an original institution free market or state of nature even optimizing behavior requires the prior existence of habits and rules although it still lacks a complete and systematic theory the evolutionary approach of the old institutionalists tackles the problem of the interactive relationship of actor to structure without analytical reduction to one or the other

how organizational resources affect strategic change and performance in turbulent environments theory and evidence this study examines how historical resource endowments and competencies affect strategic change and its outcomes amid environmental turbulence drawing from both behavioral and economics based literatures we develop four distinct perspectives regarding the likely effect of resources on strategic change these four perspectives offer alternative predictions about how and why resource endowments should affect the likelihood or magnitude of strategic change and how and why they should moderate the relation between strategic change and performance we examine the predictive power of these four alternative arguments using extensive longitudinal data from a single industry context characterized both by substantial resource heterogeneity and environmental turbulence results indicate that organizations possessing greater stocks of historically valuable resources were much less likely to engage in adaptive strategic change but also that this resource driven disinclination towards change tended to have a benign or even beneficial effect on performance we discuss the implications of our theory and findings for the strategic change literature and also for the literature on the resource based view of the firm

inequality the politics of redistribution and the tax mix political economy literature generally predicts a positive relationship between income inequality and redistribution however there is no clear empirical evidence supporting such a relationship by incorporating an informal sector that evades income taxes we account for the tax base effect that along with the political channel determines the equilibrium redistribution and tax mix we find a non monotonic relationship between inequality and redistribution and explore under which conditions an unequal society relies more heavily on indirect taxes to finance redistribution ultimately this paper shows the limitations of the income tax to finance redistribution in developing countries even when taxes are democratically chosen

varieties of regulation how to combine sectoral regional and national levels schroder m and voelzkow h varieties of regulation how to combine sectoral regional and national levels regional studies research on economic governance is contradictory varieties of capitalism scholars argue for national differences between liberal and coordinated market economies others argue that economic sectors come with distinct modes of governance a third research strand explains the economic governance of companies through the regional system of innovation and production in which they are embedded problematically this current state leaves the question open about how national sectoral and regional economic governance interact using case studies from three research projects this paper shows how the national sectoral and regional level of economic governance can be combined by advancing the argument that incoherent institutions can be complementary

towards an economic theory of the multiproduct firm this paper outlines a theory of the multiproduct firm important building blocks include excess capacity and its creation market imperfections and the peculiarities of organizational knowledge including its fungible and taut character a framework is adopted in which profit seeking firms are seen to diversify in order to avoid the high transactions costs associated with using various markets to trade the services of various specialized assets neoclassical explanations of the multiproduct firm are shown to be seriously deficient

financing technology based small firms in europe what do we know this paper reviews the evidence on financing technology based small firms tbsfs in europe european tbsfs finance new investments by relying primarily on internal funds due to capital market failures induced by asymmetric information european venture capital has caught up with us venture capital but this is mainly because of the growth in uk venture investments it is unclear whether european venture capital has been able to certify the quality and enhance the growth of funded companies compared with the nasdaq there is little development of trading in high tech stocks in europe the so called new markets established in the 1990s collapsed in the wake of the internet bubble crash public venture capital and research and development r d tax incentives seem to have positively affected high tech firms

constructing regional advantage platform policies based on related variety and differentiated knowledge bases asheim b t boschma r and cooke p constructing regional advantage platform policies based on related variety and differentiated knowledge bases regional studies this paper presents a regional innovation policy model based on the idea of constructing regional advantage this policy model brings together concepts like related variety knowledge bases and policy platforms related variety attaches importance to knowledge spillovers across complementary sectors the paper categorizes knowledge into analytical science based synthetic engineering based and symbolic arts based in nature with different requirements of virtual and real proximity mixes the implications of this are traced for evolving platform policies that facilitate economic development within and between regions in action lines appropriate to incorporate the basic principles behind related variety and differentiated knowledge bases asheim b t boschma r and cooke p

urban amenities and agglomeration economies the locational behaviour and economic success of dutch fashion design entrepreneurs the spatial clustering of industries is traditionally explained by agglomeration economies benefiting co located firms the focus on firms rather than people has been challenged by florida arguing that urban amenities attract creative people to certain cities on the basis of a questionnaire an analysis is made of the extent to which these two mechanisms affect the locational behaviour of dutch fashion design entrepreneurs it is found that fashion design entrepreneurs consider urban amenities to be more important than agglomeration economies for their location decision designers located in the amsterdam cluster do not profit from agglomeration economies as such but rather from superior networking opportunities with peers both within and outside the cluster

firm entry and institutional lock in an organizational ecology analysis of the global fashion design industry few industries are more concentrated geographically than the global fashion design industry we analyze the geography and evolution of the fashion design industry by looking at the yearly entry rates at the city level in contrast to other industry studies we find that legitimation processes operate locally and competition processes globally this result points to the rapid turnover of ideas in the fashion design industry on the one hand and the global demand for fashion apparel on the other hand we attribute the decline of paris in the post war period to institutional lock in which prevented a ready to wear cluster to emerge despite the presence of the haute couture cluster an extended organizational ecology model provides empirical support for this claim

industrial dynamics and economic geography capasso m stam e and cefis e industrial dynamics and economic geography regional studies how do industries emerge and evolve over space in this special issue the fields of industrial dynamics and economic geography are brought together in order to achieve a richer and more fundamental understanding of the organization of industries over time and space than each of these fields could do separately firm heterogeneity at the micro level and industry composition of a region at the macro level provide important elements in the explanation of industry emergence and evolution over space history and space matter in the evolution of industries this special issue shows how and why