property market efficiency an institutional economics perspective this paper reassesses the debate around property market efficiency and introduces an institutional perspective it considers property market efficiency in terms of the specific characteristics of property itself and the processes through which property is used and traded it argues that the institutional dimension fundamentally alters the concept of efficiency and leads to a partial and contingent judgement on achieved efficiency instead of seeking a judgement on whether the property market as an entity is efficient the institutional approach allows the possibility that property market process may be efficient for some market participants but not for others it also introduces a time dimension suggesting the need to assess the adaptability of property market process as economic and social conditions change

contracting contingencies and single family house prices this paper investigates the relationship between single family house prices and contingent terms in contracts since contingencies create uncertainty the market should exact a price premium the results indicate that the contracting for property rights affects house prices in the predicted ways

transport costs and urban property values in the 1970s in this paper we use data on property values published annually for the 56 local government areas in the melbourne metropolitan area to investigate the response of the property market to the oil price rises of the seventies we show that property values appeared to have responded rapidly to the australian petrol price increase of 1978 more accessible properties gaining in value relative to less accessible the 1973 increase was not passed on to australian consumers but the depression in manufacturing industry which started after it also had an impact on the property market as values in areas where manufacturing workers lived fell in value relative to others

testing for the existence of office sub markets a comparison of evidence from two cities most conceptual and applied economic models of the structure of urban office markets have been developed from traditional location theory in their basic form these models tend to posit a trade of

manufacturer allowances and retailer pass through rates in a competitive environment a commonly held belief has grocery and mass merchandise retailers gaining power relative to the upstream consumer package goods manufacturers one of the major justifications for this belief is that manufacturers are now giving retailers more side payments such as trade allowances slotting allowances etc however a number of researchers have shown that these concessions have not translated into increased profit for the retailer relative to the manufacturer this paper explores via an analytic model why one might see retailers getting concessions from the manufacturer without being able to translate them into high profits we do this by representing the interaction between the channel members as a one period profit maximizing game where manufacturers decide on how large a side payment i e a concession to give to each retailer and retailers decide on how much of this side payment to use to promote the manufacturer s product at the heart of our model is a demand function for each product offering i e a specific brand sold by a specific retailer this demand function is linear in own and other s prices but based on empirical evidence is assumed to be nonlinear in the effects of merchandising activities e g short term price discounts better shelf space advertising etc specifically merchandising effects are modeled with a square root function that also acknowledges most short term promotional effects result in brand or store switching versus increase category volume the model is composed of six parameters these are the inherent popularity of the brand at a particular outlet own price sensitivity cross but within the store price sensitivity customer s sensitivity to within store promotion activities customer s sensitivity to between store promotional activities and the degree to which promotional activities yield incremental product category sales we use our underlying demand formulation to find the equilibrium solution to the full information stackelberg leader game for different store and brand loyalty environments as captured by our six parameters these parameters are chosen based on empirical evidence to span possible market conditions that each channel member might have our findings and modeling efforts should be of interest to analytic channel modelers and scholars interested in the mass merchandising and grocery store industries for a theoretical point of view we build upon the case 4 model of lee and staelin 1997 to allow for promotional activities from a substantive point of view we show that manufacturers will freely give retailers side payments even though they know these retailers will pocket a substantial portion of this concession moreover we identify conditions within our model that lead to larger allowances lower pass through rates and lower retail profits outcomes that are compatible with recent industry trends in addition we highlight the difference in effect on profits prices etc of changes in consumers sensitivity to inter store differences in storewide merchandising activities one of the more counter intuitive results of these analyses is that it is in the manufacturer s best interest to help retailers increase their spatial monopoly by decreasing consumers tendency to cross store shop because of merchandising activities

industrial location behaviour and regional restructuring within the fifth tiger economy evidence from the thai electronics industry the paper investigates the location behaviour of firms in the electronics industry in thailand our approach is to use a logit model in order to analyse how the characteristics of the firms and the regions are related to the location decisions of firms in these sectors the logit results throw some light on the question of the nature of agglomeration behaviour in a developing economy in which the national spatial industrial structure is dominated by a single primal city our conclusions provide tentative support for a product cycle argument of industrial concentration and dispersion

side payments in marketing side payments known politely as gainsharing and pejoratively as bribery are prevalent in marketing indeed many management schools have added ethics modules to their basic marketing courses to discuss these issues and there is much discussion of side payments in the literature e g adams 1995 borrus borrus amy 1995 a world of greased palms business week november 6 36 38 mauro mauro paolo 1997 why worry about corruption international monetary fund washington d c mohl mohl bruce 1996 auto dealers color surveys to polish image buyer s say salesmen tamper with makers questionnaires boston globe august 11 b1 b6 murphy murphy kate 1995 corporate gifts what s naughty or nice business week december 11 122 peterson peterson barbara s 1996 taxing question will the government make you pay for your next travel benefits frequent flyer february 27 30 and rose ackerman rose ackerman susan 1996 bribes and gifts proc conf economics values and organization april 19 20 yale university new haven ct we seek to provide insight with respect to one class of marketing side payments we hope that our analyses clarify some of the issues and suggest how these side payments affect marketing activities we begin by focusing on one common example of potential side payments salesforce ratings of internal sales support we derive two formal results and speculate on how these results generalize the two results are 1 that having one group of employees rate another implies that there are almost always incentives for side payments but 2 the side payments need not reduce the firm s profit at least in theory the firm is always able to revise the reward system to factor out these side payments the first result based on a straightforward proof has important practical implications for managers who may wish to preclude side payments they may be unable to design a ratings based reward system that does not have inherent incentives for side payments the second result in our opinion is quite surprising it suggests that marketing managers might be advised to invest more time into understanding how side payments affect employee reactions to reward systems they might want to reconsider costly efforts to monitor police or preclude such side payments while our results do not substitute for a moral discussion of side payments we hope that the formal structure for one common marketing situation provides valuable insight the system we analyze is based on a practical managerial problem we have observed the salesforce evaluates a sales support group with a real valued rating the sales support group is rewarded based on that rating whereas the sales force is rewarded based on outcomes such as sales or customer satisfaction that indicate incremental profits to the firm the reward to the salesforce might also depend upon how it rates sales support for example the salesforce might be held to a higher standard whenever it rates sales support as excellent we argue in the paper that the firm will want this to happen in addition the salesforce might ask for a side payment from the sales support group as compensation for high ratings we cast the practical problem as a formal game and incorporate the following issues 1 incremental actions taken by the salesforce and by sales support are perceived to be onerous 2 the measure of incremental profit is a noisy measure 3 both the salesforce and sales support are risk averse 4 given the reward system imposed by the firm both the salesforce and sales support will maximize their well being and 5 given the structure of the reward system the firm will seek to maximize expected profits we first show that there are almost always incentives for side payments specifically we demonstrate that sales support is better off with a side payment while the salesforce is no worse off this is not surprising because the reward to sales support is increasing in the rating while in the absence of a side payment the salesforce will select a rating such that its net marginal returns to increasing the rating are zero the exception occurs when the rating is constrained by the firm to be less than this optimal rating but even then there might be incentives for side payments we next show that the firm can anticipate these side payments and design a reward system to factor them out at no loss of profit the intuition is straightforward the firm first adjusts the marginal returns in the reward functions for sales support and for the salesforce such that they will each take the optimal actions even though they engage in side payments then the firm adjusts their fixed compensation so that the firm extracts its full profit the proof is difficult because we must show that adjusted reward systems exist and we must show that they allow the full profit to be extracted throughout the paper we discuss the practical implications of our results we close by highlighting future research opportunities

comment cross brand pass through fact or artifact cross brand pass through implies that a retailer responds to wholesale promotional support from a target brand by changing the retail prices of competitive brands besanko et al 2005 model a target brand s retail price as a function of its own and other brands wholesale prices using 780 observations 15 price zones 52 weeks and take the many significant coefficients for other brands wholesale prices that they find as evidence of cross brand pass through because price zones do not react independently to wholesale prices when they set a brand s retail price besanko et al s 2005 estimation overstates the number of independent observations by a factor of 15 when we correct for this overstatement of independent observations we find that the number of stable significant coefficients for other brands wholesale prices is lower than one would expect by chance we conclude that there is no evidence of cross brand pass through in the 11 categories analyzed by besanko et al 2005

open innovation in the power energy sector bringing together government policies companies interests and academic essence the power and energy p e sector needs to respond to several challenges fostering investments in research and development according to the open innovation oi paradigm key stakeholders like utilities vendors laboratories universities etc should take advantage of external knowledge to improve their innovation performance several studies have demonstrated that firms adopting the oi paradigm are more likely to innovate despite the interest of p e firms in enhancing their innovation capabilities surprisingly few articles usually case studies described the implementation of the oi paradigm in p e firms this article fills the gap by identifying the key drivers that encourage a firm in the p e sector to embrace the oi paradigm the authors adopt a hybrid research approach collecting evidence from the literature and through a multiple case study analysis involving seven british firms and universities operating in the p e industry as the drivers of oi have mutual influence this article describes them with a fuzzy cognitive map finally the authors identify appropriated policies to enhance the oi adoption and consequently the sustainability of innovation in the p e sector a salient research agenda closes the paper

sectoral patterns of technical change towards a taxonomy and a theory abstract the purpose of the paper is to describe and explain sectoral patterns of technical change as revealed by data on about 2000 significant innovations in britain since 1945 most technological knowledge turns out not to be information that is generally applicable and easily reproducible but specific to firms and applications cumulative in development and varied amongst sectors in source and direction innovating firms principally in electronics and chemicals are relatively big and they develop innovations over a wide range of specific product groups within their principal sector but relatively few outside firms principally in mechanical and instrument engineering are relatively small and specialised and they exist in symbiosis with large firms in scale intensive sectors like metal manufacture and vehicles who make a significant contribution to their own process technology in textile firms on the other hand most process innovations come from suppliers these characteristics and variations can be classified in a three part taxonomy based on firms 1 supplier dominated 2 production intensive 3 science based they can be explained by sources of technology requirements of users and possibilities for appropriation this explanation has implications for our understanding of the sources and directions of technical change firms diversification behaviour the dynamic relationship between technology and industrial structure and the formation of technological skills and advantages at the level of the firm the region and the country

what exactly are technological regimes intra industry heterogeneity in the organization of innovation activities this empirical study analyzes the patterns of innovation within and across industries using firm level survey data from finland and denmark the theoretical starting point is evolutionary theory with its premise that firms in different technological regimes pursue different paths to innovation similar modes of behaviour are found in the two datasets and they closely correspond to those found in earlier studies contrary to prevailing assumptions however the results show that industries are not at all uniform in terms of how firms innovate in almost all four or five digit nace industries three or more different modes of innovation can be identified this suggests that firms strategic differentiation or local search activities overcome pressures in the technological environment towards homogenous behaviour at least in the short term

market value without a market perspectives from transaction cost theory the concept of market value is central to the property valuation profession world wide while the valuers themselves still remain hugely influential in the market there is increasing evidence of w

territorial competition and property market process an exploratory analysis this paper argues that the emerging research on territorial competition should be supplemented by an explicit consideration of the role of real property and property market process in shaping urb

dynamic equilibrium of the housing market this paper derived within a general equilibrium framework demonstrates that housing price can be explicitly expressed as a combination of an exponential and linear function of housing rental this model provides an explanation as to why housing appreciation may not match inflation in the long run steady state we show that only under a very particular set of conditions will housing prices grow at a rate greater than the inflation rate evidence from the hong kong housing market supports the predictions of theory our model indicates that the housing market will be in the long run steady state when the rent value ratio is equal to the net discount rate

creating micro marketing pricing strategies using supermarket scanner data micro marketing refers to the customization of marketing mix variables to the store level this paper shows how prices can be profitably customized at the store level rather than adopting a uniform pricing policy across all stores historically there has been a trend by retailers to consolidate independent stores into large national and regional chains this move toward consolidation has been driven by the economies of scale associated with these larger operations however some of these large chains have lost the adaptability of independent neighborhood stores micro marketing represents an interest on the part of managers to combine the advantages of these large operations with the flexibility of independent neighborhood stores a basis for these customized pricing strategies is the result of differences in interbrand competition across stores these changes in interbrand competition are measured using weekly store level scanner data at the product level obviously this presents a huge estimation problem since we wish to measure substitution between each product at a store level for a chain with 100 stores and 10 products in a category we would need to estimate over 100 000 parameters to reliably estimate these individual store differences we phrase our problem in a hierarchical bayesian framework essentially each store level parameter can be thought of as a combination of chain level and random store specific effects the improvement in estimating this model comes from exploiting the common chain level component in addition we relate these store specific changes to demographic and competitive characteristics of the store s trading area which helps explain why these differences are present these estimated differences in price response are in turn used to set store level prices to simplify and focus the problem we limit our attention to everyday price changes i e the prices of products that are not advertised there are many marketing variables that can be adjusted at a storelevel e g promotions and product assortments the reason we concentrate upon everyday pricing is driven by its importance in the marketing mix that most profits are earned on products sold at their everyday price and the amenability of everyday prices to store level customizations a limitation of this approach is that it yields only a partial solution to the retailer s global optimization problem a challenge for the retailer in implementing micro marketing pricing strategies is to retain a consistent image while altering prices that adapt to neighborhood differences in demand our approach is to search for price changes that leave image unchanged we argue that a sufficient condition for holding the input to store image constant from everyday pricing is to hold average price and revenues at their current levels we implement this condition by introducing constraints into the profit maximization problem future research into store choice may yield more efficient conditions a benefit of holding the retailer s image constant is that it does not require costly new information about competitors and promotional activity instead retailers are able to derive these store level customizations based largely upon scanner data this is very advantageous since this information is already being collected and is readily available our results indicate that micro marketing pricing strategies would be profitable and could increase gross profit margins by 4 percent to 10 percent when these gross profit gains are considered after administrative and operating costs are taken into account they could increase operating profit margins by 33 percent to 83 percent these gains come from encouraging consumers through everyday price changes to switch to more profitable bundles of products and not through overall price changes at the chain level these results show that the information contained in the retailer s store level scanner data is an under utilized resource by exploiting this information using newer and more powerful computational techniques managers can better appreciate its value the implication is that profits could be increased and gains can be made by using this information as the basis for micro marketing

scope and patterns of innovation cooperation in spanish service enterprises abstract examining 2148 innovating service firms from the spanish technological innovation panel 2004 this paper utilizes latent class analysis to appraise the scope of innovation cooperation in services in the spanish economy in accordance with the growing weight of external information flows throughout innovation processes the empirical evidence indicates that the nature of the service activity affects both the partner chosen and the cooperation intensity the results lead to the creation of a typology of cooperation composed of three broad profiles service firms intensive in techno scientific cooperation intensive in interactions with clients and a profile with low intensity in cooperation called lonely innovators the probability that a firm belongs to the latter profile is 59 which makes it reasonable to affirm that innovation cooperation is not a common practice in spanish innovating service enterprises innovation output variables have been included in order to examine the relationship between patterns of cooperation and innovation performance the findings also underline the co existence of different cooperation patterns within the same industry

structural analysis of manufacturer pricing in the presence of a strategic retailer consumer goods manufacturers usually sell their brands to consumers through common independent retailers theoretical research on such channel structures has analyzed the optimal behavior of channel members under alternative assumptions of manufacturer retailer interaction vertical strategic interaction research in empirical industrial organization has focused on analyzing the competitive interactions between manufacturers horizontal strategic interaction decision support systems have made various assumptions about retailer pricing rules e g constant markup category profit maximization the appropriateness of such assumptions about strategic behavior for any specific market however is an empirical question this paper therefore empirically infers 1 the vertical strategic interaction vsi between manufacturers and retailer 2 the horizontal strategic interaction hsi between manufacturers simultaneously with the vsi and 3 the pricing rule used by a retailer the approach is particularly appealing because it can be used with widely available scanner data where there is no information on wholesale prices researchers usually have no access to wholesale prices even manufacturers who have access to their own wholesale prices usually have limited information on competitors wholesale prices in the absence of wholesale prices we derive formulae for wholesale prices using game theoretic solution techniques under the specific assumptions of vertical and horizontal strategic interaction and retailer pricing rules we then embed the formulae for wholesale prices into the estimation equations while our empirical illustration is using scanner data without wholesale prices the model itself can be applied when wholesale prices are available early research on the inference of hsi among manufacturers in setting wholesale prices using scanner data e g kadiyali et al 1996 1999 made the simplifying assumption that retailers charge a constant margin this assumption enabled them to infer wholesale prices and analyze competitive interactions between manufacturers in this paper we show that this model is econometrically identical to a model that measures retail price coordination across brands hence the inferred cooperation among manufacturers could be exaggerated by the coordinated pricing category management done by the retailer we find empirical support for this argument this highlights the need to properly model and infer vsi simultaneously to accurately estimate the hsi when using data at the retail level functional forms of demand have been evaluated in terms of the fit of the model to sales data but recent theoretical research on channels lee and staelin 1997 tyagi 1999 has shown that the functional form has serious implications for strategic behavior such as retail passthrough while the logit and linear model implies equilibrium passthrough of less than 100 lee and staelin call this vertical strategic substitute vss the multiplicative model implies optimal passthrough of greater than 100 vertical strategic complement vsc because passthrough rates on promotions have been found to be below or above 100 chevalier and curhan 1976 armstrong 1991 we empirically test the appropriateness of the logit vss and the multiplicative vsc functional form for the data we perform our analysis in the yogurt and peanut butter categories for the two biggest stores in a local market we found that the vss implications of the logit fit the data better than the multiplicative model we also find that for both categories the best fitting model is one in which 1 the retailer maximizes category profits 2 the vsi is manufacturer stackelberg and 3 manufacturer pricing hsi is tacitly collusive the fact that the retailer maximizes category profits is consistent with theoretical expectations the inference that the vsi is manufacturer stackelberg reflects the institutional reality of the timing of the game retailers set their retail prices after manufacturers set their wholesale prices note that in the stores and product categories that we analyze the two manufacturers own the dominant brands with combined market shares of about 82 in the yogurt market and 65 in the peanut butter market the result is also consistent with a balance of power argument in the literature the finding that manufacturer pricing is tacitly collusive is consistent with the argument that firms involved in long term competition in concentrated markets can achieve tacit collusion managers use decision support systems for promotion planning that routinely make assumptions about vsi hsi and the functional form the results from our analysis are of substantive import in judging the appropriateness of assumptions made in such decision support systems

logit demand estimation under competitive pricing behavior an equilibrium framework discrete choice models of demand have typically been estimated assuming that prices are exogenous since unobservable to the researcher product attributes such as coupon availability may impact consumer utility as well as price setting by firms we treat prices as endogenous specifically prices are assumed to be the equilibrium outcomes of nash competition among manufacturers and retailers to empirically validate the assumptions we estimate logit demand systems jointly with equilibrium pricing equations for two product categories using retail scanner data and cost data on factor prices in each category we find statistical evidence of price endogeneity we also find that the estimates of the price response parameter and the brand specific constants are generally biased downward when the endogeneity of prices is ignored our framework provides explicit estimates of the value created by a brand i e the difference between consumers willingness to pay for a brand and its cost of production we develop theoretical propositions about the relationship between value creation and competitive advantage for logit demand systems and use our empirical results to illustrate how firms use alternative value creation strategies to accomplish competitive advantage

who co operates for innovation and why an empirical analysis abstract in recent years there has been growing interest in co operative arrangements for innovation with some commentators arguing innovation is no longer the province of individual firms but depends increasingly on collective action this paper examines the response to the uk s version of the second european community innovation survey cis 2 to investigate the patterns of co operation between innovating firms and external partners the analysis shows the relationship between innovation and co operation is not straightforward from a subjective i e firm based perspective it is clear that most firms still develop their new products processes and services without forming formal co operative arrangements for innovation with other organisations however firms that engage in r d and that are attempting to introduce higher level innovations i e new to the market rather than new to the firm innovations are much more likely to engage in co operative arrangements for innovation consequently if an objective i e innovation based perspective is taken which weighs innovations by their significance then it is likely that a significant proportion of high level innovations are developed through co operative arrangements although unfortunately the cis 2 does not indicate the direct significance of these arrangements to the development of the innovations in summary the extent of co operative arrangements for innovation appears to depend on the type of firms being considered and on what is meant by innovation

analysing distributed processes of provision and innovation the vast majority of products i e goods and services are provided to the consumer through several co ordinated and contributing agents acting together this paper is concerned with improving our understanding of processes of provision and innovation that involve several contributing and co ordinated agents firms or organizations the distributedness of provision and innovation varies in scale and takes a variety of dynamic forms or modes and their analysis brings to the fore the significance of dependency and asymmetric power relations between classes of economic agent the approach thereby opens up considerations on distributed innovation beyond those addressed by the systems of innovation perspectives

forecasting housing prices under different market segmentation assumptions three types of market segmentation strategies are available to estimate hedonic housing price models i e no segmentation segmentation by using statistical clustering methods and segmentation by using a priori information this research tests the hypothesis of tiebout theory that individual residential decision making is determined by equilibrium provision of local public goods in accord with the tastes and preferences of residents thereby sorting their housing locations into optimal sub markets forecasting accuracies of eight sub market segmentation strategies and two forecast combining methods are examined by using housing sales data from knox county tennessee usa the results provide empirical support for tiebout theory of optimal housing sub market location in that boundaries drawn using a priori information from local government jurisdictions school districts and expert opinions are more closely aligned with the equilibrium provision of local public goods than boundaries drawn by statistical cl

what drives the choice of the type of partner in r d cooperation evidence for spanish manufactures and services abstractwe analyse the heterogeneity in firms decisions to engage in r d cooperation taking into account the type of partner competitors suppliers or customers and research institutions and the sector to which the firm belongs manufactures or services we use information from the technological innovation panel pitec for spanish firms and estimate multivariate probit models corrected for endogeneity which explicitly consider the interrelations between the different r d cooperation strategies we find that placing a higher importance to publicly available information incoming spillovers receiving public funding and firm size increase the probability of cooperation with all kind of partners but the role is much stronger in the case of cooperative agreements with research institutions and universities our results also suggest that r d intensity and the importance attributed to the lack of qualified personnel as a factor hampering innovation are key factors influencing positively r d cooperation

identifying innovation in surveys of services a schumpeterian perspective abstract in order to compensate for decades of neglect of services in innovation studies a strand of literature has emerged which emphasises alleged distinctive features of service innovation these studies apply innovation concepts developed especially for services thereby contributing to the existing divide between manufacturing and services the present paper demonstrates that schumpeter s original innovation concept is indeed broad enough to encompass services and manufacturing and that a more direct reference to schumpeter in particular innovation as a contrast to activities based on routine systems in service oriented studies would add a needed theoretical and conceptual strengthening to service innovation studies

creating win win trade promotions theory and empirical analysis of scan back trade deals manufacturer trade promotion spending is second only to cost of goods sold as a profit and loss item yet manufacturers often lose money on these deals as a result of forward buying by retailers the search for more effective forms of trade promotion and the availability of scanners at cash registers has led to the emergence of a new type of trade deal the scan back that gives retailers a discount on unitssoldduring the promotion rather than on unitsbought we develop a theory to compare retailer pricing decisions and profitability under scan back and traditional off invoice trade deals we show that when the terms of the trade deal are identical retailers prefer off invoice trade deals and manufacturers prefer scan backs manufacturers can however redesign the scan back to leave the retailer weakly better off and leave themselves strictly better off using proprietary data from the beverage category we conduct an empirical analysis and find that during the promotion period scan back trade deals relative to off invoice deals 1 do not cause excess ordering and 2 generate higher retail sales through lower retail prices implications for researchers and managers are discussed

the economics of technical change this paper reviews the recent rapidly growing literature on technical change in the economy it concentrates on innovations and their diffusion at firm and industry level since this was the area designated as relatively weak in earlier literature surveys the review argues that the extensive empirical evidence and theoretical analysis now available presents a basic challenge to neoclassical theory after indicating some weaknesses in the neo schumpeterian literature the paper concludes by advocating an experiment with a new form of assessment by neighboring disciplines to economics itself which would take full account of the fundamental issues at stake in this modern methodenstreit c 1994 academic press inc copyright 1994 by oxford university press

innovation in services the purpose of this article is to lay the foundations of a theory that can be used to interpret innovation processes in the service sector the hypothesis underpinning this article is based on lancaster s definition of the product in both manufacturing and services as a set of service characteristics the article follows the example of those who have sought to apply lancaster s work to technological phenomena various modes of innovation in the service sectors are highlighted and illustrated