competition between telecommunications operators abstract many observers of the telecommunications industry predict that regulation will soon give way to competition policy the paper analyzes unregulated network competition both in the mature and the transition phase of the industry it considers competition in linear or nonlinear prices for customers and also considers both nondiscriminatory pricing and termination based discriminatory pricing the paper investigates whether freely negotiated access charges are compatible with effective competition in the mature phase of the industry and do not erect barriers to entry in the transition towards competition last it analyzes the meaning and impact of the efficient component pricing rule in the context of network competition

infrastructure and development a critical appraisal of the macro level literature this survey reviews the existing macro level empirical literature on the link between infrastructure and development outcomes in a critical light after providing a general framework that casts the relevant terms of the controversy on the real effect of infrastructure on growth in the context of an aggregate production function it signals what are the relevant empirical questions to be addressed this guides the systematic review of a number of empirical studies and the discussion of the main econometric challenges to the identification of the effect of infrastructure on output and productivity finally building on related research in particular in contract theory and political economy the paper spells out several promising research avenues

residual state ownership policy stability and financial performance following strategic decisions by privatizing telecoms we question previous research assuming that privatizing firm performance generally benefits from decreasing state ownership and the passage of time both of which purportedly align principal agent incentives promoting organizational decision making that increases shareholder value when state ownership shifts from majority and controlling to minority and non controlling the performance impact may be positive in the short run particularly where there is instability in the local investment policy environment consistent with this proposition we develop and test hypotheses derived from a minority and non controlling or residual state ownership framework grounded in credible privatization and institutional theory we propose that 1 residual state ownership positively affects shareholder returns after strategic decisions by privatizing firms because it signals state support for managerial initiatives 2 the passage of time since initial privatization negatively affects shareholder returns after strategic decisions by privatizing firms because initial undertakings in support of the privatizing firm are reversed and 3 home country investment policy stability moderates these two effects greater stability obviates the need for residual state ownership and slows policy reversals over time we find empirical support for our residual state ownership framework in event study analyses of cumulative abnormal returns cars associated with 196 major investments announced from 1986 to 2001 by 15 privatizing telecoms from around the world cars are positive at 5 25 state ownership levels but turn negative at higher state ownership levels cars turn sharply negative within 1 2 years from initial privatization dates increasing policy stability diminishes positive ownership and negative time effects on cars results confirm the potential supporting role that residual state ownership can play in enhancing strategic decision making and financial performance by privatizing firms particularly where there is instability in the home country investment policy environment

infrastructure and public utilities privatization in developing countries should governments in developing countries promote private ownership and deregulated prices in noncompetitive sectors or should they run publicly owned firms and regulate prices at the expense of rents to insiders a theoretical model is used to answer these normative questions the analysis focuses on the tradeoff between fiscal benefits and consumer surplus during privatization of noncompetitive sectors privatization transfers control rights to private interests and eliminates public subsidies yielding benefits to taxpayers at the cost of increased prices for consumers in developing countries where budget constraints are tight privatization and price liberalization may be optimal for low profitability industries but suboptimal for more profitable industries and once a market has room for more than one firm governments may prefer to regulate the industry without a credible regulatory agency regulation is achieved through public ownership

capital structure and investment in regulated network utilities evidence from eu telecoms this article analyzes the relationship between firm financial and investment decisions and regulatory outcomes in network industries where regulatory opportunism is often viewed to lead to underinvestment we develop a model to describe the effect of an increase in leverage on regulated rates retail as well as wholesale and company investment we then test the model s predictions using a panel of 15 eu public telecommunication operators ptos over the period 1994 2005 our results show that the data cannot reject the model s predictions that leverage positively affects regulated wholesale and retail rates as well as the ptos investment rate moreover since leverage does affect wholesale charges that alternative operators pay to access to the incumbent s network infrastructure we also find that an increase in leverage is followed by a decrease in the number of competitors and by an increase of the incumbent s market share this suggests that the use of debt to discipline the regulator s lack of commitment within a vertically integrated network industry may somewhat impair or delay retail market competition but has a favorable counterpart in mitigating the underinvestment problem

optimal pricing of new subscription services analysis of a market experiment there are now available a number of new subscription services that comprise a dual pricing system of a monthly access fee rental and a per minute usage charge examples include cellular phones the internet and pay tv the usage and retention of such services depend on the absolute and relative prices of this dual system for instance a moderate access fee but a low usage charge might initially appeal to customers but later a low usage customer might find the monthly fee unjustified and thereby relinquish the service providers of such services therefore usually offer several pricing packages to cater to differing customer needs the purpose of this study is to derive a revenue maximizing strategy for subscription services that is the combination of access and usage price that maximizes revenue over a specified time period an additional objective is to determine access and usage price elasticities because they have historically played an important role in theoretical pricing models the application area is the cellular phone market but for a new rather than an existing product to help gauge the likely usage rates and customer retention a field experiment is conducted in which several alternative price combinations are used specifically a sample of potential residential customers most of whom did not have an existing cell phone were divided into four treatment groups the first group were not charged an access fee but did have to pay a small per minute usage charge the second group also paid a small usage charge but in addition had three access price increases over the duration of the trial the third group paid no access fee but had usage charge increases while the fourth group had both access fee and usage charge increases usage levels for each respondent are recorded as is their month of dropout if they discontinue the service an initial examination of the data shows that higher access fees result in higher customer attrition and higher usage cost results in lower usage furthermore usage and retention are related in that declining usage levels over time often signal impending customer attrition hence two phenomena need to be modeled usage of the service and customer retention conditional on usage some seasonal effects are also observed and are allowed for in the model modeling customer attrition simultaneously with usage is important because ignoring customer attrition will likely result in an underestimate of price sensitivity this results from a censoring effect whereby respondents who remain in the trial tend to be wealthier and hence less price sensitive given the known problems of ignoring customer attrition we develop a theoretical model of usage which explicitly incorporates attrition by extending a time series model introduced by hausman and wise 1979 we make two extensions of the hausman and wise model the first is to generalize it from two to many time periods and the second is to allow for respondent heterogeneity by incorporating latent classes we fit the model by maximum likelihood and find that a two segment model is best in addition we examine the predictive validity of our model and find it to be reasonably good in general the results show that access and usage prices have different relative effects on demand and retention there are five key results first access price has some effect on usage but a much stronger effect on retention second usage price has a strong effect on usage and a moderate effect on retention in that if usage price increases so much that usage declines then lower usage levels results in higher attrition third access price elasticity is about half that of usage price with both elasticities generally being much smaller than 1 indicating relative inelasticity for this particular service fourth customer attrition rate churn is much more sensitive to access than usage price and last if just observed usage is examined and customer attrition is ignored then price sensitivity is very likely to be substantially underestimated on the order of 45 in our case finally when developing the revenue maximizing price combination we allow for the cost of customer acquisition by using some typical advertising to sales ratios for the telecommunications industry we find that the revenue maximizing price is 27 70 per month for the access fee and 0 81 per minute for the airtime charge these values are in line with current access fees and usage costs in the given market

infrastructure privatization and changes in corruption patterns the roots of public discontent abstract this paper offers a theory of how the degree of corruption that prevails in a society responds to changes in the ownership structure of major public service providers we show that there are cases in which privatization even though it fosters investments in infrastructure also opens the door to more corruption the public dissatisfaction towards privatization is then crucially affected by the changes in the degree and pattern of corruption our model thus helps understand the seemingly paradoxical situation prevailing in latin america where most studies find that privatizations have been efficiency enhancing and have fostered investments and at the same time popular dissatisfaction with the process is extremely high especially among the middle class we show that this line of explanation is consistent with the evidence from surveys in the region

the effects of privatization on efficiency how does privatization work summary uncovering the effects of privatization is difficult because privatization of a particular firm usually is not an accident this paper tests the effects of privatization on productive and allocative market efficiency using a rich panel data set of 22 privatized cement plants from turkey in the 1983 99 period since all public cement firms were privatized and we have pre and post privatization data for all we are able to avoid the problem of endogeneity associated with sample selection our analysis goes beyond just examining the privatization effects and explores how privatization really works changes in objectives of the firm ownership effect and changes in market structure environment effect may both be responsible for privatization outcomes we find that ownership effects are sufficient to achieve improvements in labor productivity our results on allocative efficiency however are dependent on changes in the competitive environment while all plants seem to improve labor productivity through work force reductions plants privatized to foreign buyers also increase their capital and investment significantly

political accountability and regulatory performance in infrastructure industries an empirical analysis the aim of this paper is to empirically explore the relationship between the quality of political institutions and the performance of regulation an issue that has recently occupied much of the policy debate on the effectiveness of infrastructure industry reforms taking the view that political accountability is a key factor that links political structures and regulatory processes the authors investigate for the case of telecommunications its impact on the performance of regulation in two time series cross sectional data sets on 29 developing countries and 23 industrial countries covering the period 1985 99 in addition to confirming some well documented results on the positive role of regulatory governance in infrastructure industries the authors provide empirical evidence on the impact of the quality of political institutions and their modes of functioning on regulatory performance the analysis of the data sets shows that the positive effect of political accountability on the performance of regulation is stronger in developing countries an important policy implication of this finding is that future reforms in these countries should give due attention to the development of politically accountable systems

the new economics of regulation ten years after the new economics of regulation is an application of the principal agent methodology to the contractual relationship between regulators and regulated firms after a critique of the traditional paradigms of regulation from the point of view of information economics a canonical model of regulation under asymmetric information is developed a survey of the main results obtained in the new economics of regulation is then provided in particular concerning the implementation of optimal contracts by a menu of linear contracts the dichotomy between pricing and cost reimbursement rules the auctioning of incentive contracts the dynamics of contracting under limited commitment and the hierarchical problems in regulation empirical implications are then discussed and avenues of further research are described in the conclusion

marketing mix variables and the diffusion of successive generations of a technological innovation abstract research addressing the diffusion of successive generations of technological innovations has generally ignored the impact of marketing mix variables as a result there have been several calls for the development of multiple generation models that incorporate marketing mix variables the authors develop a model of first time sales and subscriptions for successive generations of a technological innovation which explicitly captures the effects of marketing mix variables through a proportional hazards framework the empirical analysis estimates the impact of price for two generations of cellular telephones in a european country the results suggest that there are important substantive insights to be gained from the parameter estimates for this marketing mix variable when intergenerational interdependencies are considered for example although the time path of the estimated price elasticities in a multiple generation setting closely follows those reported previously for single generations the auth

equilibria in a model with partial rivalry abstract in this paper we show that a non cooperative game with a finite set of players and common finite strategy sets possesses a strong nash equilibrium in pure strategies whenever individuals preferences satisfy independence of irrelevant choices anonymity and partial rivalry moreover if any of these assumptions is violated then even a pure strategy nash equilibrium may fail to exist further more we demonstrate that even with a continuum of players the same three assumptions yield the existence of a pure strategy strong nash equilibrium and in addition the equivalence of the sets of nash and strong nash equilibria in pure strategies journal of economic literature classification numbers c72 d62

running to keep in the same place consumer choice as a game of status if individuals care about their status defined as their rank in the distribution of consumption of one positional good then the consumer s problem is strategic as her utility depends on the consumption choices of others in the symmetric nash equilibrium each individual spends an inefficiently high amount on the status good using techniques from auction theory we analyze the effects of exogenous changes in the distribution of income in a richer society almost all individuals spend more on conspicuous consumption and individual utility is lower at each income level in a more equal society the poor are worse off

water for life the impact of the privatization of water services on child mortality while most countries are committed to increasing access to safe water and thereby reducing child mortality there is little consensus on how to actually improve water services one important proposal under discussion is whether to privatize water provision in the 1990s argentina embarked on one of the largest privatization campaigns in the world including the privatization of local water companies covering approximately 30 percent of the country s municipalities using the variation in ownership of water provision across time and space generated by the privatization process we find that child mortality fell 8 percent in the areas that privatized their water services and that the effect was largest 26 percent in the poorest areas we check the robustness of these estimates using cause specific mortality while privatization is associated with significant reductions in deaths from infectious and parasitic diseases it is uncorrelated with deaths from causes unrelated to water conditions

price competition with reduced consumer switching costs the case of wireless number portability in the cellular phone industry wireless number portability wnp is a telecommunication regulatory policy that requires cellular phone service providers to allow customers who switch service subscriptions to retain their original phone numbers the right to retain the number lowers the switching cost for a consumer thus the purpose of the policy is to induce more competition and facilitate the growth of new or small service providers in this paper we show that wnp drives market price downward as expected but with a surprising twistrather than helping the smaller firms grow the policy may accelerate the process of market concentration we find that the main contributing factor to this peculiarity is the discriminatory pricing scheme prevalent in the industrythat is a service provider charges a lower per minute fee for the calls initiated and received within the same network than for the calls connected across two networks under this pricing scheme a consumer who subscribes to a larger network would benefit more than if subscribing to a smaller network despite the relatively higher fixed access fee that the former may charge by lowering the barrier of switching wnp creates a market condition conducive for a larger network to gain market share we support our analysis with the empirical evidence gathered from hong kong where wnp was adopted in march 1999

impacts on investments and transmission distribution loss through power sector reforms abstract this study analyses original panel data from 86 countries between 1985 and 2006 econometric methods were used to identify the effects of different policy devices of power sector reforms on performance indicators installed capacity per capita transmission and distribution loss in the countries analyzed the research findings suggest that reform variables such as the entry of independent power producers ipps unbundling of generation and transmission establishment of regulatory agencies and the introduction of a wholesale spot market are the driving forces of increasing generation capacity as well as reducing transmission and distribution loss in the respective regions in this study we can assume that firstly different electric industry s reform policies measures have different impacts on geographically and economically diverse countries secondly a country s state of economic development has a different impact on policy effects of reforms thirdly coexistent with independent regulatory agencies reform policy becomes more powerful in realizing sector performances

how buyers perceive savings in a bundle price an examination of a bundle s transaction value although bundling the selling of two or more products and or services at a single price has a history of economic research marketing oriented investigations have appeared only recently this pap

dynamic pricing for subscription services this paper investigates the use of pricing schemes in subscription services that consist of various combinations of activation subscription and cancellation fees when customers exclusively consider what is directly perceivable the activation fee starts low and increases as the network grows penetration strategy whereas the cancellation fee starts high and decreases as the network grows skimming strategy the activation and cancellation fees take various other forms otherwise the subscription fee remains low at the early stages and increases only when a reasonable number of subscribers is secured finally the authors discuss the theoretical and managerial implications of their findings

pricing patterns of cellular phones and phonecalls a segment level analysis one expectation of the u s federal communications commission fcc in the early stages of the cellular communications industry was that the presence of two licensees in each market would ensure competition and thereby result in declining prices over time for both cellular phones handsets and phonecalls however industry observers have noted recently that although the price of handsets has declined over time the price of the phonecalls has not we investigate this interesting pricing issue by modeling the market interaction between the providers of cellular services and also their interaction with customers using a game theoretic framework a critical assumption in the development of our model is that there exist segments of customers with different valuations usage levels and price sensitivities for cellular service empirically we provide support for the existence of two customer segments viz business professional and personal from both secondary data on industry usage and revenue and primary data collected from a conjoint analysis study of cellular service customers from the latter source we also establish that the business professional customers are more sensitive to prices of phonecalls than the personal segment from our analytical model we characterize the conditions under which penetration and skimming pricing strategies for the handsets are profit maximizing from the sellers standpoint and derive the corresponding price of phonecalls one of our main analytical results is that a competitive structure can result in lower prices over time for the handset but higher prices for the phonecalls depending on production costs of the handset we are thus able to provide a theoretical explanation for the observed price patterns for the handset and phonecalls

competition in telecommunications this paper discusses the scope for competition in the telecommunications industry taking into account the features of natural monopoly network externalities and customer inertia recent policy towards competition in the industry in the uk is surveyed with an emphasis on access pricing and interconnection finally recent theoretical developments in the economics of access pricing and interconnection are discussed and shown to lend some support for aspects of current policy in the uk copyright 1997 by oxford university press

a general choice model for bundles with multiple category products application to market segmentation and optimal pricing for bundles abstract the attribute based approach to study customer choices cannot deal with bundles of heterogeneous components which are usually drawn from different product categories the authors develop the comparability based balance model which is a unified framework for modeling bundle choices the model can be employed for any bundle regardless of the heterogeneity of bundle components under a pure bundling strategy the conjoint model and balance model are special cases of the general model the authors use mixture distributions in a hierarchical bayesian framework to incorporate consumer heterogeneity in a more flexible manner than the extant approaches such as latent class and random coefficient models the empirical tests of the model show that most attribute effects are significant and consistent with the model s predictions the model is superior to those that do not consider the issues of comparability of attributes latent class structure and heterogeneity among respondents the authors show how

privatisation in developing countries a review of the evidence and the policy lessons privatisation is widely promoted as a means of improving economic performance in developing countries however the policy remains controversial and the relative roles of ownership and other structural changes such as competition and regulation in promoting economic performance remain uncertain this article reviews the main empirical evidence on the impact of privatisation on economic performance in developing economies the evidence suggests that if privatisation is to improve performance over the longer term it needs to be complemented by policies that promote competition and effective state regulation and that privatisation works best in developing countries when it is integrated into a broader process of structural reform

bundle pricing of inventories with stochastic demand we consider a retailer selling a fixed inventory of two perishable products over a finite horizon assuming poisson arrivals and a bivariate reservation price distribution we determine the optimal product and bundle prices that maximize the expected revenue our results indicate that the performances of mixed bundling pure bundling and unbundled sales strategies heavily depend on the parameters of the demand process and the initial inventory levels bundling appears to be most effective with negatively correlated reservation prices and high starting inventory levels when the starting inventory levels are equal and in excess of average demand most of the benefits of bundling can be achieved through pure bundling however the mixed bundling strategy dominates the other two when the starting inventory levels are not equal we also observe that an incorrect modeling of the reservation prices may lead to significant losses the model is extended to allow for price changes during the selling horizon it is shown that offering price bundles mid season may be more effective than changing individual product prices

bank privatization in sub saharan africa the case of uganda commercial bank previous empirical analyses have found that bank privatizations are more successful when the government fully relinquishes control when the bank is privatized to a strategic investor and when foreign owned banks are allowed to participate in the bidding the privatization of uganda commercial bank ucb to the south african bank stanbic met all these criteria suggesting that it is a likely candidate for success but other features suggest reasons for caution ucb dominated the ugandan banking sector prior to privatization and the institutional environment in uganda was less favorable than in many of the middle income countries looked at in earlier empirical studies despite these concerns the privatization appears to have been relatively successful the portfolio of the privatized bank which was cleaned prior to sale remains relatively strong and profitability and credit growth are now on par with other ugandan banks though market segmentation remains a concern since stanbic faces little or no direct competition in many remote areas some early results suggest that access to credit has improved for some hard to serve groups

leviathan resists the endogenous relationship between privatization and firm performance using a panel dataset of privatized cement firms in turkey this paper models and finds support for the simultaneous relationship between privatization and firm performance it is found that favorable short run performance weak market potential higher employment lower socio economic development concentrated voter preferences and weaker representation of right wing parties in the firms locality delay the timing of privatization the paper also finds that privatization increases output in the medium term by reducing the labor stock and promoting the adoption of more advanced technology such that production shifts from constant to decreasing returns to scale

optimum advertising policy over time for subscriber service innovations in the presence of service cost learning and customers disadoption abstract on the theoretical side this paper characterizes qualitatively optimal advertising policy for new subscriber services a monopolistic market is analyzed first for which customers disadoption discounting of future profits streams and a service cost learning curve are allowed after characterizing the optimal policy for a general diffusion model the results pertaining to a specific diffusion model for which advertising affects the coefficient of innovation that incorporates the disadoption rate are reported the results of the theoretical research show that the advertising policy of the service firm in the presence of customers disadoption could be very different from the same when disadoption is ignored on the empirical side four alternative diffusion models are estimated and their predictive powers using a one step ahead forecasting procedure compared the diffusion data analyzed are related to the canadian cable tv industry empirical research findings suggest that the specific diffusion model considered above is not only of theoretical appeal but also of major empirical relevance the analytical findings of the study are documented in six theoretical propositions for which proofs are provided in a separate appendix the results of a related numerical experiment together with the analytical findings pertaining to the competitive role of advertising are included managerial implications of the study together with directions for future research are also discussed

services trade protection and economic isolation poor connectivity is conventionally blamed on difficult geography and low income but economic isolation could also result from policy choices in key linking services such as air transportation and telecommunications a new database on applied services trade policies reveals that many countries restrict trade in the very services that connect them with the rest of the world we present evidence that restrictive policies lead to more concentrated market structures and limited access to services even after taking into account the influence of geography and income moving from an intermediate level of restrictiveness to an open regime could lead to a 20 percentage point increase in cellular teledensity in the telecommunications sector and to a 25 per cent increase in flight connections per airline in the aviation sector respectively

a more general theory of commodity bundling this paper extends the standard model of bundling as a price discrimination device to allow products to be substitutes and for products to be supplied by separate sellers whether integrated or separate firms have an incentive to introduce a bundling discount when demand for the bundle is elastic relative to demand for stand alone products product substitutability typically gives an integrated firm a greater incentive to offer a bundle discount relative to the model with additive preferences while substitutability is often the sole reason why separate sellers wish to offer inter firm discounts when separate sellers coordinate on an inter firm discount they can use the discount to overturn product substitutability and relax competition

how buyers evaluate product bundles a model of anchoring and adjustment how do buyers evaluate a bundle of items the most common approach in earlier economic analyses see e g adams and yellen 1976 schmalensee 1984 was to start with the additivity assumption the overall utility of a bundle equals the sum of the bundle items individual utilities the restrictiveness of this additivity assumption was later recognized and removes dansby and conrad 1984 guiltinan 1987 hanson and martin 1990 however the question of how buyers evaluation processes may account for additivity or a lack thereof has remained largely unexplored

ownership changes and access to external financing this paper examines access to external financing in the privatization context and provides new evidence on the effects of financing constraints on performance and investment ownership reforms increase firms reliance on external financing empirically performance and investment changes around ownership reforms are increasing in country level measures of access to credit the presence of a severe prior public financing constraint contributes to stronger investment growth after privatization privatized enterprises do not outperform publicly owned industries all else given our analyses rely on new international sector and firm level data and correct for potential endogeneity of ownership changes

using stock price information to regulate firms this paper examines the role of the information contained in stock prices in the regulation of privatized firms stock prices contain noisy but unbiased information about firm s future prospects that regulators can use to decide on some regulatory policies the main argument developed is that the observation of stock price movements reduces the incentives of regulators to develop their own monitoring technologies and can allow them to commit to relatively lighthanded regulations this protects firm s investments in cost reduction activities and can increase ex ante welfare this article is concerned with the analysis of the interactions between the public listing of regulated companies and their regulation the central idea is that public listing modifies the information structure of regulators and thus the regulation implemented some evidence can motivate this view

deregulating with no regulator is the german electricity transmission regime institutionally correct abstract from 1998 to 2005 the german transmission grid has been put under a self regulated arrangement it seems hard to believe that transmission lines can be opened to third party access only with a negotiated access regime and no regulator supervision it seems contradictory with the notion of ex post contractual hazards promoted by v goldberg and o williamson if a weak institutional arrangement is implemented one might assume that it has to be harmful to network and market access if it is not to be inefficient why and how could it work when looking at rules and prices for accessing the transmission network and the corresponding wholesale markets in germany the club arrangement for transmission opening does not appear so harmful accordingly we have to reconsider the ex ante and ex post institutional mechanism of such a club arrangement ex ante we first reconsider skills and strengths of industrial consumers and german business associations in defining and assessing rules of transmission access we underline that incomplete vertical and horizontal integration of german electricity companies impeded extensive cartel collusion ex post we first look at a strong competition authority backing then we discover that ex ante and ex post dimensions are much more mixed and reinforced in an open cumulative pro competition process framed by the competition authority

optimal bundle formation and pricing of two products with limited stock abstract in this study we consider the stochastic modeling of a retail firm that sells two types of perishable products in a single period not only as independent items but also as a bundle our emphasis is on understanding the bundling practices on the inventory and pricing decisions of the firm one of the issues we address is to decide on the number of bundles to be formed from the initial product inventory levels and the price of the bundle to maximize the expected profit product demands follow a poisson process with a price dependent rate customer reservation prices are assumed to have a joint distribution we study the impact of reservation price distributions initial inventory levels product prices demand arrival rates and cost of bundling we observe that the expected profit decreases as the correlation between the reservation prices of two products increases with negative correlation bundling cost has a significant impact on the number of bundles formed when the product prices are low the retailer sells individual products as well as the bundle mixed bundling when they are high the retailer sells only bundles pure bundling the expected profit and the number of bundles offered decrease as the variance of the reservation price distribution increases for high starting inventory levels the retailer reduces bundle price and offers more bundles the number of bundle sales decreases and the number of individual product sales increases when the arrival rate increases since the need for bundling decreases impacts of substitutability and complementarity of products are also investigated the retailer forms more bundles or charges higher prices for the bundle or both as the products become more complementary and less substitutable

the financial and operating performance of newly privatized firms evidence from developing countries this paper examines the change in the financial and operating performance of 79 companies from 21 developing countries that experienced full or partial privatization during the period from 1980 to 1992 we use accounting performance measures adjusted for market effects in addition to unadjusted accounting performance measures both unadjusted and market adjusted results show significant increases in profitability operating efficiency capital investment spending output employment level and dividends we also find a decline in leverage following privatization but this change is significant only for unadjusted leverage ratios our results are generally robust when we partition our data into various subsamples

unequal pricing in the information economy implications for consumer welfare this article presents an economic analysis of information good pricing and consumer welfare and discusses the implications of price discrimination in the information economy it argues that network externalities coupled with information asymmetry enable a dominant marketer to price unequally extracting late adopters surplus to compensate for the loss from early adopters in the short term the minority early adopters benefit by paying less but in the long term the majority late adopters suffer by paying more considering that late adopters are likely to be at a disadvantage in resources this discriminatory pricing amounts to the poor subsidizing the rich based on this analysis implications for consumer welfare are discussed

corruption and infrastructure at the country and regional level abstractthis paper examines the relationship between corruption and infrastructure at both the country and regional level using the world bank s enterprise surveys data a statistically significant and considerable relationship is established between the measure of corruption in the macro data and the measures of transportation and electricity infrastructure countries with more corruption tend to have worse infrastructure at the regional level the key result is unchanged the magnitude and significance of this result is shown to vary by global region two stage least squares results using distance from the equator as an instrument at the macro level support the simple ordinary least squares ols finally it is shown that within country variation in corruption has a significant effect on regional infrastructure

toward a theory of regulation for developing countries following jean jacques laffont s lead the efficient operation and expansion of infrastructures in developing countries is crucial for growth and poverty reduction however recent reforms aimed at improving the performance of these sectors have had limited success evidence suggests that in many instances this was because the traditional regulatory theory relied on by policymakers was not suitable for the institutional context in developing countries this article surveys more recent theoretical work focusing on problems with regulation in these countries at the heart of the survey is the work of jean jacques laffont who in the last decade of his life set about developing a theoretical framework for regulation in developing countries we consider the implications of his work which focused on the key institutional limitations faced in developing countries we then discuss where experience suggests that there are important omissions from this modeling bringing in extensions and alternative approaches pursued by other authors we conclude by summarizing the key ways in which regulatory policy will be different when institutions are weak overall we find that an understanding of the institutional context and its implications are crucial when designing a regulatory framework for developing countries

the frontier of telecommunications deregulation small countries leading the pack interconnection equal access unbundling and industry structure are four key determinants of facilities based competition in telecommunications using these building blocks this paper analyzes the differences in telecommunications regulatory regimes in australia chile guatemala and new zealand assessing the effect on competition and consumer welfare some regulation is necessary as incumbents can prolong their market power after demonopolization by exploiting positive externalities inherent to telecommunications networks the authors emphasize the superiority of market mechanisms over traditional regulatory processes to achieve efficient transactions among operators such market mechanisms need clear rules and credible enforcement

concessions of infrastructure in latin america government led renegotiation this paper analyzes government led renegotiations in infrastructure concession contracts in latin america based on the same sample used in guasch laffont and straub 2003 to examine firm led renegotiations after extending the theoretical framework to a multiple period context in which both pareto improving and rent shifting renegotiations at the initiative of the government can occur we develop an original instrumental variable strategy to address the issue of contract endogeneity and derive empirical results while some of the main insights concerning the importance of having a regulator in place when awarding concessions and the fragility of price cap regulatory schemes are unchanged significant differences arise with respect to the effect of investment and financing as well as the corruption variables we provide evidence that a good regulatory framework is especially important in contexts with weak governance and political opportunism copyright 2007 john wiley sons ltd

the implications of the liberalization in telecommunication markets for market structure and price policy evidence from a small open economy this study analyses the impact of liberalization on market structure and pricing in the greek telecommunication market from 1992 to 2005 the data refers to 44 of the most prominent companies of fixed telephony mobile telephony and internet services and was compiled by means of interviews with the help of a questionnaire our descriptive analysis concluded that liberalization of the telecommunication market reduced its concentration degree increased competition and induced price cuts this conclusion is supported by other research studies concerning other countries of the eu since greece as an eu member country has also implemented the respective european policy in the specific industry as far as the econometric level is concerned we used panel feasible generalized least squares fgls fgls is an appropriate tool for samples such as our own composed by intersectoral data that extend to more than one time periods and without correlation between the unobserved effects and the interpretative variable

the firm as a nexus of treaties part 1 knowledge its acquisition sharing and or asymmetry the participatory generation of information rents and the theory of the firm masahiko aoki common knowledge and the co ordination of economic activities jacques cremer profit sharing information and employment matti pohjola part 2 vertical integration and the strategic management of the enterprise what is vertical integration michael h riordan vertical integration transaction costs and learning by using kurt lundgren the firm as a nexus of internal and external contracts torger reve part 3 issues of labour organization the viability of worker ownership an economic perspective on the political structure of the firm henry hansmann intellectual skill and the role of employees as constituent members of large firms in contemporary japan kazuo koike the implicit contract for corporate law firm associates ex post opportunism and ex ante bonding robert h mooking part 4 finance and the political structure of the firm capital structure as a mechanism of control a comparison of financial systems erik berglof long term contracts in financial markets hakan lindgren the principle of external accountability in competitive markets herbert gintis union militancy and plant designs kar ove moene can transaction cost economics explain trade associations marc schneiberg and j rogers hollingsworth

new evidence on the impact of structural reforms on electricity sector performance abstract the evolution of electricity industry over the last decades has shown substantial differences between oecd countries this paper empirically investigates to what extent different structural forms of regulation competition and privatisation explain these international differences it distinguishes three modes of electricity performance a net generation per capita b installed capacity and c labour productivity the empirical model spans the period 1975 2011 and uses panel data econometric techniques our analysis reveals that there is a strongly significant interaction impact on the level of electricity performance between regulation and competition the empirical findings do confirm that a robust independent regulatory scheme must be implemented in order to achieve a competitive electricity market

political independence accountability and the quality of regulatory decision making recent decades have seen a considerable increase in delegation to independent regulatory agencies which has been justified by reference to the superior performance of these bodies relative to government departments yet the hypothesis that more independent regulators do better work has hardly been tested we examine the link using a comprehensive measure of the quality of work carried out by competition authorities in 30 organisation for economic co operation and development oecd countries and new data on the design of these organizations we find that formal independence has a positive and significant effect on quality contrary to expectations though formal political accountability does not boost regulatory quality and there is no evidence that it increases the effect of independence by reducing the risk of slacking the quality of work is also enhanced by increased staffing more extensive regulatory powers and spillover effects of a more capable bureaucratic system

the financial and operating performance of newly privatized firms an international empirical analysis this study compares the pre and postprivatization financial and operating performance of 61 companies from 18 countries and 32 industries that experience full or partial privatization through public share offerings during the period 1961 to 1990 our results document strong performance improvements achieved surprisingly without sacrificing employment security specifically after being privatized firms increase real sales become more profitable increase their capital investment spending improve their operating efficiency and increase their work forces furthermore these companies significantly lower their debt levels and increase dividend payout finally we document significant changes in the size and composition of corporate boards of directors after privatization the last fifteen years have witnessed a significant global shift away from state socialism towards entrepreneurial capitalism one of the most important and visible aspects of this trend has been the enthusiasm with which governments of all political persuasions have sold their state owned enterprises soes to private investors in hopes that the generally unsatisfactory economic performance of these firms can be improved by the discipline of private ownership this denationalization process given its current title of privatization by the conservative government of margaret thatcher in

winners and losers from the privatization and regulation of utilities lessons from a general equilibrium model of argentina a computable general equilibrium cqe model is used to estimate the macroeconomic and distributional effects of the privatization and regulation of utilities in argentina begun in 1989 based on data available after the privatization that indicate different kinds of efficiency gains in electricity gas water and telecommunications both the privatization and effective regulation are estimated to yield significant macroeconomic benefits gains from the privatization accrue mainly to high income classes while gains from the effective regulation of newly privatized utilities accrue mainly to low income classes computable general equilibrium cge estimates of overall employment effects suggest that privatization was not a major contributor to the dramatic rise in unemployment in argentina between 1993 and 1995 this rise was more likely due to the tequila effect of an interest rate shock

monopoly and soft budget constraint a benevolent government may decide to subsidize an unprofitable monopoly whose profits do not capture all the social surplus from its production anticipating this the firm may underinvest in order to become unprofitable and extract state subsidies the resulting welfare loss may exceed by many times the deadweight cost of monopoly pricing committing the firm to a price ceiling may soften its budget constraint and thus reduce welfare competition can harden budget constraints in industries in which free entry is socially excessive

understanding the soft budget constraint we propose a clarification of the notion of a soft budget constraint a concept widely used in the analysis of socialist transitional and market economies our interpretation is broad enough to embrace most existing approaches to soft budget constraint phenomena and provides a classification of their causes and consequences in light of this interpretation we then review the theoretical literature on the subject and compare it with those on other dynamic commitment problems in economics

privatizing highways in latin america fixing what went wrong revolution in the way highways are provided took place in latin america in the 1990s when more than fifty projects mainly in argentina brazil chile colombia and mexico were privatized using build operate and transfer bot contracts the so called lost decade of the 1980s resulted in low investment in infrastructure and inad equate maintenance and it created a major highway deficit across latin america this deficit together with chronic budgetary problems led gov ernments to embrace a scheme in which the private sector financed urgently needed infrastructure investments thereby freeing up public resources for projects in other priority areas 1 this paper draws some lessons based on the evidence accumulated to date in particular we show that policymakers face unpleasant choices when considering how to provide highways in the future the evidence suggests that private financing of new highways freed up fewer resources than expected in several cases public funds were diverted to bail out fran chise holders in financial trouble 2 government guarantees for private highway franchises also added to the fiscal burden and such guarantees

the pitfalls of water privatization failure and reform in malaysia summary this paper examines why private participation in infrastructure ppi in water continues to be promoted despite poor results in developing countries it argues that the main characteristics of infrastructure discourage private investment and necessitate state subsidies which dilute private risks and incentives and facilitate rent seeking as a result ppi is characterized by public financing selective private investments and inconclusive efficiency gains this is reflected globally and in malaysia where ppi continues to be promoted because it provides captive rents the political factors that drive ppi invariably compromise institutional solutions as malaysia s water sector reforms illustrate

an econometric analysis of telecom competition privatization and regulation in africa and latin america this paper explores the effects of privatization competition and regulation on telecommunications performance in 30 african and latin american countries from 1984 through 1997 fixed effects regressions reveal that competition measured by mobile operators not owned by the incumbent is correlated with increases in the per capita number of mainlines payphones and connection capacity and with decreases in the price of local calls privatization combined with an independent regulator is positively correlated with telecom performance measures privatization alone however is associated with few benefits and is negatively correlated with connection capacity

collusive conduct in duopolies multimarket contact and cross ownership in the mobile telephone industry the deregulation of the telecommunications industry has resulted in a variety of industry structures which have been created in hopes of increasing competition one example is the licensing of cellular telephone services in the united states where the fcc created duopolies in which two firms were granted licenses to compete in strictly defined product and geographic markets taking advantage of the unique regulatory environment we test to what degree duopolistic competition leads to competitive market outcomes we find that cross ownership and multimarket contact are important factors in explaining non competitive prices

credit and efficiency in centralized and decentralized economies we study a credit model where because of adverse selection unprofitable projects may nevertheless be financed indeed they may continue to be financed even when shown to be low quality if sunk costs have already been incurred we show that credit decentralization offers a way for creditors to commit not to refinance such projects thereby discouraging entrepreneurs from undertaking them initially thus decentralization provides financial discipline nevertheless we argue that it puts too high a premium on short term returns the model seems pertinent to two issues soft budget constraint problems in centralized economies and differences between anglo saxon and german japanese financing practices

games of social interactions with local and global externalities abstract in this paper we present a result on the existence of pure strategies nash equilibrium which covers a large class of games with local and global social interactions the result highlights common features of well known games analyzed in the literature

regulation competition and liberalization in many countries throughout the world regulators are struggling to determine whether and how to introduce competition into regulated industries this essay examines the complexities involved in the liberalization process while stressing the importance of case specific analyses this essay distinguishes liberalization policies that generally are procompetitive from corresponding anticompetitive liberalization policies

the privatization of the fixed line telecommunications operator in oecd latin america asia and africa one size does not fit all summary this paper challenges the idea that there exists a unique model of reform for infrastructure sectors which is equally applicable across regions and countries and expected to yield similar outcomes we perform an empirical analysis of the impact of privatization of the fixed line activity of the traditional telecommunications operator on network expansion tariffs and labor efficiency in a 1985 2007 data set on a selection of 108 countries that we split into regional sub samples we find that the performance of privatization depends to a large extent on regional factors related to market profitability wealth and geography

privatization financial development property rights and growth abstract this study analyzes how prevailing institutional arrangements i e property rights contracting rights political institutions and corporate governance practices affect privatized firms performance capital markets development and economic growth most of the studies surveyed show that privatization enhances privatized firms performance efficiency and profitability which percolates to economic growth privatized firms performed better in countries with better regulatory and legal frameworks partial privatization may be beneficial in countries with weak institutions namely the french civil law countries the stronger the economic and the governing institutions the easier it is for privatized firms to thrive and contribute to economic growth overall privatization allows firms to achieve improved efficiency while driving the development of the financial sector

optimal pricing and composition of multiple bundles a two step approach abstract this paper analyzes the problem facing a firm that must determine the optimal composition and pricing of multiple bundles it supplies to a single market segment it is assumed the firm s competitors does not react in the short run to its decisions and that their bundles prices and characteristics are known it is further assumed that potential consumers of bundles are rational and maximize a random utility function the problem is modeled as a mixed integer non linear program though such programs are normally hard to solve using traditional methods the difficulties are circumvented here by taking advantage of the problem s mathematical structure to develop a novel two phase solution approach two aspects of the solution are particularly worthy of note 1 we demonstrate that the optimal price of a bundle marketed by a firm depends on the composition of all the firm s bundles and not on their prices and on the composition and price of all the competitors bundles in the market and 2 that if the consumer choice behavior is described by a logit model then the firm s bundles should be very similar to each other

congestion games with player specific payoff functions a class of noncooperative games in which the players share a common set of strategies is described the payoff a player receives for playing a particular strategy depends only on the total number of players playing the

renegotiation of concession contracts in latin america evidence from the water and transport sectors abstract high rates of contract renegotiation have raised serious questions about the viability of the concession model to attract private participation in infrastructure in developing countries after extending in reduced form a standard regulation model in which renegotiation occurs due to the imperfect enforcement of concession contracts we use a unique data set of 307 concessions awarded in latin america from 1989 to 2000 covering the sectors of transport and water to analyze the determinants of this high incidence of renegotiations of infrastructure contracts we look in details at the impact on the probability of renegotiation of a concession of regulatory institutions institutional features economic shocks and of the characteristics of the concession contracts themselves we then derive some policy implications of our work

the efficiency of state owned and privatized firms does ownership make a difference abstract this paper compares the pre and post privatization efficiency of a sample of state owned enterprises privatized in spain with the efficiency of their closest private competitors we perform a two stage double bootstrap data envelopment analysis model in the first stage the efficiency is estimated through a bootstrapped data envelopment analysis and then followed in the second stage by a bootstrapped truncated regression our results provide evidence that i there were no significant differences in efficiency between the state owned enterprises and their private counterparts before privatization and ii the efficiency of newly privatized firms significantly increased after their privatization while private competitors showed no significant improvement during the same post privatization period

privatization in latin america what does the evidence say privatization is under attack criticisms run from corrupt deals to abuse of market power and social welfare losses we evaluate the empirical record on privatization relying on recent comprehensive studies from latin america the paper presents four main results first the increased profitability of privatized firms is not explained by sample selection biases second in the quest to identify the sources of increased profitability after privatization we find little evidence that validates concerns of generalized market power abuses exploitation of workers and lack of fiscal benefits third the manner in which privatization is carried out matters transparency and homogeneity in procedures speed and limited restructuring prior to privatization lead to better outcomes and less room for corruption and discretion finally privatization s success is enhanced by two complementary policies deregulation or reregulation of industries previously shielded from competitive forces and an effective corporate governance framework that facilitates privatized firms access to capital at lower cost overall the empirical record shows that privatization leads to increased profitability and productivity firm restructuring fiscal benefits output growth and even quality improvements most cases of privatization failure can be linked to poor contract design opaque processes with heavy state involvement lack of reregulation and a poor corporate governance framework

lobbies delegation and the under investment problem in regulation abstract a time inconsistency problem in regulation often results in under investment especially where there are high sunk costs in network industries such as electricity gas telecommunications and water this paper provides a new perspective on this hold up problem facing the price regulation of a firm with market power where full commitment to a price regime is not possible we compare a political equilibrium based on a voting model with lobbying with a delegation equilibrium where a government can delegate to a particular type of pro or anti industry regulator our analysis suggests two possible ways in which we may observe price regulation that encourages socially optimal investment in the absence of externally imposed regulatory commitment first there is less than total transparency in which voters receive an optimal amount of information and second the decisions on price are delegated to a sufficiently but not excessively pro industry regulator

on the form of transfers to special interests an important question in political economy concerns the form of transfers to special interests the chicago view is that political competition leads politicians to make such transfers efficiently the virginia position is that lack of information on the part of voters leads politicians to favor inefficient sneaky methods of redistribution this paper analyzes the form of transfers in a model of political competition in which politicians have incentives to make transfers to special interests it shows that when voters have imperfect information about both the effects of policy and the predispositions of politicians inefficient methods of redistribution may be employed

a probabilistic approach to pricing a bundle of products or services the authors propose a probabilistic approach to optimally price a bundle of products or services that maximizes seller s profits their focus is on situations in which consumer decision making is o

the benefits of privatization evidence from mexico critics of privatization often argue that its benefits come at a high cost to society the authors test the validity of this criticism for mexico s privatization program one of the world s largest case by case programs assessing the performance of newly privatized firms in such areas as profitability and efficiency they find that these firms quickly close the gap with their peers in the private sector their findings suggest that the firms profit gains come from productivity gains 52 percent layoffs 33 percent and higher prices 15 percent

on pricing of multiple bundles of products and services this paper considers the pricing decision faced by a seller of bundles composed of a service and an associated product offered to customers on a subscription basis using a two part tariff scheme an optimal pricing policy that maximizes the profit of a firm is obtained using a dynamic programming approach and it is found that in the long run there is an optimal number of customers associated to each bundle due to managerial purposes two suboptimal fixed price policies are derived and compared to the optimal pricing policy the conditions under which it is profitable for the firm to expand its offer from one to two bundles is studied finally it is concluded that introducing a fee for subscribed customers to deter the switching from one bundle to the other increases the profitability of the firm

customized bundle pricing for information goods a nonlinear mixed integer programming approach this paper proposes using nonlinear mixed integer programming to solve the customized bundle pricing problem in which consumers are allowed to choose up to n goods out of a larger pool of j goods prior work has suggested that this mechanism has attractive features for the pricing of information and other low marginal cost goods although closed form solutions exist for this problem for certain cases of consumer preferences many interesting scenarios cannot be easily handled without a numerical solution procedure in this paper we investigate the efficiency gains created by customized bundling over the alternatives of pure bundling or individual sale under different assumptions about customer preferences and firm cost structure as well as the potential loss of efficiency caused by pricing with incomplete information about consumer reservation values our analysis suggests that customized bundling enhances sellers profits and enhances welfare when consumers do not place positive values on all goods and that this consumer characteristic is much more important than the shape of the valuation distribution in determining the optimal pricing scheme we also find that customized bundling outperforms both pure bundling and individual sale in the presence of incomplete information and that customized bundling still outperforms other simpler pricing schemes even when exact consumer valuations are not known ex ante

when information dominates comparison abstract we propose a micro econometric evaluation of the relation between life satisfaction and income distribution using a balanced panel survey of the russian population russian longitudinal monitoring survey rlms running from 1994 to 2000 covering 4685 individuals we show that in the context of the very volatile russian environment hirschman s q j econ 87 1973 544 tunnel effect conjecture seems to be confirmed variables reflecting income distribution do not influence satisfaction through social comparisons individuals rather seem to use their informational content in order to form their expectations the reference group s income thereby exerts a positive influence on individual satisfaction which contrasts with other studies on the subject inequality indices do not affect individual welfare

heuristics for pricing and positioning a product line using conjoint and cost data designing and pricing a product line is the very essence of every business in recent years quantitative methods to assist managers in this task have been gaining in popularity conjoint analysis is already widely used to measure preferences for different product profiles and build market simulation models in the last few years several papers have been published that suggest how to optimally choose a product line based on such data we formalize this problem as a mathematical program where the objective of the firm is either profit or total welfare unlike alternative published approaches we introduce fixed and variable costs for each product profile the number of products to be introduced is endogenously determined on the basis of their desirability fixed and variable costs and in the case of profits their cannibalization effect on other products while the problem is difficult np complete we show that the maximum welfare problem is equivalent to the uncapacitated plant location problem which can be solved very efficiently using the greedy interchange heuristic based on past published experience with this problem and on simulations we perform we show that optimal or near optimal solutions are obtained in seconds for large problems we develop a new greedy heuristic for the profit problem and its application to simulated problems shows that it too runs quickly and with better performance than various alternatives and previously published heuristics we also show how the methodology can be applied taking existing products of both the firm and the competition into account

corruption in procurement and public purchase abstract the paper studies capture and extortion in public purchase it shows that capture yields a dead weight loss while extortion does not based on the calibration of the model the total cost of capture is between 1 2 and 2 88 times the amount of the bribes the theoretical analysis focuses on capture fight the legal framework that emerges from the normative analysis involves open tender for larger purchases and no monitoring for the smaller ones the rule is independent of a country s characteristics large public purchases should hence be ruled by international legislation for markets of medium range national legislation differs when susceptibility to corruption rises there is a shift from the capture to the extortion regime

optimal product bundling with dependent valuations the price of independence abstract in this paper we investigate the tactical problem of pricing a bundle of products when the underlying valuations of the bundle components are dependent we use copula theory to model the joint density of reservation prices and provide analytical derivations for the prices under different bundling strategies and sharp bounds for the profit function we discover that when only the bundle is offered and the marginal costs are relatively small the seller is better off by bundling products that have a negative association between their valuations while the converse is true when the marginal costs are relatively high we also show that the net benefit of offering a full product line containing both the bundle and the components decreases for mild to strong associations between the component valuations compared to offering just the bundle finally we analyze how the typical literature assumption of independence of reservation prices impacts the seller s profitability when in fact the valuations are dependent and find that this gap in profitability which we call the price of independence can be arbitrarily large

a theory of privatisation public enterprises around the world have proved to be highly inefficient primarily because they pursue strategies such as excess employment that satisfy the political objectives of politicians who control them privatization of public enterprises can raise the cost to politicians of influencing them since subsidies to private firms necessary to force them to remain inefficient are politically harder to sustain than wasted profits of the state firms in this way privatization leads to efficient restructuring of firms moreover privatization is more effective when combined with a tight monetary policy and when the new owners of firms are profit maximizing investors rather than their employees or even managers copyright 1996 by royal economic society

empirical evidence on satisfaction with privatization in latin america since the 1980s privatization of formerly state owned firms has been extensively implemented by governments across latin america despite the fact that most evaluations of the process fail to find significant adverse efficiency and welfare effects there has been a strong surge in public discontent with such policy in the region this paper performs a systematic empirical analysis of the determinants of such dissatisfaction using survey data from latinobarometro covering 17 countries over the period 1998 2008 complemented by country level data on macroeconomic political and institutional aspects as well as data on privatization dissatisfaction appears to respond to absolute and relative welfare effects and the authors find a robust u shaped effect in term of education and income levels with individuals in the middle of such distributions being more critical with the outcome of privatizations

a universal construction generating potential games abstract strategic games are considered where each player s total utility is the sum of local utilities obtained from the use of certain facilities all players using a facility obtain the same utility therefrom which may depend on the identities of users and on their behavior if a trimness condition is satisfied by every facility then the game admits an exact potential conversely if a facility is not trim adding it to a potential game may destroy that property in both congestion games and games with structured utilities all facilities are trim under additional assumptions the potential attains its maximum which is a nash equilibrium of the game

corruption and inefficiency theory and evidence from electric utilities we investigate the determinants of the efficiency of firms with a focus on the role of corruption we construct a simple theoretical model where corruption increases factor requirements of firms because it diverts managerial effort away from factor coordination we then exploit a unique dataset comprising firm level information on 80 electricity distribution firms from 13 latin american countries for the years 1994 to 2001 as predicted by the model we find that more corruption in the country is strongly associated with more inefficient firms in the sense that they employ more inputs to produce a given level of output the economic magnitude of the effects is large the results hold both in models with country and firm fixed effects the results survive several robustness checks including different measures of output and efficiency and instrumenting for corruption other elements associated with inefficiency are public ownership inflation and lack of law and order but corruption appears to play a separate and more robust role

mises hayek and corruption using the arguments of ludwig von mises and friedrich august von hayek i argue that private ownership solves the economic problem of corruption since private ownership discourages entrepreneurs from rent seeking and privately owned media provide objective and unbiased information to citizens any legal reform establishing and enforcement of private ownership also solves the corruption problem

bundling with customer self selection a simple approach to bundling low marginal cost goods with declining costs of distributing digital products comes renewed interest in strategies for pricing goods with low marginal costs in this paper we evaluate customized bundling a pricing strategy that gives consumers the right to choose up to a quantity m of goods drawn from a larger pool of n different goods for a fixed price we show that the complex mixed bundle problem can be reduced to the customized bundle problem under some commonly used assumptions we also show that for a monopoly seller of low marginal cost goods this strategy outperforms individual selling m 1 and pure bundling m n when goods have a positive marginal cost or when customers have heterogeneous preferences over goods comparative statics results also show that the optimal bundle size for customized bundling decreases in both heterogeneity of consumer preferences over different goods and marginal costs of production we further explore how the customized bundle solution is affected by factors such as the nature of distribution functions in which valuations are drawn the correlations of values across goods and the complementarity or substitutability among products altogether our results suggest that customized bundling has a number of advantages both in theory and practice over other bundling strategies in many relevant settings

surviving the crisis foreign multinationals vs domestic firms starting from the observation that all firms in ireland foreign and domestic in manufacturing and services industries were hit by the crisis the paper asks whether there is a difference in the behaviour of foreign and domestic firms one hypothesis is that foreign multinationals are less linked into the irish economy so more likely to leave once the economy is hit by a negative shock the paper discusses background hypotheses before giving empirical evidence from firstly aggregate data and secondly firm level observations the analysis of the latter suggests that foreign firms are not more likely to leave during the crisis than irish firms some policy conclusions are offered in the paper