collusion collective action and protection theory and evidence this paper provides a novel explanation forthe formation of protectionist lobby groupsin imperfectly competitive sectors thelevel of collusion is shown to be a crucialdeterminant of the ability of firms tosustain lobbying we show that greatercollusion reduces firm contributionsto tariff lobbying when the governmentvalues welfare sufficiently and thecross price elasticity between the domesticand foreign goods is sufficiently high the empirical evidence from the u s supports the theory greater collusionreduces the level of pac contributions

energy market liberalization and renewable energy policies in oecd countries abstract this paper investigates the effect of energy liberalization compared to other drivers on policies that support renewable energy in a long panel of oecd countries we estimate this effect by accounting for the endogeneity of liberalization related to joint decisions within a country s energy strategy using regulation in other industries as instruments we find that energy liberalization increases public support for renewable energy the effect of liberalization is the second largest after the effect of per capita income and is mostly driven by reductions in entry barriers while the effect of privatization is unclear this finding suggests that a reduction in the monopolistic power of state owned utilities has a positive effect on renewable energy policies when various types of actors are ensured access to the grid instead of it being provided to only a few large private firms

common agency and coordination general theory and application to government policy making we develop a model of common agency with complete information and general preferences with nontransferable utility and we prove that the principals nash equilibrium in truthful strategies implements an efficient action we apply this theory to the construction of a positive model of public finance where organized special interests can lobby the government for consumer and producer taxes or subsidies and targeted lump sum taxes or transfers the lobbies use only the nondistorting transfers in their noncooperative equilibrium but their intergroup competition for transfers turns into a prisoners dilemma in which the government captures all the gain that is potentially available to the parties

allocation of flexible and indivisible resources with decision postponement and demand learning we consider a firm that uses two perishable resources to satisfy two demand types resources are flexible such that each resource can be used to satisfy either demand type resources are also indivisible such that the entire resource must be allocated to the same demand type this type of resource flexibility can be found in different applications such as movie theater complexes cruise lines and airlines in our model customers arrive according to independent poisson processes but the arrival rates are uncertain thus the manager can learn about customer arrival rates from earlier demand figures and potentially increase the sales by postponing the resource allocation decision we consider two settings and derive the optimal resource allocation policy for one setting and develop a heuristic policy for the other our analysis provides managerial insights into the effectiveness of different resource allocation mechanisms for flexible and indivisible resources

multi resource investment strategies operational hedging under demand uncertainty abstract consider a firm that markets multiple products each manufactured using several resources representing various types of capital and labor and a linear production technology the firm faces uncertain product demand and has the option to dynamically readjust its resource investment levels thereby changing the capacities of its linear manufacturing process the cost to adjust a resource level either up or down is assumed to be linear the model developed here explicitly incorporates both capacity investment decisions and production decisions and is general enough to include reversible and irreversible investment the product demand vectors for successive periods are assumed to be independent and identically distributed the optimal investment strategy is determined with a multi dimensional newsvendor model using demand distributions a technology matrix prices product contribution margins and marginal investment costs our analysis highlights an important conceptual distinction between deterministic and stochastic environments the optimal investment strategy in our stochastic model typically involves some degree of capacity imbalance which can never be optimal when demand is known

beyond bankruptcy does the us bankruptcy code provide a fresh start to entrepreneurs abstract this paper assesses the extent to which the us bankruptcy system is effective in providing small businesses a fresh start after a bankruptcy filing i use data from the 1993 1998 and 2003 national survey of small business finances to explore how firms fare after a bankruptcy filing on the positive side previously bankrupt firms are not any more burdened than the average small firm by problems relating to profitability cash flow health insurance costs or taxes further the fact that these firms are surviving several years after the filing is itself a testament to the efficient functioning of the us bankruptcy system it suggests that the bankruptcy system goes a long way toward helping businesses recover after a bankruptcy filing however the one area of concern that persists after a filing is financing or credit access in general these firms have a nearly 24 percentage point higher likelihood of being denied a loan and are charged interest rates that are more than 1 percentage point higher than those charged to other businesses a bankruptcy affects all types of financing even trade credit which is a significant form of lending between businesses in fact it appears that firms with a bankruptcy record are rationed out of the market with all types of loans being denied at significantly higher rates than other firms further my results show that bankruptcy leads to a class of discouraged borrowers who are significantly less likely to even apply for a loan

repeated partnership games with imperfect monitoring and no discounting in a partnership game each player s utility depends on the other players actions through a commonly observed consequence e g output profit price which is itself a function of the players actions and an exogenous stochastic environment if a partnership game is repeated infinitely and each player s payoff in the infinite game supergame is the long run average of his expected one period utilities then efficient combinations of one period actions can be sustained as nash equilibria of the supergame even if the players cannot observe other players actions or information but can only observe the resulting consequences

integrating replenishment decisions with advance demand information there is a growing consensus that a portfolio of customers with different demand lead times can lead to higher more regular revenues and better capacity utilization customers with positive demand lead times place orders in advance of their needs resulting inadvance demand information this gives rise to the problem of finding effective inventory control policies under advance demand information we show that state dependent s s and base stock policies are optimal for stochastic inventory systems with and without fixed costs the state of the system reflects our knowledge of advance demand information we also determine conditions under which advance demand information has no operational value a numerical study allows us to obtain additional insights and to evaluate strategies to induce advance demand information

political internalization of economic externalities and environmental policy abstract this paper derives the characteristics of endogenous environmental policy in a common agency model of politics and proceeds to show that competition between lobby groups is an important source of internalization of economic externalities our analysis generalizes bhagwati s principle of targeting to the case of distorted political markets moreover we show that the politically optimal structure of environmental taxes incorporates a pigouvian adjustment however since lobby groups care about the distribution of income as well as about efficiency the equilibrium structure of taxes differs considerably from the pigouvian rule

price and order postponement in a decentralized newsvendor model with multiplicative and price dependent demand we analyze the effect of price and order postponement in a decentralized newsvendor model with multiplicative and price dependent demand wherein the manufacturer sets the wholesale price and possibly offers a buyback rate and the retailer determines the order quantity and retail price such postponement strategies can be used by the retailer by delaying his operational decisions order quantity and retail price until after demand uncertainty is observed we show how the equilibrium values of the contract parameters and profits are affected by i vertical competition ii type of contract wholesale price only or buyback iii demand distribution iv form of the expected demand function and v the timing of the retailer s operational decisions although in most cases postponement is quite beneficial for the channel members we show that for some model parameters due to vertical competition the expected value of perfect information about demand for price postponement and order postponement may be negative for the channel and even surprisingly for both members we also show that when a buyback option is offered neither order postponement nor price postponement has an effect on the equilibrium wholesale price profit allocation ratio between the manufacturer and the retailer and channel efficiency and that the equilibrium wholesale price expected retail price profit allocation ratio between the manufacturer and the retailer and channel efficiency in the model with buyback options under either order or price postponement further coincide with their counterparts in the corresponding deterministic model

the epidemiology of corporate pac formation 1975 1984 abstract most work on corporate political action committees pacs accounts for their formation or activity level in terms of market concentration and collective action dilemmas subsidiary concerns include the effects of regulatory burden and the firm s internal organization however these cross sectional designs yield little insight into the dynamics of the process results of logit and event history analyses of panel data on 119 u s firms from 1975 1984 show that changes in corporate profitability pac formation by other firms in a firm s board of directors interlock network and the degree of managerial dominance of corporate governance also affect the likelihood that a firm will form a pac analyses also reveal important differences in pac formation dynamics across different types of firms particularly in their response to pac formation by linked firms

optimal investment strategies for flexible resources considering pricing and correlated demands we study the optimal resource investment decision faced by a two product price setting firm that operates in a monopolistic setting and employs a postponed pricing scheme the firm has the option to invest in dedicated resources as well as a more expensive flexible resource that can satisfy both products while the resource investment decision is made under demand uncertainty pricing and resource allocation decisions are postponed to the time when demand curves are realized our analysis provides the structure of the firm s optimal resource investment strategy as a function of demand parameters and investment costs and shows that the flexible resource investment decision follows athreshold policy we also show that it can be optimal for the firm to invest in the flexible resource even when demand patterns are perfectly positively correlated the reason for flexible capacity investment in this case is financial rather than risk pooling on the other hand we show that it can be optimal for the firm not to invest in the flexible resource even when demand patterns are perfectly negatively correlated the flexible resource investment decision in this case depends on the profitability of the two products based on our analysis we provide principles on the firm s optimal resource investment decision

resource flexibility with responsive pricing this article studies two types of flexibility used by firms to better respond to uncertain market conditions resource flexibility and responsive pricing we consider a situation in which a single flexible resource can be used to satisfy two distinct demand classes while the resource capacity must be decided based on uncertain demand functions the resource allocation as well as the pricing decision are made based on the realized demand functions we characterize the effects of two key drivers of flexibility demand variability and demand correlation assuming normally distributed demand curve intercepts demand variability creates opportunity costs and with fixed prices decreases the firm s profit we show that with the additional flexibility gained from responsive pricing the firm can maximize the benefits of favorable demand conditions and mitigate the effects of poor demand conditions ultimately profiting from variability positive demand correlation on the other hand remains undesirable under responsive pricing the optimal capacity of the flexible resource is always increasing in both demand variability and demand correlation this contrasts with the scenarios based on fixed prices highlighting the crucial difference that responsive pricing makes in the management of flexible resources we further quantify the value of flexibility for the firm and its customers by considering as a benchmark a firm relying on two dedicated resources the value of flexibility is most significant if the demand levels are highly variable and negatively correlated in such cases the firm benefits from demand variability due to responsive pricing while facing limited demand risk due to resource flexibility finally we endogenize the input price of the flexible resource by considering the pricing decision of the resource supplier

capacitated multi item inventory systems with random and seasonally fluctuating demands implications for postponement strategies we address multi item inventory systems with random and seasonally fluctuating and possibly correlated demands the items are produced in two stages each with its own lead time in the first stage a common intermediate product is manufactured the production volumes in the first stage are bounded by given capacity limits we develop an accurate lower bound and close to optimal heuristic strategies of simple structure the gap between them evaluated in an extensive numerical study is on average only 0 45 we use the model to investigate the benefits of various delayed product differentiation postponement strategies as well as other strategic questions including i the benefits of flexible versus dedicated production facilities ii the trade off between capacity and inventory investments and iii the trade off between capacity investments and service levels

rent seeking and market structure comment if the firms in an industry are to be successful in raising money to influence government two conditions must be met 1 there must be sufficient rents available from government decisions regarding that industry to make such expenditures worthwhile and 2 the industry must be sufficiently concentrated to avoid a free rider problem in fund raising this argument though seemingly intuitively appealing has been under recent empirical attack this paper seeks to restore the parapets

inventory control with limited capacity and advance demand information manufacturers make production decisions and carry inventory to satisfy uncertain demand when holding and shortage costs are high carrying inventory could be even more expensive for acapacitated production system recent developments in information technology and sales strategies enabled firms to acquire collect or induce advance demand information we address a periodic review stochastic capacitated finite and infinite horizon production system faced by a manufacturer who has the ability to obtain advance demand information we establish optimal policies and characterize their behavior with respect to capacity fixed costs advance demand information and the planning horizon with a numerical study we quantify the value of advance demand information and additional capacity for specific problem instances we illustrate how advance demand information can be a substitute for capacity and inventory

personal bankruptcy and credit supply and demand this paper examines how personal bankruptcy and bankruptcy exemptions affect the supply and demand for credit while generous state level bankruptcy exemptions are probably viewed by most policy makers as benefiting less well off borrowers our results using data from the 1983 survey of consumer finances suggest that they increase the amount of credit held by high asset households and reduce the availability and amount of credit to low asset households conditioning on observable characteristics thus bankruptcy exemptions redistribute credit toward borrowers with high assets interest rates on automobile loans for low asset households also appear to be higher in high exemption states

mortgage lending in boston interpreting hmda data the home mortgage disclosure act was enacted to monitor minority and low income access to the mortgage market the data collected for this purpose show that minorities are more than twice as likely to be denied a mortgage as whites yet variables correlated with both race and creditworthiness were omitted from these data making any conclusion about race s role in mortgage lending impossible the federal reserve bank of boston collected additional variables important to the mortgage lending decision and found that race continued to play an important though significantly diminished role in the decision to grant a mortgage copyright 1996 by american economic association

discrimination in the small business credit market we use data from the 1993 and 1998 national surveys of small business finances to examine the existence of racial discrimination in the small business credit market we conduct an econometric analysis of loan outcomes by race and find that black owned small businesses are about twice as likely to be denied credit even after controlling for differences in creditworthiness and other factors a series of specification checks indicates that this gap is unlikely to be explained by omitted variable bias these results indicate that the racial disparity in credit availability is likely caused by discrimination

endogenous lobby formation and endogenous environmental protection with unilateral tariff reduction this paper studies how one country s decision to liberalize trade affects the political economic structure that determines environmental policy in another country by constructing a political economy model in which the formation of lobby groups and environmental policy are endogenously determined we show that unilateral tariff reductions by a large country importing a polluting good will generate a lobby group with a relatively lower cost of organization in a small country exporting that good a formulated lobby demands an inefficient environmental policy and hence the small country s environmental regulations become less efficient then we show that when a lobby already exists unilateral tariff reductions result in the formation of a rival lobby and consequently make the small country s environmental policy more efficient

on the formation of industry lobby groups abstract this paper provides a step towards a more complete theory of lobbying extending the menu auction model of grossman and helpman grossman g m helpman e 1994 american economic review 84 833 850 a new explanation is proposed for why more concentrated industries more easily overcome the free rider problem inherent in political collective action instead of focusing on transactions costs as olson olson m 1965 the logic of collective action harvard university press cambridge ma we show that more collusive industries with higher collusive profits have a greater incentive to form lobby groups and to contribute to industry lobbying moreover more polluting industries also have a greater incentive to form and contribute to a lobby group

what happens when information leaves a market evidence from postbankruptcy consumers federal law mandates the removal of personal bankruptcies from credit reports after 10 years the removal s effect is market efficiency in reverse the short term effect is a spurious boost in apparent creditworthiness especially for the more creditworthy bankrupts delivering a substantial increase in both credit scores and the number and aggregate limit of bank cards the longer term effect is lower scores and higher delinquency than initial full information scores predict these findings relate to both the debate over the bankruptcy code and the wisdom of influencing market clearing by removing information

the emergence of cooperation among egoists this article investigates the conditions under which cooperation will emerge in a world of egoists without central authority this problem plays an important role in such diverse fields as political philosophy international politics and economic and social exchange the problem is formalized as an iterated prisoner s dilemma with pairwise interaction among a population of individuals results from three approaches are reported the tournament approach the ecological approach and the evolutionary approach the evolutionary approach is the most general since all possible strategies can be taken into account a series of theorems is presented which show 1 the conditions under which no strategy can do any better than the population average if the others are using the reciprocal cooperation strategy of tit for tat 2 the necessary and sufficient conditions for a strategy to be collectively stable and 3 how cooperation can emerge from a small cluster of discriminating individuals even when everyone else is using a strategy of unconditional defection

market structure and campaign contributions does concentration matter a reply economic rents may be obtained through the process of market competition or be obtained by resorting to governmental protection rational firms choose the least costly alternative collusion to obtain governmental protection will be less costly the higher the concentration ceteris paribus however high concentration in itself is neither necessary nor sufficient to induce governmental protection

redefining business success distinguishing between closure and failure new firms are believed to have high closure rates and these closures are believed to be failures but two u s census bureau data sources illustrate that these assumptions may not be justified the business information tracking series bits showed that about half of new employer firms survive beyond four years and the characteristics of business owners cbo showed that about a third of closed businesses were successful at closure the cbo also made it possible to compare results of models of business survival and business success but because of non response bias logit models were used similar to previous studies firms having more resources that were larger with better financing and having employees were found to have better chances of survival factors that were characteristic of closure such as having no start up capital and having a relatively young owner were also common in businesses considered successful at closure hence few defining factors can be isolated leading to true failures the significant proportion of businesses that closed while successful calls into question the use of business closure as a meaningful measure of business outcome it appears that many owners may have executed a planned exit strategy closed a business without excess debt sold a viable business or retired from the work force it is also worth noting that such inborn factors as race and gender played negligible roles in determining survivability and success at closure

rates for vehicle loans race and loan source a household s vehicle purchases are among its largest expenditure outlays moreover unlike housing purchases which a typical household may make once or twice over a lifetime a house hold may well buy several cars over the same interval the magnitude and relative frequency of vehicle purchases suggest that differential treatment by race in the vehicle market may have important implications for differences in wealth and financial well being by race yet whereas a robust literature in economics has studied virtu

the effect of commonality on safety stock in a simple inventory model we examine the effects of component commonality on optimal safety stock levels in a two product two level inventory model the criterion is to minimize system safety stock subject to a service level constraint although our model is specialized its analysis provides insights not available in other multilevel inventory models

interest group size and legislative lobbying abstract we develop a model of legislative decision making in which lobbying and public policy are jointly determined we examine how policy outcomes depend on the sizes of the interest groups while a larger size typically involves favorable effects on policy we also identify threshold levels of interest group size where a lobby will be harmed if it becomes larger this may provide another rationale as to why some interests do not or not fully organize spending limits can remove adverse policy effects of interest group size however this is not necessarily welfare improving moreover we find that endogenous proposal making may turn a second mover advantage in standard legislative lobbying models into a second mover disadvantage

environmental policy in majoritarian systems abstract this paper sheds new light on the determination of environmental tax policies in majoritarian federal electoral systems such as the u s and derives implications for the environmental federalism debate on whether the national or local government should have authority over environmental taxes in the absence of majority bias the socially preferred policy would be federal district level taxation which accounts both for cross boundary pollution and differences in industry concentration across districts in majoritarian systems however where the legislature consists of geographically distinct electoral districts the majority party at the national or state level favors home districts depending on the location of polluting industries and the associated damages the majority party may therefore impose sub optimally high or low pollution taxes due to a majority bias majority bias can influence the social welfare ranking of alternative environmental tax policies in some cases majority bias may make decentralized or federal uniform taxation the preferred solution

polluters and collective action theory and evidence 1 introductionthe seminal theory by olson 1965 predicts that industries with fewer firms have a greater ability to undertake collective action they organize cooperative political action more easily because greater concentration lowers the cost of political action 1 the empirical evidence is inconclusive however andres 1985 masters and keim 1985 heywood 1988 and humphries 1991 find positive effects of industry concentration on the probability of making political action committee pac contributions see also mckeown 1994 pittman 1976 finds that concentrated industries generate greater contribution levels grier munger and roberts 1991 find an inverted u shaped relationship between the level of pac formation and industry concentration with a maximum political participation rate occurring at a four firm concentration ratio around 0 45 esty and caves 1983 and zardkoohi 1985 report ambiguous effects of concentration on pac contributions 2in this paper we suggest an alternative perspective on firms ability to organize collective action which to our knowledge has been ignored so far the novel argument is that industries that face multiple regulations a greater number of policy issues find it easier to overcome collective action problems and sustain lobbying in particular we focus on the difference between firms in polluting and clean industry sectors using a simple repeated game framework similar to spagnolo 2000 we argue that firms in industries that are naturally polluting because of their input requirements and therefore incur pollution abatement costs will face an additional policy battle compared with other industries everything else equal 3 this enables such industries to sustain greater cooperation and lobbying this is because firms seeking to form a lobby group face a free riding problem due to a limited amount of enforcement power available to punish deviation and ensure cooperation firms that face multiple areas of regulation have an advantage in the formation of lobby groups because they have a greater amount of enforcement power available to reallocate between policy issues when joint lobbying gives large gains in environmental policy this surplus can be reallocated to trade policy for example free riding behavior on trade policy lobbying may more easily be disciplined the prediction that emerges from our theoretical model is that polluting industries are relatively less affected by the free riding problems involved in organizing political action and we thus expect the level of political contributions to be higher in these sectors 4we evaluate this prediction using a cross section data set of u s manufacturing industries our empirical model builds on a multiple equation model by gawande and bandyopadhyay 2000 who test the well established theory of grossman and helpman 1994 on the pattern of protection their theory takes lobby group formation as given we augment gawande and bandyopadhyay s model with an additional equation for environmental policy stringency 5 the empirical results lend support to our theory industry pac contributions and thus the level of lobby group cooperation are greater in industries with larger pollution abatement costs this result is robust to several measures of lobby group formation and environmental policy the present paper contributes to the recent literature on the formation of lobby groups in the area of pollution taxation damania and fredriksson 2000 argue that collusive industries may more easily form lobby groups that oppose such taxes using a related setup damania and fredriksson 2003 discuss the effect of exogenous trade liberalization on environmental policy formation when lobby group formation is endogenous pecorino 1998 and mitra 1999 discuss the formation of trade lobby groups 6 neither of these papers explore the relationship between collective action and the number of policy instruments however

ex ante efficiency of bankruptcy procedures abstract this paper suggests a framework to analyze the efficiency properties of bankruptcy procedures distinguishing between ex ante and ex post efficiency ex post efficiency consists in maximizing the ex post value of the insolvent firm whereas ex ante efficiency consists in maximizing the proceeds to creditors from the reorganization of the firm and providing incentives for the creditors to monitor the firm we show that the definition of creditors ownership rights over the company and the protection of the creditors seniority are crucial to asses the ex ante efficiency of a bankruptcy procedure

entrepreneur human capital endowments and minority business viability this study analyzes the relationship between entrepreneur human capital endowments and minority enterprise profitability the better educated subset of entrepreneurs earns high profits relative to their minority business counterparts and the lines of business in which they are concentrating lie outside the retail and personal service areas that have traditionally dominated minority business activity in addition to fostering industrial diversity by creating and expanding firms in heavy construction manufacturing and skill intensive services the better educated entrepreneur group is found to be utilizing effectively both its financial and human capital inputs

when subsidies for pollution abatement increase total emissions in a first best deterministic world it is well known 2 28 30 that a unit tax on emissions equal to marginal damage is an efficient mechanism for internalizing the damages caused by polluting firms a unit subsidy for emissions abated also equal to marginal pollution damage has the same desirable property but only in the short run in the long run such subsidies induce polluting firms to operate at too small a scale and attract an excessive number of new firms to the polluting industry this can have the perverse result that there are more emissions when abatement is subsidized than when it is not nevertheless economists have been reluctant to give up entirely on the subsidy approach recognizing with oates 23 290 that polluters will obviously be far more receptive to measures that assist with the costs of pollution control than to those that place the burden upon themselves it is therefore not surprising that economists have continued to look for and find new justifications for subsidizing pollution control thus mestelman 20 187 argues that the subsidy scheme may be a second best alternative for externality control when the direct taxation alternative is not politically viable mchugh 17 64 shows that subsidies for pollution abatement expenditures can be a useful instrument in the case of cost increasing technological innovations harford 6 demonstrates that subsidies for pollution control inputs may be efficient when enforcement is sufficiently costly harford 7 makes still another argument for subsidies in the case in which the day to day performance of abatement equipment is uncertain but the uncertainty can be reduced by maintenance expenditures finally there are schemes for combining subsidies and taxes 14 26 given the continuing interest in subsidies it is important to examine carefully the disturbing case in which subsidies increase rather than decrease total emissions

the role of venture capital in financing small business abstract venture capital is a primary and unique source of funding for small firms because these firms with sales and or assets under 5 million have very limited access to traditional capital markets venture capital is a substitute but not a perfect substitute for trade credit bank credit and other forms of financing for small firms small businesses are not likely to be successful in attracting venture capital unless the firms have the potential to provide extraordinary returns to the venture capitalist this study provides an analysis of a survey of venture capital firms that participate in small business financing the survey participants are venture capital firms that were 1986 members of the national venture capital association nvca the largest venture capital association in the united states the average size of the venture capital firms responding to the survey is 92 million dollars in assets with a range from 600 thousand to 500 million twenty three percent of the respondents have total assets below 20 million and 27 have assets above 100 million the venture capitalists investment assets held in small firms delineate the supply of venture capital to small firms sixty three of the 92 venture capitalists have more than 70 of their assets invested in small firms the venture capitalists were asked how their investment plans might change with changes in the tax law that were projected in the spring of 1986 fifty four percent expected to increase their investments in small firms and 38 did not expect to change these activities venture capitalists are very selective in allocating their resources the average number of annual requests that a venture capitalist receives is 652 and the median number is 500 only 11 5 of the respondents receive more than 1 000 proposals per year

trading rules and the environment does equal treatment lead to a cleaner world abstract in this paper we consider a three stage game in the context of a competing exporters model to compare and contrast the effects of discriminatory and uniform most favored nation mfn tariffs on countries choice over environmental standards for varying degrees of pollution spillovers because of the presence of punishment effects and stronger own and cross tariff effects we find that discrimination yields higher standards than mfn and free trade independently of the extent of pollution spillovers when pollution is local and incentives to free ride on other countries abatement efforts are weak we show however that welfare is larger under mfn than under discrimination in a dynamic setting we consider the impact of symmetric and asymmetric treatments on the sustainability of an international environmental agreement iea and obtain that multilateral cooperation is easier to sustain under discrimination than under mfn or free trade

market structure and political influence new data on political expenditures activity and success this paper utilizes new data to evaluate the determinants of the political influence of thirty five manufacturing industries on the u s congress during 1976 80 several measures of influence serve to distinguish between political activity and success seller concentration and geopolitical dispersion increase both activity and success but neither industry size nor leading firm size proves significant we test whether political expenditures facilitate obtaining the favors conferred on an industry by its market structure or by influence independent of that strurture statistical inference strongly confirms both roles

the political economy of pollution taxes in a small open economy abstract this paper develops a positive theory explaining pollution tax policy outcomes in a small open economy the equilibrium tax rate depends on lobby group membership the relative importance of lobbying activities and the tax elasticity of pollution the equilibrium properties are investigated the model is extended to incorporate pollution abatement and a pollution abatement subsidy we show that total pollution may be increasing in the pollution abatement subsidy rate this effect arises because the equilibrium pollution tax rate may be decreasing in the subsidy rate due to altered political influence of the lobby groups in the political equilibrium

multistage selection and the financing of new ventures using a random sample of 221 new swedish ventures initiated in 1998 we examine why some new ventures are more likely than others to successfully be awarded capital from external sources we examine venture financing as a staged selection process in which two sequential selection events systematically winnow the population of ventures and influence which ventures receive financing for a venture to receive external financing its founders must first select it as a candidate for external funding and then a financier must fund it we find evidence that founders select ventures as candidates for external finance based on their perceptions of market competition market growth and employment growth while financiers base funding decisions on objective verifiable indicators of venture development such as the completion of organizing activities marketing activities and the level of sales of the venture our findings have implications for venture financing and evolutionary theories of social processes

trade policy reform endogenous lobby group formation and environmental policy abstract this paper explores the effects of trade liberalization on environmental policy outcomes when collective action is endogenous the polluting industry s ability to undertake lobbying is shown to depend on the degree of competition in the product market establishing a new link between trade and environmental policies if trade liberalization causes industry collective action to become harder to sustain the stringency of the environmental policy is likely to rise these results highlight the role of trade liberalization on product market competition and its consequent impact on the incentive to lobby for less stringent environmental policies

the impact of demand aggregation through delayed component allocation in an assemble to order system we consider an assemble to order system in which multiple products are assembled from a common component and a set of product dedicated components component capacities are chosen prior to a finite horizon selling season and the common component is allocated to the products based on observed demands we propose a collection of allocation mechanisms involving varying degrees of demand aggregation ranging from a scheme under which all demands are observed prior to making the allocation decision to allocations made for each arriving demand in this context we explore the impact of the allocation scheme on sales profits and capacity decisions including the degree of capacity imbalance we find that the benefit from increased demand aggregation is closely linked to the degree of capacity imbalance profit gains from delayed allocation tend to be higher in systems in which the optimal capacity portfolio is highly unbalanced when the allocation decision is made after observing all demands we develop insights into what detailed system parameters lead to the largest gains from demand aggregation and also explore the trade offs associated with the choice of an allocation scheme when customers exhibit impatience if the allocation scheme forces them to wait to be served this paper was accepted by ananth iyer operations and supply chain management

price versus production postponement capacity and competition this article presents a comparative analysis of possible postponement strategies in a two stage decision model where firms make three decisions capacity investment production inventory quantity and price typically investments are made while the demand curve is uncertain the strategies differ in the timing of the operational decisions relative to the realization of uncertainty we show how competition uncertainty and the timing of operational decisions influence the strategic investment decision of the firm and its value in contrast to production postponement price postponement makes the investment and production inventory decisions relatively insensitive to uncertainty this suggests that managers can make optimal capacity decisions by deterministic reasoning if they have some price flexibility under price postponement additional postponement of production has relatively small incremental value therefore it may be worthwhile to consider flexible ex post pricing before production postponement reengineering while more postponement increases firm value it is counterintuitive that this also makes the optimal capacity decision more sensitive to uncertainty we highlight the different impact of more timely information which leads to higher investment and inventories and of reduced demand uncertainty which decreases investment and inventories our analysis suggests appropriateness conditions for simple make to stock and make to order strategies we also present technical sufficiency and uniqueness conditions under price postponement these results extend to oligopolistic and perfect competition for which pure equilibria are derived interestingly the relative value of operational postponement techniques seems to increase as the industry becomes more competitive

the benefits of lending relationships evidence from small business data this paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm we analyze data collected in a survey of small firms by the small business administration the primary benefit of building close ties with an institutional creditor is that the availability of financing increases we find smaller effects on the price of credit attempts to widen the circle of relationships by borrowing from multiple lenders increases the price and reduces the availability of credit in sum relationships are valuable and appear to operate more through quantities rather than prices

general equilibrium tax incidence under imperfect competition a quantity setting supergame analysis the incidence of various taxes is analyzed in a model with competitive and oligopolistic sectors friedman s grim trigger strategies support collusion with firms producing output to maximize joint profits subject to the constraint that no firm desires to cheat the sustainable level of output depends on the capitalized value of future retaliation therefore tax induced changes in the net return to capital the discount rate affect the output mix through their impact on the sustainability of collusion this collusive pricing effect is isolated and analyzed one result is that a general factor tax on capital but not labor is shifted

component commonality with service level requirements this paper extends recent results of baker et al baker k r m j magazine h l w nuttle 1986 the effect of commonality on safety stocks in a simple inventory model management sci 32 982 988 in understanding the impact of component commonality on stocking levels under service level constraints a model is formulated for an arbitrary number of products with general joint demand distribution the results obtained are not all intuitive while utilizing commonality is beneficial nothing general can be said about the resulting change in the components stock levels when the cost structure is of a particular simple form though some interesting general patterns do emerge we also discuss the case of using a service level measure where rationing of common components might be required and characterize the implied rationing rule

incentives and commonality in a decentralized multiproduct assembly system in this paper we explore the impact of decentralized decision making on the behavior of multiproduct assembly systems specifically we consider a system where three components two product specific and one common are used to produce two end products to satisfy stochastic customer demands we study the system under both centralized and decentralized decision making in the decentralized system we prove that for any set of wholesale prices there exists a unique pareto optimal equilibrium in the suppliers capacity game we show that the assembler s optimal wholesale prices lie in one of two regions one leads to capacity imbalance and one does not we use these results to derive insights regarding the inefficiencies that decentralization can cause in such systems in particular several of our findings indicate that outsourcing the management of component supplies may inhibit the use of operational hedging approaches for managing uncertainty