the evolving landscape of banking the structure of the financial services industry is in flux liberalization deregulation and advances in information technology have changed the financial landscape dramatically interbank competition has heated up and banks face increasing competition from nonbanking financial institutions and the financial markets the predictability of the industry with low levels of financial innovation little innovation in distribution channels and well defined and rigid institutional structures is gone product innovations new distribution channels and emerging new competitors are in abundance moreover the subprime crisis that has hit the financial sector in 2007 2008 appears to have a major impact on the structure of the industry this article emphasizes the importance of understanding the economics of banking for assessing the changes in the industry in particular we point at relationship banking as a prime source of the banks comparative advantage the proliferation of transaction oriented banking trading and financial market activities does however seriously challenge relationship banking in order to focus on these issues in a rigorous way we will evaluate the key insights from the relationship banking literature including the potential complementarities and conflicts of interest between intermediated relationship banking activities and financial market underwriting securitization etc activities we also address the issue of the optimal conglomeration of bank activities including the empirical evidence on scope and scale economies we analyze the strategic positioning of banks in the currently highly uncertain competitive arena and link this to the theory of the firm and particularly firm boundaries and learning

control rights in complex partnerships this paper develops a theory of the allocation of authority between two players who are in a complex partnership that is a partnership which produces impure public goods we show that the optimal allocation depends on technological factors the parties valuations of the goods produced and the degree of impurity of these goods when the degree of impurity is large control rights should be given to the main investor irrespective of preference considerations there are some situations in which this allocation is optimal even if the degree of impurity is very low as long as one party s investment is more important than the other party s if the parties investments are of similar importance and the degree of impurity is large shared authority is optimal with a greater share going to the low valuation party if the importance of the parties investments is similar but the degree of impurity is neither large nor small the low valuation party should receive sole authority we analyze an extension in which side payments are infeasible we check for robustness of our results in several dimensions such as allowing for multiple parties or for joint authority and apply our results to interpret a number of complex partnerships including those involving schools and child custody jel d02 o23 h41 l31

meta paradigm change and the theory of the firm many seemingly unrelated debates on the theory of the firm are in fact part of a single deeper transformation of the social sciences as the foundational assumptions of 20th century social science have slowly been shown by science to be false new sub paradigms have emerged which cumulatively drop i theoretical assumptions about markets to explain firms ii epistemological assumptions about knowledge to explain diversity and iii metaphysical assumptions about causality to explain technical change debates occur across each of these levels

the environment and welfare implications of trade and tax policy developing countries with comparative advantage in dirty industries face the risk of environmental degradation unless appropriate policies are implemented using applied general equilibrium analysis we examine how trade influences the environment and assess the welfare and environmental implications of alternative pollution abatement policies for indonesia our results indicate that unilateral trade liberalization by indonesia would increase the ratio of emission levels to real output for almost all major pollution categories more importantly when tariff removal is combined with a cost effective tax policy the twin objectives of welfare enhancement and environmental quality improvement appear to be feasible this sheds new and positive light on the role of trade in sustainable development

examining the global environmental impact of regional consumption activities part 2 review of input output models for the assessment of environmental impacts embodied in trade this paper offers a detailed review of recently described single and multi region input output models used to assess environmental impacts of internationally traded goods and services it is the second part of a two part contribution in part 1 turner k lenzen m wiedmann t and barrett j in press examining the global environmental impact of regional consumption activities part 1 a technical note on combining input output and ecological footprint analysis ecological economics we describe how to enumerate the resource and pollution content of inter regional and inter national trade flows with the aim to illustrate an ideal accounting and modelling framework for the estimation of ecological footprints a large number of such environment economic models have been described but only in the last few years models have emerged that use a more sophisticated multi region multi sector input output framework this has been made possible through improvements in data availability and quality as well as computability we identify six major models that employ multi sector multi region input output analysis in order to calculate environmental impacts embodied in international trade results from the reviewed studies demonstrate that it is important to explicitly consider the production recipe land and energy use as well as emissions in a multi region multi sector and multi directional trade model with global coverage and detailed sector disaggregation only then reliable figures for indicators of impacts embodied in trade such as the ecological footprint can be derived

the proper scope of government theory and an application to prisons when should a government provide a service in house and when should it contract out provision we develop a model in which the provider can invest in improving the quality of service or reducing cost if contracts are incomplete the private provider has a stronger incentive to engage in both quality improvement and cost reduction than a government employee has however the private contractor s incentive to engage in cost reduction is typically too strong because he ignores the adverse effect on noncontractible quality the model is applied to understanding the costs and benefits of prison privatization

determinants of vertical integration an empirical test this paper tests models of vertical integration with emphasis on incentives that arise from transactions costs and demand variability the tests are based on a logit analysis of firms backward integration choices in a sample of thirty four chemical products the results are consistent with recent transactions cost theories and the demand variability model proposed by carlton 1979 copyright 1991 by blackwell publishing ltd

bargaining foundations of shapley value1 a transferable utility economy in which each agent holds a resource which can be used in combination with the resources of other agents to generate value according to the characteristic function v is studied using a dynamic model of bargaining the main theorem establishes that the payoffs associated with efficient equilibria converge to the agents shapley values as the time between periods of the dynamic game goes to zero in addition it is demonstrated that an efficient equilibrium exists and is unique when an additivity condition is satisfied to demonstrate the sensitivity of the solution to the institutional detail we modify the model to allow for partnerships and show that the shapley value is no longer achieved

agency relationships in family firms theory and evidence does owner management necessarily eliminate the agency costs of ownership drawing on agency literature and on the economic theory of the household we argue that private ownership and owner management expose privately held owner managed firms to agency threats ignored by jensen s and meckling s 1976 agency model private ownership and owner management not only reduce the effectiveness of external control mechanisms they also expose firms to a self control problem created by incentives that cause owners to take actions which harm themselves as well as those around them jensen 1994 p 43 thus shareholders have incentive to invest resources in curbing both managerialand owner opportunism we extend this thesis to the domain of the family firm after developing hypotheses which describe how family dynamics and specifically altruism exacerbate agency problems experienced by these privately held owner managed firms we use data obtained from a large scale survey of family businesses to field test our hypotheses and find evidence which suggests support for our proposed theory finally we discuss the implications of our theory for research on family and other types of privately held owner managed firms

reputation and the allocation of ownership we show that allocation of ownership matters even in a long term relationship where problems of opportunism are less severe unless agents are very patient ownership structure is chosen to give the agents best incentives to cooperate the optimal control structure of the static game restricts the gain from deviation to be the lowest but also the punishment will be minimal the worst ownership structure of the one shot game is good in the repeated setting because it provides the highest punishment but bad because the gain from deviation is also highest we show that when investment costs are very elastic partnership and a hostage type solution arise in equilibrium while when costs are moderately elastic the results of the one shot game apply

intra firm bargaining under non binding contracts we present a new methodology for studying the problem of intra firm bargaining based on the notion that contracts cannot commit the firm and its agents to wages and employment we develop and analyse a general non cooperative multilateral bargaining framework between the firm and its employees and consider outcomes which are immune to renegotiations by any party equilibrium firm profits are characterizable as both a weighted average of a neo classical non bargaining firm s profits and a generalization of shapley value for a corresponding cooperative game furthermore the resulting payoffs induce economically significant distortions in the firm s input and organizational design decisions

investment options and bargaining power the eurasian supply chain for natural gas we use cooperative game theory to analyze how the architecture of the pipeline network determines the power structure in the supply chain for russian gas if the assessment is narrowly focused on the abilities to obstruct flows in the existing system the main transit countries belarus and ukraine appear to be strong if investment options are accounted for however russia achieves clear dominance we show that options to bypass one of the transit countries are of little strategic importance compared to russia s direct access to its customers through the baltic sea comparing the results of our calibrated model with empirical evidence obtained from transit and import agreements we find that the shapley value explains the power of major transit countries better than the core and the nucleolus

building and managing facilities for public services abstract we model alternative institutional arrangements for building and managing facilities for provision of public services including the use of the private finance initiative pfi by exploring the effects on innovative investment activity by providers the desirability of bundling the building and management operations is analyzed and it is considered whether it is optimal to allocate ownership to the public or the private sector we also examine how the case for pfi is affected by the voluntary or automatic transfer of ownership from the private to the public sector when the contract expires asset specificity and service demand risk play critical roles

tying the manager s hands constraining opportunistic managerial intervention we discuss and examine empirically a firm level equivalent of the ancient problem of tying the king s hands namely how to avoid managerial intervention that is undertaken to reap private benefits but is harmful to overall value creation that is managerial opportunism the link from managerial intervention to firm level value creation is moderated by employee motivation thus intervention in the form of managers overruling employees or reneging on delegation may demotivate employees particularly when the intervention is perceived as being unfair undertaken for personal gain etc we argue that a number of mechanisms such as managers staking their personal reputation employees controlling important assets strong trade unions etc may function as constraints on managerial proclivities to intervene thus reducing the problem of managerial opportunism we derive four hypotheses from these ideas and test them using path analysis on a rich dataset based on 329 firms in the spanish food and electric electronic industries

markets for ownership the prevailing economic theory of the firm based on a property rights perspective has demonstrated that ownership by dispensable outside parties is an inefficient outcome relative to ownership by productive agents in order to better understand observed patterns of ownership this paper considers the outcome of ma rkets for ownership that operate prior to production taking place the main result is that outside parties will often become the equilibrium asset owners this is precisely because but for ownership such parties would not earn rents in contrast productive agents earn rents even when they do not own assets given that their contribution is complementary with other productive agents their willingness to pay for ownership is less than that of an outside party this result is robust to the introduction of moderate levels of inefficiency arising from outside ownership and to a consideration of opportunities for re sale before production begins the main conclusion drawn is that the nature of the operation of markets for ownership stands alongside incentive effects as important predictors of firm boundaries journal of economic literature classification numbers d23 l22

free riding carbon treaties and trade wars the role of domestic environmental policies this paper uses a calibrated general equilibrium model of north south trade with carbon emissions to explore the strategic open economy implications of price and quantity based instruments for co2 emission reduction we compute non cooperative environmental and trade policy equilibria and nash bargaining outcomes in environmental policies with side payments of cash results show that quotas can lead to higher internalization levels in a non cooperative zero tariff equilibrium in comparison with emission fees if tariffs are also chosen non cooperatively the form of policy instrument used affects equilibrium tariffs with quotas leading to lower trade barriers particularly under a regional carbon treaty

the triple inefficiency of uncoordinated environmental policies when pollution is transboundary and there is international trade a domestic inefficiency may arise in addition to the well known inefficiencies at the international level more precisely there will be a nash equilibrium in which each country chooses a policy that gives it lower welfare than would otherwise be possible given the emission levels of all countries however there will also be a nash equilibrium in which each country chooses tradable emission quotas as its policy instrument to achieve its desired level of emissions in this nash equilibrium welfare in each country is maximised given the emission levels of all countries

a cost benefit analysis of slowing climate change there are many conflicting views regarding the true dimensions of the climate change problem often these viewpoints are based on different estimates of key parameters with little indication as to why parameter estimates vary so much and which ones might be the more reliable the prospects for a co ordinated strategy to tackle climate change appear dim little consensus has emerged for example regarding the costs of abating carbon emissions some take the view that considerable improvements in energy efficiency are available at negative cost by setting minimum efficiency standards for vehicles and domestic appliances e g mills et al 1991 others regard the macroeconomic costs of even small reductions in carbon emissions as substantial manne and richels 1993 in the judgement of other researchers a proportion of carbon emissions arise purely as a result of institutional failings either at a regional level in the subsidies paid to fossil fuel energy producers in the erroneous belief that this promotes economic growth shah and larsen 1994 in failure to deal with air pollution glomsrod et al 1992 and vehicle congestion in urban areas hughes 1994 or at a global level in failing to make appropriate transfers to those countries whose forests contain rich biodiversity which we would wish to preserve pearce 1991

corporate governance and game theoretic analyses of shareholder power the case of spain the definition and implementation of control is at the heart of the corporate governance debate the paper approaches the issue by using power indices derived from the theory of cooperative games an application to spanish listed firms shows that incentives for large shareholders to form controlling blocs are high in the spanish system of corporate governance ownership concentration is therefore the main mechanism to mitigate agency problems between shareholders and managers moreover these results suggest that the shapley shubik index is not an appropriate measure of shareholder power

an inquiry into the development process of village industries the case of a knitwear cluster in northern vietnam abstract while village industries are known to have high potential to grow their growth process has seldom been analysed this study explores the development process of a rapidly growing village based garment cluster in northern vietnam we found that both the human capital and social capital measured by the kinship ties with overseas vietnamese traders of the proprietors facilitated their innovative entry into new export markets furthermore general human capital acquired by schooling and specific human capital acquired by management experience are found to have contributed to the adoption of a vertically integrated production system which in turn contributed to enhanced enterprise performance

the firm as a dedicated hierarchy a theory of the origins and growth of firms in the formative stages of their businesses entrepreneurs have to provide incentives for employees to protect rather than steal the source of organizational rents we study how the entrepreneur s response to this problem determines the organization s internal structure growth and its eventual size large steep hierarchies will predominate in physical capital intensive industries and will have seniority based promotion policies by contrast e at hierarchies will prevail in human capital intensive industries and will have up or out promotion systems furthermore e at hierarchies will have more distinctive technologies or cultures than steep hierarchies the model points to some essential differences between organized hierarchies and markets at the root of most enterprises generating economic surplus is an entrepreneur with a unique critical resource such as an idea good customer relationships a new tool or superior management technique a fundamental problem of entrepreneurship is how to enlist the cooperation of the many agents necessary for production without ceding to them too much of the surplus generated by the enterprise the risk of being expropriated however is always inherent in production in particular the entrepreneur has to give her employees whom we call managers close proximity or access to the critical resource for them to learn to produce effectively for example a manager has to understand the idea be in contact with the key customers and suppliers or even learn the entrepreneur s unique managerial techniques in order to work effectively but access also gives the manager the opportunity to expropriate this critical resource and compete against the entrepreneur managers may steal the idea walk away with clients or mimic the entrepreneur s management style and start up a rival concern the greater the access a manager has the more he can appropriate and the more effectively he can compete this paper explores the role of organizational design in

an inquiry into the rapid growth of the garment industry in bangladesh abstractthe export oriented garment industry in bangladesh has grown rapidly for the last 3 decades and now ranks among the largest garment exporters in the world while its early success is attributed to the initial technology transfer from south korea such a one time infusion of knowledge alone is insufficient to explain the sustained growth for 3 decades this article uses primary data collected from knitwear manufacturers and garment traders to explore the process of the continuous learning of advanced skills and know how it finds among other things that the high profitability of garment manufacturing due to the initial infusion of specific human capital attracted a number of highly educated entrepreneurs to the industry that the division of labor between manufacturers and traders has facilitated the expansion of the industry and that enterprise growth has lasted long because of the continuous learning from abroad by the highly educated entrepreneurs

power in a theory of the firm transactions take place in the firm rather than in the market because the firm offers power to agents who make specific investments past literature emphasizes the allocation of ownership as the primary mechanism by which the firm does this within the contractibility assumptions of this literature we identify a potentially superior mechanism the regulation of access to critical resources access can be better than ownership because i the power agents get from access is more contingent on their making the right investment and ii ownership has adverse effects on the incentive to specialize the theory explains the importance of internal organization and third party ownership

integration of the sales force an empirical examination this article develops and tests a model of integration of a marketing function personal selling the model derived from transaction cost analysis as developed principally by williamson is formulated as a logistic function which is estimated with data from the electronic components industry as expected integration is associated with increasing levels of asset specificity difficulty of performance evaluation and the combination of these two factors contrary to the transaction cost model neither frequency of transactions nor interaction of specificity and environmental uncertainty is significantly related to integration the transaction cost model improves significantly upon the fit of a simple model relating integration to company size alone these results suggest that for studying transactions of this kind it is fruitful to view the firm as a governance structure

what characterizes a fast growing firm this paper seeks to empirically identify factors that influence the probability of being a fast growing firm in eastern and western germany descriptive analyses have shown that most firms experience only small positive or negative employment growth or stagnate over time the job generation mechanism rests with a handful of firms that increase their employment significantly over time the empirical analysis shows that the probability of being a fast growing firm depends on different factors when separating eastern and western germany as well as using different definitions of fast growing firms moreover the analysis shows that technology intensive manufacturing branches and knowledge based business related services do not generate the majority of fast growing firms

the triple c approach to local industrial policy abstract in both developed and developing countries there is mounting evidence that clustering and networking help small and medium sized manufacturers to raise their competitiveness the role of public policy in this process is less clear the european experience suggests that local and regional government can play an important role equally if not more interesting experiences can be found in developing countries their analysis constitutes the core of this paper the lessons can be summarized as the triple c which stands for customer oriented collective and cumulative

opec s response to international climate agreements this paper studies a game between a group of countries that have agreed to participate in an international climate agreement the signatories and opec the purpose of the signatories is to design carbon taxes that maximize their total net income given a goal on global carbon emissions as a response to the climate agreement opec imposes an oil tax on its member states that maximizes opec s profits within a numerical model we find the subgame perfect equilibrium of a game in which each player chooses when to fix his decision variables it is shown that in equilibrium the group of signatories chooses to be the leader and opec chooses to be the follower it is demonstrated however that for both agents the order of move is of minor numerical importance hence the players have limited incentives for strategic behaviour

on economics a review of why nations fail by d acemoglu and j robinson and pillars of prosperity by t besley and t persson the purpose of this essay is to review the books why nations fail by daron acemoglu and james robinson and pillars of prosperity by timothy besley and torsten persson the essay briefly discusses the main contributions of the books and the role of politics for economic performance the review then discusses these contributions in the light of recent research on organizational economics particularly the modern theory of the firm jel d23 d72 o10 o47 o57

virtual incubation in industrial clusters a case study in pakistan abstract in industrial clusters transaction costs are kept low and free riding is discouraged by a community mechanism developed through dense and repeated interactions among entrepreneurs in such environments new entrants without established reputations and connections are put at a distinct disadvantage this negative effect on new entry must be neutralised for an industrial cluster to expand using enterprise level data from pakistan this study finds that personal networks are indeed important for successful enterprise operation which works to the advantage of incumbents but that subcontracting plays the role of virtual incubation in nurturing new enterprises reinforcing the cluster s dynamism

comparing bargaining solutions in the shadow of conflict how norms against threats can have real effects abstract in many economic environments agents make costly and irreversible investments in guns that may enhance their respective threat payoffs but also shrink the utility possibilities set in such settings with variable threats and a variable utility possibilities set it becomes possible to rank different bargaining solutions in terms of efficiency we compare bargaining solutions within a class in which the influence of the threat point on the bargaining outcome varies across solutions under symmetry we find that the solution in which the threat point is least influential the equal sacrifice solution pareto dominates the other solutions since the equal sacrifice solution puts the least weight on the threat point norms against threats that can be seen in many seemingly rhetorical pronouncements in adversarial relations can mitigate some of the costs of conflict and therefore have efficiency enhancing effects journal of economic literature classification numbers c72 c78 d30 d70 d72 k42

collective efficiency growth path for small scale industry this study is concerned with the growth of small local industry in developing countries and explores one particular route for understanding and fostering such growth it focuses on the clustering of firms and the competitive advantage which they derive from local external economies and joint action captured in the concept of collective efficiency following a conceptual discussion the article explores the economic and institutional conditions which enhance or hinder collective efficiency this includes a case study which suggests that responding to opportunity and crisis requires shifting from mere reliance on external economies to joint action and from ascribed to earned trust

unilateral co2 reductions and carbon leakage the consequences of international trade in oil and basic materials a recursively dynamic general equilibrium model featuring six world regions with trade in energy and non energy goods is used to simulate the period from 1990 through 2100 in 10 year intervals the simulations explore the effect of unilateral action by the oecd to curb global co2 emissions unilateral cuts create incentives for free riding by non participating regions so that global emissions are reduced by less than the amount that the oecd cuts back its regional emissions carbon leakage occurs through two channels first basic materials production increases in unconstrained regions resulting in increased carbon intensity of gdp second reductions in oecd oil imports cause the world oil price to fall leading to an increased energy intensity in the non participant regions in this paper we use a general equilibrium model to assess the extent to which these two mechanisms reduce the effectiveness of oecd reductions in curbing global co2 concentrations

international trade in carbon emission rights and basic materials general equilibrium calculations for 2020 restrictions on co emissions affect international trade and the pattern of comparative advantage this paper based on calculations with a static general equilibrium model suggests that international trade in carbon rights is a substitute for trade in energy intensive goods and thus international trading in carbon rights reduces sectoral effects of emission reductions in our model we surprisingly find that free riding by non signatory countries may not render unilateral action ineffective if the oecd unilaterally cuts global emissions by 5 per cent from 1990 levels by the year 2020 emissions by non oecd regions increase but offset less than 15 per cent of this cutback moreover carbon taxes depress international oil prices and create incentives for increased tradc in natural gas

costly bargaining and renegotiation we identify the inefficiencies that arise when negotiation between two parties takes place in the presence of transaction costs first for some values of these costs it is efficient to reach an agreement but the unique equilibrium outcome is one in which agreement is never reached secondly even when there are equilibria in which an agreement is reached we find that the model always has an equilibrium in which agreement is never reached as well as equilibria in which agreement is delayed for an arbitrary length of time finally the only way in which the parties can reach an agreement in equilibrium is by using inefficient punishments for some of the opponent s deviations we argue that this implies that when the parties are given the opportunity to renegotiate out of these inefficiencies the only equilibrium outcome which survives is the one in which agreement is never reached regardless of the value of the transaction costs

does asset ownership always motivate managers outside options and the property rights theory of the firm this paper studies the grossman hart moore ghm property rights approach to the theory of the firm under alternating offers bargaining when managers can pursue other occupations while negotiating over the division of the gains from cooperation the ghm results obtain if taking the best alternative job terminates bargaining outcomes are very different sometimes an agent with an important investment decision should not own the assets he works with sometimes independent assets should be owned together sometimes strictly complementary assets should be owned separately

nature of human capital technology and ownership of public goods abstract besley and ghatak 2001 show that a public good should be owned by the agent who values the public good the most irrespective of technological factors in this paper we relax their assumptions in a natural way by allowing the agents to be indispensable and we show that the relative valuations are not the sole determinant of an optimal ownership structure but also the nature of human capital and technology matter

balancing subsidiary influence in the federative mnc a business network view the contest for intra organisational power in the multinational corporation mnc has gradually become a prominent issue on the research agenda as long as 25 years ago hedlund 1980 investigated the strategic roles of subsidiaries in mncs and doz and prahalad 1981 raised the issue of how difficult it is for headquarters to remain in control of its subsidiaries and to influence their strategies over time since then several researchers have suggested that mncs can be considered to be dispersed structures of power in which the top management s authority does not necessarily result in hierarchical power being the ultimate control mechanism hedlund 1986 forsgren 1989 ghoshal and bartlett 1990 doz and prahalad 1993 ferner and edwards 1995 kristensen and zeitlin 2001 morgan and whitley 2003 birkinshaw and hood 1998 examined the evolution of capabilities at the subsidiary level and recognised that in most corporations there is an internal competition for charter that implies a process of change in subsidiary roles birkinshaw and hood 1998 782 case research has also indicated that changes in the charters of divisions or subsidiaries in mncs constitute a strong feature of horizontal or vertical competition in the corporate marketplace galunic and eisenhardt 1996 birkinshaw and fry 1998 the tension between the headquarters and overseas laboratories caused by the laboratories desire for autonomy and influence is an example of such a competition asaka wa 2001

the economics of child custody i develop a model of marriage in which spouses decide on investments in child quality during marriage and on the allocation of child custody should they divorce the custodial allocation determines the share of the marital surplus each spouse appropriates which in turn influences spouses investment incentives the custodial allocation therefore has both distributional and efficiency consequences i derive the equilibrium investments and optimal custodial allocation and identify three channels through which making divorce easier affects child welfare investments in child quality during marriage the likelihood of divorce and the allocation of custody if divorce occurs

on the management of open innovation abstract in an open innovation relationship the party that owns a key asset enjoys bargaining power that discourages the investments of the other party in the collaboration we show that these incentives can be restored by conferring on the weak party the power to take decisions during the research process e g a pharmaceutical firm with manufacturing and commercialization assets offers the direction of a joint research project to a biotech partner however on many occasions the strong party still captures more value from the collaboration by retaining the power to take decisions during research even if it produces less innovation value and fewer aggregate profits we conclude that the potential of open innovation is underexploited in particular owners may not release enough power to take decisions on the use of their assets

the co2 abatement game costs incentives and the enforceability of a sub global coalition abstract this paper studies the economic incentives and the institutional issues governing the outcomes of a short term climate change policy package guided by the united nations framework convention on climate change and the berlin mandate initiatives game theoretic tools and the global trade environment interface are explored within a 26 region 13 commodity computable general equilibrium framework to characterize the incentives of oecd regions to comply with a non binding agreement in a carbon abatement coalition the results showed that in the absence of side payments the achievement of such a coalition might require the design of suitable trade instruments

do investments in specialized knowledge lead to composite good industries we try to understand why firms producing goods by means of complementary components do not merge especially in industries in which investments in component based knowledge matters as audretsch we state that these activities are developed by individuals who do their best to appropriate the return from their knowledge and whose effort is non contractible the organization of the industry into firms is identified to a partition of the set of individuals in this context we prove that an organization in which each individual hold his own firms is both stable with respect to unilateral deviation and optimal in the line of the property right approach if the returns are high enough this structure is even the only one which shares both properties

rural nonagricultural activities in development theory and application abstract this paper focusses on the potentially important role of rural nonagricultural activity in the development process using the hymer resnick z goods model as a point of departure we first show that its pessimistic conclusions are based on rather restrictive assumptions as applied to the colonial period we relax these assumptions indicating the theoretical possibility of a substantially more positive scenario for that period subsequently we analyze the role of z goods traditional and nontraditional in the post independence era again distinguishing between archetypal pessimistic and optimistic cases finally the comparative historical experience of the philippines and taiwan is brought to bear to illustrate the argument empirically

ownership access and sequential investment we extend the property rights framework to allow for a separation of the ownership rights of access and veto and sequential investment parties investing first ex ante do so before contracting is possible parties that invest second ex post can contract on at least some of their investment costs along with this cost sharing effect the incentive to invest is affected by a strategic effect generated by sequential investment together these effects can overturn some of the predictions of the property rights literature for example the most inclusive ownership structure might not be optimal even if all investments are complementary

does competition solve the hold up problem in an environment in which heterogeneous buyers and sellers undertake ex ante investments the presence of market competition for matches provides incentives for investment but may leave inefficiencies namely hold up and coordination problems this paper shows using an explicitly non cooperative model that when matching is assortative and investments precede market competition buyers investments are constrained efficient while sellers marginally underinvest with respect to what would be constrained efficient however the overall extent of this inefficiency may be large multiple equilibria may arise one equilibrium is characterized by efficient matches but there can be additional equilibria with coordination failures

free trade and global warming a trade theory view of the kyoto protocol this paper demonstrates how three important results in environmental economics true under mild conditions in closed economies are false or need serious amendment in a world with international trade in goods since the three results we highlight have framed much of the ongoing discussion and research on the kyoto protocol our viewpoint from trade theory suggests a re examination may be in order specifically we demonstrate that in an open trading world but not in a closed economy setting 1 unilateral emission reductions by the rich north can create self interested emission reductions by the unconstrained poor south 2 simple rules for allocating emission reductions across countries such as uniform reductions may well be efficient even if international trade in emission permits is not allowed and 3 when international emission permit trade does occur it may make both participants in the trade worse off and increase global emissions

a social contract account for csr as an extended model of corporate governance i rational bargaining and justification this essay seeks to give a contractarian foundation to the concept of corporate social responsibility csr meant as an extended model of corporate governance of the firm it focuses on justification according to the contractarian point of view leaving compliance and implementation problems to a related article sacconi 2004b forthcoming in the journal of business ethics it begins by providing a definition of csr as an extended model of corporate governance based on the fiduciary duties owed to all the firm s stakeholders then by establishing the basic context of incompleteness of contracts and abuse of authority it analyses how the extended view of corporate governance arises directly from criticism of the contemporary neo institutional economic theory of the firm thereafter an application of the theory of bargaining games is used to deduce the structure of a multi stakeholder firm on the basis of the idea of a constitutional contract which satisfies basic requirements of impartial justification and accordance with intuitions of social justice this is a sequential model of constitutional bargaining whereby a constitution is first chosen and then a post constitutional coalition game is played on the basis of the unique solution given to each step in the bargaining model the quest for a prescriptive theory of governance and strategic management is accomplished so that i am able to define an objective function for the firm consistent with the idea of csr finally a contractarian potential explanation for the emergence of the multi fiduciary firm is provided

rent seeking versus productive activities in a multi task experiment incentive instruments like asset ownership and performance pay often have to strike a balance between the productive incentives and the rent seeking incentives they provide standard theory predicts that these instruments become less attractive when the effectiveness of rent seeking activities increases in contrast theories that emphasize the importance of reciprocity suggest that this relationship may go the other way around in this paper we test these predictions by means of a laboratory experiment by and large our findings confirm standard theory incentive instruments typically become less attractive when the scope for rent seeking activities increases however reciprocity motivations do seem to mitigate the adverse effects of rent seeking opportunities to a considerable extent