investors in need of social ethical and environmental information in this contribution we will briefly discuss the shareholders need for social ethical and environmental information and the efforts of corporations to address this need looking at three cases we will raise some doubt with regard to the adequacy of corporate see reporting to meet the needs of shareholders we will discuss the following three cases bp s investments in azerbaijan nike s management of its labour conditions of child labour and security issues and monsanto s production of genetically modified seeds

ethical investment processes and outcomes there is a growing body of literature on ethical or socially responsible investment across a range of disciplines this paper highlights the key themes in the field and identifies some of the major theoretical and practical challenges facing both scholars and practitioners one of these challenges is understanding better the complexity of the relationship between such investment practices and corporate behaviour noting that ethical investment is seldom characterised by agreement about what it actully constitutes and that much of the extant research focuses on a narrow set of issues the paper argues that there are benefits associated with examining ethical investment as a process

price competition and market structure the impact of cartel policy on concentration in the uk this paper examines the impact of firms conduct on market structure it studies the evolution of concentration in uk manufacturing following the abolition of cartels using a theoretical framework based on sutton s theory of market structure and a panel data set of four digit industries over 1958 1977 the econometric results suggest that the intensity of price competition has a positive impact on concentration in exogenous sunk cost industries as well as in advertising intensive and r d intensive industries the concentration market size relationship while negative in exogenous sunk cost industries breaks down in industries with high advertising or r d intensity

what will consumers pay for social product features the importance of ethical consumerism to many companies worldwide has increased dramatically in recent years ethical consumerism encompasses the importance of non traditional and social components of a company s products and business process to strategic success such as environmental protectionism child labor practices and so on the present paper utilizes a random utility theoretic experimental design to provide estimates of the relative value selected consumers place on the social features of products

continuous time repeated games in this paper the authors develop a model of strategic behavior in continuous time games of complete information which includes conventional repeated games in discrete time as a special case the model developed here admits a very large class of strategies that allows one to extend the repeated game model to continuous time the set of equilibria in this game may be large in many cases equal to the feasible individually rational set of payoff s the authors also study the restriction of renegotiation proofness in this framework and apply these results to a cournot duopoly example copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

profit margins and the business cycle evidence from uk manufacturing firms this paper presents some empirical models of profitability using panel data covering 709 large u k companies ove r the 1970s and 1980s focusing specifically on the role of aggregate demand shocks in shaping firm level profitability in basic regressi ons and in quite complex econometric models the results suggest that firm level profit margins fell heavily during the deep manufacturing recession of the early 1980s and as such are consistent with model s predicting the procyclical nature of profit margins this result hol ds across different product groups producer goods consumer durables a nd nondurables though the timing of the impact of aggregate shocks appears to differ copyright 1993 by blackwell publishing ltd

academic freedom private sector focus and the process of innovation we develop a model that clarifies the respective advantages and disadvantages of academic and private sector research rather than relying on lack of appropriability or spillovers to generate a rationale for academic research we emphasize control rights considerations and argue that the fundamental tradeoff between academia and the private sector is one of creative control versus focus by serving as a precommitment mechanism that allows scientists to freely pursue their own interests academia can be indispensable for early stage research at the same time the private sector s ability to direct scientists toward higher payoff activities makes it more attractive for later stage research

good news and bad news in two armed bandits abstract this note provides a characterization of optimal policies in a class of two armed bandits that allows for correlated arms this characterization extends previously known results in the literature in particular it implies under a mild continuity assumption the optimality of cutoff belief strategies for this class of bandits cutoff beliefs are not unique though

negatively correlated bandits we analyse a two player game of strategic experimentation with two armed bandits either player has to decide in continuous time whether to use a safe arm with a known pay off or a risky arm whose expected pay off per unit of time is initially unknown this pay off can be high or low and is negatively correlated across players we characterize the set of all markov perfect equilibria in the benchmark case where the risky arms are known to be of opposite type and construct equilibria in cut off strategies for arbitrary negative correlation all strategies and pay offs are in closed form in marked contrast to the case where both risky arms are of the same type there always exists an equilibrium in cut off strategies and there always exists an equilibrium exhibiting efficient long run patterns of learning these results extend to a three player game with common knowledge that exactly one risky arm is of the high pay off type

do socially responsible fund managers really invest differently to date research into socially responsible investment sri and in particular the socially responsible investment funds industry has focused on whether investing in sri assets has any differential impact on investor returns prior findings generally suggest that on a risk adjusted basis there is no difference in performance between sri and conventional funds this result has led to questions about whether sri funds are really any different from conventional funds this paper examines whether the portfolio allocation across industry sectors and the stock picking ability of sri managers are different when compared to conventional fund managers the study finds that sri funds exhibit different industry betas consistent with different portfolio positions but that these differences vary from year to year it is also found that there is little difference in stock picking ability between the two groups of fund managers

will women lead the way differences in demand for corporate social responsibility information for investment decisions recent years have featured a leap in academic and public interest in corporate social responsibility csr activities and related corporate reporting two main themes in this literature are the exploration of management incentives to engage in and disclose this information and of the use and value of this information to market participants we extend the second theme by examining the interest that specific investor classes have in the use of csr information we rely on feminist intersectionality which suggests that gender intersects with other identities to yield different values experiences and opportunities that can lead to gender based preferences for csr information based upon a survey of 750 us based retail investors we find that female retail investors have a greater interest in the use of csr information relative to male retail investors women express greater anticipated future demand for this information than do men further the magnitude of the increase from current use to anticipated future demand is greater for women than men age is a significant modifying factor in that the discrepancy between women of any age and older men is greater than that between women and younger men finally women also exhibit greater demand for streamlining of the information flow consistent with pressures induced by time poverty it appears that current disclosure practices provide a less than optimal match with the needs of the information consumers that are primarily interested in using this information this mismatch may result in a systematic disenfranchisement of female investing classes which suggests an ethical need to level the playing field

cartel stability with multiproduct firms abstract i examine the implications of the presence of multiproduct firms for cartel stability in a horizontally differentiated market under quantity competition an increase in the number of varieties produced by each firm for any given number of firms increases the critical discount factor above which collusion is sustainable by trigger strategies and thus makes collusion less likely this is also the case under price competition except for a special case where the number of firms is small and the products are close substitutes these results may help explain apparent inconsistencies between theoretical predictions and empirical evidence on the effect of market structure and product differentiation on the likelihood of collusion

collusion and predation under almost free entry abstract this study investigates the degree of cooperation that firms can support in the absence of significant barriers to entry a free entry subgame perfect equilibrium is defined by q n where q is the collusive output rate and n is the number of active firms such that there is no incentive for an active firm to deviate output from q and there is no incentive for a potential entrant to enter the industry it is shown that for all n 1 if the discount factor is sufficiently high there exists a free entry equilibrium in which active firms sustain a non trivial degree of cooperation cooperation is supported by active firms credibly threatening to respond to entry with a period of aggressive competition

the joint profit maximum as a free entry equilibrium outcome abstract this study investigates the degree of collusion that can be sustained at a free entry equilibrium when the number of active firms is endogenous an increase in the discount factor is found to have two counter acting effects on the incentive for active firms to deviate from the collusive arrangement holding the number of firms fixed a higher discount factor reduces the incentive for cheating according to the standard argument however a higher discount factor also makes entry more profitable since entry entails an initial loss the cost of entry and a future stream of positive profits raising the discount factor then increases the number of active firms which tends to increase the incentive for firms to cheat our analysis shows that the first effect dominates so that the joint profit maximum can be sustained as a free entry equilibrium outcome when the discount factor is sufficiently high

collusion profitability and welfare theory and evidence abstract in a differentiated oligopoly model with free entry the static welfare loss from collusion is larger the lower the entry cost the larger the market size and the higher the degree of product differentiation the cartel overcharge is larger the lower the entry cost and the larger the market size and is independent of the degree of product differentiation these theoretical results are consistent with evidence from a natural experiment of policy reform the introduction of cartel law in the uk in the late 1950s price cost margins declined after the breakdown of cartels in low capital and larger sized industries relative to capital intensive and smaller sized ones there is weaker evidence of a fall in price cost margins in consumer good and advertising intensive relative to producer good and low advertising industries crucially these effects are not observed for industries that were not affected by the cartel law a comparison of these findings with evidence on the incidence of collusion suggests that the welfare loss from collusive pricing may often be smaller in industries where cartels tend to form than in those where collusion is more difficult to sustain

tacit collusion free entry and welfare the effect of collusion under free entry has a long history of analysis in economics yet many of the central issues remain unresolved of particular interest is the interaction between the number of firms in the industry and the degree of collusion in the industry there are two relationships that might reasonably exist between the number of firms and collusion on one hand collusion is made easier if the number of firms is small but on the other hand an industry that successfully colludes will earn short run above normal profits and attract new entry until profits are driven to zero in this paper we model the interaction between these two forces and present in a simple diagram an illustration of the determination of equilibrium entry and collusion we are also concerned with the implications of such a structure for public policy in particular direct anti collusive policies and entry fees are examined one preliminary point to address is why collusion should occur at all if profits are going to be driven to zero in any case 1 first of all it is only marginal firms that must earn zero profits so if there are asymmetries between firms inframarginal firms might hope to gain from collusion even in the long run our analysis however focusses on the case of symmetric firms all firms earn zero profits in the long run even in this case the profit that can be earned in the short run implies that the present discounted value of an increase in the degree of collusion is positive furthermore once a collusive zero profit equilibrium is reached industry participants will want to maintain collusion so as to avoid the short run losses that would result from a breakdown in collusive arrangements this is similar to the transitional gains trap described in tullock 9751 certainly a fairly large class of industries seem to be characterized by partial collusion and free entry providers of professional services are an important example there is a wide variation in the ability and income of different providers of the same professional services nevertheless in most professions there are individuals at the margin earning zero economic profit moreover in many countries professionals such as lawyers and dentists are

a critical review of sustainable business indices and their impact most studies into the performance of socially responsible investment vehicles have focused on the performance of sustainable or socially responsible mutual funds this research has been complemented recently by a number of studies that have examined the performance of sustainable investment indices in both cases the majority of studies have concluded that the returns of socially responsible investment vehicles have either underperformed or failed to outperform comparable market indices although the impact of sustainable indices to date has been limited the recent launch of sustainable indices by dow jones and ftse suggests that more attention is being paid to the subject by financial markets investors and companies this development raises a number of important issues which are reviewed in this article a the performance of indices compared with their benchmark indices b the methodologies employed in compiling the indices and c the impact of the indices on companies and the investment community the article concludes with a number of suggestions for areas that merit future research

on the efficiency of bertrand and cournot equilibria with product differentation in a differentiated products setting with n varieties it is shown under certain regularity conditions that if the demand structure is symmetric and bertrand and cournot equilibria are unique then prices and profits are larger and quantities smaller in cournot than in bertrand competition and as n grows both equilibria converge to the efficient outcome at a rate of at least 1n if bertrand reaction functions slope upwards and are continuous then even with an asymmetric demand structure given any cournot equilibrium price vector one can find a bertrand equilibrium with lower prices in particular if the bertrand equilibrium is unique then it has lower prices than any cournot equilibrium

rivals search for buried treasure competition and duplication in r d we model an r d race in which each fi rm decides in each period between two research projects only one of which has positive success probability and it is not known which there is symmetric information and hence scope for strategic search if the prize is shared when discovery is simultaneous there is too much duplication of projects if neither is rewarded in this event then equilibrium is efficient unless projects have asymmetric costs in which case there is a bias toward the high cost project or asymmetric success probabilities in which case too little duplication is possible if one firm is informed it may choose the wrong project to put the other off the scent

price competition non price competition and market structure theory and evidence from the uk this paper examines the impact of price competition on advertising r and d expenditure and market structure a general theoretical result is derived which restricts the space of possible outcomes regarding the behaviour of concentration and advertising r and d expenditure following an intensification of price competition the theory is tested using uk data on the evolution of competition concentration and advertising over 1954 77 the econometric results suggest that the introduction of restrictive practices legislation in the uk caused a rise in concentration in previously cartelized high advertising manufacturing industries and probably also a fall in advertising intensity

support for investor activism among u k ethical investors an important goal of ethical investment is to influence companies to improve their ethical and environmental performance the principal means that many ethical funds employ is passive market signalling which may not on its own have a significant effect a much more promising approach may be active engagement this paper reports on a questionnaire study of a sample of 1146 ethical investors in order to assess whether u k ethical investors would support more activist ethical investment and whether they would be prepared to invest in companies which are failing ethically in order to do so the results show general support for the current practice of passive signalling accompanied by soft engagement in the form of lobbying and the development of dialogue in order to improve corporate practice the harder options of investing in companies that err in order to change them is however favoured by consistent minorities

it s a matter of principle the role of personal values in investment decisions we investigate the role of personal values in an investment decision in a controlled experimental setting participants were asked to choose an investment in a bond issued by a tobacco company or a bond issued by a non tobacco company that offered an equal or sometimes lower yield we then surveyed the participants regarding their feelings toward tobacco use to determine whether these values influenced their investment decision using factor analysis we identified investment and tobacco related dimensions on which participants responses tended to load two of these factors relating to the societal impact of investment decisions and the health effects of tobacco were highly significant in determining whether participants selected a tobacco or non tobacco related investment more importantly we found that when the rate of return on a tobacco related investment exceeds the rate of return on an investment not involving tobacco by 1 the intensity of participant concerns about the societal effects of their investment decisions was especially important in determining investment choices this finding indicates that traditional wealth maximization approaches which do not consider the personal values of the investor omit an important factor that affects investment decisions

different missions and commitment power in r d organizations theory and evidence on industry university alliances this paper proposes a theory for why firms conduct some research activities in house but outsource other projects to independent partners and for why firms retain different degrees of control over collaborative research projects the focus is on the determinants of a company s choice to outsource research projects to academic organizations because of the different institutional missions of academic organizations outsourcing a project to a university allows a firm to commit not to terminate or alter a scientifically valuable project before it is complete this commitment is potentially valuable for the firm in an environment where scientific value and economic value may not coincide and scientific workers are responsive to the incentives defined by their community of peers an economic model that formalizes these arguments is developed empirical hypotheses are then formulated about the kind of research activities firms will outsource to universities and activities on which they will exert stronger control evidence from a sample of industry university research agreements as well as from other large sample and case studies shows patterns consistent with the predictions of the model

learning and information aggregation in an exit game we analyze information aggregation in a stopping game with uncertain common payos players learn from their own private experiences as well as by observing the actions of other players we give a full characterization of the symmetric mixed strategy equilibrium and show that information aggregates in randomly occurring exit waves observational learning induces the players to stay in the game longer the equilibria display aggregate randomness even for large numbers of players

socially responsible investing in the united states socially responsible investing sri has emerged in recent years as a dynamic and quickly growing segment of the u s financial services industry involving over 2 trillion in professionally managed assets its conceptual origins can be found in the early history of civilization with it s modern roots in the 1960s this paper provides an overview of the breadth and depth of the concept and practice of socially and environmentally responsible investing describes the investment strategies that together define sri as currently practiced in the u s offers several observations about some of the factors fueling its dramatic growth and presents data showing that investors who choose to invest in a socially and environmentally responsible manner can do so without giving up investment returns sri has matured to a point where virtually any investment need can be met through portfolio design that integrates an investor s personal values institutional mission and or social priorities the socially responsible investment industry in the unitedstates is a young phenomenon even referring to it as an industry ten years ago may have been a bit of a stretch while it has grown dramatically in recent years it is an area of work of study and of practical application that continues to evolve in many significant ways one intriguing example of the ongoing development of the field can be found in the analysis of the language used to describe it the terms social investing socially responsible investing ethical investing socially aware investing socially conscious investing green investing values based investing and mission based or mission related investing all refer to the same general process and are often used interchangeably

elevating the role of divestment in socially responsible investing the divest movement has focused attention on strategic and ethical differences in the practice of socially responsible investing sri and highlighted an unnecessary bifurcation of best of class engagement and divestment although best of class engagement is favored as a contemporary and pragmatic approach this paper calls for a more pronounced recognition of absolute dealbreakers and divestment as an underpinning for best of class engagement after linking divestment and best of class engagement to their foundations of absolutism and relativism respectively i critique best of class engagement and argue that without a distinct and explicit role for divestment best of class strategies are ethically and strategically fraught following a discussion of which types of issues suggest divestment or best of class engagement i identify the norway government pension fund as a noteworthy example and posit that divestment and engagement are best presented and employed in tandem particularly for issues that have yet to be addressed by law and convention

in which industries is collusion more likely evidence from the uk i examine the factors facilitating or hindering collusion using a comprehensive data set on the incidence of price fixing across uk manufacturing industries in the 1950s the econometric results suggest that collusion is more likely the higher the degree of capital intensity and less likely in advertising intensive than in low advertising industries there is also some evidence of a non monotonic relationship between market growth and the likelihood of collusion there is no clear link between concentration and the incidence of collusion

strategic learning in teams this paper analyzes a two player game of strategic experimentation with three armed exponential bandits in continuous time players face replica bandits with one arm that is safe in that it generates a known payoff whereas the likelihood of the risky arms yielding a positive payoff is initially unknown it is common knowledge that the types of the two risky arms are perfectly negatively correlated i show that the efficient policy is incentive compatible if and only if the stakes are high enough moreover learning will be complete in any markov perfect equilibrium with continuous value functions if and only if the stakes exceed a certain threshold

coming out of the niche social banking in germany an empirical analysis of consumer characteristics and market size the social banking market constitutes a small but rapidly growing submarket of the global banking sector due to an explicit commitment to sustainability social banking is a segment of banking services which is not exclusively focused on economic performance criteria but pursues ecological and social goal dimensions on an equal footing information on the number and reachability of potential social banking customers is essential for social banks to further promote sustainable consumption in finance in scientific research social banking is considered a relatively new field still lacking empirical analyses regarding the market size and specific consumer behaviour this study addresses the research gap by generating first insights into the german social banking market based on an online survey using an adaptive conjoint analysis a large data set covering 3537 respondents was compiled sample 1 comprises 2896 respondents who are customers of three major social banks in germany sample 2 covers the remaining 641 respondents who represent the german adult population and exclusively buy from conventional banks logistic regression modelling reveals that social banking customers differ significantly from their conventional counterparts regarding several socio demographic behavioural and psychographic factors in comparison with conventional banking customers social banking customers tend to be younger higher educated and located in larger places of residence contrary to existing research on socially responsible investors they are male to a higher proportion than female moreover social banking customers demonstrate stronger sustainable buying patterns and weaker preferences for financial but stronger preferences for social return than conventional banking customers the results further indicate a considerable untapped growth potential for social banks by uncovering a market size ranging between 10 and 26 of the german adult population finally suggestions for marketing strategies and future research are given