informative externalities and pricing in regulated multiproduct industries this paper addresses the issue of how to organise a two product industry with interdependent demands when the regulator cannot observe the demand level of the goods produced two industry structures are compared a multiproduct monopoly in which an informed firm produces both goods and a differentiated duopoly where two firms control one good each but the level of demand is known by one firm only focusing on the informative costs of regulation the paper shows that if goods are substitutes the regulator may achieve a better performance through integration of production with complements instead decentralisation tends to be preferred

conglomerates and regulation conglomerates operating integrated productions in different regulated and unregulated sectors may benefit of scope economies however the precise size of these synergies is often unknown to both rival firms and regulators we show that the conglomerate s private information on scope economies may negatively affect both the regulated and the unregulated sectors depending on the precise nature of competition strategic substitutes or complements we also unveil a novel effect of regulation that involves an informational externality to the conglomerate s rivals notwithstanding these complications and independently of the nature of competition we show that in our model it is desirable as for welfare to let the firm run integrated productions unless diseconomies of scope may realize jel l51 l43 l52

fostering change to sustainable consumption and production an evidence based view this note from the field is an edited version of a policy brief summarizing the key findings from the first half of the sustainable consumption research exchange network score for the policy programs in the field of sustainable consumption and production scp we recommend a framework for action to change to scp that mentions the key domains to include food mobility and energy use housing the last two clearly related to urban development it should use a systemic perspective on the scp challenge and differentiate between developed fast developing and base of the pyramid economies score focuses mainly on developed economies and here we propose to differentiate between 1 measures that fit with mainstream beliefs and paradigms here governments could make operational agreements on implementation of instruments like green public procurement stimulating ecodesign etc 2 problems where a rough agreement on goals exists but where change is radical or means are uncertain and hence planning difficult here governments could foster visioning experimentation and support e g international collaboration in leapfrogging programs 3 problems that outright clash with the mainstream beliefs and paradigms here governments could foster informed deliberation on the more fundamental issues related to markets governance and growth 2007 elsevier ltd all rights reserved

regulating horizontal diversification abstract this paper investigates the optimal design of diversification rules for regulated enterprises diversification generates profit in non core markets that can be shared with core customers however a diversified firm may divert its attention and effort to non core operations causing consumer welfare in core markets to decline diversification generally results in lower prices and higher powered reward structures in core markets surprisingly diversification is not always directed into the non core markets where the expected contribution of the regulated firm is most pronounced furthermore diversification may be permitted more often as the potential losses from effort diversion increase

public procurement and innovation resurrecting the demand side abstract demand is a major potential source of innovation yet the critical role of demand as a key driver of innovation has still to be recognised in government policy this article discusses public procurement as one of the key elements of a demand oriented innovation policy the paper starts by signaling the new significance of public procurement for innovation policy strategies at the eu level and in a range of european countries it then defines the concept of public procurement and embeds this concept within a taxonomy of innovation policies the rationales and justifications of public procurement policies to spur innovation are discussed followed by a consideration of the challenges and potential pitfalls as well as appropriate institutional arrangements and strategies including some recent empirical examples of good practice it concludes by confronting the public procurement approach with two of the most common objections to it and by considering future prospects

the impact of order and mode of market entry on profitability and market share market share performance and profitability of overseas business activities has long been an important issue in international business in this study we explore the impact of order and mode of market entry into an overseas market we find that early entrants have significantly higher market shares and profitability than late followers we also find that equity joint ventures have a higher profitability than either wholly owned operations or contractual joint ventures a significant interaction exists between order and mode of market entry as expected firm efficiency and size affect the performance of firms these results are based on the business activities of a sample of 14 466 foreign firms in china in 1995

on countervailing incentives abstract this paper extends and unifies previous work on optimal contracts under countervailing incentives shedding light in particular on the relation between countervailing incentives and pooling inflexible rules our main result is that the nature of the optimal contract depends crucially on whether the agent s utility is quasiconcave or quasiconvex in the private parameter the optimal contract is separated in the former case and it may entail pooling in the latter case journal of economic literature classification number d82

toward a new conception of the environment competitiveness relationship accepting a fixed trade off between environmental regulation and competitiveness unnecessarily raises costs and slows down environmental progress studies finding high environmental compliance costs have traditionally focused on static cost impacts ignoring any offsetting productivity benefits from innovation they typically overestimated compliance costs neglected innovation offsets and disregarded the affected industry s initial competitiveness rather than simply adding to cost properly crafted environmental standards can trigger innovation offsets allowing companies to improve their resource productivity shifting the debate from pollution control to pollution prevention was a step forward it is now necessary to make the next step and focus on resource productivity

a note on price and quantity competition in differentiated oligopolies abstract in this note we show that the results developed in n singh and x vives 1984 rand j econ 15 546 554 are sensitive to the duopoly assumption if there are more than two firms prices may be higher under price competition than under quantity competition this will be the case if quality differences are large and goods are complements if goods are substitutes high quality firms may earn higher profits under price competition than under quantity competition hence it is not evident which kind of competition is more efficient journal of economic literature classification numbers d43 l13

model of efficient and sustainable improvements in a lean production system through processes of environmental innovation abstract globalization has changed the world as well as how a customer judges the value of a product which has created a new business focus different approaches have been oriented on this direction such as the lean manufacturing system and the concept of sustainability however these two notions are not easy to implement simultaneously besides several authors have declared doubts with respect to reaching this target difficulty persists in identifying the tools required and quantifying the improvements achieved this research develops a general approach based on environmental innovation to help firms harmonize efficiency and sustainability the goal is to add extra value to the product which provides the potential to enhance competitiveness in the 21st century globalized market a case study demonstrates that the costs the incomes the social responsibility and the sustainability can be improved when environmental innovation is applied transforming the traditional production system into a lean system

participation constraints in adverse selection models abstract this paper characterizes the optimal contract offered by an uninformed principal to an informed agent when the latter s reservation utility depends on his type the informational rent is nonmonotonic so that interior types may have a vanishing rent or be excluded from trade the paper identifies conditions for the optimal contract to be separating to be nonstochastic and to induce full participation it also discusses the nature of the solution when bunching occurs the results are applied to nonlinear pricing under price cap regulation and bypass competition and to competition in nonlinear pricing journal of economic literature classification numbers d82 d42 d23 d78 l51 l15

environmental criteria in the public purchases above the eu threshold values by three nordic countries 2003 and 2005 abstract green public procurement gpp has been considered as an important policy instrument in the context of sustainable consumption and production the state and progress of gpp has earlier been measured by questionnaires and interviews both methods being based on the assessment by the purchaser and questionnaires having low response rates recently a new method was developed analyzing the existence of environmental criteria in the calls for tenders however the studies have dealt neither with the progress in gpp nor the statistical evidence of differences between countries our aim was to analyze more thoroughly whether the differences in the proportions of green calls for tenders between the three nordic countries denmark finland and sweden in 2003 and 2005 were real and whether there had occurred any progress between the years concerned the paper also presents the gpp record method which enables more valid measurement of the environmental soundness of public purchasing the statistical analyses were done using logit models with country year and product group as the explanatory factors it proved to be relevant to take into account the variation that occurred from the random existence of product groups in the samples of calls for tender there were less environmental criteria in the calls for tenders in finland than in denmark and sweden in 2003 but in 2005 no significant difference between finland and denmark was observed both finland and sweden saw progress in this area between 2003 and 2005

green supply chain performance with cost learning and operational inefficiency effects environmental issues are receiving significant attention from the public accelerating the development of green supply chain in operations management this study focuses on the green supply chain performance in a single manufacturer retailer setup in which the manufacturer determines energy efficiency level and wholesale price while the retailer decides on sales price the unit production cost is jointly affected by cost learning and operational inefficiency effects open loop feedback and myopic equilibria are subsequently derived and the corresponding supply chain performance and profit distribution are analyzed the main results show that forward looking behavior is preferred to myopic one for channel members feedback equilibrium is beneficial to the manufacturer but is harmful to the retailer the supply chain efficiencies in forward looking and myopic situations are lower than the static supply chain efficiency which results from cost learning and operational inefficiency effects as well as non price variable the manufacturer and the retailer extract more profits under certain conditions i e high cost learning effect large energy efficiency effectiveness low operational inefficiency effect or discount rate however the corresponding supply chain efficiencies decrease and the manufacturer s profit proportions are less than 2 3 investigation of supply chain performance with competition from multiple retailers implies that the effects of system parameters on supply chain performance keep the same directions of single manufacturer retailer setup while competition improves supply chain efficiency and manufacturer s profit proportion this work contributes in involving cost learning and operational inefficiency effects simultaneously in a dynamic environment to explore supply chain performance

getting the incentives right energy performance contracts as a tool for property management by local government energy conservation is a challenging and difficult task because disincentives in the building sector inhibit innovation the municipality of rotterdam experimented with an energy performance contract that aimed to avoid disincentives and replace them with a stimulus for innovation this article investigates whether the design requirements for performance management found in the management literature were fulfilled during the development of the contract and its implementation the outcomes of the experiment show substantial energy conservation around 30 percent the existing incentive structure was changed through the use of a performance management contract and perverse effects that are mentioned in the literature were limited the incentives established between the commissioning party and the contractor triggered better performance and innovation although balancing the responsibilities between the principal and the agent was demanding and time consuming energy performance contracts are a useful piece of the sustainability puzzle but tailor made refinements are necessary

influences on foreign equity ownership level in joint ventures in china this study examines the determinants of foreign equity ownership in joint ventures in china drawing upon duning s ownership locational and internalization paradigm and the literature on bargaining power eleven variables that impact foreign ownership preferences and concessions are examined these variables are advertising intensity foreign capital input country risk of china ejv investment amount ejv contractual duration cultural distance competitive intensity local partner state ownership local partner alignment foreign partner alignment and ejv location the empirical findings are largely consistent with the hypotheses the empirical findings are largely consistent with the hypotheses further interesting differences were found among u s european and japanese firms with respect to the impact of these determinants

financial performance and survival of multinational corporations in china this study investigates the impact of entry timing mode of entry market focus and location advantages on the financial performance and survival of multinational corporations mncs in china three major results were found first mncs that entered china in an earlier year had a higher level of profit than those that entered in a later year second equity joint ventures ejvs had a higher profit level than cooperative operations or wholly foreign owned subsidiaries third mncs that utilized well the location advantages in china had a higher profit we also found that ejvs were more likely to survive compared to cooperative operations while wholly owned subsidiaries did not differ from ejvs the findings are based on a 2 year study of about 1000 mnc operations in china copyright 1999 john wiley sons ltd

countervailing incentives in agency problems abstract we analyze countervailing incentives in agency problem countervailing incentives exist when the agent has an incentive to understate his private information for some of its realizations and to overstate it for others when countervailing incentives arise pooling generally characterizes the equilibrium contract furthermore performance is distorted both above and below efficient levels in addition the agent s rents generally increase with the realization of his private information over some ranges and decrease over other ranges we demonstate that the creation of countervailing incentives can enhance aggregate welfare

the formation of japanese and u s equity joint ventures in china this study examines the characteristics of japanese and u s equity joint ventures ejvs in china over a 15 year period these ejvs were announced between 1979 and the end of 1993 substantial differences are found with respect to six key characteristics they are selection of the chinese partner selection of the second foreign partner when more than one foreign partner is involved foreign equity ownership foreign capital contribution ejv business scope and the ejv location tentative explanations for these differences are offered from the perspectives of risk orientation cultural similarities and the impact of political events in china 1997 by john wiley sons ltd

the value of information in a simple duopoly model abstract this paper is concerned with the evaluation of information in a duopoly model in which the cost functions are subject to uncertainty it explores how changes in information about the costs available to either firm affects the welfare of both firms along with the welfare of consumers by comparing the ten possible types of information structures it is shown that information may be detrimental that improved information for one firm may or may not benefit the other firm and or the consumer and that it may be more desirable for a firm to gather information about the rival s cost rather than its own all of these irregular results depend on the values of the variances of the costs and their correlation coefficient

competition and regulation in vertically related markets in an industry where naturally monopolistic and competitive activities are vertically related should the natural monopolist be allowed also to operate in the deregulated competitive sector unlike much of the literature on vertical integration this paper assumes that monopoly pricing behaviour is regulated and therefore the effect of vertical integration on the task of regulation is central to the analysis in the model there is both imperfect information and imperfect competition when vertical integration by the monopolist is allowed the regulator s task is made harder insofar as the monopolist has anticompetitive incentives to raise rivals costs on the other hand integration may lead to there being fewer firms in the deregulated sector and hence less duplication of fixed costs the overall welfare comparison between separation and integration is ambiguous as two simple examples illustrate various extensions to the analysis are also considered one of the central questions in debates on regulatory reform is how to organize industries that contain both naturally monopolistic and potentially competitive activities electricity transmission and distribution are characterized by natural monopoly cost conditions but electricity generation is not in the gas industry pipeline services may be naturally monopolistic but supply to larger customers is not in telecommunications natural monopoly is more a feature of local network operations than of long distance operations and is not present in apparatus manufacture and supply or in the provision of value added services in railways while the infrastructure of track and stations is naturally monopolistic the supply of train services might not be policy developments notably those associated with privatization in britain and deregulation in the united states have sometimes led to radical structural reform in these industries at t for decades a vertically integrated monopolist was required under the 1982 settlement of its long running antitrust case against the u s government to divest itself of its local network operations the central electricity generating board cegb in england and wales was restructured both vertically transmission grid activities were separated from generation and horizontally before privatization in 1990 1991 by contrast british telecom was privatized as a vertically integrated dominant firm bt now faces competition from mercury and others especially in the long distance market but its dominance of local network operations might affect competition there and in other areas such as apparatus supply the local network monopoly would of course have to be regulated in any event but its link via ownership to vertically related and potentially competitive activities poses additional regulatory questions many of the efforts of the regulatory body oftel notably in relation to interconnection between bt s and rivals 1 for a general account of the theory and british experience of regulatory reform in the utility industries

diversification incentives under price based and cost based regulation this article considers two schemes of regulationforfirms that serve both monopoly markets and markets subjected to substantial competition the first form cost based regulation combines elements of rate of return regulation on monopoly markets with filly distributed cost pricing much like the form of regulation currently in place in the domestic telephone industry the secondform price based regulation would establish rate caps on noncompetitive services and allow the firm to enter into competitive markets and charge whatever prices it might like in those markets models of both forms of regulation are developed and analyzed with respect to incentives for cost misreporting choice of technology cost reducing innovation choices of prices and output levels and diversification into competitive markets

choosing among alternative cost function specifications an application to italian multi utilities abstract the paper investigates the cost properties of a sample of italian utilities providing in combination gas water and electricity services the estimates from a multi product composite cost function rev econ stat 74 1992 221 are compared with the ones coming from other traditional functional forms such as the standard translog st the generalized translog gt and the separable quadratic sq the results show that the composite model provides a better description of data and highlight the presence of global scope and scale economies for the median firm of the sample

environmental value chain in green sme networks the threat of the abilene paradox abstract demand side policies are an important complement to subsidies in fostering green product service markets green public procurement gpp in particular presents valuable characteristics in terms of directionality volumes and measurability despite being widely analysed from a public perspective gpp development is still under explored from a corporate point of view to shed some light on the strategic attitude of firms towards gpp this paper discusses an exploratory research in the field of road construction an inductive analysis of direct observations and theoretical contributions suggests the potential for the so called abilene paradox to hamper gpp opportunities for small and medium enterprises in fact in times of crisis increased pressures to improve performance and reduce risk resistance to change and strategic myopia can easily impair inter organizational interactions and thus prevent potentially innovative networks from pressuring public investments in green supply chains the related policy suggestions represent a first attempt to enter the realm of systemic approaches to gpp