deciding between competition and collusion we develop an approach to identify and test for bid rigging in procurement auctions first we introduce a general auction model with asymmetric bidders second we study the problem of identie cation in our model we state a set of conditions that are both necessary and sufe cient for a distribution of bids to be generated by a model with competitive bidding third we discuss how to elicit a prior distribution over a e rm s structural cost parameters from industry experts given this prior distri bution we use bayes s theorem to compare competitive and collusive models of industry equilibrium finally we apply our methodology to a data set of bidding by construction e rms in the midwest the techniques we propose are not computationally demanding use e exible functional forms and can be programmed using most standard statistical packages

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

a study of collusion in first price auctions this paper examines the bidding for school milk contracts in florida and texas during the 1980s in both states firms were convicted of bid rigging the data and legal evidence suggest that the cartels in the two states allocate contracts in different ways one cartel divides the market among members while the other cartel also uses side payments to compensate members for refraining from bidding we show that both forms of cartel agreements are almost optimal provided the number of contracts is sufficiently large in the auction the cartel bidder may face competition from non cartel bidders the presence of an optimal cartel induces an asymmetry in the auction the selected cartel bidder is bidding as a representative of a group and has on average a lower cost than a non cartel bidder the data support the predicted equilibrium bidding behaviour in asymmetric auctions in accordance with optimal cartels

international entrepreneurship in internet enabled markets abstract despite the increasing numbers of businesses that are already using the internet to pursue international opportunities and the latent potential for such activity from rising internet adoption levels the international entrepreneurship literature has paid limited attention to the phenomenon to address this gap we review past research in international entrepreneurship as well as the broader fields of entrepreneurship international business marketing management and management information systems to identify firm level resources that are associated with the successful pursuit of international opportunities in internet enabled markets we identify three such internet related firm level resources online reputation online technological capabilities and online brand communities we develop a propositional inventory of the expected relationships identify measures expected to be useful to future scholars in this area and present the implications of our review for future international entrepreneurship research

nominal price rigidity money supply endogeneity and business cycles abstract this paper investigates the ability of nominal price rigidity to explain the co movement of inflation with the cyclical component of output observed in the post war u s data a dynamic general equilibrium model is constructed with the introduction of monopolistic competition and nominal price rigidity in a standard real business cycle model allowing for an endogenous money supply rule it is then demonstrated that sticky price models can explain the observed associations between movements in inflation and output much better than flexible price models this result depends little on whether money supply is assumed to be endogenous or not

measuring globalization of industries using a national industry approach empirical evidence across five countries and over time this paper presents an objective measurement of industry globalization although crucial in understanding firm strategies industry globalization has been largely subjectively measured consisting of mostly case studies this research develops a two pronged measure of industry globalization based on a the extent of an industry s international linkages lit and b the integration of value added activities within the industry iit in addition of providing a quantitative equivalent to porter 1986 and bartlett and ghoshal s 1989 conceptual industry categorizations this measure permits the examination of important but previously untested notions regarding globalization using data for chemical and manufacturing industries for five major trading nations we find that 1 chemical industries are less global than manufacturing industries despite high levels of fdi found in chemical industries 2 u s globalization frequently assumed to be representative of worldwide globalization of industries is less than that of other major industrial countries and 3 industries in both sectors are globalizing over time consistent with the literature

tacit collusion in repeated auctions abstract this paper considers the question of tacit collusion in repeated auctions with independent private values and with limited public monitoring mcafee and mcmillan show that the extent of collusion is tied to the availability of transfers monetary transfers allow cartels to extract full surplus a folk theorem proved by fudenberg et al econometrica 62 1994 997 1039 shows that transfers of future payoffs are almost as good if players are patient and communicate before auctions we ask how the scope of collusion is affected if players dispense with explicit communication and their monitoring is limited collusion better than bid rotation is still feasible but full surplus cannot be extracted this constraint becomes less severe with more players and large cartels can become asymptotically efficient even with very limited monitoring

adaptive learning and the use of forecasts in monetary policy abstract this paper investigates monetary policy design when central bank and private sector expectations differ private agents learn adaptively the central bank has a possibly misspecified model of the economy successful implementation of optimal policy using inflation targeting rules requires the central bank to have complete knowledge of private agents learning behavior if the central bank mistakenly assumes private agents to have rational expectations when in fact they are learning then policy rules frequently lead to divergent learning dynamics however if the central bank does not correctly understand agents behavior stabilization policy is best implemented by controlling the path of the price level rather than the inflation rate

optimal sustainable monetary policy in recent monetary policy literature optimal commitment policy or its variant from a timeless perspective has been studied with emphasis on welfare gains from policy commitment regardless of its time consistency problem called a stabilization bias with an optimizing model used in the literature we examine sustainable equilibrium of chari and kehoe 1990 and study optimal sustainable policy the policymaker s strategy in the best sustainable equilibrium in the absence of commitment technologies calibrated versions of the model show that the ramsey equilibrium generated by optimal commitment policy is not achievable suggesting that optimal sustainable policy is the desirable policy benchmark from the viewpoint of policy operationality the latter policy involves some issues due to its dependence on the entire history of lagrange multipliers on a sustainability constraint as a guidepost for actual policy conduct that contains no such issues and attains higher social welfare than discretionary policy does we propose a sustainable policy conducted by following a policy rule that achieves the best markov equilibrium

favor exchange in collusion empirical study of repeated procurement auctions in japan abstract it is known that bid rigging in public work auctions in japan often takes the form of exchanging favors in such a scheme the winner is designated based on favors he has given to other ring members by explicitly modeling favor as an explanatory variable this paper analyzes data from the public works auctions for consulting works in naha japan to confirm that such a collusion scheme is in operation

globalization and electronic commerce inferences from retail brokering e commerce has contributed to the retail brokerage industry becoming more global and more contestable by examining the different stages of the value chain we can analyze the differential impact of the information and communication technology ict revolution on each segment of the industry to date the primary drivers of globalization have been manifested at the wholesale stage of the industry in contrast important features of the broker customer interface have perpetuated a multi locational competitive structure at the retail stage of the industry nevertheless actual and potential competition has been significantly increased by the spread of e commerce at all stages of the industry e commerce innovations encourage both standardization and variety within an increasingly competitive industry

price level versus inflation targeting abstract this paper shows that price level targeting outperforms inflation targeting in the standard new keynesian model under the assumption that the central bank is forced to operate in an environment characterized by discretion in the benchmark case with no persistence in the shocks the commitment solution can be fully replicated intuitively price level targeting introduces history dependence and a stationary level of prices both of which are prominent features of the commitment solution

aggregate and welfare effects of redistribution of wealth under inflation and price level targeting abstract an unanticipated rise in the price level redistributes wealth from lenders to borrowers its size depends on the monetary policy regime as inflation targeting it and price level targeting pt have different implications for the price level path following price level movements the effects of an unexpected 1 price level increase are measured and assessed under both regimes overall the redistribution of wealth and the implied aggregate and welfare effects are larger under it than they are under pt the youngest the poorest and the government gain at the expense of the rest of the population and when the government gain is given to households as lump sum transfers the effects on gdp are negative and long lasting

learning about monetary policy rules abstract we study macroeconomic systems with forward looking private sector agents and a monetary authority that is trying to control the economy through the use of a linear policy feedback rule we use stability under recursive learning a la evans and honkapohja learning and expectations in macroeconomics princeton university press princeton new jersey 2001 as a criterion for evaluating monetary policy rules in this context we find that considering learning can alter the evaluation of alternative policy rules

on the perils of stabilizing prices when agents are learning abstract the main advantage of price level stabilization compared with inflation stabilization rests on the central bank s ability to shape expectations we show that stabilizing prices is no longer optimal when the central bank can shape expectations of agents with incomplete knowledge who have to learn about the policy implemented disinflating in the short run more than agents expect generates short term gains without triggering an abrupt loss of confidence because agents update expectations sluggishly following this policy in the long run the central bank loses the ability to shape agents beliefs and the economy converges to a rational expectations equilibrium in which policy does not stabilize prices economic volatility is high and agents suffer the corresponding welfare losses however these losses are outweighed by short term gains from the learning phase

winning isn t everything corruption in sumo wrestling although the theoretical literature on corruption is well developed empirical work in this area has lagged because it has proven difficult to isolate corrupt behavior in the data in this paper we look for evidence of corruption in an unlikely place the highest echelons of japanese sumo wrestling this paper provides strong statistical evidence documenting match rigging in sumo wrestling a non linearity in the incentive structure of promotion leads to gains from trade between wrestlers on the margin for achieving a winning record and their opponents we show that wrestlers win a disproportionate share of the matches when they are on the margin increased effort can not explain the findings winning on the bubble is more frequent when the two competitors have met often in the past success on the bubble tends to rise over the course of a wrestler s career but declines in his last year consistent with the game theoretic predictions wrestlers who are victorious when on the bubble lose more frequently than would be expected the next time they meet that opponent suggesting that part of the payment for throwing a match is future payment in kind systematic differences across wrestling stables suggest that the stables play a role in facilitating the corruption in times of increased media scrutiny the match rigging disappears this abstract was borrowed from another version of this item

auction cartels and the absence of efficient communication abstract this paper examines the feasibility of collusive mechanisms in single unit auctions a model is constructed with private and common value information asymmetry and continuous type space we show that an incentive compatible bid coordination mechanism bcm does not exist if common value uncertainty is present this result contradicts actual antitrust cases where common effects or resale opportunities created uncertainty about valuations but a price fixing cartel was formed we solve the puzzle by relaxing the assumption that all bidder types truthfully reveal their private information the introduced bayesian bid coordination mechanism bbcm exists if the main source of information asymmetry is private value in that case a designated ring member can signal high valuation and suppress competition our results demonstrate the rationale behind cartel mechanisms with pre auction knockouts

bid rotation and collusion in repeated auctions this paper studies bidder collusion with communication in repeated auctions when no side transfer is possible it presents a simple dynamic bid rotation scheme which coordinates bids based on communication history and enables intertemporal transfer of bidders payoffs the paper derives a sufficient condition for such a dynamic scheme to be an equilibrium and characterizes the equilibrium payoffs in a general environment with affiliated signals and private or interdependent values with ipv it is shown that this dynamic scheme yields a strictly higher payoff to the bidders than any static collusion scheme which coordinates bids based only on the current reported signals

a language theory of discrimination any advanced industrial society is composed of a number of speech communities with different verbal and nonverbal languages in particular in the united states blacks and whites and men and women have sharply differing methods of speaking and listening this paper develops a model in which people can only work together if they speak the same language and in which it is costly to learn a second language the competitive market will tend to minimize communication through segregation but if interaction is required the cost will be borne by the minority a number of nontrivial predictions are derived from the model

international retail banking as a strategy an assessment we assess the viability of a bank s strategy of entering into retail banking worldwide wherever regulations permit via a review of literature and evidence on foreign direct investment in banking issues we discuss include the roles of regulation the costs of operating at a distance and in an unfamiliar environment and the advantages or offsetting factors which foreign banks may possess relative to their local competitors the factors the paper examines are uncompetitive host markets product differentiation economies of scale management and technology cost of capital government support and vertical integration

cartel pricing dynamics with cost variability and endogenous buyer detection this paper characterizes collusive pricing patterns when buyers may detect the presence of a cartel buyers are assumed to become suspicious when observed prices are anomalous we find that the cartel price path is comprised of two phases during the transitional phase price is generally rising and relatively unresponsive to cost shocks during the stationary phase price responds to cost but is much less sensitive than under non collusion or simple monopoly the length of the transition phase is decreasing in the variance of cost shocks it is also shown that the cartel price path may overshoot its long run level so that price converges from above

redefining industry structure for the information age we are entering a new competitive age in which the basis of competition is being fundamentally altered through the introduction of advanced information technologies and public communication infrastructures such as the internet in these environments the nature and locus of competition will radically alter as information becomes an increasingly important resource this paper develops ideas around the strategic characteristics of information information separability and information specificity moreover it attempts to redefine the nature of industry structure in such a competitive environment by examining what constitutes the real boundaries of competition industry concentration related diversification and innovation for firms competing in the information age 1998 john wiley sons ltd

harmonization of the european balancing power auction a game theoretical and empirical investigation abstract the shift towards renewable energies is accompanied by great volatility on the supply side demanding european wide instead of national balancing services for the integrated european procurement of balancing reserves the european commission proposes a multi attributive auction mechanism which is very similar to the current german auction the key difference however is a switch from pay as bid to uniform pricing we develop a game theoretical model of the current german and the future european balancing market design both market designs have desirable economic properties in their one shot version i e an efficient auction outcome and competitive prices we show that a switch to uniform pricing does not induce bidders to report their true costs in their bids but leads to underbidding we contrast the equilibrium outcomes with german market data and find a substantial discrepancy i e non competitive prices we provide a game theoretical grounded explanation that is based on the regular repetition of the auction combined with the invariant supplier side

global value chains from a 3d printing perspective this article outlines the evolution of additive manufacturing technology culminating in 3d printing and presents a vision of how this evolution is affecting existing global value chains gvcs in production in particular we bring up questions about how this new technology can affect the geographic span and density of gvcs potentially wider adoption of this technology has the potential to partially reverse the trend towards global specialization of production systems into elements that may be geographically dispersed and closer to the end users localization this leaves the question of whether in some industries diffusion of 3d printing technologies may change the role of multinational enterprises as coordinators of gvcs by inducing the engagement of a wider variety of firms even households