asymmetry and revenue in first price auctions abstract we show by an example that in first price ipv auctions asymmetry in bidders valuations need not reduce the revenue compared to a benchmark symmetric model with the same amount of social surplus asymmetry need not reduce competition in first price auctions

mergers in symmetric and asymmetric noncooperative auction markets the effects on prices and efficiency abstract united states antitrust merger analysis has recently focused on simulating the unilateral effects of mergers we develop a model to simulate the unilateral price increase from a merger in an auction market we illustrate our results in the context of hospital mergers in the u s and calibrate our simulations to known market parameters we compare the price increases in our model to those suggested by analytically simpler models the simulation results suggest that the unilateral price increases predicted by our model are modest in general we also simulate the merger cost savings that are needed to offset the price effects

asymmetric private values auctions with application to joint bidding and mergers abstract much of the theoretical auction literature assumes that there are no observable differences between the bidders of an auction in this paper i present an asymmetric auction model where the distribution of a bidder s value depends on some commonly observed characteristics the model is applied to joint bidding and mergers in auction markets the results provide additional evidence that first price auctions are less susceptible to the acquisition and exercise of market power than open auctions

investment incentives in procurement auctions this paper investigates firms incentives to invest in cost reduction in the first price sealed bid auction a format largely used for procurement two central features of the model are that we allow firms to be heterogeneous and that investment is observable we find that firms will tend to underinvest in cost reduction because they anticipate fiercer head on competition using the second price auction as a benchmark we also find that the first price auction will elicit less investment from market participants and that this is socially inefficient these results have implications for market design when investment is important different market institutions provide different incentives for firms to reduce costs acquire information expand and so on in short to undertake any activity that affects their competitive positions accordingly the performance of these market institutions should be judged not only from a static perspective taking firms competitive positions as given but also from a dynamic perspective auction markets are a natural competitive environment to study because there is a clear sense in which we can design such markets by choosing appropriate rules for competition in this paper we study how the first price auction fpa a format commonly used for procurement affects firms incentives to invest in cost reduction many procurement markets are characterized by a small number of participants heterogeneity among firms and low rates of turnover therefore it is interesting to investigate to what extent the format used for the auction contributes to these characteristics the basic ingredients of our model are as follows there are n firms and one of them has the opportunity prior to the auction to make an investment we model this investment as an improvement in the ex ante distribution of costs for this firm the main question we ask is what are the firm s incentives to invest given that this investment is observed by its competitors clearly the benefits of such investment depend on how the firm s competitors react in other words to determine the firm s incentive to invest we need to compare the equilibrium at the procurement stage if it makes this investment and if it does not in section 3 we derive new comparative statics results for the fpa we find that after the investment the investor s opponents will bid collectively more aggressively this result holds generally when there are only two bidders or when the investor s opponents are symmetric proposition 1 otherwise a sufficient condition is that investment changes market leadership proposition 2 in the language of industrial organization investment has a negative strategic effect in the fpa this erodes 1

an empirical examination of multinational corporate capital structure this paper examines whether there are systematic differences in the traditional capital structure determinants between mncs and dcs and if there are additional uniquely international factors that may help explain the capital structure choice of multinational corporations the results suggest that specific international factors such as political risk and exchange rate risk are relevant to the multinational capital structure decision that multinationals have higher agency costs than purely domestic firms and that international diversification does not lower earnings volatility for multinational corporations

openness and the international allocation of foreign direct investment abstract this paper develops an ordinal index to measure the openness of fdi policy regimes for individual countries there has been a generalised increase in the index between 1990 and 2002 the most important determinants of variations in fdi flows across countries and over time are country size the level of educational achievement and growth the openness index is positively associated with fdi flows but its explanatory power is low liberalising approval procedures and lifting requirements that foreign companies enter into joint ventures with domestic firms encourage fdi we conclude that the openness of the fdi regime operates as a factor enabling fdi but that location advantages are paramount in determining the international allocation of fdi we also turn the question around and ask what countries are more likely to impose restrictions on fdi we find that lower levels of education and larger domestic markets are associated with greater restrictions on fdi in addition there is some evidence t

strategic trade and investment policies implications for the study of international political economy b usiness gurus point out that successful firms often carefully strategise about what to sell where to sell how to sell and how and where to manufacture their goods and services suppose a country drawing inspiration from such firms were to formulate a set of economic policies to become globally competitive in leading economic sectors how specific or encompassing would such policies be and what might be the justifications for them even though the theory and practicality of such policies the strategic trade and industrial policies stips is contested they retain their appeal for politicians and policymakers in this paper we discuss how and why stips have created a new agenda for the study of international political economy state intervention to directly guide industrial activity is called industrial policy and to guide foreign trade is called trade policy industrial policies differ from macroeconomic policies in that they target only a subset of the economy whereas macroeconomic policies such as tax rates level of deficit spending and interest rate policies generally do not discriminate among types of firms or industries industrial policies such as r d subsidies tax subsidies preferential loans and credit allocations are targeted at specific firms or industries

optimal bidding in auctions from a game theory perspective abstract the game theoretic perspective in auction bidding has provided a powerful normative framework for the analysis of auctions and it has generated an impressive volume of research contributions tracing this research we review key recent advances which have greatly expanded our understanding of the operation of auctions and produced a more accurate analysis of mechanism design and optimal bidding we follow various experimental studies which have shown that the predictive power of auction theory remains in many cases limited for this reason we concentrate on research themes which enhance the applicability of auction theory leading to more realistic descriptions of bidding behaviors we identify important innovations which expand the environment of auction bidding and carry us beyond rational decision making we conclude providing directions of future research and discussing their implications

the effect of bidders asymmetries on expected revenue in auctions abstract bidders asymmetries are widespread in auction markets yet their impact on behavior and ultimately revenue and profits is still not well understood this paper defines a natural benchmark auction environment to which to compare any private values auction with asymmetrically distributed valuations the main result is that the expected revenue from the benchmark auction dominates that from the asymmetric auction both in the first price auction and the second price auction moreover for classes of distributions that lend themselves to a quasi ordering of more or less asymmetric configurations we prove that the expected revenue is lower the more asymmetric bidders are these results formalize the idea that competition is reduced by bidders asymmetries applications to merger analysis joint bidding and investment are discussed

large is beautiful the welfare effect of technology transfer reconsidered abstract this paper demonstrates that a technology transfer via foreign owned firms always reduces the host country s national income if the new technology is localized in the atkinson stiglitz sense at a capital labor ratio higher than prevails locally although developing countries can mitigate this negative impact of technology transfer by restricting the activities of foreign firms we argue that complete capital market liberalization yields even higher national income

corporate strategic technological partnerships in the european information and communications technology industry abstract in the era of alliance capitalism the increasing number of strategic technological partnerships stps has been mainly recorded in the science based fields of which information and communications technology ict is a leading sector the establishment of stps has also characterised the european ict industry the growing technological interrelatedness and the need to acquire capabilities in related fields have been identified in the literature as major explanations for the increase in corporate technological co operation this paper investigates the role of corporate technological specialisation factors in the conclusion of stps in the european ict industry by carrying out a dynamic analysis accordingly the patterns followed by corporate technological partnerships in the industry in question are investigated since the late 1970s based on us patent data granted to the world s largest firms as well as stps data the results of the econometric analysis are consistent with the view that the more similar partners technological portfolios are with one another the easier it is to absorb each other s capabilities

the effect of foreign acquisition on employment and wages evidence from finnish establishments employee characteristics by skill groups makes it possible to disentangle the effect of foreign ownership on wages from its effects on the quality of the workforce furthermore this information allows us to examine the heterogeneity of the effect of foreign acquisition on wages and employment third the long timespan of our data thirteen years enables us to consider the effects of foreign acquisition in the long run hiring and firing costs may delay the effects of foreign acquisition by looking at the effects of acquisition in several periods after it has taken place these delays can be taken into account we believe finland to be an interesting case study for the effects of foreign ownership it is a typical example of a small open economy where foreign investment plays an important role furthermore our data cover the years 1988 2001 when the share of foreign direct investments rose rapidly in finland this increase is depicted in figure 1 and it partly reflects the worldwide trend in foreign direct investment but the years 1988 2001 were also characterized by two phenomena which undoubtedly led to the increase in the share of foreign owned firms first finland experienced a very severe recession in the early 1990s and the recovery from this crisis was associated with a rapid restructuring of the economy and a growth of new industries in particular the export oriented high tech sector 2 second finland joined the european union in 1995 which naturally removed a considerable number of barriers to foreign investment in the finnish economy the results derived by both matching and regression methods indicate that foreign acquisition has a positive effect on wages in all skill groups this wage increase is not immediate but occurs within one to three years after the acquisition the magnitude of this effect increases with the level of schooling of the workers the results indicate that there is a small decrease in the share of highly educated workers after foreign acquisition the decrease in the share of highly educated workers after acquisition also seems to hold for domestic acquisitions the paper is organized as follows the next section briefly describes the theoretical background for the analysis and reviews some previous empirical findings the third section describes the statistical framework and the fourth section presents the data sets the results are provided in the fifth section the last section concludes the paper

numerical analysis of asymmetric first price auctions abstract we propose numerical algorithms for solving first price auction problems where bidders draw independent valuations from heterogeneous distributions the heterogeneity analyzed in this work is what might naturally emerge when subsets of distributionally homogeneous bidders collude bid functions and expected revenues are calculated for two special cases extensions to more general asymmetric first price auctions are discussed journal of economic literature classification numbers d44 c63 c72 d82

internalization advantage and subsidiary performance the role of business group affiliation and host country characteristics we extend internalization theory by examining the contingencies associated with market internalization and its impact on foreign subsidiary survival based on a sample of 6170 subsidiary year observations in 63 countries belonging to 292 mncs from korea during 1995 2013 we find that greater product and labor market internalization have weaker impacts on the survival of subsidiaries operating in countries with more developed institutional environments but stronger for subsidiaries of mncs affiliated with business groups the impact of business group affiliation is further dependent on host country institutional development and the diversification and size of the business group

how weak are the signals international price indices and multinational enterprises international price indices ipis provide the most timely and comprehensive market information available to international business how do multinational enterprises mnes affect the validity of ipis we review the earlier debate over methods for calculating ipis which concluded that unit values were inferior to specification prices although most governments produce only unit value indexes we explore three ways in which mnes can affect the validity of ipis determining the representative transfer price excluding intrafirm transactions from the index and choosing the right transfer price along the transportation chain we argue that mne activities strengthen the case for specification prices although still uncommon they are the stronger signal of international markets our empirical analysis supports this hypothesis finding that a 10 increase in the intrafirm trade share of us imports widens the gap between specification price and unit value by 1 3 with transfer price manipulation further increasing the gap journal of international business studies 2004 35 61 74 doi 10 1057 palgrave jibs 8400069

exploring the impact of trade and investment on income inequality a cross national sectoral analysis of the developed countries this article explores the relationship between international integration and domestic inequality in the developed countries in the mid 1980s and early 1990s the analysis examines two major modes of integration trade and direct investment disaggregating each by economic sector and distinguishing between imports and exports and inbound and outbound flows and stocks in measuring income inequality extensive use is made of micro data sets that have recently become available through the luxembourg income study lis which provides much more detailed and comparable data on income inequality than has heretofore been the case in particular lis data can be aggregated at the level of economic sector and permit the comparison of pre and post government income the study finds few significant relationships between either trade or investment and sectoral income distribution the overall conclusion is that economic globalization is not a critically important factor in explaining recent trends in income inequa

entry and r d in procurement contracting abstract a model of competitive procurement and contracting is presented in this paper the key features of the model include precontract r d an endogenous number of homogeneous firms and sealed bid auction rules both diminishing and constant returns to scale drs and crs in r d expenditure technologies are considered i find that the sealed bid first price auction fpa is equivalent to the second price auction spa under drs technology the revenue equivalence theorems breaks down under crs because multiple equilibria arise in the r d stage when spa is used howerer spa yields a unique perfect equilibrium given sufficient heterogeneity among potential firms the free entry perfect equilibrium is also characterized the buyer prefers free entry through an appropriate selection of the reservation price

macro determinants of fdi inflows to japan an analysis of source country characteristics this paper examines the source country determinants of fdi into japan the paper highlights certain methodological and theoretical weaknesses in the previous literature and offers some explanations for hitherto ambiguous results specifically the paper highlights the importance of panel data analysis and the identification of fixed effects in the analysis rather than simply pooling the data indeed we argue that many of the results reported elsewhere are a feature of this mis specification to this end pooled fixed effects and random effects estimates are compared the results suggest that fdi into japan is inversely related to trade flows such that trade and fdi are substitutes moreover the results also suggest that fdi increases with home country political and economic stability the paper also shows that previously reported results regarding the importance of exchange rates relative borrowing costs and labour costs in explaining fdi flows are sensitive to the econometric specification and estimation approach the paper also discusses the importance of these results within a policy context in recent years japan has sought to attract fdi though many firms still complain of barriers to inward investment penetration in japan the results show that cultural and geographic distance are only of marginal importance in explaining fdi and that the results are consistent with the market seeking explanation of fdi as such the attitude to risk in the source country is strongly related to the size of fdi flows to japan 2007 the authors journal compilation 2007 blackwell publishing ltd

auctions with resale markets an application to u s forest service timber sales when bidders anticipate an opportunity for resale trade the value of winning an auction is determined in part by the option values of buying and selling in the secondary market one implication is that a bidder s willingness to pay at an auction increases with the expected level of competition between resale buyers empirical evidence from auctions of timber contracts supports this prediction and rejects standard models that ignore resale the estimated effect is smaller after policy changes expected to diminish the prevalence of resale additional evidence supports the predicted presence of a common value element introduced by the resale opportunity

the production transfer and spillover of technology comparing large and small multinationals as technology producers multinational enterprises are sina qua non the world s technology producers in this paper we explore the concept of technology production by multinationals focusing on three aspects i technology as a firm specific advantage ii the costs of technology transfer and iii technology spillovers in each case we outline current views and debates in the field about the role played by large multinationals in technology production finally we compare mnes with small and medium sized enterprises smes as technology producers we conclude that smes face certain constraints due to small size and inadequate financing that raise their costs of technology production and transfer relative to the costs for mnes on the other hand their flexibility and use of unconventional methods can create successful mini nationals in niche markets

angel investors and the market for angel investments abstract the market for angel capital where individuals provide risk capital directly to small private often start up firms operates in almost total obscurity very little is known about the market s size scope the type of firms that raise angel capital and the types of individuals that provide it in this paper i present evidence on the angel market gathered from my field research which has involved interviews with more than a dozen angel investors in the dallas fort worth area the angel market appears to be a very heterogeneous and localized market with that qualification in mind i present some common characteristics of the angels i interviewed and how they select and monitor their investments i pay particular attention to how they address adverse selection and moral hazard problems i compare their behavior with venture capital limited partnerships in the more formal market for venture capital

the mne as a portfolio interdependencies in mne growth trajectory we conceptualize the mne as a portfolio of interdependent sub units and examine its growth trajectory in relation to its existing portfolio the empirical testing is based on a unique dataset that details all the location moves of us legal services mnes during 1949 2006 these mnes evolve in directions that follow from their past their portfolios affect their subsequent moves speaking for the impact of interdependencies among sub units on the evolution of mnes the portfolio exercises stronger impact on entry than on exit suggesting that different forces affect mnes expansion and contraction we outline strategic and organizational implications of the conceptualization of the mne as a portfolio