tying and innovation a dynamic analysis of tying arrangements this paper analyses the effects of tying arrangements on r d incentives it shows that tying is a means through which a firm can commit to more aggressive r d investment in the tied goods market tying also has the strategic effect of reducing rivals incentives to invest in r d the strategy of tying is a profitable one if the gains via an increased share of dynamic rents in the tied goods market exceed the losses that result from intensified price competition in the market the welfare implications of tying and consequently the appropriate antitrust policy are discussed

export industry policy and reputational comparative advantage abstract country of origin reputations are endogenized in this paper and it is shown that otherwise identical countries can be correctly perceived as differing in their percentage of high quality producers these self fulfilling reputations determine not only the average quality of a country s exports but also the type of products in which a country specializes hence the pattern of international trade can be determined by this reputational comparative advantage an inferior country of origin reputation leads to lower national welfare therefore several trade and industrial policies that can improve country of origin reputation are examined

price signaling and the strategic benefits of price rigidities we analyze trade between a perfectly informed price setting party seller and an imperfectly informed price taker buyer differently from most of the literature we focus on the case in which under full information it would be inefficient to trade goods of sufficiently poor quality we show that the unique equilibrium surviving d1 is characterized by market breakdown although trade would be mutually beneficial in some state of nature this occurs independently of the precision of the information available to the buyer the model thus implies that signaling through prices may exacerbate the effect of adverse selection rather than mitigate it under d1 the seller would always benefit from committing to prices that do not reveal her information we develop this intuition by analyzing the strategic advantages of price rigidities we show that price rigidities help restore trade and could even enhance effectiveness of prices as signals of quality

choice proliferation simplicity seeking and asset allocation abstract in settings such as investing for retirement or choosing a drug plan individuals typically face a large number of options in this paper we analyze how the size of the choice set influences which alternative is selected we present both laboratory experiments and field data that suggest larger choice sets induce a stronger preference for simple easy to understand options the first experiment demonstrates that in seeming violation of the weak axiom of revealed preference subjects are more likely to select a given sure bet over non degenerate gambles when choosing from a set of 11 options than when choosing from a subset of 3 the second experiment clarifies that large choice sets induce a preference for simpler rather than less risky options lastly using records of more than 500 000 employees from 638 institutions we demonstrate that the presence of more funds in an individual s 401 k plan is associated with a greater allocation to money market and bond funds at the expense of equity funds

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

price advertising and the deterioration of product quality arguments in favour of self enforced bans on advertising by professionals often rely on the stylized fact that advertising can communicate information about price but not about quality this being the case it is argued that allowing professionals to advertise runs the risk that firms will compete vigorously over price at the expense of the quality of their product this paper shows that even if price can communicate no information directly about quality it can do so indirectly because price will be a signal of quality because of this allowing advertising is shown to improve consumer welfare

search costs and investment in quality in this paper we analyze how lower search costs aect rms incentives to invest in quality we identify two con icting eects on the one hand lower search costs increase incentives to invest in quality by eroding the market share of low quality rms and increasing the market share of high quality rms on the other hand by intensifying price competition lower search costs adversely aect high quality rms more than low quality rms the net eect of a change in the search cost on quality is shown to depend on the initial quality distribution there is a critical value such that if the average quality in the market is initially above this value lower search costs lead to lower quality whereas if the initial quality is below this value lower search cost leads to higher quality we show that our results are consistent with a superstar eect

economics coursework and long term behavior and experiences of college graduates in labor markets and personal finance i introduction if economics is a unique way of thinking as many economists like to claim some level of coursework in economics may provide enough specific knowledge and skills to lead students to make different choices in their adult roles as consumers workers and voters citizens of course the same could be claimed for training in business and other areas even though or perhaps because it could be argued that most content and training in business courses is more applied and pragmatic than what is presented in economics courses some empirical evidence though not really a great deal suggests that training in economics and business is associated with different adult behaviors and outcomes for example golec 1996 finds that mutual funds perform better if mutual fund managers have an mba and chevalier and ellison 1999 also report a positive correlation between mutual fund performance and the educational background of mutual fund managers black sanders and taylor 2003 found that economics majors earn almost 20 more than graduates in other social science majors and about 10 more than those who major in business administration in fields with large numbers of graduates they find that only engineering majors earn more than economics majors similarly hecker 1995 reported that males majoring in economics had median earnings 3 higher than all majors for the age cohort of 25 34 and 53 more than average for the cohort aged 35 44 craft and baker 2003 find that lawyers with an undergraduate major in economics earn 13 more than otherwise comparable lawyers with other undergraduate majors and economics is the only major with a statistically significant effect on earnings 1 hamermesh and donald 2008 however find that higher earnings by economics majors are partly due to economics majors working more hours than others the relationship between financial literacy knowledge and adult behavior and outcomes in financial markets has been addressed in several recent studies many sponsored by federal reserve banks hilgert hogarth and beverly 2003 and braunstein and welch 2002 find that knowledge about credit saving and investment is significantly related to recommended financial practices in cash flow management credit management saving and investment unfortunately there is also evidence of widespread financial illiteracy in u s households and particularly among elderly women see lusardi and mitchell 2007 2008 employee education programs have been found to affect workers savings retirement and investment behaviors bayer bernheim and scholz 2009 bernheim and garret 2003 state mandates for precollege education in personal finance appear to succeed in at least exposing students to more information and sources on financial education and students from states with such mandates report higher levels of savings and net worth as adults bernheim garrett and maki 2001 tennyson and nguyen 2001 much less research exists linking college coursework or majoring in economics to personal finance outcomes 2 but christiansen joensen and rangvid 2008 find that those trained in economics in college courses or employee education programs are more likely to invest in stocks than those who receive training in other areas guiso and jappelli 2005 report that among college graduates having a degree in economics is positively associated with knowledge about financial assets chert and volpe 1998 107 concluded that business majors had better knowledge about personal financial literacy than other students but that in general college students were not knowledgeable about personal finance 3 in this paper we use a large and unique data set to investigate the relationships between taking college coursework in economics or majoring in economics with long term labor market and personal finance behaviors and outcomes our information on long term behaviors and outcomes is drawn from a detailed questionnaire we mailed in january 2003 to over 25 000 graduates who attended four public universities in 1976 1986 or 1996

the efficiency of sponsor and participant portfolio choices in 401 k plans abstract to evaluate the extent of inefficient behavior in 401 k pensions now the dominant form of retirement saving in america we attribute inefficiencies separately to the employer s menu design versus participant portfolio elections results from our analysis of over 1000 plans and a million participants demonstrate that most sponsors offer efficient investment menus but participants undo this by constructing inefficient portfolios thus reducing their potential retirement wealth by one fifth because participants are the main source of inefficient pension investment choices strategies targeting their behavior may be useful including improved default investment strategies or educational programs we also show that the number of options offered is less important than the range of funds provided when designing 401 k menus

corporate social responsibility theories mapping the territory the corporate social responsibility csr field presents not only a landscape of theories but also a proliferation of approaches which are controversial complex and unclear this article tries to clarify the sit uation mapping the territory by classifying the main csr theories and related approaches in four groups 1 instrumental theories in which the corporation is seen as only an instrument for wealth creation and its social activities are only a means to achieve economic results 2 political theories which concern themselves with the power of corporations in society and a responsible use of this power in the political arena 3 integrative theories in which the corporation is focused on the satisfaction of social demands and 4 ethical theories based on ethical responsibilities of corporations to society in practice each csr theory presents four dimensions related to profits political performance social demands and ethical values the findings suggest the necessity to develop a new theory on the business and society relationship which should integrate these four dimensions

product quality and competition evidence from the broadband industry abstractaccess to high quality broadband internet is important in many different respects such as in communication education commerce and information acquisition we investigate the relationship

shareholder value stakeholder management and social issues what s the bottom line we test the relationship between shareholder value stakeholder management and social issue participation building better relations with primary stakeholders like employees customers suppliers and communities could lead to increased shareholder wealth by helping firms develop intangible valuable assets which can be sources of competitive advantage on the other hand using corporate resources for social issues not related to primary stakeholders may not create value for shareholders we test these propositions with data from s p 500 firms and find evidence that stakeholder management leads to improved shareholder value while social issue participation is negatively associated with shareholder value copyright 2001 john wiley sons ltd

does demand for product quality increase worker training abstract we uniquely examine the relationship between firm organized training and the sensitivity of consumer demand to product quality cross section panel fixed effect and instrumental variable estimates confirm that british workplaces provide more intensive training when their product demand is more sensitive to product quality robustness checks including using alternative key variable definitions and a counterfactual analysis examining the importance of competing on price support this confirmation

location costs product quality and implicit franchise contracts abstract in the literature on international trade only little attention has been given to informational asymmetries between firms and consumers with respect to product quality the few economic models that analyze the question of how asymmetric information about product quality might affect trade flows treat product quality as exogeneous in contrast our model takes product quality as an endogeneous variable i e firms can choose the quality they wish to produce in this case location costs can signal product quality under certain conditions and thereby affect international trade flows more specifically intra industry trade in vertically differentiated experience goods can be determined by information asymmetries about product quality

linking benefits to investment performance in us public pension systems abstract this paper calculates the effect that introducing risk sharing during either retirement or the working life would have on public sector pension liabilities we begin by considering the introduction of a variable annuity for the retirement phase in which positive benefit adjustments are granted each year only if asset returns surpass 5 this change would reduce unfunded accrued liabilities by over half and would lower the annual contribution increases required to target full funding in 30 years by 44 alternative measures that have similar effects on costs include increasing employee contributions by 10 3 of pay while keeping benefits unchanged or giving employees a collective dc plan with an employer contribution of 10 of pay for future service if there is a minimum guarantee that benefits cannot fall below their initial levels the impact of introducing variable annuities is substantially smaller we discuss these results in the context of models of lifecycle portfolio choice and analyze the conditions under which lifecycle agents might receive utility gains from the implementation of variable annuities

markets with untraceable goods of unknown quality beyond the small country case when importing durables and nondurables consumers often cannot discern quality prior to purchase if they cannot also identify the individual producer exporters have diminished incentives to produce high quality goods to raise the quality of traded experience goods previous international literature has proposed consolidation of export firms and the imposition of export quotas policies that may be appropriate for tiny taiwan but not a colossus like china we contribute to this literature in three ways first we explicitly model the way in which consumers of experience goods rely on the reviews of previous buyers who in turn rely on the reviews of buyers before them when deciding whether to purchase an experience good second we endogenize the price of any given quality third we assume that firms may exercise market power as we show once the small country assumption is dropped policies advocated in the literature such as the merger of exporters or the imposition of export quotas can have adverse consequences on the profits of domestic exporters and on the welfare of all consumers on the other hand the unilateral imposition of minimum quality standards will increase the profits of domestic exporters while improving the welfare of all consumers

know how and asset complementarity and dynamic capability accumulation the case of r d dynamic capabilities enable firms to create new products and processes and respond to changing market conditions this empirical investigation of dynamic r d capabilities deals with the role of complementary know how and other assets in the context of changing conditions in the u s petroleum industry during the 1970s and early 1980s the analysis suggests that in response to rising oil prices firms with larger amounts of complementary technological knowledge and physical assets also undertook larger amounts of r d on coal conversion a synthetic fuels process 1997 by john wiley sons ltd

product quality reputation and market structure in a repeated game in which firms simultaneously choose price and product quality but quality is observed only after consumption takes place equilibria exhibiting high quality may exist in oligopoly markets even when the low quality one is a unique equilibrium outcome in monopoly and competitive markets oligopolists can sustain high quality through the threat of both a loss of reputation and a breakdown in tacit collusion while we abstract from other reasons that market structure might affect product quality we show that the inverted u shaped relationship between feasible quality and market structure is robust to several generalizations of the model the relationship between market structure and product quality is an important and widely studied part of the theoretical industrial organization literature going back to schumpeter s 1942 work on the relationship between innovation and market structure and including the seminal work of swan 1972 on market power and product durability we contribute a small but important insight to this debate by asking how market structure influences the incentives to provide high quality product when quality is unobservable that is when the products sold are experience goods and when firms can tacitly collude theoretically higher margins give stronger incentives to sustain a reputation for high quality and they encourage firms to increase product quality in order to steal business from rivals this is also true empirically in the airline industry deregulation led to lower prices and a reduction in service quality 2 on the other hand competition encourages firms to protect their market share by competing in product quality in general monopolists have higher margins but face less of a threat from competition whereas firms in competitive markets have lower margins and face a greater threat from competition in between are the oligopoly markets firms in oligopoly markets may enjoy high margins because of tacit collusion and face a strong threat from competition which suggests product quality might be highest in imperfectly competitive markets this article considers a repeated gamemodelofpricingandproductqualitychoiceinwhichmarketstructurehasanonmonotone impact on firms ability to maintain reputation for high quality high quality is more likely to be an equilibrium in oligopoly markets than in either monopoly or competitive markets empirical evidence on the relationship between market structure and quality is mixed mazzeo 2003 finds that on time performance increases dramatically when a second nonstop carrier serves a route domberger and sherr 1989 find that the british government s liberalization of the conveyancing monopoly in 1984 led to improvement in quality of conveyancing services in england and wales these article are consistent with our model in that

naive diversification strategies in defined contribution saving plans there is a worldwide trend toward defined contribution saving plans and growing interest in privatized social security plans in both environments individuals are given some responsibility to make their own asset allocation decisions raising concerns about how well they do at this task this paper investigates one aspect of the task namely diversification it is shown that some investors follow the 1 n strategy they divide their contributions evenly across the funds offered in the plan consistent with this naive notion of diversification it is found that the proportion invested in stocks depends strongly on the proportion of stock funds in the plan

price quality and reputation evidence from an online field experiment we examine the link between price quality seller claims and seller reputation in internet auctions after purchasing actual baseball cards and having them professionally graded we find that some buyers in the online graded market are misled by incredible claims of quality they pay higher prices but do not receive better quality and in fact are defrauded more often online seller reputation is effective for identifying good faith sellers but conditional on completed auctions reputable sellers do not provide better quality evidence also suggests that high claim sellers target less experienced buyers we attribute these patterns to two loopholes in the ebay rating system we benefited from the comments of austan goolsbee raphael thomadsen john shea dan vincent david reiley larry ausubel peter cramton v joseph hotz jeff smith jimmy chan vincent crawford mark duggan and attendees at numerous seminars and conferences we are particularly grateful to seth sanders and john list for their constructive advice at the early stage of the research to timothy bresnahan rachel kranton and thomas hubbard for their detailed suggestions in reshaping earlier versions and to editor ariel pakes and two anonymous referees for their careful readings special thanks to eight friends who acted as our agents in purchasing baseball cards in retail markets and to numerous sports card store owners who shared their insights on the sportscard industry excellent research assistance from randy alexander moore and krzysztof fizyta is gratefully acknowledged any remaining errors are ours

portfolio choice and trading in a large 401 k plan we study nearly 7 000 retirement accounts during the april 1994 august 1998 period several interesting patterns emerge most asset allocations are extreme either 100 percent or zero percent in equities and there is inertia in asset allocations equity allocations are higher for males married investors and for investors with higher earnings and more seniority on the job equity allocations are lower for older investors there is very limited portfolio reshuffling in sharp contrast to discount brokerage accounts daily changes in equity allocations correlate only weakly with same day equity returns and do not correlate with future equity returns

why does the law of one price fail an experiment on index mutual funds we conduct an experiment to evaluate why individuals invest in high fee index funds in our experiments subjects allocate 10 000 across four s p 500 index funds and are rewarded for their portfolio s subsequent return subjects overwhelmingly fail to minimize fees we can reject the hypothesis that subjects buy high fee index funds because of bundled non portfolio services search costs for fees matter but even when we eliminate these costs fees are not minimized instead subjects place high weight on annualized returns since inception fees paid decrease with financial literacy interestingly subjects who choose high fee funds sense they are making a mistake

market imperfections opportunity and sustainable entrepreneurship this research develops the argument that four types of market imperfections i e inefficient firms externalities flawed pricing mechanisms and information asymmetries at once contribute to environmental degradation and that they also provide significant opportunities for the creation of radical technologies and innovative business models we show that these opportunities establish the foundations for an emerging model of sustainable entrepreneurship one which enables founders to obtain entrepreneurial rents while simultaneously improving local and global social and environmental conditions to advance this new field we offer suggestions for a research agenda focusing on two areas the relationship between market imperfections and entrepreneurial opportunities and the emerging field of sustainable entrepreneurship

domestic industrial structure and export quality country of origin may provide a signal of product quality if consumers are on average correct in thei r assessments of product quality from a given country then a lemons effect emerges a firm which pays the full cost of quality improvem ent will receive only diluted benefits in return while competitors gain by free riding the resulting international trade equilibrium i s suboptimal for the exporting country the country may be able to ra ise its welfare by use of export quality standards or by internalizi ng the externality by limiting export licenses or by industrial conso lidation copyright 1988 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

competition and the incentive to produce high quality previous literature indicates that when quality is a choice variable firms have an incentive to produce high quality to maintain their reputations with consumers the strategic interaction among firms and competition for market share is not considered this paper finds that when firms compete for market share perfect equilibria in which firms produce high quality goods need not exist competition for customers can eliminate the price premium needed to induce firms to maintain a reputation for high quality production in this case economists and policy analysts should pay greater attention to the interaction among firms and the institutions such as professional associations that structure interfirm relations when considering whether firms have an incentive to produce high quality goods

individual account investment options and portfolio choice behavioral lessons from 401 k plans abstract this paper examines how the menu of investment options made available to workers in defined contribution plans influences portfolio choice using unique panel data of 401 k plans in the u s we present three principle findings first we show that the share of investment options in a particular asset class i e company stock equities fixed income and balanced funds has a significant effect on aggregate participant portfolio allocations across these asset classes second we document that the vast majority of the new funds added to 401 k plans are high cost actively managed equity funds as opposed to lower cost equity index funds third because the average share of assets invested in low cost equity index funds declines with an increase in the number of options average portfolio expenses increase and average portfolio performance is thus depressed all of these findings are obtained from a panel data set enabling us to control for heterogeneity in the investment preferences of workers across firms and across time

the value of partnership under competition when competitors may be r d joint venture and supply chain partners for a critical component conventional wisdom suggests that firms are worse off when the intensity of competition increases however when competitors have the option of cooperating as supply chain and r d joint venture rjv partners the findings may be counterintuitive in this paper we consider two competing firms that must develop a critical component for their products they must decide whether to develop a distinct component or to form an rjv with their competitor in order to develop a common component and how much research effort should be exerted to improve the quality of this component forming an rjv partnership reduces r d investment because both firms are jointly responsible for the research cost but customers perceive the products to be less differentiated thus leading to a more intense degree of competition between products moreover one of the manufacturers does not produce this component and must therefore decide whether to outsource the production of this component to its competitor or to a third party supplier we examine the following two drivers of competition 1 competition because the two base products are substitutable and 2 when the two firms form an rjv to develop a common component the competition between these two products intensifies our main results show that both firms are better off when the competitiveness of the industry increases or when forming an rjv intensifies the competition between two products moreover we investigate the robustness of our results to the firms bargaining powers by considering a generalized nash bargaining game where firms negotiate on the rjv partnership decision and we find that unless the supplier has a very large bargaining power our results hold

imperfect competition and reputational commitment abstract competition can both aid and hinder reputational commitments for quality these are self sustaining depending on future profits after maintaining or deviating from the commitment and on current costs of sustaining it competition can affect these three elements at different rates

coordination commitment and enforcement the case of the merchant guild we interpret historical evidence in light of a repeated game model to conclude that merchant guilds emerged during the late medieval period to allow rulers of trade centers to commit to the security of alien merchants the merchant guild developed the theoretically required attributes secured merchants property rights and evolved in response to crises to extend the range of its effectiveness contributing to the expansion of trade during the late medieval period we elaborate on the relations between our theory and the monopoly theory of merchant guilds and contrast it with repeated game theories that provide no role for formal organization

does hospital competition save lives evidence from the english nhs patient choice reforms recent substantive reforms to the english national health service expanded patient choice and encouraged hospitals to compete within a market with fixed prices this study investigates whether these reforms led to improvements in hospital quality we use a difference in difference style estimator to test whether hospital quality measured using mortality from acute myocardial infarction improved more quickly in more competitive markets after these reforms came into force in 2006 we find that after the reforms were implemented mortality fell i e quality improved for patients living in more competitive markets our results suggest that hospital competition can lead to improvements in hospital quality

mental accounting in portfolio choice evidence from a flypaper effect this paper documents a lack of coordination between the asset allocations of different financial accounts in a household portfolio our findings are predicted by the theory of mental accounting richard h thaler 1985 1990 1999 agents sometimes make decisions about individual accounts in their portfolio without considering their other accounts the setting for our analysis is a large u s firm when an employee at this firm makes a 401 k contribution the company makes a matching contribution proportional to the employee s contribution up to a match threshold in march 2003 the firm changed its 401 k matching rules creating a natural experiment both before and after the rule change the initial allocation of participants own contribution flows was determined by the participants 1 the change in march 2003 was to the policy determining the initial asset allocation of the employer match contributions in the first regime before march 2003 the firm directed matching contribution flows entirely into employer stock this was not a binding restriction as participants could freely reallocate their match balances after matching contributions were made although in practice participants rarely did so in march 2003 the company changed its match policy requiring new enrollees to actively choose the asset allocation for both their own and match contribution flows the change between these regimes was economically neutral any allocation of balances in one regime could be replicated in the other nevertheless allocations to employer stock differed vastly across the two regimes employees who enrolled in february 2003 just before the regime change allocated 23 of their own contribution flows to employer stock since all of their match contributions were directed into employer stock this resulted in a 56 total 401 k allocation to employer stock combining the own contribution and match contribution accounts few of these february enrollees made subsequent trades to reduce their employer stock balances in either account employees who enrolled in march 2003 right after the change allocated 23 of their total own plus match contribution flows to employer stock notice that own contribution allocations to employer stock in the first regime precisely match the combined allocation of own and match contributions in the second regime 23 in both cases even though combined allocations differ greatly across the regimes these results imply that each dollar of employer stock contributed to enrollees through the match in the first regime increased the employees total holdings of employer stock by a full dollar rather than being offset by reduced employer stock holdings elsewhere or being sold off directly in other words money sticks where it hits a phrase attributed to arthur okun generating an asset allocation flypaper effect that is akin to the flypaper effects of public finance corporate finance and intra household consumption 2 after considering several explanations for the asset allocation flypaper effect we conclude that it is due in part to mental accounting our results can be explained by the following simple model in the first regime new enrollees actively allocated only their own contribution flows effectively ignoring the fact that their matching contributions were entirely directed into employer stock in the second regime the match allocation became salient because new enrollees were required to choose both their match and own contribution allocations during the enrollment process this caused enrollees to consider their entire 401 k portfolio instead of just their own contribution accounts as a result the fraction of total contributions allocated to employer stock under the second regime equaled the fraction of own contribution flows allocated to employer stock under the first regime the average participant allocated roughly one quarter of assets to employer stock in whatever accounts were salient whether the set of salient accounts was narrow regime one or broad regime two the dependence of portfolio outcomes on account salience is inconsistent with investors having a clear target asset allocation for their entire portfolio which they efficiently implement through their investment choices in accordance with much prior research we also find that investors are quite passive rarely reallocating their portfolios 3 however our central finding concerns asset allocation decisions made at enrollment a point when people have overcome their passivity and are taking action investor passivity thus cannot account for the unresponsiveness of own contribution allocations to the match allocation at enrollment under the first regime although passivity helps explain why these initial decisions are rarely reversed subsequently

dynamic capabilities what are they this paper focuses on dynamic capabilities and more generally the resource based view of the firm we argue that dynamic capabilities are a set of specific and identifiable processes such as product development strategic decision making and alliancing they are neither vague nor tautological although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence they have significant commonalities across firms popularly termed best practice this suggests that they are more homogeneous fungible equifinal and substitutable than is usually assumed in moderately dynamic markets dynamic capabilities resemble the traditional conception of routines they are detailed analytic stable processes with predictable outcomes in contrast in high velocity markets they are simple highly experiential and fragile processes with unpredictable outcomes finally well known learning mechanisms guide the evolution of dynamic capabilities in moderately dynamic markets the evolutionary emphasis is on variation in high velocity markets it is on selection at the level of rbv we conclude that traditional rbv misidentifies the locus of long term competitive advantage in dynamic markets overemphasizes the strategic logic of leverage and reaches a boundary condition in high velocity markets copyright 2000 john wiley sons ltd

queues not just mediocrity inefficiency in decentralized markets with vertical differentiation abstract we analyze a dynamic decentralized market with endogenous entry where in each period the active sellers supply one unit of an indivisible service at varying degrees of quality the customers that have entered the market are randomly matched with the active sellers and prices are set by complete information pair wise bargaining in its unique steady state the market leads to an excess diversity of quality and customers may have to suffer costly delays notably efficiency is not regained as per period delay costs disappear we also show that setting minimal quality standards such as licensing rules by a professional college will improve welfare and even consumer surplus relative to the free market whenever the inefficiency is caused by a large enough excess supply

reputational comparative advantage and multinational enterprise 1 introduction when cultivating a new export market or attempting to expand its share of an existing market an exporter is likely to find that it has been preceded by its reputation minus a readily identifiable brand name quality reputation may solely reflect the country of origin for example when consumers are presented with a large amount of complex product information they may use the country of origin as a heuristic in forming product impressions without considering other product attributes 1 in this article i show that this heuristic decision making process can affect a firm s quality decision and can therefore become self fulfilling hence any bias that consumers have may be well founded however it is only correct because firms respond rationally to it colombia s garment industry provides an interesting example of a self fulfilling unfavorable quality reputation in international trade as described by morawetz 1981 a single colombian garment firm took a contract for 50 000 men s suits that was beyond its capability the poor quality result so tarnished the american importer s name that other high quality importers become wary of colombian sewn garments with the payoff to high quality production reduced colombian garment firms then concentrated on low quality markets and the newly found unfavorable reputation was justified in the model constructed here consumers see only a noisy signal of the product s quality at the time of purchase therefore their posterior beliefs are based on this noisy signal and the country of origin reputations as will be made clear higher quality firms benefit more from an increase in their country s reputation so that a better reputation generates an increase in the percentage of high quality firms in this way the reputation becomes self fulfilling and ex ante identical countries can be correctly perceived as differing in their percentage of high quality producers i next introduce an economy with two sectors one sector produces more complex goods where high quality is not easily verified and is more essential to the product s performance these may be technology intensive products or they may consist of the design and marketing of the goods produced in the other sector in particular high quality production costs and the consumer s value for high quality goods is greater in this sector i show that this sector becomes more profitable as the country of origin reputation increases hence if one country s equilibrium reputation is low and the other country s equilibrium reputation is high then the pattern of specialization and international trade can be determined solely by reputational comparative advantage 2 finally i show that reputational comparative advantage can overshadow a small technological comparative disadvantage in determining the pattern of international trade given this pattern of trade and specialization based on reputational comparative advantage a high reputation firm may expend resources to establish a multinational enterprise mne in the low reputation country for example many mne products require the differing specializations of both the high and low reputation countries although differing in motivation this result accords well with more traditional models of vertical mne 3 however this impetus for mne as well as its more traditional counterparts does not explain why the mne would choose foreign direct investment fdi over a less costly licensing arrangement 4 the quality uncertainty in this model along with the difference in equilibrium reputations allows us to address this question in particular appropriable reputational rents are generated by fdi when the high reputation parent firm procures and internalizes production with a low reputation host firm this fdi breaks the low reputation equilibrium of the host firm and generates reputational rents

development and the interaction of enforcement institutions we examine how formal and informal contract enforcing institutions interact in a competitive market with asymmetric information where consumers do not observe quality before purchase firm level incentives for producing high quality can be achieved with an informal enforcement mechanism reputation the efficacy of which is enhanced by consumers investing in connectedness or with a formal mechanism legal enforcement the effectiveness of which can be reduced by means of bribes we show that formal and informal enforcement mechanisms do not necessarily substitute each other while high levels of judicial efficiency decrease consumers incentives to connect higher consumers connectedness leads to higher levels of judicial efficiency we then look at how the equilibrium institutional mix evolves with the level of development in doing so we show the presence of a new physical channel that can affect institutions i e the frequency of bad productivity shocks that in less developed settings can impact on firms incentives to cheat c 2010 elsevier b v all rights reserved

offering versus choice in 401 k plans equity exposure and number of funds records of over half a million participants in more than 600 401 k plans indicate that participants tend to allocate their contributions evenly across the funds they use with the tendency weakening with the number of funds used the number of funds used typically between three and four is not sensitive to the number of funds offered by the plans which ranges from 4 to 59 a participant s propensity to allocate contributions to equity funds is not very sensitive to the fraction of equity funds among offered funds the paper also comments on limitations on inferences from experiments and aggregate level data analysis how much and how to save for retirement is one of the most important financial decisions made by most people defined contribution dc pension plans such as the popular 401 k plans are important instruments of such savings by 2001 year end about 45 million american employees held 401 k plan accounts with a total of 1 75 trillion in assets holden and vanderhei 2001 an important characteristic of these plans is that the participant has responsibility over his savings among a plan s various funds how responsibly do the participants behave in particular how sensitive are participants choices to possible framing effects associated with the menu of choices they are offered to explore these questions this paper analyzes a data set recently provided by the vanguard group consisting of records of more than half a million participants in about 640 dc plans these plans offer between 4 and 59 funds in which participants can invest all plans offer at least one stock fund 635 plans

individual dynamic managerial capabilities influence over environmental and social commitment under a gender perspective abstract the current business market is characterized by rapid and continuous changes companies should adapt to new situations to guarantee sustainable development managers need to have capabilities to understand the new environment s requirements managers individual dynamic capabilities idc help them face these unpredictable changes in the market however few authors have analysed individual dynamic capabilities to ensure business sustainability this study aims to shed light on the relationship between a manager s idc and business sustainability from a gender perspective a survey of 339 managers was conducted and structural equation modelling sem was applied to study the impact of the relationship the results show that managers individual dynamic capabilities help them detect changes in the market earlier and promote a greater social and environmental commitment from those managers in addition significant differences in the environmental and social commitment between men and women were found therefore this paper first provides advice for developing business sustainability to provide an advantage for organizations second individual dynamic managerial capabilities appear to be important for promoting sustainability finally another step in the construction of gender and sustainability is provided thus this paper provides useful empirical evidence for managerial practice from a strategic management viewpoint

antitrust innovation and competitiveness the essays in this book explore how the us antitrust laws especially the sherman act have affected the ways in which us corporations can form alliances to compete in world markets the editors start from the premise that current antitrust laws needlessly and unwisely restrain innovation because they inhibit communication and co operation between firms although not all the contributors agree with them about the extent of this effect

competition and product quality in the supermarket industry this article analyzes the effect of competition on a supermarket firm s incentive to provide product quality in the supermarket industry product availability is an important measure of quality using u s consumer price index microdata to track inventory shortfalls i find that stores facing more intense competition have fewer shortfalls competition from walmart the most significant shock to industry market structure in half a century decreased shortfalls among large chains by about a third the risk that customers will switch stores appears to provide competitors with a strong incentive to invest in product quality

consumer financial protection the recent financial crisis has led many to question how well businesses deliver services and how well regulatory institutions address problems in consumer financial markets this paper discusses consumer financial regulation emphasizing the full range of arguments for regulation that derive from market failure and from limited consumer rationality in financial decision making we present three case studies of mortgage markets payday lending and financing retirement consumption to illustrate the need for and limits of regulation we argue that if regulation is to be beneficial it must be tailored to specific problems and must be accompanied by research to measure the effectiveness of regulatory interventions

working for the woman female managers and the gender wage gap most previous research on gender inequality and management has been concerned with the question of access to managerial jobs and the glass ceiling we offer the first largescale analysis that tur

competition in shared markets and major league baseball broadcast viewership abstractthis work evaluates the cross quality elasticity of related products in the context of local market nielsen local people meter ratings of major league baseball mlb regular season broadcasts from 2010 through 2013 from six teams in three shared markets we employ a fixed effects panel regression with multi way error clustering finding that fans exhibit nuanced behaviour related to the absolute quality and relative quality of the two local teams our estimates imply quality related competition for viewership between teams in the face of large disparities in quality however when both teams are of high quality viewership increased beyond what own team success would predict alone for the competing team the competitive effects are largely dominated by the spillover effects these findings point to complementary effects of team success beyond own team interest and bring about an important nuance in the literature on market definition competition and substitution in sport

competition in the us meatpacking industry is it history the us meatpacking industry has become concentrated to a degree not experienced since the days of the beef trust a century ago a number of mainstream studies have investigated if such concentration has been detrimental to competition just as earlier studies may have helped shape competition policy towards meatpacking a century ago contemporary studies have made their way into current discussions and may shape competition policy at the turn of this century this paper asks whether or not contemporary studies are useful in informing competition policy after comparing how competition looks from the econometric vantage point with how it looks from the vantage point of the industry s 300 yr history this article concludes that mainstream studies are more useful for a competition policy targeting conduct rather than structure

gender differences in customer expectations and perceptions of corporate social responsibility abstract the literature on business ethics corporate social responsibility and sustainability includes many studies on gender differences however the results are often contrasting in particular there has not yet been full agreement on the role and significance of gender differences in customer expectations and perceptions of responsible corporate conduct an extensive review of the research on the subject reveals that the published studies have not dealt with the substantive significance of gender differences and as a result the size of such differences is unknown the current study analyses both the statistical and the substantive significance of gender differences in customer expectations and perceptions of corporate responsibility also examining the influence of age and education the analysis is carried out on a remarkably large sample of 908 clients pertaining to 12 of the largest italian banks the overall results show that there is a small substantive difference between women s and men s average expectations with women showing higher average values than men this result holds generally true with variation of education levels and age groups young females show the highest average values of expectations and the significance of gender differences decreases with age in contrast the perception of corporate social responsibility does not show significant gender differences either at the general level or when the analyses are repeated by education levels and age groups the paper introduces the use of a standardized measure of effect size for analysing the substantive significance of gender differences in customer expectations and perceptions of corporate social responsibility this novel approach increases results reliability and accordingly the effectiveness of company or policy maker strategies in designing planning implementing and assessing sustainability initiatives