measuring the spillovers from technical advance mainframe computers in financial services measuring the social gains from recent technological advances is difficult because there are no output indexes from some important adopters measurement methods that infer the willingness to pay of theadopting industries from the derived demand curve for a new technologyovercome this difficulty the derived demand for high speed computersfor use in banks finance and insurance is shown to imply a very largesocial gain to computerization that is not captured by computer manufacturers copyright 1986 by american economic association

estimating economies of scale in higher education abstract if colleges and universities periodically operate at unexpected enrollment levels measured costs may reflect short run rather than long run minimum average costs for different levels of output if there is a systematic relationship between operating at disequilibrium and institutional size cross sectional estimates of the degree and level of scale economies may be biased using data from 1987 88 we assess the importance of the equilibrium assumption for estimates of scale economies in higher education

industrial power demand response analysis for one part real time pricing demand side management dsm programs in the industrial sector appear to be economically feasible due to the large controllable loads and relatively low costs per control point innovative electricity tariffs provide one of the most important dsm alternatives because real time pricing rtp is considered as an excellent management option which reflects the real cost of generating electricity to the end user the electricity cost saving potential of rtp through demand management is presented in this paper a unique analytical approach is followed to describe the potential electricity cost savings mathematically in terms of variables familiar to both the end user and utility these variables include the installed power consumption capacity of the plant the plant s spare energy consumption capacity and terms that describe the structure of the rtp tariff

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

testing alternative theories of the firm transaction cost knowledge based and measurement explanations for make or buy decisions in information services firms boundary choices have undergone careful examination in recent years particularly in information services while transaction cost economics provides a widely tested explanation for boundary choice more recent theoretical work advances competing knowledge based and measurement cost explanations similar to transaction cost economics these theories examine the impact of exchange attributes on the performance of markets and hierarchies as institutions of governance these theories however offer alternative attributes to those suggested by transaction cost economics or offer alternative mechanisms through which similar attributes influence make buy choices traditional empirical specifications of make buy models are unable to comparatively test among these alternative theories by developing and testing a model of comparative institutional performance rather than institutional choice we examine the degree of support for these competing explanations of boundary choice hypotheses are tested using data on the governance of nine information services at 152 companies our results suggest that a theory of the firm and a theory of boundary choice is likely to be complex requiring integration of transaction cost knowledge based and measurement reasoning 1998 john wiley sons ltd

spillovers and governance an analysis of knowledge and reputational spillovers in information technology investigating spillovers potential costs and benefits to a firm that extend beyond an individual transaction i integrate transaction cost theory and the knowledge based view of the firm in an effort to better understand the efficient governance of knowledge contracts with detailed task descriptions were associated with transactions with the potential to generate new and reusable knowledge the risk of a firm s technology spilling over to others and the risk of reputation impairing spillovers were associated with suppliers using their own employees rather than subcontractors thus results suggest that the creation and protection of knowledge are key factors in understanding governance decisions

resources transactions and rents managing value through interfirm collaborative relationships this paper offers a theoretical explanation for why interfirm collaborations form yet fail and further suggests how firms might manage them for a more positive outcome based on a perspective of value we explain how a more inclusive and integrative perspective one which combines elements from transaction costs and resource based theory provides more robust insight into collaboration formation management and instability in doing so we differentiate rent yielding firm specific assets at the core of the resource based view from the transaction specific assets at the core of transaction cost theory the paper makes a crucial distinction between the potential value attainable through collaborations and its actual realization the crux of our argument is that firms enter into collaborative relationships because these are expected to yield superior value relative to alternate organizational forms in certain situations offering potentially synergistic combinations of complementary resources and capabilities yet such relationships are frequently prone to failure because the partner firms tend not to recognize ex ante the nature and extent of transaction specific investment that is required in the collaborative relationship to attain these synergies in our argument critically the relationship between organizations is seen not simply as a governance structure of a hybrid nature but more importantly as a productive resource for value creation and realization in this light transaction specific investment in what we term relational specificity becomes imperative in the search for value we explain why the transaction costs incurred in the exchange of resources are not independent of the nature of resources to be transacted and similarly why the returns realized from these resources are not independent of the relationship and transaction specific expenditures incurred in effectively combining them and maintaining the combination the interdependence between the two mediated by the quality of the relationship has direct implications for the earning of rents through collaborations these relationship specific expenditures can be of an internally generated nature endogenous to the alliance form itself and need not exceed alternative forms while the associated benefits have the capacity to potentially exceed the alternatives this translates into potentially superior value the paper contributes in three key related ways a the explicit recognition of the relationship as a value bearing asset embedded in a larger and endogenous institutional context namely a system of resource relationships both intraorganizational and inter organizational among partner firms and the collaboration b the recognition of the evolving relationship between production and exchange which at the level of the collaboration is directly dependent on the nature evolution and dynamics of the relationship among the parties to the transaction and c the provision of a nontrust explanation for why firms might knowingly forego opportunities to take advantage of their partners drawing from this the paper occasions a a shift in focus from the form to the process of governance which has direct implications for value creation and realization and b a shift in the primary identity of transaction specific and relationship specific expenditures from cost to investment in future value

keeping organizational secrets protective institutional mechanisms and their costs the notion that firms generate rents from proprietary knowledge is widely accepted however the mechanisms that firms as institutions can differentially deploy to protect their knowledge form appropriation by rivals are not well understood this paper examines three broad classes of protective mechanisms that firms coon deploy to keep their knowledge secret rules compensation schemes and structural isolation the paper concludes that keeping organizational secrets through the deployment of protective mechanisms is both difficult and costly economizing considerations can therefore be expected to bear strongly on this aspect of firm organization copyright 1997 by oxford university press

a new stepwise power tariff model and its application for residential consumers in regulated electricity markets stepwise power tariff spt which has been put into practice is a crucial way for energy saving and environment protecting in this paper a new optimal model of spt based on residential demand response model is presented the optimal decision is proposed to restrain high electricity consumption as well as safeguard benefits of both supply and demand sides as a result the objective is designed to minimize electricity consumption and constraints are taken into consideration thoroughly including acceptable index of consumers average price sales profit of power providers and basic electricity demand which serves as a foundation for smooth implement of spt to solve the constrained optimal problem genetic algorithm ga is employed the effectiveness of the model and algorithm is investigated and demonstrated based on real data of 300 residents by a numerical example the study shows that the method can reduce power consumption obviously with little sacrifice of the benefits of consumers and power providers

academic research and industrial innovation the purpose of this study is to estimate the extent to which technological innovations in various industries have been based on recent academic research and the time lags between the investment in recent academic research projects and the industrial utilization of their findings because no attempt to my knowledge has been made to estimate the social rate of return from academic research we also make some rough and tentative estimates of this sort while the results are subject to many limitations discussed below they should be of interest to public policy makers concerned with science and technology as well as to

institutions of higher education as multi product firms economies of scale and scope a multiple output cost function is estimated for institutions of higher education in the united states employing data for 1981 82 the authors flexible fixed cost quadratic function includes three outputs undergraduate teaching graduate teaching and research grants and one input price average faculty salaries results indicate the existence of scope economies at least up to a point for both public and private institutions of higher education ray economies of scale are more pronounced in the private sector and product specific economies of scale are observed only in the public sector for research and graduate teaching copyright 1989 by mit press

should economists be kicked upstairs academic folklore has it that faculty of the same discipline seldom meet together even for merriment and diversion but that the conversation turns to a conspiracy inevitably being wrought upon them by their university s administration 1 economists are not immune from such suspicions about the competence of academic administrators if economists were running academe they tend to believe a good dose of competition incentives marginal analysis and a realistic appreciation for opportunity costs would surely boost efficiency some economists do get to reallocate inputs on the basis of marginal revenue products and some have actually met a payroll a handful have worked their way into executive offices of fortune 500 firms others manage smaller consulting businesses the largest concentration of economists in complex leadership and management positions however is in academe itself these economists are the subject of this article the belief of colleagues in the humanities and natural sciences that economists would make better administrators than incumbents seems widespread the only exception to this faith in economists occurs it seems at institutions where an incumbent is already an economist the esteem in which economists are held as prospective university administrators by noneconomists however seems frequently based on false premises consider this quotation from a conversation in the faculty lunchroom economists know all about money and balancing and cutting a budget they can read a balance sheet and an income statement and know how to reconcile a checkbook these proponents of economists as good administrators have apparently never conducted empirical research to check for example the accuracy of their premises with a few economists spouses who have struggled to untangle a checkbook bordering on chaos or who have tried in vain to convince their economist partners that personal expenditures are also subject to a budget constraint seldom do the champions of economists as academic administrators argue that an understanding of economics provides an edge in recognizing trade offs tracing indirect effects of policy changes being alert to alternatives focusing on incremental benefits and costs ignoring past mis

market structure informed trading and analysts recommendations we examine stock price behavior in response to initial coverage buy recommendations that are pre released to important clients before the stock market opens and find a strong positive valuation effect at the open on average it takes five minutes of trading for nyse amex stocks and 15 minutes for nasdaq stocks to reflect the private information contained in these analyst recommendations so when informational asymmetry is high the centralized call market is more efficient than a competitive but fragmented dealer market public news release leaves share prices unaltered overall competition among informed traders causes private information to be rapidly incorporated into stock prices

do business cycles affect state appropriations to higher education 1 introduction and motivation business cycles affect higher education in a number of important ways anecdotal evidence from college admissions officers and administrators as well as empirical evidence on the behavior of students and institutions of higher education suggest that enrollment in higher education is countercyclical for example betts and mcfarland 1995 recently showed that enrollments in community colleges are highly responsive to changes in local labor market conditions these authors found a 1 increase in the unemployment rate among all adults associated with a 4 increase in enrollment at community colleges in a large panel of community colleges across the united states leslie and ramey 1986 found a similar relationship between economic conditions and enrollment using data aggregated to the regional level this paper examines the relationship between state appropriations to higher education and state specific measures of business cycle conditions in order to better understand the effects of the business cycle on government funding of higher education 1 i further investigate the relationship between the business cycle and state government appropriations to higher education reported by betts and mcfarland 1995 and leslie and ramey 1986 both of these studies aggregated state and local government appropriations to higher education to the regional and national level while data aggregated to the regional and national levels are readily available decisions about government funding to higher education are made at the state and local levels and these decisions may be affected more by local economic conditions than by aggregate economic conditions if the timing of turning points in the business cycle varies across states then aggregating government appropriations data across states may obscure important statespecific phenomena most research has focused on the effects of economic conditions on demand for higher education one notable exception is leslie and ramey 1986 who examined the relationship between enrollment business cycles and state appropriations to higher education using regional appropriations and enrollment data and a national measure of business cycle conditions that study found a procyclical relationship between the nber coincident index and regional level government appropriations to higher education for one region the estimated elasticity of appropriations with respect to changes in the coincident index was three suggesting that a 1 change in the nber coincident index was associated with a 3 change in appropriations to higher education in that region this study also highlighted the complex relationship between state funding for higher education enrollment and business cycle conditions by documenting a statistically significant relationship between enrollment and state appropriations at the regional level although they found that the appropriations enrollment relationship weakened after 1977 betts and mcfarland 1995 also describe in an informal way using aggregate data a procyclical relationship between the business cycle and funding for higher education these authors report that aggregate state and local government appropriations to higher education fell in the years 1971 1975 1980 1982 as well as in several years in the early 1990s all of these years are either coincident with or immediately following years when the nber dating committee has identified a cyclical downturn in the economy the transmission mechanism linking business cycles and government appropriations to higher education during recessionary periods seems clear recessions reduce tax revenues state and local governments most of which operate under legally required balanced budget restrictions reduce appropriations to institutions of higher education as well as other types of expenditures in order to balance their budgets betts and mcfarland point out that these cyclical patterns of government support for higher education may place tremendous financial pressure on institutions of higher education during economic downturns because the cuts in government funding happen at the same time enrollments are increasing

are supply and plant inspections complements or substitutes a strategic and operational assessment of inspection practices in biotechnology this paper theoretically and empirically examines the conventional wisdom in procurement management that often portrays supply inspections and supplier plant inspections as substitutes we develop a theoretical model that focuses on potential internal spillover costs of the buyer receiving low quality inputs and external spillover costs should low quality inputs go undetected key to our analysis is the condition of whether a buyer can commit to the intensity of supply inspection if a buyer cannot commit supply inspections and plant inspections are substitutes as widely believed the two types of inspections however may become complements when a buyer is able to commit to the intensity of supply inspection complementarity is especially likely when a external spillovers are smaller than expected internal spillovers which depends on the level of buffer inventory b when knowledge sharing between buyer and supplier becomes more effective as the supplier allocates more resources to learning for quality improvement or c when hiding aspects of the production processes is easier for suppliers we empirically evaluate our model with a new data set drawn from a large biotechnology manufacturer empirical results provide broad support for theory which we argue might help to explain variation in inspection practices across industries our theory and empirical analysis contribute to the literatures on strategic management organizational economics and procurement management by highlighting the organizational and strategic use of inspection practices

flexible strategies for load demand management using dynamic pricing the need for and potential role of flexible pricing options which offer an efficient means for achieving a utility s load demand management objectives are discussed the focus is on dynamic tariffs by incorporating real time features within one or more key parameters of the tariff such pricing options can be tailored to offer the degree of flexibility that is necessary and cost effective for achieving the given demand management objective s

knowledge based approaches to the theory of the firm some critical comments it is argued that kogut and zander kogut b u zander 1992 knowledge of the firm combinative capabilities and the replication of technology organ sci 3 383 397 and conner conner k r 1991 a historical comparison of resource based theory and five schools of thought within industrial organization economics do we have a new theory of the firm j management 17 121 154 erred in the specific way in which they claimed that a distinct theory of the multi person firm can be constructed on the basis of a theory of organizational knowledge or from resource based insights it is not possible to tell very much of a story about why there should be firms in lieu of notions such as opportunism or moral hazard however properly interpreted knowledge based theories may help shed light on issues relating to the boundaries and internal organization of the firm

learning to contract evidence from the personal computer industry organizational forms involving more detailed contracts than are found in traditional spot market exchanges appear to be increasingly prevalent there has been relatively little analysis however of the extent to which firms learn how to use contracts to manage their interfirm relationships over time in this paper we conduct a detailed case study of a time series of 11 contracts concluded during 1989 1997 between the same two partners both of whom participate in the personal computer industry to explore whether and how firms learn to contract we find many changes to the structure of the contracts that cannot be fully explained by changes in the assets at risk in the relationship and evidence that these changes are largely the result of processes in which the firms were learning how to work together including learning how to contract with each other the nature of this learning appears to have been quite incremental and local that is not very far sighted we suggest how and when contracts might serve as repositories for knowledge about how to govern collaborations and suggest some boundary conditions for this phenomenon our findings also provide implications for the debate about whether contracts have a positive or negative effect on interorganizational trust we conclude with suggestions for future research

quality and economies of scale in higher education this study attempts to develop and empirically estimate an average cost and output reltion for average total for higher education statistical results based on data for top phd granting institutions suggest there are economies of scale in higher education academic reputation is also an important variable in explaining variations in average total cost

the choice of organizational form the case of franchising abstract we examine companies that franchise some units and centrally operate own others the agency problems confronting these two organizational forms are analyzed testable hypotheses are developed the empirical results support the notion that owning versus franchising reflects a trade off among agency related problems the cost of monitoring store managers appears to be especially important in the own franchise decision the level of repeat business and initial investment requirements per unit also appear to be important

the duality of collaboration inducements and opportunities in the formation of interfirm linkages i argue that the linkage formation propensity of firms is explained by simultaneously examining both inducement and opportunity factors drawing upon resource based and social network theory literatures i identify three forms of accumulated capital technical commercial and social that can affect a firm s inducements and opportunities to form linkages firms possessing these capital stocks enjoy advantages in linkages formation however firms lacking these accumulated resources can still form linkages if they generate a radical technological breakthrough thus i identify paths to linkage formation for leading as well as peripheral firms i test these arguments with longitudinal data on technical collaborative linkages in the global chemicals industry copyright 2000 john wiley sons ltd

the impact of degree programmes on university expenditure this research examines the impact of the number and mix of academic degree programmes on university operating expenditure in the united states statistical results are based on data for doctoral and research institutions without medical schools after controlling for other factors influencing expenditure additional degree programmes are associated with significant increases in expenditure with doctoral programmes having a 40 higher marginal impact on total expenditure than baccalaureate programmes most institutions are found to be smaller than the expenditure minimizing size and to have higher expenditure per full time equivalent student as specified the models explain a large amount of the variation in expenditure across the institutions

the economics of private liberal arts colleges private not for profit liberal arts colleges operate in a knotty market where consumers are both inputs and outputs and the total product is not directly observed our model explains interactions among price quantity reputation and cost the evidence suggests that these institutions alter tuition and financial aid to set price below the market clearing value reputation is more a function of expenditure per student and student quality than tradition and endowment costs depend more on student inputs and the price of faculty than that of capital scale economies occur at less selective colleges with excess capacity and a hierarchy exists among purveyors