innovation enterprise as a vehicle for sustainable development a general framework for the design of typical strategies based on enterprise systems engineering dynamic capabilities and option thinking abstract the development of strategies actions and programs on sustainability through innovation has been taking into account within the current essential and disorderly train of events the issue of designing mechanisms was considered by institutions and organizations which innovate on sustainability the way of speeding the progress as well as the process of learning on sustainability there has been always a concern over forwarding the incremental innovations which actually improve or renew the already existing ideas and practices at the level of system or even the sos systems level together with a new focus over the technical social human and environment or markets interspaces the main issue regards the type of changes necessary on transforming the sustainability new institutions public politics strategies of settlements new ways of thinking and business practices the analysis of innovative part within the process of economic and social change should gather interdisciplinary multidisciplinary and trans disciplinary research although there is an obvious agenda of integrating the sustainability within the process of innovation the long term approach has not been provided with a phasing and the process has been quite complex the current global process has been characterized by a socio technological dynamism of an accurate changing management more exactly by the oscillation between intervals of normality and steadiness and disorderly and volatile intervals that influence the design way of strategies since these should understand and integrate the new dynamics of change of markets and of the external environment the traditional approach cannot show such mixtures of dynamics and cut off over the markets and stakeholders this paper emphasizes the synergic assortment between the systematic control of innovation for sustainable development focused on the internal environment and that based on a mix between the concept of innovation enterprise in context of enterprise systems engineering the dynamic capabilities for spectral selection in a multiple dynamics and option thinking as a paradigm well adapted in innovation the dynamic capabilities seen as strategy of creating the strategies have offered a quick qualitative image so that this approach has been combined with the paradigm of real options within a frame that proposes the active control over the extended performance of innovation enterprise the novelty has been offered by the possibility of emphasizing some mechanism of inter correlations between innovation enterprise the dynamic capabilities as strategic tool of high level and the real options as tool of option thinking on one hand and the capabilities for innovation on extended way on the other hand adapting the paradigm of dynamic capabilities to the oscillation between the normality or steadiness times and those full of disorder and volatility by means of real composed options has offered a dynamic image of relative performance during a complex process viewing the performances progress in two steps and two volatilities has been quite significant since it offered the possibility of some immediate actions of reconfigurations and conformation to

structural estimation and the border puzzle abstract we revisit anderson and van wincoop s anderson james and eric van wincoop 2003 gravity with gravitas a solution to the border puzzle american economic review 93 170 192 claim that structural estimation solves the u s canadian border puzzle we find this claim tenuous as the proposed solution attributes to structural estimation the effects of added u s data and an assumption that u s and canadian border costs are symmetric estimated canadian and u s multilateral resistance measures which are the foundation of anderson and van wincoop s argument depend critically on the symmetric costs assumption even accepting symmetry we show that structurally consistent estimates of the canadian border effect are only marginally smaller than the ols estimates when we exclude the arguably non comparable u s data

operating flexibility global manufacturing and the option value of a multinational network the multinational corporation is a network of activities located in different countries the value of this network derives from the opportunity to benefit from uncertainty through the coordination of subsidiaries which are geographically dispersed we model this coordination as the operating flexibility to shift production between two manufacturing plants located in different countries a stochastic dynamic programming model treats explicitly this flexibility as equivalent to owning an option the value of which is dependent upon the real exchange rate the model is extended to analyze hysteresis effects and within country growth options we show that the management of across border coordination has led to changes in the heuristic rules used for performance evaluation and transfer pricing

minimum market share this paper analyzes a specific model of oligopolistic competition involving product differentiation marketing activities and economies of scale in production this model is consistent with sales response models which have been justified on theoretical and empirical bases it is shown that at a nash equilibrium each firm must have market share equal to zero or greater than a threshold value this result has implications for determination of minimum firm size the effectiveness of a low market share strategy entry barriers and the likelihood of concentration in an industry the paper explores these implications and relates them to various theories and hypotheses in industrial organization and strategic planning

co development ventures optimal time of entry and profit sharing we find the optimal time for entering a joint venture by two firms and the optimal linear contract for sharing the profits we consider risk sharing timing incentive and asymmetric decisions contract designs if the firms are risk neutral and the cash payments are allowed all three designs are equivalent with risk aversion the optimal contract parameters may vary significantly across the three designs and across varying levels of risk aversion we also analyze a dataset of joint biomedical ventures in which in agreement with our theoretical predictions both royalty and cash payments are mostly increasing in the smaller firm s experience and the time of entry happens sooner for more experienced small firms

the impact of the timing of patents on innovation performance abstract in the context of industry standard setting firms face the strategic decision of whether to move faster than competitors or wait for more information that reduces uncertainty these decisions are even more challenging if there are multiple standards and if there are benefits to belonging to more than one standard this paper examines the effect of the timing of patents on a firm s innovation performance the strategic logic of real options posits that patent timing is determined by the tension between the value of preemption and the value of waiting we analyze 680 dvd disc patents in dvd patent pools to test the effect of the timing of patents on innovation performance consistent with real options logic under high uncertainty the later the timing of the patent the higher the innovation performance while under low uncertainty there is an early mover advantage

lines in the sand price dispersion across iraq s intranational borders before during and after the surge abstractthis paper tests the impact of a change in security commitment on market development in a country embroiled in low intensity conflict we analyze weekly price data for approximately 250 goods from 18 iraqi cities between 2005 and 2008 our paper suggests four empirical regularities associated with price dispersion and market development in postwar iraq first the degree of intracountry price dispersion in iraq is higher than that reported for a typical industrialized nation second the degree of price dispersion decreased significantly during 2007 coincident with the change in u s security strategy known as the surge third the economic impact of the surge is geographically uneven but loosely follows patterns of u s deployment with price dispersion decreasing by roughly one third in areas targeted during the surge but remaining relatively static in other areas finally we find that internal ethnoreligious divisions have relatively modest effects on price dispersion

the gravity model an illustration of structural estimation as calibration dawkins srinivasan and whalley calibration handbook of econometrics 2001 propose that estimation is calibration we illustrate their point by examining a leading econometric application in the study of international and interregional trade by anderson and van wincoop gravity with gravitas a solution to the border puzzle american economic review 2003 we replicate the econometric process and show it to be a calibration of a general equilibrium model our approach offers unique insights into structural estimation and we highlight the importance of traditional calibration considerations when one uses econometric techniques to calibrate a model for comparative policy analysis jel f10 c13 c60 i introduction contemporary economic analysis includes two broad traditions of fitting models to data many estimate stochastic theory based reduced forms with few parameters while others calibrate models by an extensive collection and computation of consistent fitted values although the first technique is called estimation and the second calibration these exercises are identical under consistent identifying assumptions both calibration and estimation fit a model to data dawkins srinivasan and whalley 2001 make this point succinctly calibration is estimation estimation is calibration the point is widely recognized in the macroeconomic real business cycle literature hoover 1995 our purpose is to demonstrate that it is equally relevant to micro based general equilibrium models in our view there is too little communication between calibrators and estimators of such models and the lack of communication impedes research it is important to clearly delineate the processes of data fitting and the subsequent model analyses in analysis of fitted models the degree of concentration on counterfactual simulation versus hypothesis testing around specific parameters often cleaves with our respective notions of calibration and estimation but counter examples are easily found sensitivity analysis found in computable general equilibrium cge studies can be specifically designed to generate higher order moments to facilitate hypothesis testing 1 many econometric studies are specifically focused on model identification for the purpose of counterfactual simulation 2 a more informative distinction might be drawn between testing models and calibrating models hoover 1995 places this issue at the heart of the macroeconomic debate surrounding real business cycle models we see a direct extension of the macroeconomic debate into any empirical methodology that involves general equilibrium systems in the testing paradigm stochastic measures of fit provide a critically important benchmark for evaluating alternative structural assumptions or analytical results derived from a particular set of assumptions when the objective is to provide a quantitative context for counterfactual analysis traditional measures of fit are little more than indicators of parsimony one example of the macroeconomic debate spilling over to the empirical literature is forwarded by learner and levinsohn 1995 who advise us to estimate don t test the point being that falsifiable theories are informative conceptually and empirically in the context of estimating as opposed to testing some researchers find it preferable to exhaust the degrees of freedom available in the data by expanding the set of structural parameters this results in a calibrated model that perfectly fits the benchmark observation but requires external information on how it will respond to shocks model responses are usually summarized in a set of elasticity assumptions econometric estimation does not exhaust the degrees of freedom and may focus on internal measurements of response parameters there also seems to be convergence in the empirical international trade literature some calibrators of traditional general equilibrium simulation models attempt to identify response parameters e

multinomial logit market share models equilibrium characteristics and strategic implications we specify and analyze the conditions under which the mnl market share models are appropriate for equilibrium analysis our results show that a linear price response function as is often used in empirical research in conjunction with the typical concavity assumed in a large range of marketing response functions would yield an interior equilibrium solution we then consider the optimal reactions on pricing and marketing spending to entry and potential market expansion in the context of the mnl models we demonstrate that the entry of a new brand evokes a decrease in the equilibrium prices of the existing brands as a defensive reaction this is true in both an expanding market as well as a fixed market however while new entry into a fixed market would trigger the incumbents to lower the marketing expenditure we show that firms tend to raise marketing activities as they experience market expansion consequently there exist distinct possibilities that marketing efforts for the existing brands increase in view of entry in an expanding market further managerial and marketing implications for endogeneity of the number of firms are explored

estimating the effects of free trade agreements on international trade flows using matching econometrics abstract this paper provides the first cross section estimates of long run treatment effects of free trade agreements on members bilateral international trade flows using nonparametric matching econometrics our nonparametric cross section estimates of ex post long run treatment effects are much more stable across years and have more economically plausible values than corresponding ols cross section estimates from typical gravity equations we provide plausible estimates of the long run effects of membership in the original european economic community eec and the central american common market cacm between 1960 and 2000 and the estimates confirm anecdotal reports of these agreements effectiveness

internal trade productivity and interconnected industries a quantitative analysis does trade within a country affect welfare and productivity what are the magnitude and consequences of costs to such trade to answer these questions we exploit unique canadian data to measure internal trade costs in a variety of waysthey are large and vary across sectors and provinces to quantify their consequences for welfare and productivity we use a recent multi sector trade model featuring rich inputoutput relationships we find interprovincial trade is an important contributor to canada s gdp and welfare though there are significant costs to such trade reducing interprovincial trade costs by 10 yields aggregate gains of 0 9 eliminating our preferred estimates of costs gains average between 3 and 7 equivalent to real gdp gains between 50 billion and 130 billion finally as policy reforms are often sector specific we liberalize sectors one at a time and find gains are largest in highly interconnected industries

assessing the influence of campaign expenditures on voting behavior with a comprehensive electoral market model this paper extends previous single equation econometric modeling efforts of the sales advertising relationship in elections operating within the perspective of the general demand context of voting behavior it develops a comprehensive electoral market model that takes account of potential simultaneous relationships among votes cast campaign expenditures and voting participation turnout the model is estimated using 3sls techniques with aggregate electoral district data from each of eight canadian provincial elections the model appears to yield consistent and therefore generalizable empirical results across the eight election events chief among the empirical results is the expected relationship between campaign efforts and voting behavior own communications efforts as proxied by campaign expenditures have a positive impact on votes received while competitive communications efforts draw votes away from a candidate

do state borders matter for u s intranational trade the role of history and internal migration empirical evidence of the impact of borders on international trade flows using the gravity equation approach abounds this paper examines the empirical relevance of state borders in u s interstate trade for various specifications of the gravity equation we find a large and economically significant subnational border effect for some specifications however two model specifications drastically reduce if not eliminate the border effect i dynamic panel specifications controlling for past levels of trade and ii models conditioning on internal migration les resultats empiriques de l analyse des impacts des frontieres sur les flux de commerce international en utilisant les modeles de gravite sont devenus monnaie courante ce texte examine l impact des frontieres entre etats a l aide de cette technique il s avere que les effets de frontieres infranationales sont grands et significatifs pour certaines specifications du modele cependant deux specifications du modele reduisent dramatiquement s ils n eliminent pas l effet de frontiere i des specifications qui prennent en compte les niveaux anterieurs de commerce et ii des specifications qui dependent de la migration interne

strategizing by firms in the presence of markets for resources strategizing by firms from the resource based view is concerned with the process through which firms acquire a distinctive bundle of resources that is costly and time consuming for competitors to duplicate or imitate a central question facing any firm therefore is its strategy for accumulating the resources that underpin its production activities in this article the process of resource accumulation is discussed as one involving potentially both internal resource development and external resource acquisition from the perspective of the strategic issues involved in making a choice between these options emerging markets for technologies and know how through licensing and other forms of resource exchange have opened up new avenues through which firms may jostle for advantage the article is concerned with three major aspects of this process illustrating the discussion with cases from biotechnology and pharmaceuticals first the strategizing by firms around the internal development vs external sourcing issue is discussed as informed by the practices of leading firms and how these lend greater variety of strategic options for firms second the potential competitive advantages as well as disadvantages to be secured by firms through the process of external sourcing as compared with the well known potential advantages accruing to incumbents through internal development such as time compression diseconomies and causal ambiguity and third the criteria to be used by firms to strategically evaluate resources individually as contrasted with the strategic evaluation of the resource bundle or totality these criteria it is argued turn on the issues of marginal value contribution resource complementarities and synergies resource variety and transferability involving intellectual property issues successful firms it is argued expand their options through blending internal resource accumulation with external resource leverage thereby deepening their distinctive dynamic capabilities this approach extends the framework of the rbv enabling it to encompass resource driven schumpeterian competition and such aspects of industrial dynamics as specialization modularization and imitative challenge copyright 2003 oxford university press

dark costs missing data shedding some light on services trade a structural gravity model is used to estimate barriers to services trade across many sectors countries and time since the disaggregated output data needed to infer border barriers flexibly are often missing for services this paper derives a novel methodology for projecting output data the empirical implementation sheds light on the role of institutions geography size and digital infrastructure as determinants of border barriers the paper finds that border barriers have generally fallen over time but there are differences across sectors and countries notably border effects for the smallest economies have remained stable giving rise to a divergent pattern across countries

technological joint venture formation under the real options approach abstract technological joint ventures as powerful mechanisms to attain innovation have become commonplace firms form tjvs in an effort to access future technological opportunities without losing flexibility in uncertain contexts the real options approach allows the essence of such managerial thinking to be captured although research in this line remains scarce drawing on the real options approach and using an eight year panel of 4050 spanish manufacturing firms we examine under which conditions firms form technological joint ventures we find that a firm s propensity to form technological joint ventures is positively related to its absorptive capacity and to the degree of environmental technological uncertainty and negatively related to the risk of pre emption by rivals and the existence of opportunity costs our study contributes to bridging the gap between finance theory and strategic analysis in addition it shows practitioners the applicability of the real options approach for decision making results suggest that public policies should particularly although not exclusively foster participation of young and small firms in technological joint ventures we also suggest using managerial perceptions as a guide for channeling public grants

the structure of equilibria in market share attraction models a market share attraction model of competitive effort allocation by two firms is formulated as a constant sum two person game the dependence of optimal competitive effort allocations on factors such as gross profit margins relative effectiveness of effort and attraction elasticity of effort is studied two versions of the model are developed in the first version effort budgets of both competitors are exogenously fixed in the second the competitors each choose both budget levels and allocations in each version of the model an important function of the parameters called the competitive advantage ratio indicates when it is optimal to either increase or decrease effort allocated in a market in response to changes in various measures of effectiveness implications of differences in the cost associated with each competitor s budget on equilibrium allocations are derived

thick and thin borders in the european union how deep internal integration is within countries and how shallow between them the existence of large border effects is one of the main puzzles of international macroeconomics the seminal paper by mccallum found that trade between any two canadian provinces was on average 22 times greater than trade between any canadian province and any united state us although various authors have estimated internal and external border effects for the whole european union and some specific european countries none has done so in the manner that mccallum s seminal paper stymied by lack of data on region to region international trade flows this study uses a novel data set that captures intra and international truck shipments between spanish regions and regions in seven european countries during the period 2004 11 it computes internal and external border effects offering novel results for aggregate flows and the importing countries and estimates several specifications of the gravity equation so as to tackle such issues as the multilateral resistance term heteroskedasticity and zero flows and non linear relation between trade and distance the paper also adds a detailed analysis on the external border effect for each spanish exporting region and each of the seven european countries considered by means of this analysis we shed new light on the relative integration between regions of these seven countries and spanish exporting regions finally we conduct an extrapolation exercise computing the trade potentials that would be expected in a fully integrated europe and estimating how long full integration would take to achieve between each spanish exporting region and each european importing country to this regard two alternative scenarios are considered one using the growth rates of the spanish exports before the crisis 2001 08 and other considering the postcrisis growth rates 2011 13

attraction versus linear and multiplicative market share models an empirical evaluation linear and multiplicative market share models are compared with the attraction specification on the basis of both predictive and descriptive measures the data used represent 15 brands in three dif

sunk costs uncertainty and market exit a real options perspective in this article we examine whether the option value of keeping an operation alive will deter firms from exiting an industry we find that uncertainty dissuades firms from exiting an industry but only when the sunk costs of entering and exiting that industry are sizeable moreover we argue and find that sunk costs can be influenced by the technological intensity of an industry by the extent to which a firm competes on the basis of innovation and by the firm s diversification strategy copyright 2009 the author 2009 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

the economic significance of national border effects to address the economic significance of national border effects this paper provides evidence on two fundamental questions 1 do large border effects arise because of high perceived price wedges between foreign and domestic products or because imports and domestic goods are very close substitutes and 2 if price wedges are important do they reflect distortionary barriers to trade or do they arise from nondistortionary factors such as differences in transactions costs or product characteristics i conclude that while border effects may imply barriers welfare costs and a role for policy distortions are probably not as substantial as initial border results suggested jel f1

real options analysis and strategic decision making the real options approach is frequently advocated as an approach that offers a positive and radical reassessment of the value of risk and exploration we examine a recent case where merck used the real options approach to justify an investment in an r d project this case is used to highlight some of the problems associated with using real options we note that the assumptions incorporated in most standard option valuation models can conflict with the conclusions reached by strategic analysis as a result users of real options models should understand the quantitative aspects of these models and may often need to create a customized model for each situation the difficulty of developing customized models may explain in part the limited use of the real options approach in strategic analysis

asset stock accumulation and sustainability of competitive advantage given incomplete factor markets appropriate time paths of flow variables must be chosen to build required stocks of assets that is critical resources are accumulated rather than acquired in strategic factor markets barney barney j 1986 strategic factor markets expectations luck and business strategy management sci october 1231 1241 sustainability of a firm s asset position hinges on how easily assets can be substituted or imitated imitability is linked to the characteristics of the asset accumulation process time compression diseconomies asset mass efficiencies inter connectedness asset erosion and causal ambiguity

intra national versus international trade in the european union why do national borders matter the first objective of this paper is to estimate border effects among european union countries in this context the specification of the gravity equation together with the choice of the distance measure are shown to be crucial for assessing the size of the border effect the second objective is to evaluate the determinants of the cross commodity variation in national border effects contrary to previous findings reported in the literature we show that trade barriers do provide an explanation in particular technical barriers to trade together with product specific information costs increase border effects whereas non tariff barriers are not significant our results further suggest that these barriers are not the only cause since the spatial clustering of firms is also found to matter

valuing modularity as a real option we provide a general valuation approach for capital budgeting decisions involving the modularization in the design of a system within the framework developed by baldwin and clark baldwin c y k b clark 2000 design rules the power of modularity mit press cambridge ma we implement a valuation approach using a numerical procedure based on the least squares monte carlo method proposed by longstaff and schwartz longstaff f a e s schwartz 2001 valuing american options by simulation a simple least squares approach rev financial stud 14 1 113 147 the approach is accurate general and flexible

within u s trade and the long shadow of the american secession using data from the us commodity flow surveys we show that the historical union confederacy border lowers contemporaneous trade between us states by about 16 percentrelative to trade flows within the former alliances amongst one million placebos there is no other constellation of state grouping that would yield a larger border effect the finding is robust over different econometric models treatment of the rest of the world available survey waves or levels of aggregation including contemporaneous controls such as network institutional or demographic variables and heckscher ohlin or linderterms lowers the estimate only slightly historical variables such as the incidence of slavery do not explain the effect away adding us states unaffected by the civil war we argue that the friction is not merely reflecting unmeasured north south differences finally the estimated border effect is larger for differentiated than for homogeneous goods stressing the potential role for cultural factors and trust

an equilibrium analysis of defensive response to entry using a coupled response function model we determine the optimal response to competitive entry in a market characterized by a market share attraction model the response of an incumbent is limited to changes in prices advertising and distribution expenditures brand positions are assumed to be fixed we also assume that the entrant s position is chosen exogenously and that the sales potential of the market is constant after proving the existence of a unique nash equilibrium we show that the optimal response depends on the relative market share of the incumbents the response by nondominant brands with market shares less than 50 mirrors the prediction by decoupled response function models reduce price advertising and distribution spending for the dominant brand having a market share of 50 the response is to reduce price and increase marketing spending this finding explains previous empirical results that could not be addressed by the decoupled models

subnational home market bias in vietnam evidence from enterprise level data this paper contributes to the home market bias literature where administrative or political borders limit trade across borders home bias is well documented at the national and subnational level to sort out macro e g location characteristics and micro e g enterprise characteristics factors behind home bias we use small and medium sized enterprise sme data from vietnam using the fractional multinomial logit model we find that the proportion of sme sales outside of their home markets is positively associated with enterprise size age number of business association memberships and the distance of smes most important supplier in contrast the proportion of sme sales to neighbouring provinces is negatively associated with the share of sme production for final consumption besides enterprise level frictions market characteristics matter too the proportion of sme sales to customers in their home markets is negatively associated with home or neighbouring provinces governance quality while the proportion of sales to customers in neighbouring provinces is positively associated with these areas governance quality these suggest that good governance frees sme resources for use in selling to less familiar markets

sh a r p shelf allocation for retailers profit shelf space is the retailer s scarcest resource space management tools are thus badly needed for that purpose commercial computer packages and optimal allocation models have been developed building on the work of corstjens and doyle we elaborate a general theoretical shelf space allocation model which focuses on the demand interdependencies prevailing across and within product groups rules of thumb are compared to the derived optimal allocation the sh a r p model is introduced as a simplified yet realistic variant and validated against data collected in a dutch supermarket chain subsequently the feasibility of its implementation has been experimented in various belgian chains case studies demonstrate the profit potential of sh a r p

choosing the open sea the cost to the uk of staying out of the euro abstract in this paper we provide an estimate of the trade flows that there would have been between the uk and its main trading partners if the uk had joined the euro as an alternative approach to the standard log linear gravity equation we employ the synthetic control method we show that the aggregate trade flows between britain and eurozone members would have been 16 higher if the uk had adopted the euro we also provide an estimate of the hypothetical euro s effect on trade flows between the uk and non euro countries our results suggest that the adoption of the european currency would also have led to a substantial increase in british trade flows with non euro members finally we provide a new estimate of the euro s trade impact for euro members our results suggest that the adoption of the single currency led to an increase in intra european trade flows of between 19 and 55

on modeling the advertising operations interface under asymmetric competition abstract using a market share attraction structure of advertising competition and following a supermodular game approach this article demonstrates for an asymmetric oligopoly the directional impact of changes in model parameters on the marketing controlled variables of all rivals advertising budgets and the operations controlled variables of all rivals ordered quantities importantly the various changes are examined analytically empirically and numerically in both non dominated and dominated asymmetric oligopolies in this regard the results indicate that firms in a dominated oligopoly one firm of market share larger than or equal to 50 behave differently compared to firms in a non dominated oligopoly each firm of market share less than 50 in response to changes in model parameters furthermore changes in model parameters are investigated in terms of their relative influential impact on a variety of equilibrium measures in this regard the findings indicate that for the analyzed model the marketing parameters exert much more influence on the equilibrium measures than the operations parameters additionally a change in the mode of competition from non cooperation oligopoly to cooperation joint ownership dictates that strong asymmetric firms of favorable marketing and operations parameters continue advertising but at lower levels and weak asymmetric firms of less favorable parameters cease advertising altogether

discontinuity of output convergence within the united states why has the course changed has the progress of output convergence changed within the united states this article examines the output convergence among u s states for the last five decades by making several improvements over the extant literature by applying a battery of convergence tests designed to capture nonlinear transitional dynamics to real output per worker data i e nominal values deflated by state level price we find that output convergence has not been a feature of the continental united states since the 1970s instead output convergence has proceeded among four subgroups within which constituent states have certain characteristics in common our regression analysis suggests that state level characteristics related to technology and human capital play a crucial role in accounting for the formation and composition of convergence clubs in agreement with the recent theoretical models of growth and development e g aghion et al 2009 gennaioli et al 2013b the level of technology proxied by patents turns out to be a consistently significant determinant even after controlling for endogeneity suggesting that frictions in the diffusion of technology and human capital may have led to clustering of states with different levels of productivity our results therefore cast doubt on the common view that diffusion of knowledge and technology across state borders is frictionless jel o47 o51

a two stage sales forecasting procedure using discounted least squares the authors develop a two stage forecasting methodology for estimating the sales responses to marketing and environmental variables when it is likely that their impacts will change unpredictably over time the methodology is based on an integrated least squares procedure that uses regression analysis in stage 1 to estimate the coefficients of the controllable and environmental variables in combination with a stage 2 discounted least squares smoothing procedure that updates key parameters in response to changing market conditions the effectiveness of the methodology is demonstrated by applying it to weekly sales data from a major retail chain

strategic growth options we provide a strategic rationale for growth options under uncertainty and imperfect competition in a market with strategic competition investment confers a greater capability to take advantage of future growth opportunities this strategic advantage leads to the capture of a greater share of the market either by dissuading entry or by inducing competitors to make room for the stronger competitor as a result of this strategic effect payoffs are in a rough sense more convex than in the case of no investment in a growth option when the strategic advantage is strong increased uncertainty encourages investment in growth options higher uncertainty means more opportunity rather than simply larger risk if the strategic effect is weak the reverse is true on the other hand an increase in systematic risk discourages the acquisition of growth options our results contradict the view that volatility is a strong disincentive for investment

one money one market the effect of common currencies on trade currency unions their dramatic effect on international trade a gravity model is used to assess the separate effects of exchange rate volatility and currency unions on international trade the panel data bilateral observations for five years during 1970 90 covering 186 countries includes 300 observations in which both countries use the same currency i find a large positive effect of a currency union on international trade and a small negative effect of exchange rate volatility even after controlling for a host of features including the endogenous nature of the exchange rate regime these effects statistically significant imply that two countries sharing the same currency trade three times as much as they would with different currencies currency unions like the european emu may thus lead to a large increase in international trade with all that that entails andrew rose

real options theory in international business the last quarter century has witnessed substantial growth in applications of real options theory rot to international business ib research in this review we explicate the core rot concepts in the ib context and discuss the contributions of rot based research to three core ib issues timing and scale of market entry or exit entry mode and governance form and the role of multinational networks based on our review we propose a holistic rot view of the multinational enterprise that synthesizes the insights of existing studies finally to move the field forward we highlight key questions and challenges in current rot based work provide a more precise definition of exogenous and endogenous uncertainty suggest empirical designs to test unique rot predictions and explore areas where rot can be combined with other theoretical perspectives to better understand ib phenomena

licensee technological potential and exclusive rights in international licensing a multilevel model granting of exclusive rights is an important consideration for firms using licensing as a mode of entry into foreign markets as exclusive contracts reduce licensors flexibility in a given market during the term of the agreement by granting exclusivity to a licensee with greater technological potential the exchange partners can increase the potential transactional value of the licensing agreement at the same time a licensee with strong technological potential will increase the threat of transactional hazards due to underinvestment and rent appropriation in this paper we develop and empirically test a model that evaluates the balancing of transactional value and transaction costs in exclusive licensing in particular we identify the conditions under which exclusive contracts are likely to be granted to foreign licensees with strong technological potential empirical results from a multilevel model based on 375 international licensing agreements of us firms in high technology industries during 1995 2008 show that licensees with a stronger technological potential are more likely to be granted exclusive rights in countries with strong intellectual property rights protection and in industries with a high rate of technological change but are less likely to be granted exclusive rights when there is a high degree of overlap between licensor and licensee products

the wto trade effect this paper reexamines the gatt wto membership efiect on bilateral trade ows using nonparametric methods including pair matching permutation tests and a rosenbaum 2002 sensitivity analysis together these methods provide an estimation framework that is robust to misspeciflcation biases allows general forms of heterogeneous treatment efiects and addresses potential hidden selection biases this is in contrast to most conventional parametric studies on this issue our results suggest large gatt wto trade promoting efiects robust to various restricted matching criteria alternative indicators for gatt wto involvement different matching methodologies non random incidence of positive trade ows and inclusion of multilateral resistance terms

intra national trade costs assaying regional frictions abstract the effects of intra regional inter regional and international frictions on the trade flows of canada s provinces are disentangled by gravity model techniques unexplained trade barriers utbs are the difference between inter provincial trade barriers inferred from pair fixed effects and from bilateral distance and contiguity the estimates reveal large intra national trade costs and utbs that vary significantly across canada s provinces decomposition of utbs into relative border effects and a systematic residual utb is based on a novel cobb douglas aggregator of intra provincial and pure inter provincial trade costs variation of both components across provinces is big

a multiattribute model of consumer choice during product learning the processes of consumer preference formation during product learning are analyzed a hypothesis about how individuals form attribute expectations is used to derive a dynamic multinomial logit model of individual choice which endogenously recognizes product learning the model and its underlying assumptions are then tested in the context of an interactive grocery store learning game the results support most elements of the proposed model structure an assumption of temporal stationarity in attribute salience however could not be supported approaches to implementation of the model are discussed and implications for marketing management and research in individual choice modeling are addressed

optimal sequential investment when capital is not readily reversible when investment opportunities arrive one at a time and are reviewed sequentially a corporation s optimal policy differs from a standard net present value rule if the corporation exercises control over an industry state variable and control is costly the first condition presupposes a degree of market power for the firm the second occurs if corporate investment decisions are imperfectly reversible to address the problem of optimal investment in this context a firm s investment decisions are modeled as a markov reward process the causes of economic irreversibility are discussed and general propositions concerning the optimal investment policy are derived these propositions are then applied to the optimization of an exploration program by an oligopolistic firm a price leader under particular demand and distributional assumptions solutions for the optimal decision rule and the value of the exploration program are obtained and their properties examined current investment may affect future opportunities by creating growth opportunities as defined by myers 16 see also spence 25 or by reducing the value of an existing opportunity set despite the known potential for these interactions capital budgeting techniques such as net present valuation scenario planning and monte carlo simulation focus exclusively on the stand alone value of an investment the capacity for modeling interactions is present in the multiperiod models of merton 16 bogue and roll 5 and others the absence of applications however is evidence that actual economic interactions between current and future opportunities are not well understood this paper develops a model of a firm facing a sequence of interdependent growth opportunities opportunities have positive net present values because the firm exercises market power in its product market current investment changes the value of future opportunities through its effect on a product market variable the model is used to examine the impact of demand industry structure and technology on optimal investment rules and on the value of aggregate growth

timid choices and bold forecasts decision makers have a strong tendency to consider problems as unique they isolate the current choice from future opportunities and neglect the statistics of the past in evaluating current plans

a retailer promotion policy model considering promotion signal sensitivity recent research suggests that the signal e g sign or marker with a point of purchase promotion will stimulate a significant sales increase regardless of whether or not that signal is accompanied by a price cut this paper develops a model of retailer profitability that incorporates this promotion signal sensitivity in a field test the profitability of the promotion policy prescribed by this model is compared to the profitability of two other promotion policy setting paradigms a model based policy that does not consider promotion signal sensitivity and one prescribed by industry experts the test results support the proposed model its policy generates 11 more category profit per unit than the model based policy and 12 more than the industry experts implications for retailers and future research are discussed

the effect of domestic uncertainty on the real options value of international investments scholars have noted that international investments have the potential to provide firms with real options value under uncertainty to assess this issue prior studies have tended to focus primarily on exchange rate volatility although multinational firms face other types of uncertainty as well including those stemming from their domestic operating environment the role of such uncertainty for firms flexibility needs has not been previously considered in this study we compare the influence of both domestic economic uncertainty and exchange rate uncertainty on the real option value of international investments of korean firms over 16 years of varying uncertainty we find evidence that an international investment network characterized by greater breadth and lower depth is associated with higher firm value under domestic economic uncertainty exchange rate uncertainty however was not found to play a role in firms need for flexibility the results suggest that firms are able to hedge exchange rate uncertainty by using mechanisms such as forward contracts or derivatives thus potentially reducing the impact of this type of uncertainty on their operations

a minimum discrimination information estimation of multiattribute market share models multiattribute market share models mmsm using supplier product and buyer attributes as explanatory variables generally use a logit model structure the literature indicates two basic types of approaches for estimating coefficients regression type approaches generally using log share ratios and a nonregression approach which is based on maximum likelihood principles this article discusses a nonregression estimation approach a minimum discrimination information mdi whose formulation differs from mdi procedures previously applied to the marketing literature the mdi formulation enables researchers to estimate a logit model with proportions as the dependent variable and is computationally easy because it uses the same estimators as an mle approach which assumes independence of trials equivalence between mdi and mle estimates under certain conditions are discussed the estimation methods are applied to a real world data set the results indicate the mdi mle method does best in predicting the market shares of the suppliers according to some basic error criteria both at disaggregate and aggregate levels

capabilities as real options strategy research consists of a balance between positive and normative theory normative theories suggest particular heuristics or cognitive representations to find appropriate solutions heuristics permit faster solutions to real time problems they also suffer from the potential of negative transfer to inappropriate applications the theory of real options provides the appropriate heuristic framing of competencies and exploratory search a real options approach marries the theory of financial options to foundational ideas in strategy organizational theory and complex systems we join these approaches to identify three pairs of concepts scarce factor and the underlying asset in option theory inertia and irreversibility and the ruggedness of landscape and option values strategic theories of resources largely define a core competence as unique and nonimmutable in doing so this definition has wrongly forgotten barney s initial insight into scarce factor markets as determining the valuation of a competitive asset financial theory of real options derives its heuristics of investing in exploratory search by inferring future value of today s investments from market prices we apply the three conceptual pairs to the evaluation of capabilities as real options through a formal descriptive model the valuation of core capabilities is derived from observing the price dynamics of correlated strategic factors in the market because of inertia managers cannot easily adjust the wrong set of organizational capabilities to the emergence of market opportunities however firms that have made investments in capabilities appropriate to these opportunities are able to respond from this description we define core competence as the choice of capabilities that permits the firm to make the best response to market opportunities the heuristic framing of capabilities as real options guides the normative evaluation of the balance between exploitation and exploration

the value of market share and the product life cycle a game theoretic model the paper presents a dynamic game theoretic model of marketing competition in an oligopoly the equilibrium solution to this model is used to investigate how a firm s optimal marketing expenditure per unit sold which can be interpreted as a measure of the value of market share depends on current and future market demand which in turn can be related to the product life cycle the results support and refine the conventional wisdom that the earlier it is the life cycle the greater is the value of the market share

option pricing when the underlying asset earns a below equilibrium rate of return a note in their classic paper black and scholes 2 present two derivations of the european call option pricing formula the first which we will refer to as the replication derivation relies on the fact that the returns from the option can be replicated by holding a continuously revised position in the underlying asset and bonds this implies that if an option is not priced according to the blackscholes formula there is a sure profit to be made by some combination of either short or long sales of the option and underlying asset this argument is seemingly independent of considerations relating to capital market equilibrium the second derivation which we will call the equilibrium derivation evolves from the requirement that the option earn an expected rate of return commensurate with the risk involved in holding the option as an asset this note considers the pricing of a call option on an asset which earns an expected rate of return lower than that necessary to induce investors to hold it we show in this case that even if the replication strategy is feasible it is inefficient a consequence of this is that the correct option pricing formula is different than the black scholes formula unlike the black scholes formula our formula requires as an input the difference between the expected rate of return on the underlying asset and that expected rate of return which would be required to induce holding of the asset other papers have made a similar point constantinides 3 and cox et al 4 have argued that in equilibrium the prices of traded contingent claims must satisfy a partial differential equation which is identical to the black scholes partial differential equation only when the underlying asset pays no dividends and earns a rate of return sufficient to induce holding of the asset more recently ingersoll 5 has noted that commodities often pay a nonpecuniary service yield the value of which must be taken into account in deriving the option price none of these authors however explain why the black scholes formula is sometimes inappropriate the purpose of this note is to demonstrate why the black scholes formula needs modification even if replication is feasible we provide an intuitive derivation of the correct formula and discuss why divergences of the equilibrium price from the black scholes formula do not result in arbitrage opportunities

the trade creating effects of business and social networks evidence from france using theory grounded estimations of trade flow equations this paper investigates the role that business and social networks play in shaping trade between french regions the bilateral intensity of networks is quantified using the financial structure and location of french firms and bilateral stocks of migrants compared to a situation without networks migrants are shown to double bilateral trade flows while networks of firms multiply trade flows by as much as four in some specifications finally taking network effects into account divides the estimation of the impact of transport costs and of the effect of administrative borders by around three

the economic policy uncertainty and firm investment in australia this paper examines the impact of economic policy uncertainty epu on the australian firm investment activity we find a significant positive relationship between the epu and the firm investment o

on the prediction power of market share attraction models logical consistency of market share models has received considerable attention in the recent marketing literature the reports suggest that at least theoretically attraction type specifications a

a hybrid conjoint model for price demand estimation abstract recent developments in conjoint analysis include the introduction of hybrid models in which part worths estimated from self explicated data are combined with information obtained from full profile evaluations this paper extends the hybrid approach to conjoint problems entailing multiple suppliers with particular emphasis on competitive price relationships

measuring internal trade distances a new method applied to estimate provincial border effects in canada in this paper we suggest an improved methodology for comparing the intensity of trade across and within national and provincial boundaries earlier efforts to assess border effects for provinces or for countries without internal trade statistics made fairly arbitrary assumptions about average distances for internal trade flows we improve on earlier efforts by taking more complete account of the distribution of population within each province or country internal distance is estimated as a population weighted average of intra city and intercity distances as well as distances to and within rural areas we find higher estimates of internal distances and hence border effects than found in previous studies

assessing the benefits of trade facilitation a global perspective this paper estimates the relationship between trade facilitation and trade flows using a panel of disaggregated manufactured goods for the 2000 2001 period for 75 countries four categories of trade facilitation are defined measured and assessed for their impact on bilateral trade flows using a gravity model the four measures of trade facilitation are port infrastructure air and maritime customs environment regulatory environments and e business infrastructure the results suggest that raising global capacity halfway to the world average in the four areas would increase trade by 377 billion most regions of the world increase exports more than imports in large part this result stems from increased exports to oecd markets that is obtained through a country s own effort to improve ports customs regulations and services infrastructures in addition the results suggest that reform and capacity building in trade facilitation in areas related to gatt articles v viii and x that are under discussion at the world trade organisation could expand trade and exports significantly many of the reform measures necessary to achieve this goal need not necessarily require large scale investment projects but rather action in legal and administrative reform to facilitate trade

avoiding complexity catastrophe in coevolutionary pockets strategies for rugged landscapes can firms and coevolutionary groups suffer from too much interdependent complexity is complexity theory an alternative explanation to competitive selection for the emergent order apparent in coevolutionary industry groups the biologist stewart kauffman suggests a theory of complexity catastrophe offering universal principles explaining phenomena normally attributed to darwinian natural selection theory kauffman s complexity theory seems to apply equally well to firms in coevolutionary pockets based on complexity theory four kinds of complexity are identified kauffman s nk c model is positioned at the edge of chaos between complexity driven by newtonian simple rules and rule driven deterministic chaos kauffman s insight which is the basis of the findings in this paper is that complexity is both a consequence and a cause multicoevolutionary complexity in firms is defined by moving natural selection processes inside firms and down to a parts level of analysis in this instance porter s value chain level to focus on microstate activities by agents the assumptions of stochastically idiosyncratic microstates and coevolution in firms are analyzed competitive advantage as a dependent variable is defined in terms of nash equilibrium fitness levels this allows a translation of kauffman s theory to firms paying particular attention to 1 how value chain landscapes might be modeled 2 assumptions underlying kauffman s models making them amenable to firms and 3 a delineation of seven of kauffman s computational experiments as part of the translation possible parallels between the application of complexity catastrophe theory to coevolutionary pockets and studies by institutional theorists and social network analysts are discussed the models derive from spin glass microstate models resulting in boolean games kauffman s boolean statistical mechanics is introduced in developing the logic underlying the somewhat simplified nkm c model the model allows the use of computational experiments to better understand how the dependent variable value chain fitness is affected by changes in the number of internal interdependencies k the number of coevolutionary links with opponents c the size of the coevolutionary pocket s and the number of simultaneous adaptive changes among other things various computational experiments are presented that suggest strategic organizing approaches most likely to foster competitive advantage high or low nash equilibrium fitness levels are shown to result from internal and external coevolutionary densities as a function of links among value chain competencies within a firm and between a firm and an opponent complexity phenomena appear to suggest a number of expected and thus validating and surprising strategies with respect to complex organizational interdependencies for example moderate complexity fares best and external coevolutionary complexity sets an upper bound to advantages likely to be gained from internal complexity various complexity lessons are discussed models such as the nk c could offer insights into strategic organizing

technological platforms and diversification as the invention of fundamental new sciences spawns subsequent research discovery and commercialization core technologies branch into new applications and markets some of them evolve over time into many derived technologies whereas others are essentially dead ends the pattern of evolution and branching is called a technological trajectory an intriguing question is whether some firms can ride the trajectory by developing proprietary experience in a platform technology because the knowledge is proprietary firms that originate in industrial fields based on a platform technology acquire the technological skills to diversify and to mimic the branching of the underlying technological trajectory the ability to compete in hypercompetitive markets depends on the acquisition of know how that is applicable to a wide set of market opportunities such capabilities serve as platforms into quickly evolving markets to respond rapidly to market changes a firm must have already acquired fundamental compet

the environmental consequences of trade evidence from subnational trade flows abstract the debate over the environmental consequences of free trade is not only quite heated but also entails significant policy ramifications recently cross sectional analysis at the country level has made use of exogenous determinants of trade to identify the causal effect of trade on the environment finding moderate evidence of a beneficial impact of expanded trade on environmental quality given the stakes involved we revisit this finding using subnational data on trade flows across us states and several measures of pollution not only does the analysis shed further light on the debate at the international level but also addresses a heretofore unexamined question does greater inter regional commerce at the subnational level harm the environment our findings are striking providing further evidence against a negative environmental impact of trade for the majority of measures analyzed however several sources of heterogeneity arise that are noteworthy

networks and the disappearance of the intranational home bias abstract previous studies have shown that not only countries but also regions have a preference to trade within their administrative borders using unique trade flows data we also find a large home bias in spanish intranational trade however we show that this home bias tends to disappear once we take into account the higher density of social and business networks within regions than between regions we also find that the home bias does not disappear if intranational trade flows are measured in quantity rather than value this fact might explain why previous studies on other european countries still find an intranational home bias even when network effects are taken into account

chapter 6 market share models publisher summary this chapter describes that three basic principles motivate the specification of the market share models market share models should be competitive descriptive as well as predictive and profit oriented being fundamentally competitive implies that one cannot know the effect or effectiveness of a marketing action without accounting for the actions of competitors market share models are models for understanding how the marketing efforts of every brand impact the results in a competitive marketplace only by describing the influence of each marketing instrument can one gain a basis for marketing planning prediction alone is not enough time series models that forecast the future from the past sales provide no insight into how sales are generated the emphasis on being descriptive also embraces the need to understand the areas in which consumer choice probabilities are synonymous with market shares as well part of the goal of description transcends what can be done by market share models alone managers need to understand that their efforts have potentially competitive effects and potentially market expansive effects in sales response models these effects are comingled but by combining descriptive market share models for the competitive effects with descriptive category volume models for the market expansive effects managers obtain a much richer understanding of the market the profit oriented goal of market share analysis urges us to ask how the firm s allocations of resources to aspects of the marketing mix produce bottom line results

intergenerational hybrids spillbacks spillforwards and adapting to technology discontinuities during technological discontinuities incumbents frequently develop hybrids of competing technical generations although some prior work implies that such intergenerational hybrids may be the result of organizational dysfunction we propose that in some cases hybrids may be sophisticated learning tools that shape organizational adaptation to a technological discontinuity in this paper we suggest two mechanisms through which intergenerational hybrids may affect organizational adaptation spillbacks and spillforwards in an empirical test among the population of automobile carburetor manufacturers during a technological discontinuity we observe that organizations developing intergenerational hybrids capture spillback benefits knowledge spillovers from an emerging technology generation to the current generation furthermore we find that these same organizations also capture spillforwards spillover benefits from developing higher performing intergenerational hybrids that improve their product performance in the future technology generation these results suggest that intergenerational hybrids may be stepping stones for organizations to learn about and adapt to technology discontinuities

trade frictions and welfare in the gravity model how much of the iceberg melts a key element missing from the structural gravity literature is an examination of the implied general equilibrium by design the gravity equation is adept at predicting bilateral trade flows to make inferences beyond trade flows however the theoretic models should be consistent with other observables structural econometric estimates from anderson and van wincoop 2003 allow us to evaluate their proposed general equilibrium along several dimensions we find that their gravity model predicts too large a difference between consumer and producer prices excessive variation in the geographic distribution of consumer price indices and an exceptionally large portion of output devoted to overcoming trade frictions under plausible parameterizations of the model at least 50 of output melts in transit jel classification f10 frictions commerciales et bien etre dans un modele gravitationnel quelle portion du iceberg fond un element cle qui manque dans la litterature specialisee sur la gravite structurelle est l examen de l equilibre general implicite par construction l equation de gravite predit bien les flux de commerce bilateraux pour suggerer des inferences au dela des flux de commerce il faut cependant que les modeles theoriques soient compatibles avec ce qu on observe par ailleurs les calibrations econometriques structurelles d anderson et van wincoop 2003 permettent d evaluer leur equilibre general propose selon plusieurs dimensions il s avere que leur modele de gravite predit une difference trop grande entre les prix des producteurs et des consommateurs une variation excessive dans la distribution geographique des indices de prix a la consommation et une portion anormalement grande de la production depensee pour surmonter les frictions commerciales a partir de parametrisations plausibles du modele on montre que 50 de la production fond en cours de route

national borders and international trade evidence from the european union in this paper the impact of national borders on international trade within the european union is considered using a gravity model i find that averaged over all eu countries intranational trade is about ten times as high as international trade with an eu partner country of similar size and distance this relatively strong home bias suggests that even within the european union national borders still have a decisive impact on trade patterns jel classification f02 f14 f15 o52 ce memoire examine l impact des frontieres nationales sur le commerce international a l interieur de l union europeenne on montre que en moyenne pour tous les pays de l union europeenne le commerce intranational est a peu pres dix fois plus important que le commerce international avec un pays partenaire de l union europeenne de meme taille et a meme distance ce degre relativement important de preference nationale suggere que meme dans le cadre de l union europeenne les frontieres nationales ont encore un impact determinant sur les patterns de commerce

chapter 9 econometric and time series market response models publisher summary marketing has seen a rapid expansion in the widespread use of quantitative methods correlation and regression analysis were among the first techniques used as marketing research emerged as a discipline after world war ii in the early 1970s regression analysis became econometrics simultaneous equation systems could be estimated almost as easily as single regression equations while econometrics as a whole continues to flourish as new and more sophisticated estimation techniques and associated computer software have become available simultaneous equation systems have not become widely prevalent the dynamic structure of marketing variables themselves is addressed in the chapter followed by discussions of leads and lags among marketing variables and the assessment of the direction of causality dynamic properties of sales response functions have been discussed in more detail marketing generalizations that have been uncovered as well as empirical evidence on the shape of the sales response function is reported

developed country mnes investing in developing economies progress and prospect this study reviews research from 1970 through 2016 on developed country multinational enterprises dmnes entering and competing in developing economies to identify the current state of knowledge of this research and push it further we review the literature using bibliometric and qualitative content analyses covering leading journals and books we articulate frontier issues that are understudied yet critical to both theorization and practice of dmnes in developing economies we discuss the findings and conclusions from prior research along five key areas 1 entering developing economies 2 organizing local activities 3 managing alliances and joint ventures 4 competing in dynamic environments and 5 dealing with institutions governments and society we offer prospective insights into future agenda that have important implications for mne strategies and decisions and propose frontier directions that encompass strategic localization reverse transfer and adaptation co evolution with local business ecosystems reorganizing and restructuring and strategic responses to institutional and market complexity

strategic implications of market share attraction models market share attraction models which specify that a firm s market share is equal to the ratio of its attraction to the total attraction for all firms have received increasing attention in recent years however there has been little research investigating the practical implications of such models this paper presents a game theoretic analysis of such a model and deduces the strategic implications of a nash equilibrium solution to the model it is shown that these implications are consistent with previous empirical research in marketing and business policy

on the predictive power of market share attraction models the authors test naert and weverbergh s empirical finding that attraction type specifications are characterized by a predictive power greater than that of their nonrobust counterparts the empirica

licensing duration in foreign markets a real options perspective licensing can be considered an initial trial of a foreign market before a firm fully commits to it through other investment modes the length of trial has great importance because licensing duration represents part of the licensing agreement when it is too short the firm may not acquire the necessary experience and knowledge of the foreign market but if it is too long the firm misses optimal expansion timing arguing that licensing can be considered as a european style real option with a fixed holding period we develop and test a model of the determinants of licensing duration in foreign markets empirical results based on a sample of firms in various countries show that uncertainty and threat of competitive pre emption in the foreign market are related to shorter duration of the technology licensing agreements we also find that irreversibility of the impending investment moderates the relationships between uncertainty and duration specifically market and technology uncertainties in the foreign market induce shorter contracts under low levels of irreversibility

intra national home bias some explanations wolf demonstrates that trade within the united states appears substantially impeded by state borders we revisit this finding with improved data we show that much intranational home bias can be explained by wholesaling activity shipments by wholesalers are much more localized within states than shipments from manufacturing establishments controlling for relative prices and the use of actual rather than imputed shipment distances also reduces home bias estimates

the use of real options approach in energy sector investments abstract energy shortage global warming and climate change led to an increase in the use of alternative sources of energy with renewable energy sources res playing a fundamental role in this new energetic paradigm however the investment costs often constitute a major barrier to their spread use moreover the overall benefits of renewable energy technologies are often not well understood and consequently they are often evaluated to be not as cost effective as traditional technologies from the moment that the energy sector started a deregulation process with a high level of competitiveness and associated increased market uncertainty traditional project evaluation techniques alone became insufficient to properly deal with these additional risk and uncertainty factors the diffusion of the renewable energy technologies is also affected by this feature the way investors evaluate their investments call now for the use of more sophisticated evaluation techniques real options approach can deal with these issues and as so began to be considered and applied for the energy sector decision aid this approach it is now extensively widespread in evaluating investment projects in the energy sector a large set of applications in almost all fields of energy decision making from electricity generation technologies appraisal to policy evaluation is available in the literature however the use of this technique in the field of res is still limited and worth to be analysed this paper addresses this issue a review of the current state of the art in the application of real options approach to investments in non renewable energy sources and res is presented giving perspectives for further research in this field

technical note pricing under the nested attraction model with a multistage choice structure we develop a solution approach to the centralized pricing problem of a nested attraction model with a multistage tree structure we identify conditions under which the optimal solution can be uniquely determined and we characterize the optimal solution as a fixed point of a single variable in the special case of a multistage nested logit model we show the impact of asymmetry in price sensitivity and adjustment index also known as the dissimilarity index and we derive a closed form solution when the tree structure is symmetric many existing results in the literature regarding the single or two stage nested attraction model are shown to be special cases of the results we have derived we show that the equal markup property which holds for the single stage logit model with symmetric price sensitivity in general does not hold for products that do not share the same immediate parent node in the nested choice structure even when price sensitivities are the same for all products

trade in polarized america the border effect between red states and blue states political and cultural polarization in the united states is widely discussed but does it relate to any economic disconnection among states we estimate the border effect between red and blue states using the gravity equation with a nonlinear generalized method of moments estimator to simultaneously overcome the problems associated with endogeneity cross state price differences and zero trade flow the border effect is robustly confirmed for the 2000s while not so robustly detected for the 1990s notably in 2007 the border reduces trade between red and blue states to approximately 75 of the trade within each set of states this estimated border effect is much smaller than the united states canada national border effect estimated by anderson and van wincoop 2003 and by feenstra 2002 yet is comparable to the border effect that nitsch and wolf 2009 find for the former west and east germanies approximately loyears after reunification while the border effect in germany after reunification is decreasing the border effect between the red and blue states is emerging we also find the border effect is more significant for consumption rather than intermediate goods the border effect is an important indicator for a potential dismantling of the economic connectivity in the united states jel d72 f10 fi5 r1 i introduction recent u s presidential elections have raised concern about polarization in u s politics and culture namely the united states is divided into two nations the red states we call it the red nation preserving the term state for an individual state and the blue states the blue nation in the red nation culturally and religiously conservative republicans are dominant while in the blue nation liberal democrats are the majority so far the focus of the discussion is the extent of the polarization abramowitz and saunders 2008 fiorina et al 2008 its determinants gelman et al 2010 and its implications on federal policy making glaeser et al 2005 mellow and trubowitz 2005 economic implications have not been largely discussed however the polarization may suggest economic divisions because it is a sign of geographic sorting of people and their preferences this article provides evidence that economic disconnectivity between the red and blue nations emerged in the 2000s we explore 1 whether there is a border effect on interstate trade 2 if the effect exists how large it is and 3 what types of goods are most affected in the context of existing literature and recent u s political and cultural events we then provide possible explanations for our findings this study uses a gravity equation of international trade to examine the effect of the fictional national border between the red and blue nations the methodology was originally applied by mccallum 1995 to estimate the degree of impact of the national border on trade between the united states and canada he finds that intercountry trade is less than 5 of the intracountry trade of canada controlling for other factors following mccallum s 1995 work several studies have proposed methodological improvements we apply an updated estimation method nonlinear generalized method of moments gmm estimator of a gravity equation to examine the border effect between the red and blue nations our analysis finds a statistically and economically significant border effect between the red and blue nations especially in years 2002 and 2007 we examine the border effect in 1993 1997 2002 and 2007 the years in which trade flow data are available from the federal commodity flow survey cfs the border effect is not robustly found in 1993 and 1997 however it is robustly detected in 2002 and 2007 even with additional controls or alternative specifications at the industry level analysis we find that the border effect is significant for consumption goods such as food tobacco and printed products but not for intermediate products i

trade facilitation and economic development this article analyzes the relationship between trade facilitation and trade flows in the asia pacific region country specific data for port efficiency customs environment regulatory environment and e business usage are used to construct indicators for measuring trade facilitation the relationship between these indicators and trade flows is estimated using a gravity model that includes tariffs and other standard variables enhanced port efficiency has a large and positive effect on trade flows regulatory barriers deter trade improvements in customs and greater e business use significantly expand trade but to a lesser degree than improvements in ports or regulations the benefits of specific trade facilitation efforts are estimated by quantifying differential improvements in these four areas among members of the asia pacific economic cooperation apec a scenario in which apec members with below average indicators improve capacity halfway to the average for all members shows that intra apec trade co

the dynamic effects of currency union on trade abstract the response of trade to a monetary union is a dynamic process an empirical study of the european monetary union finds that the extensive margin of trade in new goods responded several years ahead of emu implementation and ahead of overall trade volume a dynamic rational expectations trade model shows that early entry of new firms in anticipation is explainable as a rational forward looking response to news the model helps identify which types of trading frictions are reduced by a currency union and shows how new entry can be affected by uncertainty about emu

the disappearance of the border barrier in some european union countries bilateral trade this paper estimates the tariff equivalent of the border barrier in each bilateral trade among european union countries the results show that there are large differences in the border barrier across european union countries bilateral trade in some bilateral trade flows the border barrier has almost disappeared whereas in other cases it is still equivalent to a 75 per cent tariff the results also show that some countries have low border barriers in most of their bilateral trade flows with other eu members whereas other countries persistently present large border barriers