bookbuilding and strategic allocation in the bookbuilding procedure an investment banker solicits bids for shares from institutional investors prior to pricing an equity issue the banker then prices the issue and allocates shares at his discretion to the investors we examine the books for 39 international equity issues we find that the investment banker awards more shares to bidders who provide information in their bids regular investors receive favorable allocations especially when the issue is heavily oversubscribed the investment banker also favors revised bids and domestic investors investment banks commonly build a book before pricing an equity issue in the united states it has been standard practice for a number of years in many other countries where fixed price offerings were traditionally used the bookbuilding procedure is becoming increasingly common especially for international equity issues 1 under the formal bookbuilding procedure the investment banker solicits indications of interest from institutional investors such indications consist of a bid for a quantity of shares and might include a maximum price i e a limit price or other details the investment banker uses the information to construct a demand curve the issue price is not set according to any explicit rule but rather based on the banker s interpretation of investors indications of interest he generally sets the price at a level at which demand exceeds supply and then allocates shares to the bidders at his discretion thus the

interfering with secondary markets we present a model to address in a unified manner four ways in which a monopolist can interfere with secondary markets in the model consumers have heterogeneous valuations for quality so that used good markets play an allocative role our results are the following 1 in contrast to swan s famous independence result a monopolist does not provide socially optimal durability 2 allowing the monopolist to rent does not restore socially optimal durability and increases the monopolist s market power in the used market however forcing the monopolist to sell the goods may be a bad policy because it would lead to either lower output or lower durability 3 the manufacturer benefits from a well functioning used good market despite the fact that used goods provide competition for new goods 4 the monopolist prefers to restrict consumers abilities to maintain the good

ipo pricing in hot market conditions who leaves money on the table this paper explores the impact of investor sentiment on ipo pricing using a model in which the aftermarket price of ipo shares depends on the information about the intrinsic value of the company and investor sentiment i show that ipos can be overpriced and still exhibit positive initial return a sample of recent french offerings with a fraction of the shares reserved for individual investors supports the predictions of the model individual investors demand is positively related to market conditions moreover large individual investors demand leads to high ipo prices large initial returns and poor long run performance the end of the nineties was one of the hottest ipo markets ever in this period both the number of initial public offerings and the level of initial returns have reached unprecedented peaks ritter documents that in 1999 and 2000 only 803 companies went public in the united states raising about 123 billion and leaving about 62 billion on the table in the form of initial returns periodically such periods of ipo euphoria occur these so called hot issue markets are characterized by high ipo volumes and high levels of initial return see ibbotson and jaffe 1975 and ritter 1984 as well as positive serial correlation of ipo initial returns and correlation between recent levels of initial return and current ipo volume surprisingly however pre ipo shareholders do not seem to be upset about leaving so much money on the table loughran and ritter 2002 explain this phenomenon by the fact that insiders of ipo companies consider not only the shares they sell in the ipo but also those they retain which benefit from the large initial price run up ljungqvist and wilhelm 2003 show that during the 1999 to 2000 period ipo companies were significantly different from usual

the importance of firm wage differentials in explaining hourly earnings variation in the large scale sector of guatemala abstract i utilize unique firm based data to examine firm wage differentials among private firms with ten or more workers in the capital area of guatemala city approximately one seventh of the overall hourly earnings variation in this sector is related to firm effects not captured by other observable characteristics of individuals and firms for most variables including observable characteristics of firms used in most previous studies the bias from not including firm fixed effects in the estimation of log wage equations is small in magnitude though statistically significant

pre issue investor optimism and post issue underperformance prior studies have documented long run stock market underperformance after security offerings some studies conjectured that the post issue underperformance might be the result of pre issue investor optimism the study reported here investigated 1 whether investor optimism is associated with post issue underperformance 2 how investor optimism changes in the one year period surrounding the security offering month 3 whether investor optimism differs between equity issuers and debt issuers and 4 whether such differences affect companies financing choices we confirmed underperformance of debt and equity issuers and found that the post issue buy and hold abnormal returns are negatively associated with pre issue investor optimism we found little evidence however that investor optimism affects companies financing choices

durable goods theory for real world markets the early 1970s witnessed three major advances in durable goods theory swan 1970 1971 and sieper and swan 1973 on optimal durability coase 1972 on time inconsistency and akerlof 1970 on adverse selection this paper surveys durable goods theory starting with these three contributions where much of the focus is on recent literature and on models that explain real world phenomena in addition to the ideas found in the contributions of swan coase and akerlof topics covered include why producers sometimes practice planned obsolescence the role of adverse selection in new car leasing and reasons for aftermarket monopolization

elite law firms in the ipo market abstract ipos with underwriters that retain an elite law firm exhibit a lower average first day return this empirical pattern remains after controlling for an extensive set of proxies associated with existing explanations of ipo initial returns we rationalize this finding with a pre ipo pricing model in which underwriters convey their lack of conflicts of interest to the issuer by engaging an elite law firm consistent with this selection channel and our model s predictions we find a lower incidence of elite law firm involvement and a larger difference in average first day return associated with elite law firms during the dot com period we document similar findings with respect to the dispersion of ipo first day returns and a pattern in the issuers re hiring decision of investment banks consistent with our theory

durable goods monopolists durable goods monopolists face special problems because the sale of their products creates a secondhand market not controlled by the monopolist to the extent the monopolist is able to rent his product rather than sell it or to make binding promises about his future production such problems are ameliorated given the inability to do the above the monopolist is led to producing goods less durable than those produced by either competitive firms or monopolist returns a reverse averch johnson result that monopolist sellers may invest less in fixed costs including plant modernization and research and development than would the renters is shown it is also shown that even though sellers have less monopoly power than renters and nondurable goods monopolists it is possible that the seller will cause a greater deadweight loss than the other types of monopolies

union nonunion compensation differentials and industry structure abstract this paper examines the impacts of industry output and labor input market structures on workers total compensation in u s manufacturing for empirical analysis cps may 1983 data were matched with 1982 census of manufacturing results indicate that employees in highly concentrated product markets proxied by four firm concentration ratio crr earn more independent of their union membership second union members in the smaller plant sizes have the most to gain and the union advantage disappears for medium to large plants third and perhaps most important the joint effects of unionism and crr on earnings depend on the size of the manufacturing plant in conclusion the paper finds support for dowrick s 1989 conjecture that profits enhancing product market conditions generally tend to increase earnings

litigation risk and ipo underpricing abstract we examine the relation between risk and ipo underpricing and test two aspects of the litigation risk hypothesis 1 firms with higher litigation risk underprice their ipos by a greater amount as a form of insurance insurance effect and 2 higher underpricing lowers expected litigation costs deterrence effect to adjust for the endogeneity bias in previous studies we use a simultaneous equation framework evidence provides support for both aspects of the litigation risk hypothesis

industry wage effects of horizontal acquisitions in the usa pooled individual and industry information is used to measure the wage effects of horizontal acquisitions after controlling for industry differences in the percentage of union members the extent of horizontal acquisition serves no role in determining union wages instead union wage premiums erode with increased horizontal acquisitions as such acquisitions are associated with higher non union wages

a simultaneous equation analysis of advertising concentration and profitability nearly two decades of econometric research have been completed in testing relationships between industrial market structure and performance recently a number of authors have reexamined these studies and cautioned on a number of conceptual difficulties which subject the results and interpretation of previous empirical work to question one primary criticism of previous research has been the failure to account for the simultaneous nature of the interrelation among elements of industry structure conduct and performance 2 4 5 11 22 25 30 while the determinants of variables such as profits advertising and concentration have been examined separately within the context of single equation models the underlying theory suggests that these variables are more properly considered as jointly determined within a system of simultaneous equations estimation of single equation models when a simultaneous system is appropriate leads to parameter estimates that are both biased and inconsistent previous empirical studies of the structure performance relationship have also suffered due to the omission of certain critical variables first the role of international trade as an element of market structure has yet to be generally incorporated into empirical studies in spite of recent theoretical work that has demonstrated its potential importance 3 20 21 second interindustry differentials in the price elasticity of demand have been neglected even though theoretical analysis clearly underscores the necessity of explicity accounting for

strategic hiring to deter entry by unions abstract this paper presents a model of firms engaging in defensive investments designed to increase the elasticity of their demand for labor before hiring workers this allows them to lower the wage at which unionization of their workers is prevented product differentiation is given as an example of a strategy by which workers are deterred from forming unions

bargaining and the determinants of teacher salaries this study examines the impact of collective bargaining on salary setting in public school districts using a 1969 82 sample of oregon school districts the author focuses particularly on the roles

welfare impacts of intellectual property protection in the seed industry we examine the welfare impact of different intellectual property protection ipp regimes in private sector seed research and development r d we take into account the period after expiration of legal ipp and require simultaneous equilibrium in markets for r d seeds and final product optimal ipp is remarkably insensitive to alternative parameterizations except for r d productivity results suggest that optimal ipp is greater than ipp in the u s seed corn market but lower than the ipp that could be attained with genetic use restriction technologies optimal ipp is much higher than ipp achieved under open pollinated crops or where legal ipp is limited

effects of labor legislation and industry characteristics on union coverage in canada the authors investigate the determinants of union coverage using 1986 cross section data on canadian workers larger firm size larger establishment size and higher injury rates increase the probability of union coverage industry concentration import penetration and the substitutability of labor do not affect coverage through their impact on the union nonunion wage differential but concentration increases the probability of coverage through a mechanism unrelated to the wage differential mandatory checkoff provisions increase the probability of coverage but the estimated effect is barely significant restrictions on replacement workers and interprovincial differences in automatic certification provisions have statistically insignificant effects finally the results are sensitive to treating some industry characteristics as endogenous that is jointly determined with union coverage and union and nonunion wages a treatment not used in other studies

manual wage differentials collective bargaining and multi locational firms an analysis using northern ireland nes data harris r 1994 manual wage differentials collective bargaining and multilocational firms an analysis using northern ireland nes data reg studies 28 483 493 a number of studies have appeared in the literature which consider the impact on the wage distribution of for example gender and ethnic differences of union membership or coverage by collective agreements of firm size of belonging to the private vis a vis public sector of being self employed as opposed to an employee another potentially important determinant of wages is whether the firm employing an individual is locally owned or whether it is part of a multiregional or multinational organization which operates branches in various locations this paper sets out to investigate the size of this locational wage differential across all sectors for a region of the uk using a bivariate sample selectivity model where the choice of firm type i e locally owned or externally owned and union coverage are endogenous the results confirm that

interpreting a correlation between market structure and performance certain types of controlled experiments may enable causal inferences to be made about the relationship between two variables other types of experiments can be used to deal with the not completely unrelated notions of consistency in estimation exogeneity of variables and with temporal ordering generally however causal interpretations of a relationship are simply imposed on the data by appeal to an underlying theory in this paper we shall examine the theoretical basis of profits concentration correlations arguing that such correlations cannot be given a causal interpretation of the conventional kind running from structure to performance section iii 1 lest this conclusion seem to undermine the basis for anti trust policy we shall also argue that such erroneous causal interpretations are unnecessary in making a case for intervention based on structure although they do direct attention towards inappropriate targets profits concentration regressions play a role it will be argued mainly in the derivation of intervention rules section iii while the causal interpretation of co efficients is our primary concern here there is also a sense in which correlations can be interpreted as measuring the known but unobserved parameters of a model imposed on the data and we shall close section iv with a few remarks on this second issue

monopoly plant and union effects on worker wages this paper examines the effects of industry concentration plant size and unionization on the wages of blue collar manufacturing workers the author points out that few previous wage studies have included all three of those variables or have employed data sufficiently detailed to test adequately their effect on wages this study using data primarily from the 1977 quality of employment survey demonstrates that concentration plant size and unionization all exercise significant and independent effects on wages

foundations of dynamic monopoly and the coase conjecture subgame perfect equilibria are characterized for a market in which the seller quotes a price each period assume zero costs positive interest rate continuum of buyers and some technical conditions if buyers valuations are positive then equilibrium is unique buyers strategies are stationary and the price sequence is determinant along the equilibrium path but possibly randomized elsewhere otherwise a continuum of stationary equilibria can exist but at most one with analytic strategies coase s conjecture is verified for stationary strategies reducing the period length drives all prices to zero or the least valuation connections to bargaining models are described journal qf economic literature classification

the effect of discrimination and of industry segmentation on japanese wage differentials in relation to education abstract the paper investigates japanese wage differentials based on the concept of industrial division the labor market is examined for two sectors separately namely competitive sectors and non competitive sectors the effects of female male difference of human capital and of occupation also are examined and the cost of discrimination is estimated by applying several quantitative methods it was found that worker characteristics such as education length of service and age were treated differently by sector sex and occupation also wage differentials by sex were mostly rooted in differential treatment of worker characteristics while wage differentials by sector were explained largely by firm size component the above general results however are greatly modified by workers occupations and industrial divisions

employment entrepreneurship and 1992 microeconomic policy and european problems this essay has covered several areas which are not usually regarded as closely interrelated policy conclusions have been discussed briefly at various points and will now be developed more fully in this final section as evidence for the interrelatedness of such disparate fields as corporate finance and employment policy we start from the observation that many large firms are relatively inefficient particularly at product innovation and flexible organization and employment policies in part because top managerial compensation depends mainly on size this creates an incentive for excessive growth and empire building rather than payment to shareholders of the free cash flow which cannot be profitably invested internally more appropriate incentives for top management would increase dividend payments and hence the flow of funds into the capital market available for financing new start ups and small firms as venture capital even in the u s the cost of obtaining external capital often constrains small firms to invest only their internal cash flow fazzari et al 1988

domestic market power and foreign trade abstract this paper develops a conjectural variation model to include foreign trade and applies it to the swedish industry the main conclusions emerging from the empirical application are that the degree of implicit collusion is generally very low in sweden and further that while high seller concentration exerts a positive influence on this degree there is strong and counteracting competitive pressure from foreign trade a more general conclusion is that it is important to include foreign trade in analyses of market power in open economies

the intertemporal consequences of unauthorized reproduction of intellectual property in an intertemporal framework the harm to firms from unauthorized reproduction of their products may be significantly greater than that predicted by most static models copying by some consumers reduces the appropriable surplus from all consumers including those consumers lacking any propensity to copy somewhat paradoxically however the commitment value of copies may also imply that profits are higher with copying than without copying it is therefore suggested that firms may prefer differential copyright enforcement and that the commitment value of copies may offer a strategic explanation for free giveaways of abridged versions of intellectual property and vertical product differentiation more generally

price stabilization as a bonding mechanism in new equity issues abstract underwriters have an incentive to overstate investor interest in order to persuade some investors to purchase shares at a price in excess of their initial estimate of the fair value we show that this incentive is eliminated when the underwriter commits to secondary market price stabilization destroying the underwriter s incentive to overstate interest reduces the total surplus captured by initial investors in initial public offerings further efficiency gains are associated with penalty bid systems that permit the underwriter to make the stabilization commitment selectively price stabilization can thus be viewed as a bonding mechanism that improves the efficiency of the primary equity market

innovation rent sharing and the organization of labour in the federal republic of germany rent seeking by unions may inhibit various kinds of investment particularly r d and unionization is often negatively related to innovation across industries formal organization and collective bargaining may also reduce the flexibility of work organization and hence inhibit innovation in a sample of small and medium sized firms in the frg metal working industry a measure of organized labour was negatively related to product innovation but there was little evidence for rent seeking in simultaneous estimates

the structural determinants of union bargaining power this paper investigates the structural determinants of variation in union power across manufacturing industries using a pooled sample of unionized establishments from the expenditure on employee compensation surveys of 1968 72 the author estimates wage equations augmented with measures of product market structure bargaining structure and the size distribution of unions the results suggest that union wage gains are greatest where discretionary pricing power enhances employers ability to pay and where unions achieve high coverage practice centralized bargaining and avoid union fragmentation on the other hand centralized bargaining provides no advantage in competitive industries

market structure entry and performance in korea this paper applies a recursive model of structure entry performance with structural feedbacks to sixty two korean manufacturing industries for 1976 81 the results strongly support the market power hypothesis the results also indicate that despite active government intervention the invisible hand is working structure is evolving as expected with high profits leading to entry and consequently lower profits however there is little support for limit pricing hypotheses in this explosively growing economy copyright 1990 by mit press

the effects of the us plant variety protection act on wheat genetic improvement in our model of partially appropriable invention if the us plant variety protection act pvpa of 1970 succeeded in strengthening intellectual property protection for plant breeders it should have led to increases in investment in varietal r d improved varietal quality and enhanced royalties these hypotheses are tested using data on us wheat we find that the pvpa may have stimulated public but not private sector investment in wheat varietal improvement but that the pvpa did not cause any increase in experimental or commercial wheat yields these findings indicate that the pvpa had little impact on excludability or appropriability in wheat varieties

market structure and inter industry wage differences the case of taiwan abstract this note reports the structure and the determinants of inter industry wage differences in the manufacturing sector of taiwan it was found that market concentrations are significantly correlated with wage differentials from this outcome we tentatively conclude that market structure is an important factor in generating wage income differentials

market structure and the demand for unionized labor frequently the separate branches of economics grow up with far too little cross fertilization as a consequence research and results taken for granted in one field are all too frequently ignored in another such is the case with the three decades of work done on pricing behavior within a vertical stream of production the general conclusion of this work is that input monopolies will not alter their price in response to alterations in downstream market structure it is surprising that this work carried out in industrial organization has not received more attention from those studying union wage behavior this is especially so given that several of the more popular models of union behavior are similar to those we impute to the neoclassical monopoly the failure to draw on this work has resulted in several confusions in the contemporary study of unions this paper builds from the work on input pricing to demonstrate that in a very wide variety of cases the elasticity of derived demand for labor is completely invariant to product market structure in addition the specific conditions sufficient for this invariance to hold true are identified such a demonstration is important for discriminating between models of union behavior which assume bargaining along the labor demand curve and models which assume bargaining off the demand curve indeed the demonstration reveals the likely inadequacy of the labor demand curve model the logic for this conclusion is three tiered first demand curve models predict that wages will depend crucially on the elasticity of labor demand second measures of industrial concentration are usually significant in wage equations a result thought in harmony with the elasticity emphasis of demand curve models but third as will be shown market structure will typically not affect the labor demand elasticity this suggests that the conventional interpretation of the second point is wrong and casts doubt on the explanatory power of demand curve models in general while a variety of specific models of union behavior share the characteristic of bargaining along the demand curve these models are tied together by the assumption that unions choose the wage and firms respond with the employment level thus whether one assumes that unions maximize the wage bill collective rents or some explicit objective function of wage and employment

valuing and pricing ipos abstract this paper investigates how underwriters set the ipo firm s fair value an ex ante estimate of the market value using a unique dataset of 228 reports from french underwriters these reports are issued before the ipo shares start trading on the stock market and detail how underwriters determined fair value we document that underwriters often employ multiples valuation dividend discount models and discounted cash flow dcf analysis to determine fair value but that all of these valuation methods suffer from a positive bias with respect to equilibrium market value we also analyze how this fair value estimate is subsequently used as a basis for ipo pricing we report that underwriters deliberately discount the fair value estimate when setting the preliminary offer price part of the intentional price discount can be recovered by higher price updates we find that controlling for other factors such as investor demand part of underpricing stems from this intentional price discount

concentration and the inter industry wage structure the israeli manufacturing sector the paper analysis the inter industry wage differentials in the israeli manufacturing sector in conjunction with differences in the degree of competition in the various industries unlike some other studies carried out with us date that did not produce conclusive results this study shows a clear cut positive relationship between wages and the degree of monopolization this result is found both for unskilled and highly skilled workers

industrial concentration and competition in malaysian manufacturing industrial concentration is the most widely studied area among various elements of market structure in the industrial organization literature this paper is a first attempt to analyse the determinants of changes in industry concentration over time in the case of malaysia using a partial adjustment model a cross sectional analysis is carried out against a sample of manufacturing industries between 1986 and 1996 domestic factors in influencing competition e g capital intensity advertising intensity and market size are found to be significant in most cases to explain the level of concentration considering variable rate of adjustment of concentration an increase in labour productivity of large firms and high entry rates are found to be significant for faster adjustment towards equilibrium level compared with other developed countries the annual rate of structural adjustment is found to be slow in the case of malaysian manufacturing

dynamic analysis on market structure of china s coal industry abstract according to industrial organization theory market structure is a crucial factor to market performance based on the var model and the data from 1994 to 2014 we revealed the dynamic response route of the market structure to these factors and the change process of contribution rate of these factors to the market structure it shows that market structure is inertial adjustment technology advance and industry policy have continuous effects on improvement of market concentration ratio market size and production scale have sustained negative effects on market concentration ratio fixed capital has barrier effect which is mainly the entry barrier effect at the beginning and then the exit barrier effect continues to play a leading role therefore the government has no need to introduce special policies to encourage merger or expansion on the capacity as enterprises would do it spontaneously it is necessary to make market access system stricter to improve exit compensation mechanism and to promote technological innovation all these policies need dynamic adjustment based on the stages of economic cycle

what factors inspire the high entry flow in taiwan s manufacturing industries a count entry model approach why is the entry flow of the manufacturing sector extremely high in taiwan and does it contribute to the prevailing entrepreneurship this article aims to explore what factors inspire potential entrants to go into an industry based on a theoretical formulation of the poisson probability entry model a count data model is employed to investigate the determinants of entry flows the empirical results reveal that traditional entry barriers indeed lower the entry flow the entry incentives including price cost margin and industry growth play a lesser role at attracting new firms while alternatively the market size acts as a better proxy of an entry incentive in explaining entry flows incumbents responses to entry r d and advertising intensity are found to be associated with a significant negative impact on entry flows this article also finds that there is a higher bound of covariate of entry about 10 that can be attributed to the immeasurable personality of entrepreneurs entrepreneurship rather b

market dynamics and dichotomy evidence from taiwanese manufacturing in taiwan a dichotomous market structure is closely related to the progress of economic development the purpose of the present article is to examine the market dynamics and dichotomous nature of taiwanese manufacturing a model of dynamic adjustment of industry structure is considered when both the speed of adjustment and the long run market concentration are allowed to vary across industries we use 118 four digit manufacturing industries for empirical analysis of our models spanning between 1981 and 1991 empirical findings show that both the speed of adjustment and long run industry concentration are predominantly determined by minimum efficient scale the speed of adjustment is much faster in a small open economy like taiwan compared to mature economies like the us and australia in addition the dichotomous nature of the market is supported in our findings for both periods viz 1981 1986 and 1986 1991 albeit weaker for the later period

an economic theory of planned obsolescence planned obsolescence is the production of goods with uneconomically short useful lives so that customers will have to make repeat purchases however rational customers will pay for only the present value of the future services of a product therefore profit maximization seemingly implies producing any given flow of services as cheaply as possible with production involving efficient useful lives this paper shows why this analysis is incomplete and therefore incorrect monopolists are shown to desire uneconomically short useful lives for their goods oligopolists have the monopolist s incentive for short lives as well as a second incentive that may either increase or decrease their chosen durability however oligopolists can generally gain by colluding to reduce durability and increase rentals relative to sales some evidence is presented that appears to be generally consistent with the predictions of the theory

stabilization syndication and pricing of ipos we argue that in the after market trading of an ipo the underwriting syndicate by standing ready to buy back shares at the offer price price stabilization compensates uninformed investors ex post for the adverse selection cost they face in bidding for ipos this domi nates ex ante compensation by underpricing the reason is that stabilization exploits ex post information about investor demand whereas underpricing must be based on ex ante infor mation however liquidity and syndication costs constrain the use of stabilization which in equilibrium generates some underpricing as well we develop a model that formalizes this intuition and generates several empirical implications

gender stratification in contemporary urban japan japanese women participate in the labor force at rates similar to women in western industrial nations but gender stratification patterns are sharper women in japan are less apt to work as employees a tendency that increases with age likewise female employees tend to shift from larger to smaller firms across the life cycle whereas male employees do not these aggregate patterns imply that japanese women are seldom placed in career track positions in large firms early in their careers analyses on labor market entry data from the 1984 survey on work patterns substantiate this view although japanese men and women enter large firms at equivalent rates upon leaving school 22 of men and only 7 of women enter career ladders the majority of women enter large firms as clerical workers 3 4 of whom are in low level assistant clerical positions causal processes governing entrance to large firms and career tracks are examined in the paper with particular attention to the relative returns to different levels and types of education for japanese men and women authors

price cost margins and imports in an oligopolistic market abstract in a recent letter in this journal urata 1979 found an unexpected positive and significant association between price cost margins and import to domestic shipment ratio for the u s textile and apparel industries in the present letter a theoretical explanation for this phenomenon is presented by extending a conjectural variation oligopoly model

incentive to reduce crop trait durability to reduce the competition from farmers who self produce seed an inbred line seed producer can switch to nondurable hybrid seed in a two period model we investigate the impact of crop durability on self production pricing and switching decisions and we examine the impact of license fees paid by self producing farmers first in an inbred line seed monopoly model we find that the monopolist may produce technologically dominated hybrid seed in order to extract more surplus from farmers further the introduction of license fees improves efficiency second we study how the monopolist s behavior is affected by the entry of a nondurable hybrid seed producer we show that the inbred line seed producer might benefit from competing with a technologically dominated hybrid seed producer as this allows for consumers discrimination

industry specific human capital knowledge labour and industry wage structure in taiwan this paper investigates the role of industry specific human capital ishc in determining industry wage structure the model presented in this paper distinguishes between knowledge labour and physical labour knowledge labour is physical labour embodied with ishc it is postulated that more ishc intensive industries such as high tech industries pay higher wages and the wage premiums increase with workers experience the hypothesis is tested using a merged sample of 1997 1999 manpower utilization survey data from a newly industrialized economy taiwan the findings show support for the effect of ishc

is the ipo pricing process efficient this paper investigates underwriters treatment of public information throughout the ipo pricing process two key findings emerge first public information is not fully incorporated into the initial price range while the economic magnitude of the bias is small it is puzzling because it is not clear who benefits from it further it indicates that the filing range midpoint is not an unbiased predictor of the offer price as prior literature has assumed second while public information is similarly not fully incorporated into the final offer price the small economic significance of this relation indicates that the ipo pricing process is almost efficient

concentration profitability and trade in a simultaneous equation analysis the case of taiwan this paper is the first attempt to use a simultaneous four equation system to study the role of foreign trade in the analysis of market structure and performance and the determinants of trade intensity in a newly industrializing country taiwan a cross sectional analysis is carried out with the manufacturing censuses of 1976 the results indicate that public enterprises significantly influence market structures and performance also import control measures influence import intensity significantly and offset potential impacts of imports on concentration and on profitability however trade intensity is mainly explained by comparative advantage rather than market forces concentration and profitability

planned obsolescence and the r d decision by investing in rd i e the r d choice that maximizes current profitability does not maximize overall profitability the result is that if output is sold rather than rented then in its r d decision the monopolist has an incentive to practice a type of planned obsolescence that lowers its own profitability

what causes the ipo underpricing new evidence from china s sme market we study 10 year ipo initial returns in china s small and medium sized enterprise sme board between 2006 and 2016 including 755 ipo samples at the same time we test how policy changes of ipo p

labour supply and unemployment in japan abstract the paper investigated the relationship between labour supply and unemployment employment in japan the paper focused on the discouraged worker effect which specifies that a large number of workers in particular female labour forces retire from the labour market in a recession this lowers the rate of the published unemployment the paper estimated the labour supply function and presented the estimated figures of the modified or adjusted rate of unemployment finally the okun s coefficient was re estimated by using this modified rate of unemployment

market structure and price cost margins in a paper that has become a standard reference in the structure conductperformance approach to industrial economics cowling and waterson 1976 developed a theoretical rationale for expecting industry profitability to be positively correlated with the level of concentration their model based on a simple algebraic description of oligopoly behaviour has been interpreted as providing a justification for the common empirical practice of cross industry regression analysis of price cost margins in terms of concentration levels in the present paper we show that on further examination this model implies a joint determination of margins and concentration this provides some interesting comparative static results of relevance to inter industry differences in concentration levels equally however it leads to various cautionary insights concerning the meaning of price cost margin versus concentration regressions

does individual investors attention influence underwriters ipo pricing using a unique chinese ipo bidding dataset and a particular social media dataset we examine the impact of individual investors attention on underwriters offer price adjustment offer price revis

inter industry differences in profitability the legacy of the structure efficiency debate revisited this study presents a simple model on the sources of inter industry variation in profitability and tests its empirical implications in order to shed new light on the long lasting debate over industry profitability the model identifies four key factors that jointly influence an industry s price cost margin i the intensity of strategic investment e g r d and advertising ii the skewness of the distribution of market share or market concentration iii the appropriability of strategic investment and iv the extent to which firms market shares are determined by the intensity of their strategic investment these factors are expected to be positively related to industry profitability and our empirical analysis provides supportive evidence the model also suggests that the conventional single dimensional hypotheses on profitability the market power or market structure hypothesis and the efficiency hypothesis are overly simplified more importantly existing empirical results allegedly supporting each of these hypotheses are spurious to the extent that the distribution of firm specific strategic competence reflects firm heterogeneity in efficiency and at the same time underlies the distribution of market share or market concentration copyright 2009 oxford university press

one is almost enough for monopoly it has been argued that two factors product durability and potential entry may force a monopolist to price at marginal cost this article shows that when these two forces coexist the tendency toward competition may be negated first we prove that durable goods oligopolists without commitment powers may attain joint profits arbitrarily close to those of a monopolist with perfect commitment power second we demonstrate that the presence of a potential entrant may enable a durable goods monopolist to act as if he had commitment power thus potential as well as actual entry may restore monopoly power

returns to sentiment investors in ipos abstract it is shown that the presence of sentiment investors in ipos reduces the winner s curse problem and further that the expected excess return to sentiment investors may be positive or negative depending on parameter values the possibility of a positive expected return suggests a rational basis for the presence of sentiment investors in ipos

market structure and worker quality it is frequently asserted although never directly tested that firms in more monopolistic industries hire better qualified workers this paper presents two new results first worker quality education in particular is a strong determinant of whether a worker is employed in a concentrated industry when using a traditional data source second upon expanding the data to include measures of research and development workers of better quality are actually no more likely to locate in concentrated industries these results fit with theories claiming that industries subject to technological opportunities may be more concentrated and that those opportunities demand higher quality workers i introduction at least a score of articles since the 1960s test the hypothesis that more concentrated industries pay workers higher wages other things equal this investigation has been part of a more general examination of whether or not concentrated structure generates inefficiencies beyond the deviation of price from cost unfortunately this large scale effort has not been rewarded with consistent results separate researchers both confirm and fail to confirm an independent role for industrial concentration in wage determination among those who fail to confirm the concentration earnings hypothesis one explanation is offered most often while concentrated industries pay higher wages they obtain better qualified workers the generally acknowledged simple correlation between wages and concentration becomes an insignificant partial correlation in the presence of a vector of controls while some of the typical controls could be considered measures of worker quality others clearly are not it may be one or more of these non quality controls which frequently include industry characteristics which eliminates the significance of concentration for example plant size and unionization known to be correlated with both wages and concentration are among the more likely non quality variables which could explain the lack of the authors thank william j adams william g shepherd gary solon and frank p stafford their suggestions improved early versions of this paper thanks is also expressed to almarin phillips who suggested the association with technological progress those confirming a positive statistical association between wages and industrial concentration include dalton and ford 119771 mellow 119831 kwoka 119831 long and link 119831 and heywood 119861 those failing to find such an association include weiss 119661 rapping 1967 pugel i9801 and freeman and medoff 119811

copying and indirect appropriability photocopying of journals creators and owners of intellectual properties are alarmed by the growth of technologies that ease the tasks of copying these properties this paper however shows that the unauthorized copying of intellectual properties need not be harmful and actually may be beneficial the empirical impact of photocopying on publishers of journals is examined in an attempt to discover if publishers can indirectly appropriate revenues from users who are not original purchasers the evidence indicates that publishers can indirectly appropriate revenues from users who do not directly purchase journals and that photocopying has not harmed journal publishers 18 references 1 table

on profitability and industrial concentration in pakistan abstract non inclusion of an important element of market structure in the profitability equation by earlier writers might have caused their estimates to suffer from specification error due to an omitted variable we have tried to formulate a more comprehensive model in which elasticity of demand advertising and concentration capture market structure while the supply side has been incorporated by including productivity other factors used to explain the degree of monopoly are capital intensity advertising and trade our results indicate that the main determinants of the profit margin are capital intensity rising productivity and industrial concentration we find that there was some dilution due to competition from foreign trade but its impact has been swayed by other factors

auctions vs bookbuilding and the control of underpricing in hot ipo markets market returns before the offer price is set affect the amount and variability of initial public offering ipo underpricing thus an important question is what ipo procedure is best adapted for controlling underpricing in hot versus cold market conditions the french stock market offers a unique arena for empirical research on this topic since three substantially different issuing mechanisms auctions bookbuilding and fixed price are used there using 1992 1998 data we find that the auction mechanism is associated with less underpricing and lower variance of underpricing we show that the auction procedure s ability to incorporate more information from recent market conditions into the ipo price is an important reason copyright 2003 oxford university press

public information ipo price formation and long run returns japanese evidence the price formation process of jasdaq ipos is more transparent than in the united states the transparency facilitates analysis of important issues in the ipo literature why offer prices only partially adjust to public information and adjust more fully to negative information and why adjustments are related to initial returns the evidence indicates that early price information conveys the underwriter s commitment to compensate investors for acquiring and or disclosing information offer prices reflect pre ipo market values of public companies and implicit agreements between underwriters and issuers that originate well before the offering underadjustment of offer prices is substantially reversed in the aftermarket copyright c 2009 the american finance association

why don t issuers get upset about leaving money on the table in ipos one of the puzzles regarding initial public offerings ipos is that issuers rarely get upset about leaving substantial amounts of money on the table defined as the number of shares sold times the difference between the first day closing market price and the offer price the average ipo leaves 9 1 million on the table this number is approximately twice as large as the fees paid to investment bankers and represents a substantial indirect cost to the issuing firm we present a prospect theory model that focuses on the covariance of the money left on the table and wealth changes our reasoning also provides an explanation for a second puzzling pattern much more money is left on the table following recent market rises than after market falls this results in an explanation of hot issue markets we also offer a new explanation for why ipos are underpriced copyright 2002 oxford university press

profitability concentration imports and exports the case of taiwan s midstream petrochemical industries based on an open economy oligopoly model causalities among domestic firms price cost margin pcm domestic concentration import and export shares are derived and a simultaneous equation system is established by utilizing the 1989 1997 data of taiwan s midstream petrochemical industries three stage least squares is used to estimate the system the empirical results confirm the derived results and demonstrate 1 there exist simultaneous relationships among domestic pcm domestic concentration import and export shares 2 import concentration affects domestic concentration positively but affects domestic pcm import and export shares negatively 3 diversifying international markets improves domestic firms pcm 4 domestic firms seem to be in a situation of collusion

concentration and profitability in a dichotomous economy the case of taiwan this paper is an attempt to apply a two regime and a recursive structure performance analysis to one of the newly industrializing countries taiwan a two regime approach is employed because taiwan s market structure is hypothesized as being dichotomous the export oriented sector being distinct with the domestic oriented sector a recursive system is used because industry concentration is not only a determinant of profitability but is itself determined by other variables

exchange rates market structure and price cost margins evidence from a developing country this paper analyses the sensitivity of firm performance to exchange rate fluctuations in a two country world consisting of a developing domestic country and a developed foreign country we show that this sensitivity is closely related with market structure and the share of imported inputs in total cost when the share of imported inputs is low depreciation leads to an increase in price cost margin this increase intensifies in more competitive industries when the imported input share is high the price cost margin may decrease as a result of depreciation and this effect becomes pronounced in more competitive industries the empirical test where we used 3 digit turkish manufacturing industry data support most of the findings of our model

concentration unionism and labor earnings a sample selection approach using a simultaneous equations model of wages and union membership the elasticity of the wage with respect to market concentration is estimated to be approximately 0 2 the estimate uses a large data set and extensive controls to measure concentration s direct effect on the wage an indirect effect through unionization and a feedback effect the indirect effect represents the majority of concentration s effect copyright 1988 by mit press

sequential sales learning and cascades when ipo shares are sold sequentially later potential investors can learn from the purchasing decisions of earlier investors this can lead rapidly to cascades in which subsequent investors optimally ignore their private information and imitate earlier investors although rationing in this situation gives rise to a winner s curse it is irrelevant the model predicts that 1 offerings succeed or fail rapidly 2 demand can be so elastic that even risk neutral issuers underprice to completely avoid failure 3 issuers with good inside information can price their shares so high that they sometimes fail 4 an underwriter may want to reduce the communication among investors by spreading the selling effort over a more segmented market consider a scenario in which an issuer is selling a new security of uncertain value for example an ipo initial public offering of stock or high yield debt through an underwriter the s e c has banned variable price sales while the value of this new security is highly uncertain to individual market participants investors hold perfectly accurate information when aggregated moreover there are many potential investors and a small number of these investors can jointly determine the value of the firm or its project with high precision it would seem that in this scenario underpriced offerings would succeed and overpriced offerings would fail nevertheless this paper shows that if the distribution channels of invest ment banks are limited underpriced offerings can fail and overpriced offer ings can succeed with limited distribution channels it takes the under writer time to approach interested investors therefore later investors can observe how well an offering has sold to date or at least how successful it has sold relative to offerings previously undertaken by this underwriter

noncooperative collusion in durable goods oligopoly coase conjectured that a durable goods monopolist who can make offers to sell arbitrarily frequently will lose the ability to extract positive profits this result which has now been proved can be attributed to the inability of the monopolist to commit to maintaining sufficiently high prices in the near future for the case of durable goods oligopoly we show that letting the firms make offers arbitrarily frequently enhances their ability to commit to high prices and in the limit enables the firms to enjoy total market profits equal to the full commitment one shot monopoly profit

financing technology based small firms in europe what do we know this paper reviews the evidence on financing technology based small firms tbsfs in europe european tbsfs finance new investments by relying primarily on internal funds due to capital market failures induced by asymmetric information european venture capital has caught up with us venture capital but this is mainly because of the growth in uk venture investments it is unclear whether european venture capital has been able to certify the quality and enhance the growth of funded companies compared with the nasdaq there is little development of trading in high tech stocks in europe the so called new markets established in the 1990s collapsed in the wake of the internet bubble crash public venture capital and research and development r d tax incentives seem to have positively affected high tech firms

eliminating the market for secondhand goods an alternative explanation for leasing there are a number of prominent specific instances in which a durable goods manufacturer with significant market power employed a lease only policy i united shoe in the market for shoe machinery ii ibm in the market for computers and iii xerox in the market for copiers the obvious question that arises is why would such a firm prefer leasing over selling in this article i argue that one role of the lease only policy was to eliminate the market for secondhand goods the article formally demonstrates the argument discusses the relationship between this article and earlier literature on secondhand markets and discusses the implications for antitrust policy

the effects of u s trade laws on poverty in america this study examines the relationship between the application of u s trade laws and the distribution of income and levels of poverty in america specifically we examine the recent use of administered protection by u s industries and compare the experiences of these industries under the trade laws with their associated poverty rates wage levels and rates of unemployment this study seeks to determine whether this protection has served to alleviate or to exacerbate poverty we find an inherent bias in the trade laws toward increasing the incidence of poverty

simultaneous equations models of the structure performance paradigm abstract this paper is concerned with determining the dimension of the simultaneous equations model surrounding the basic profits concentration relationship a very general model is considered and then simplified using a simple test for exogeneity and it is concluded that the model is nonlinear in concentration and that simultaneous interaction occurs between profits and foreign competition variables

on the specification of structure performance relationships this paper argues that most estimated structure profitability equations in industrial economics have not been derived from a single coherent view of the behaviour of firms the independent variables in such equations have often been derived on the basis of a literature search and by appeal to conflicting approaches e g constrained and unconstrained profit maximisation the use of a coherent approach indicates that structure performance equations are likely to be highly non linear and that simultaneous equation estimation is neither required nor appropriate in some cases single equation estimation is adequate and in other cases reduced form equations are needed

the determinants of smes market share in 1991 taiwan manufacturers small and medium sized enterprises smes have become increasingly popular in recent decades having caused concern among scholars of various areas our line of research focuses on the determinants of smes market share this study explores the topic base on taiwan s manufacturers data collected in 1991 our empirical results indicate that taiwan has witnessed smes becoming prosperous in manufacturing industries with higher relative labor productivity low entry barriers prosperous subcontracting activities and young ages our results indicate that in the transitory process of industrial development taiwan s smes no longer can afford high wage payments when at the same time the quality of labor does not increase accordingly as taiwan approaches the status of a developed economy the beneficiaries of export activities have changed unlike 1986 in 1991 there was a smaller share of smes in taiwan s export oriented industries furthermore smes benefited from their efforts to increase their automation status the emphasis on issues concerning environmental protection proved to be another source of entry barrier that kept smes from prospering certain similarities arise when comparing our conclusions with those of the u s canada germany and japan all of whom represent industrialized countries we can conclude that as taiwan matures in her industrial development process smes also struggle to a certain maturity in theirs