armington elasticities for energy policy modeling evidence from four european countries elasticities of substitution among imports and competing domestic production armington elasticities play an important role in computable general equilibrium cge assessments of energy and climate policy this paper provides estimates of armington elasticities for 15 commodity groups in four european countries since armington elasticities are found to be rather low on average researchers may want to reconsider the device of using high values of armington elasticities in cge models to avoid unrealistic competitiveness effects or emission leakage rates associated with energy or carbon taxes or other forms of energy related regulation estimated elasticities tend to be higher in the case of machinery and other investment goods than in the case of primary products ores and chemicals as well as consumer goods

alliance governance and technological performance some evidence from biotechnology alliances pursuing alliance opportunities are fraught with difficulties due to information asymmetry between the potential partners as well as technological and or market uncertainties in this article i empirically test how social ties between alliance partners alliance governance and individual firm characteristics impact alliance performance since alliances are by definition relationships between two or more independent firms defining and measuring alliance performance is difficult as the partner firms may have different objectives in entering the alliance therefore analyzing alliance performance at different stages of the alliance process using intermediate indicators of success can provide help to better understand the determinants of alliance performance as well as how these determinants may change over time

product introduction decisions in a duopoly abstract in this paper we model a dynamic environment with two firms that fight for share of industry sales and profit in a market with constant size they capture share by repeatedly introducing new products price changes from period to period reflecting each firm s learning we formulate the problem as a repeated game where each player s decision at each period is to introduce a new product we find that in general each firm s frequency of product introductions clockspeed in equilibrium decreases as its fixed product introduction cost increases further we find that a higher rate of manufacturing learning results in a higher clockspeed and in a higher market share and also results in significantly worse profits for the competitor the results underscore the importance of manufacturing expertise in a firm s ability to introduce new products

assessing the regional economic impacts of renewable energy sources a literature review abstract the transition of the global energy system is one of the main trends that offers opportunities as well as challenges for the economy most literature evaluates the impact of that transition at a national level that view is broadened towards a regional scale due to the lower energy density of many renewable energy sources renewable energy generation will be more decentralised leading to potentially significant changes in the regional economy when transitioning to a renewable energy system in this paper the current literature and methods of assessing regional economic impacts of a transition to renewable energy generation is reviewed the findings suggest an overall need to clearly define the topics such as technologies that are assessed and the evaluated time period a guideline for a regional impact assessment is provided focusing on the suitability of applied impact assessment methods employment ratios supply chain analyses input output models and computable general equilibrium models

the role of brand image and product characteristics on firms entry and oem decisions we investigate the optimal market entry and original equipment manufacturer oem decisions of a firm facing a market in which firms brands can be horizontally differentiated and products can be vertically differentiated the entrant might sell under its own brand and compete with an incumbent become a supplier to the incumbent or both findings reveal that when consumers perceive the firms are horizontally and vertically differentiated the entrant profits by simultaneously entering the market and establishing an oem arrangement with the incumbent in such competitive scenarios both buyer and seller increase profits by agreeing on wholesale prices that are not too low which softens both horizontal and vertical conflict between the firms findings also show that the incumbent may prefer to pay high wholesale prices to the entrant even if the incumbent had the option to source the product independently at a lower marginal cost when firms have the capability of producing each other s product lines su

optimal product launch times in a duopoly balancing life cycle revenues with product cost we present a model describing the demand dynamics of two new products competing for a limited target market the demand trajectories of the two products are driven by a market saturation effect and an imitation effect reflecting the product experience of previous adopters in this general setting we provide analytical results for the sales trajectories and life cycle sales of the competing products we use these results to study the impact of launch time on overall life cycle sales we consider the perspective of one of the competing products and model the trade off between the lost revenues resulting from a delayed launch and the lower unit production costs we find that the profit maximizing launch time exhibits a counterintuitive behavior in particular we show that a firm facing a launch time delay from a competing product might benefit from accelerating its own product launch as opposed to using the softened competitive situation to further improve its cost position we identify conditions under w

the role of equity royalty and fixed fees in technology licensing to university spin offs we develop a model based on asymmetric information adverse selection that provides a rational explanation for the persistent use of royalties alongside equity in university technology transfer the model shows how royalties through their value destroying distortions can act as a screening tool that allows a less informed principal such as the university s technology transfer office tto to elicit private information from the more informed spin off we also show that equity royalty contracts outperform fixed fee royalty contracts because they cause fewer value destroying distortions furthermore we show that our main result is robust to problems of moral hazard beside the coexistence result the model also offers explanations for the empirical findings that equity generates higher returns than royalty and that ttos willing to take equity in lieu of fixed fees are more successful in creating spin offs this paper was accepted by david hsu entrepreneurship and innovation

management ownership and market valuation an empirical analysis we investigate the relationship between management ownership and market valuation of the firm as measured by tobin s q in a 1980 cross section of 371 fortune 500 firms we find evidence of a significant nonmonotonic relationship tobin s q first increases then declines and finally rises slightly as ownership by the board of directors rises for older firms there is evidence that q is lower when the firm is run by a member of the founding family than when it is run by an officer unrelated to the founder

a dynamic marketing operations interface model of new product updates abstract two critical success factors for nearly any firm are the introduction of new products and the integration of the marketing and operations functions within the business enterprise the series of products being considered are associated with sequential non disruptive innovations in technology but disruptive in fashion the study presents a model that integrates and builds upon the popular dynamic bass model for new product diffusion in marketing and the wagner and whitin dynamic lot sizing model a seminal model in operations management the end result is a model that simultaneously determines the optimal timing for the introduction of new product generations pricing production timing and produced quantities this model is then used to examine the impact of variations in marketing and operations parameters on both optimal profit and optimal product lifecycle length the study finds that larger profit and a faster pace of new product introductions are generally associated with faster diffusion lower price elasticity larger market potential lower new product introduction cost and more costly consumer products

optimal temporal product introduction strategies under valuation changes and learning consider a firm facing two consumer segments with differing valuations for quality the demand is stationary and known and consumers make repeat purchase over two time periods however once a premium product is introduced the valuations of the consumers change in the next period the firm derives a cost savings due to learning effect in the second period the magnitude of which depends on the sales volume in the first period under such a situation should a firm introduce a premium product before a basic product or the vice versa should it introduce two products simultaneously when should a firm expand or consolidate its product line what is the optimal product introduction strategy for a firm using a two period stylized model we seek to answer these questions we characterize the optimal product introduction strategy for the firm we describe three easily calculable parameters that govern the optimal choice of the firm the conditions under which a firm should expand or consolidate its product line are discussed we study the effects of cost savings and customer valuation changes we show that the dominated product strategies in absence of these effects can be a part of an optimal product strategy of a firm under valuation changes and cost savings the managerial implications of the model are discussed

strategic commitment to price to stimulate downstream innovation in a supply chain abstract it is generally in a firm s interest for its supply chain partners to invest in innovations to the extent that these innovations either reduce the partners variable costs or stimulate demand for the end product they will tend to lead to higher levels of output for all of the firms in the chain however in response to the innovations of its partners a firm may have an incentive to opportunistically increase its own prices the possibility of such opportunistic behavior creates a hold up problem that leads supply chain partners to underinvest in innovation clearly this hold up problem could be eliminated by a pre commitment to price however by making an advance commitment to price a firm sacrifices an important means of responding to demand uncertainty in this paper we examine the trade off that is faced when a firm s channel partner has opportunities to invest in either cost reduction or quality improvement i e demand enhancement should it commit to a price in order to encourage innovation or should it remain flexible in order to respond to demand uncertainty we discuss several simple wholesale pricing mechanisms with respect to this trade off

a comparison of milestone based and buyout options contracts for coordinating r d partnerships we analyze optimal contractual arrangements in a bilateral research and development r d partnership between a risk averse provider that conducts early stage research followed by a regulatory verification stage and a risk neutral client that performs late stage development activities including production distribution and marketing the problem is formulated as a sequential investment game with the client as the principal where the investments are observable but not verifiable the model captures the inherent incentive alignment problems of double sided moral hazard risk aversion and holdup we compare the efficacy of milestone based options contracts and buyout options contracts from the client s perspective and identify conditions under which they attain the first best outcome for the client we find that milestone based options contracts always attain the first best outcome for the client when the provider has some bargaining power in renegotiation and identify their applicability to different r

marginal q revisited two measures of firm investment behaviour used in the empirical research are tobin s q average q and marginal q the marginal q is a more recently introduced measure than tobin s q and is not as well known this article aims to demonstrate the advantages of using marginal q as a performance measure and is a response to an earlier critical article berglund 2011 claiming an elusiveness bias the pro arguments made in response are that the claimed elusiveness is not a problem furthermore many of the evaluation problems inherent in the empirical use of tobin s q like estimation of replacement cost of assets can be avoided from a pure theoretical standpoint it has long been recognized that marginal q is superior to an average measure of investment behaviour such as tobin s q

on the surprising sufficiency of linear models for dynamic pricing with demand learning we consider a multiperiod single product pricing problem with an unknown demand curve the seller s objective is to adjust prices in each period so as to maximize cumulative expected revenues over a given finite time horizon in doing so the seller needs to resolve the tension between learning the unknown demand curve and maximizing earned revenues the main question that we investigate is the following how large of a revenue loss is incurred if the seller uses a simple parametric model that differs significantly i e is misspecified relative to the underlying demand curve we measure performance by analyzing the price trajectory induced by this misspecified model and quantifying the magnitude of revenue losses as a function of the time horizon relative to an oracle that knows the true underlying demand curve the price of misspecification is expected to be significant if the parametric model is overly restrictive somewhat surprisingly we show under reasonably general conditions that this need not be the case this paper was accepted by gerard cachon stochastic models and simulation

new product strategy and industry clockspeed we study how industry clockspeed internal firm factors such as product development production and inventory costs and competitive factors determine a firm s optimal new product introduction timing and product quality decisions we explicitly model market demand uncertainty a firm s internal cost structure and competition using an infinite horizon markov decision process based on a large scale numerical analysis we find that more frequent new product introductions are optimal under faster clockspeed conditions in addition we find that a firm s optimal product quality decision is governed by a firm s relative costs of introducing new products with incremental versus more substantial improvements we show that a time pacing product introduction strategy results in a production policy with a simple base stock form and performs well relative to the optimal policy our results thus provide analytical support for the managerial belief that industry clockspeed and time to market are closely related

estimates of electricity saving potential in chinese nonferrous metals industry the paper analyzes the electricity saving potential of nonferrous metals industry in china the cointegration method is applied to estimate electricity intensity of chinese nonferrous metals industry in an effort to predict future electricity saving potential the results show that there is a long run equilibrium between electricity intensity and factors such as r d intensity industrial electricity price enterprise scale and labor productivity by means of scenario analysis we evaluate different possible measures that might be adopted to narrow down the electricity efficiency gap between nonferrous metals industry in china and that of japan the results indicate that more active electricity conservation policies are needed in order to reduce the electricity intensity of chinese nonferrous metals industry we also find that the electricity efficiency gap could be significantly narrowed by 2020 if proper electricity conservation policy is adopted finally based on the results of the scenario analysis future policy priorities are suggested

resource allocation decisions under imperfect evaluation and organizational dynamics research and development r d projects face significant organizational challenges especially when the different units who run these projects compete among each other for resources in such cases information sharing among the different units is critical but it cannot be taken for granted instead individual units need to be incentivized to not only exert effort in evaluating their projects but also to truthfully reveal their findings the former requires an emphasis on individual performance whereas the latter relies on the existence of a common goal across the organization motivated by this commonly observed tension we address the following question how should a firm balance individual and shared incentives so that vital information is both acquired and equally importantly disseminated to the entire organization our model captures two key characteristics of r d experimentation information is imperfect and it is also costly our analysis yields several important implications for the design of such incentive schemes and the management of r d portfolios this paper was accepted by david hsu entrepreneurship and innovation

innovation and technology diffusion in competitive supply chains abstract innovations in consumer products frequently rely on technological advances across multiple tiers in a supply chain considering the consumer market demand and downstream investment conditions as input we model a game in a two tier supply chain where downstream firms choose to adopt different levels of an upstream technology and an upstream technology leader determines its pricing policy we identify two necessary but distinct elements for the successful development adoption and diffusion of upstream technologies that are sold to lower tiers as components within final products 1 the level of technology demanded by the market we develop a measure technological potential which describes the highest level of an upstream technology demanded by consumer markets 2 a sufficiently rich return to an upstream innovator as a function of different levels of technology from these two elements we show that the relative magnitudes of two competing sets of consumer market factors determine the technological potential whereas the overall magnitude of the factors in both sets determines the return to the upstream developer we discuss how this difference in consumer market factors influence on these two elements may determine how different technologies fare in the supply chain our results have managerial implications for investors in research and development project selection in identifying profitable technologies that are also demanded at higher capability levels and for governments in defining more targeted public policies for example in choosing the right tier of a supply chain to provide subsidies to encourage market support for certain technologies

the end of the robinson patman act evidence from legal case data the robinson patman act rp an antitrust statute aimed at protecting small businesses limits price setting in distribution channels to avoid costly penalties under rp managers take a variety of precautions when pricing to retailers and wholesalers but how likely is a court to find a defendant guilty of violating the rp we find that this likelihood has dropped drastically as a result of recent supreme court rulings from more than 1 in 3 before 1993 to less than 1 in 20 for the period 2006 2010 the analysis also points to an increased success of the no harm to competition defense which reflects the view that the courts have raised the hurdle for plaintiffs to establish competitive harm finally our results indicate that smaller plaintiffs over time have fared worse than larger ones a trend that challenges the notion that rp protects small businesses

the regional economic impacts of biofuels a review of multisectoral modelling techniques and evaluation of applications allan g j the regional economic impacts of biofuels a review of multisectoral modelling techniques and evaluation of applications regional studies the regional economic impact of biofuel production depends upon a number of interrelated factors the specific biofuels feedstock and production technology employed the sector s embeddedness in the rest of the economy through its demand for local resources and the extent to which new activity is created these issues can be analysed using multisectoral economic models some studies use input output io and social accounting matrix sam modelling frameworks whilst a nascent computable general equilibrium cge literature has begun to examine the regional impact of biofuel development this paper reviews compares and evaluates these approaches for modelling the regional economic impacts of biofuels

age analysis of the impact of a carbon energy tax on the irish economy a computable general equilibrium model with specific detail in taxation and energy use is developed in this paper to quantify the impact of the implementation of energy taxation to reduce carbon dioxide emissions in ireland benchmark data combining physical energy and emissions data and economic data in the form of a social accounting matrix sam had to be compiled from various data sources because energy and pollution accounts from the seea are not available for ireland we find that the reduction target for energy related co2 emissions in ireland of 25 8 compared to 1998 levels can be achieved with a carbon energy tax of 10 15 euros per tonne of co2 though fuel switching is important in meeting the target this result is more sensitive to the possibilities for producers to substitute away from energy use welfare would fall but only by small percentages production and consumption patterns would change more significantly with a shift in demand from fuels with a high emission factor to energy sources with a lower carbon intensity and from energy to other commodities this paper confirms that a carbon energy tax leads to greater emission reductions than an equivalent uniform energy tax the latter has a stronger negative impact on the less polluting energy sectors whereas the carbon tax greatly stimulates the use of renewable energy and reduces the use of peat and coal the new sam the model and the application to energy taxes contribute to a better informed debate on environmental policy in ireland

strategic choice of quality when quality is costly the persistence of the high quality advantage in a two firm two stage model of vertical product differentiation i show that for every convex fixed cost function of quality the firm that chooses the higher quality at the first stage earns the higher profits the result holds for the pure strategy equilibrium in the simultaneous quality game and it holds as well if firms choose their qualities in sequential order

innovation diffusion public policy and local initiative the case of wood fuelled district heating systems in austria abstract this paper comprises a three level study on wood fuel utilisation for district heating in austria first we discuss the framework conditions for the diffusion in austria of rural biomass district heating bdh plants an energy conversion plant type which constituted a real innovation in the 1980s second we describe the diffusion of bdh systems in the austrian province of vorarlberg where a variety of biomass energy systems have been promoted by capital grants since 1993 as part of a dedicated bioenergy promotion programme third the paper contains a case study of a 2 mw bdh plant put into operation in 2000 in rankweil a small market town located in vorarlberg on the east side of the rhine valley analysis of the plant history reveals that an oversupply of forest residues caused by devastating storms and forest diseases together with the more general need to rejuvenate severely over aged forest stands created strong incentives to form local actor networks and initiatives to push for the adoption and diffusion of centralised biomass heating systems in rural areas in addition intensive lobbying and strong political and public support were necessary to successfully combat interventions by both the natural gas industry and influential gas supplied industrial enterprises finally a capital grant of 45 of eligible investment costs as well as careful capacity expansion and other planning significantly improved and safeguarded the economic viability of the plant these considerations combined with a dedicated forest restructuring programme render the plant one of the most successful integrated forestry and bdh projects in vorarlberg and an important model for later adopters overall the analysis sheds some light on the role of public policy local actors and economic and other framework conditions on the market diffusion dynamics of bdh in austria

average q marginal q and the relation between ownership and performance abstract using average performance measures as the literature does to investigate the relation between ownership structure and performance suffers from severe drawbacks we propose a marginal tobin s q and argue for its superiority

competition between biomass and food production in the presence of energy policies a partial equilibrium analysis abstract bioenergy has several advantages over fossil fuels for example it delivers energy at low net co 2 emission levels and contributes to sustaining future energy supplies the concern however is that an increase in biomass plantations will reduce the land available for agricultural production the aim of this study is to investigate the effect of taxing conventional electricity production or carbon use in combination with subsidizing biomass or bioelectricity production on the production of biomass and agricultural commodities and on the share of bioelectricity in total electricity production we develop a partial equilibrium model to illustrate some of the potential impacts of these policies on greenhouse gas emissions land reallocation and food and electricity prices as a case study we use data for poland which has a large potential for biomass production results show that combining a conventional electricity tax of 10 with a 25 subsidy on bioelectricity production increases the share of bioelectricity to 7 5 under this policy regime biomass as well as agricultural production increase a carbon tax that gives equal net tax yields has better environmental results however at higher welfare costs and resulting in 1 to 4 reduction of agricultural production

technology transfer under asymmetric information licensing contracts for newly patented innovations are observed to vary along several dimensions including the form and size of the payment to the inventor fixedfee versus some output based royalty the degree of exclusivity and the division of rents in this article we show that theform of the contract can be explained by two problems in technology exchange the superiority of a licensor s precontractual information about the economic value of the innovation and thefact that sharing this information with the licensee mayfacilitate imitation we show that a licensor signals her technology type with an output based payment or royalty and may leave some of the rents with the licensee conditions under which exclusive license contracts linear and nonlinear and nonexclusive linear contracts are used to transfer technology are identified

integrated product architecture and pricing for managing sequential innovation science and technology advances drive firms to continually enhance their product s performance and launch sequentially improving offerings firms face challenges in marketing such improving products to well informed forward looking consumers who anticipate product improvements and seek to delay their purchase timing product design specifically a modular upgradable architecture in which improving and stable subsystems of a product are separated and selectively upgraded can be a valuable approach for marketers to alleviate consumer concerns about product obsolescence however such an architecture based approach can present new challenges as well and dealing with them requires carefully coordinated cross functional decision making by the firm in this paper we identify and formalize the notion of design inconsistency which refers to the monopolist firm s inability to commit to future product design architectures we find that firms experience design inconsistency even when they are able to commit to future prices and design inconsistency lowers firm profits as well as consumer surplus we then derive a joint product architecture and pricing approach to solve this problem this enables an innovating firm to optimally and in a time consistent manner launch modular upgradable products the modeling and analysis in the paper lends insight into types of markets and products for which modular upgradability is most appropriate and offers guidelines on making pricing and product design decisions jointly for managing sequential innovation this paper was accepted by preyas desai marketing

adverse selection and renegotiation in procurement as was shown by dewatripont optimal long term contracts are generally not sequentially optimal the parties ex post renegotiate them to their mutual advantage this paper fully characterizes the equilibrium of a simple two period procurement situation and studies the extent to which renegotiation reduces ex ante welfare i a central result is that like in the non commitment case the second period allocation is optimal for the principal conditionally on his posterior beliefs about the agent ii the first period allocation exhibits an increasing amount of pooling when the discount factor grows iii with a continuum of types it is never optimal to induce full separation the paper also analyzes whether renegotiated long term contracts yield outcomes resembling those under either unnegotiated long term contracts or a sequence of short term contracts and it links the analysis with the multiple unit durable good monopoly problem

pricing and lead time decisions in decentralized supply chains this paper studies a decentralized supply chain consisting of a supplier and a retailer facing price and lead time sensitive demands a stackelberg game is constructed to analyze the price and lead time decisions by the supplier as the leader and the retailer as the follower the equilibrium strategies of the two players are obtained using the performance of the corresponding centralized system as a benchmark we show that decentralized decisions in general are inefficient and lead to inferior performance due to the double marginalization effect however further analysis shows that the decision inefficiency is strongly influenced by market and operational factors and if the operational factors are dominating it may not be significant this shows that before pursuing a coordination strategy with retailers a supplier should first improve his or her own internal operations

the assortment packing problem multiperiod assortment planning for short lived products motivated by retailers frequent introduction of new items to refresh product lines and maintain their market shares we present the assortment packing problem in which a firm must decide in advance the release date of each product in a given collection over a selling season our formulation models the trade offs among profit margins preference weights and limited life cycles a key aspect of the problem is that each product is short lived in the sense that once introduced its attractiveness lasts only a few periods and vanishes over time the objective is to determine when to introduce each product to maximize the total profit over the selling season even for two periods the corresponding optimization problem is shown to be np complete as a result we study a continuous relaxation of the problem that approximates the problem well when the number of products is large when margins are identical and product preferences decay exponentially its solution can be characterized it is optimal to introduce products with slower decays earlier the structural properties of the relaxation also help us to develop several heuristics for which we establish performance guarantees we test our heuristics with data on sales and release dates of women s handbags from an accessories retailer the numerical experiments show that the heuristics perform very well and can yield significant improvements in profitability this paper was accepted by yossi aviv operations management

durable goods monopolists rational consumers and improving products we consider the case of a monopolist supplying an improving durable product to a population that is heterogeneous in its valuation of product quality in a two period framework we show that if consumers expect the product to improve in present value terms then intertemporal discrimination might result in the first period marginal consumer being left with zero surplus and some higher end consumers postponing purchase the resulting trajectories for quality and price do not constitute a subgame perfect equilibrium one of our conclusions is that the logic of profit maximization in the context of rational consumer choice imposes a demand side constraint on the rate of product improvement we also emphasize the disequilibrium consequences of improving a product so rapidly that high end consumers are tempted to wait for a future new and improved version finally the formulation adopted in the paper may be useful to understand observed differences in product improvement rates in different markets

technology and technical change in the mit eppa model potential technology change has a strong influence on projections of greenhouse gas emissions and costs of control and computable general equilibrium cge models are a common device for studying these phenomena using the mit emissions prediction and policy analysis eppa model as an example two ways of representing technology in these models are discussed the sector level description of production possibilities founded on social accounting matrices and elasticity estimates and sub models of specific supply or end use devices based on engineering process data a distinction is made between exogenous and endogenous technical change and it is shown how because of model structure and the origin of key parameters such models naturally include shifts in production process that reflect some degree of endogenous technical change as a result the introduction of explicit endogenous relations should be approached with caution to avoid double counting

economic and co2 mitigation impacts of promoting biomass heating systems an input output study for vorarlberg austria this paper reports on an empirical investigation about the economic and co2 mitigation impacts of bioenergy promotion in the austrian federal province of vorarlberg we study domestic value added employment and fiscal effects by means of a static input output analysis the bioenergy systems analysed comprise biomass district heating pellet heating and automated wood chip heating systems as well as logwood stoves and boilers ceramic stoves and buffer storage systems the results indicate that gross economic effects are significant regarding both investment and operation of the systems and that the negative economic effects caused by the displacement of conventional decentralised heating systems might be in the order of 20 40 finally co2 mitigation effects are substantial contributing already in 2004 around 35 of the 2010 co2 mitigation target of the land vorarlberg for all renewable energy sources

when showrooming increases retailer profit abstractshowrooming the phenomenon of consumers visiting a brick and mortar b m store to learn about products but then buying online to obtain lower prices is attracting increased attention both in business practice and in academic literature it is considered a major threat to the b m retailers and determining how to fight it seems to be the only consideration however the manufacturer s need for retail informational services has always been one of the essential reasons for retailers to exist and is a means for retailers to achieve profitability the popular arguments about the threat of showrooming ignore the strategic role of the manufacturer in the distribution channel this article analytically shows that when the manufacturer s decisions are considered i e when the manufacturer retailer contract is endogenous consumers ability to engage in showrooming may lead to increased rather than decreased profitability for b m retailer s thus retail efforts to restrict showrooming behavior m

pre commitment and flexibility abstract this paper considers several related strategic duopoly settings in which uncertainty creates an option value from retaining flexibility by delaying investment or output decisions until after uncertainty is resolved this value of flexibility must be weighed against the strategic value of pre commitment yielding a trade off between flexibility and pre commitment we obtain a simple characterization of the timing of output decisions as a consequence of the degree of uncertainty particular attention is paid to the implications for entry deterrence by an incumbent firm and to the possible flexibility enhancing effects of investment in capital

strategic spillovers and incentives for research and development this paper develops a model in which a monopolist supplier can contribute to downstream product improvements by creating knowledge spillovers which downstream firms use as a substitute for their own r d efforts although a market for r d information does not exist the supplier may appropriate an indirect return on r d for two reasons sufficiently high levels of spillover information lead to greater downstream product quality and spillover information reduces the equilibrium sunk cost of r d for downstream firms and thus facilitates entry both effects cause an expansion of downstream output and enhance the demand for the supplier s intermediate good given sufficiently strong incentives for supplier r d the locus of r d shifts partially from the downstream to the upstream industry r d expenditures technological opportunities and downstream industry structure are determined endogenously weak appropriability conditions in the downstream industry enhance innovation incentives in the supply sector

optimal design of research contests procurement of an innovation often requires substantial effort by potential suppliers motivating effort may be difficult if the level of effort and quality of the resulting innovation are unverifiable if innovators cannot benefit directly by marketing their innovations and if the buyer cannot extract up front payments from suppliers we study the use of contests to procure an innovation in such an environment an auction in which two suppliers are invited to innovate and then bid their prizes is optimal in a large class of contests if contestants are asymmetric it is optimal to handicap the most efficient one

regional income effects and renewable fuels increased usage of renewable energy sources in danish rural areas and its impact on regional incomes co2 emission is a worldwide problem and in the attempt to reduce these emissions renewable energy sources may be considered serious alternatives to the present usage of fossil fuels as part of a research programme financed by the danish energy agency data concerning the different heating technologies based on oil and wood fuels have been collected private and social costs are estimated and these economic data are used when analysing regional income effects of increased consumption of fuels e g wood locally produced the impacts on income and tax revenues are calculated from multiplier expressions constructed with rights to the measurement of local effects

contract renegotiation and coasian dynamics consider a long term relationship between a seller and a buyer whose valuation for a per period service or a durable good is private as trade progresses the valuation will be partially revealed and it may be impossible for the parties to commit ex ante not to take advantage of this we analyse this situation first by supposing that the parties can sign a sequence of short term contracts and secondly by supposing that they can sign a long term contract but cannot commit not to renegotiate it later we find a close relationship in the second case between the optimal long term contract and the non commitment outcome in the standard coasian durable good model our results also have implications for hidden information principal agent models

pricing for a durable goods monopolist under rapid sequential innovation a durable goods monopolist who will be introducing new and improved versions of his product must decide how to price his products keeping in mind the relative attractiveness of the current and future products dhebar 1994 has shown that if technology is changing too quickly and the producer cannot credibly commit to future prices and quality then no equilibrium strategy exists that is there is no credible strategy for the future product that the producer can commit to in the first period we show that an equilibrium pricing strategy exists if the monopolist does not offer upgrade pricing that is special pricing to consumers who have bought an earlier version the author shows the possible purchase patterns in equilibrium and derives the optimal pricing strategy

economic potential of biomass based fuels for greenhouse gas emission mitigation use of biofuels diminishes fossil fuelcombustion thereby also reducing net greenhousegas emissions however subsidies are neededto make agricultural biofuel productioneconomically feasible to explore the economicpotential of biofuels in a greenhouse gasmitigation market we incorporate data onproduction and biofuel processing for thedesignated energy crops switchgrass hybridpoplar and willow in an u s agriculturalsector model along with data on traditionalcrop livestock production and processing andafforestation of cropland net emissioncoefficients on all included agriculturalpractices are estimated through crop growthsimulation models or taken from the literature potential emission mitigation policies ormarkets are simulated via hypothetical carbonprices at each carbon price level theagricultural sector model computes the newmarket equilibrium revealing agriculturalcommodity prices regionally specificproduction input use and welfare levels environmental impacts and adoption ofalternative management practices such asbiofuel production results indicate no rolefor biofuels below carbon prices of 40 perton of carbon equivalent at these incentivelevels emission reductions via reduced soiltillage and afforestation are more costefficient for carbon prices above 70 biofuels dominate all other agriculturalmitigation strategies

vertical product differentiation with entry abstract this paper examines the non cooperative behaviour of established firms that compete in product quality and prices while foreseeing the effects of their rivalry on the decisions made by the later entrants we prove an existence and uniqueness of the equilibrium and show that the dominant firms engage in maximal product differentiation i e select the highest and lowest technologically feasible qualities later entrant however always selects an intermediate quality moreover we show that the equilibrium configuration is identical to that generated by perfect foresight equilibrium in a model of sequential entry furthermore the profits earned by each firm are ranked in the same order as the qualities implifying that the later entrant despite being the last mover ends up with higher profits and larger market share than one of the incumbents

milestone payments or royalties contract design for r d licensing we study how innovators can optimally design licensing contracts when there is incomplete information on the licensee s valuation of the innovation and limited control over the licensee s development efforts a licensing contract typically contains an up front payment milestone payments at successful completion of a project phase and royalties on sales we use principal agent models to formulate the licensor s contracting problem and we find that under adverse selection the optimal contract structure changes with the licensee s valuation of the innovation as the licensee s valuation increases the licensor s optimal level of involvement in the development directly or through royalties should decrease only a risk averse licensor should include both up front and milestone payments moral hazard alone is not detrimental to the licensor s value but may create an additional value loss when combined with adverse selection our results inform managerial practice about the advantages and disadvantages of the different terms included in licensing contracts and recommend the optimal composition of the contract

exploiting the medium term biomass energy potentials in austria a comparison of costs and macroeconomic impact the transition to an implicitly solar basedenergy system can make use of various specificbiomass energy systems this paper provideseconomic and environmental indicators forevaluating alternative options the paper proceeds in three empirical steps first an expert survey supplies the primarybiomass potentials available for non food usein austria and their respective costs second an inquiry into investment operating andfinancing costs of 30 different biomass energyuse systems allows a standardized comparisonamong them and their relationship to fossilreference technologies third a computablegeneral equilibrium model of the austrianeconomy is employed to quantify the impacts offostering the use of distinct biomass energytechnologies the results allow us to distinguish betweenthose technologies that tend to lead to anincrease in both gdp and employment e g combined heat and power production from sewagesludge biogas to an increase only inemployment while gdp tends to diminish e g district heating based on agricultural pellets or to a decline in both e g co firing basedon wood chips bark or industrial pellets individual technologies could account for up toone third of austrias kyoto obligation whilecombinations of technologies triggered by acombined co2 tax and biomass energysubsidy for example could almost fully lead toaustrian kyoto compliance

the optimal pace of product updates some firms e g intel and medtronics use a time pacing strategy for product development pd introducing new generations at regular intervals if the firm adopts a fast pace introducing frequently it prematurely cannibalizes its old generation incurring high development costs while if it has a slow pace it fails to capitalize on customer willingness to pay for improved technology we develop a model to gain insight into which factors drive the pace we consider pd cost the diffusion rate coefficients of innovation and imitation the rate of margin decline and the degree to which a new generation stimulates market growth we find that a faster pace is generally associated with faster diffusion a higher market growth rate and faster margin decay not so intuitively we find that relatively minor differences in the development cost function can significantly impact the pace

optimal pricing strategy for new products robinson and lakhani 1975 initiated a long research stream in marketing when they used the bass model 1969 to develop optimal pricing path for a new product a careful analysis of the extant literature reveals that the research predominantly suggests that the optimal price path should be largely based on the sales growth pattern however in the real world we rarely find new products that have such pricing pattern we observe either a monotonically declining pricing pattern or an increase decrease pricing pattern that does not seem close to the sales path in this paper we use a variation of the generalized bass model called gbm developed by bass et al 1994 that yields optimal pricing policies that are consistent with empirical data

step by step the benefits of stage based r d licensing contracts we examine how a licensor can optimally design licensing contracts for multi phase r d projects when he does not know the licensee s project valuation leading to adverse selection and cannot enforce the licensee s effort level resulting in moral hazard we focus on the effect of the phased nature typical of such projects and compare single phase and multi phase contracts we determine the optimal values for the upfront payment milestone payments and royalties and the optimal timing for outlicensing including multiple milestones and accompanying payments can be an effective way of discriminating between licensees holding different valuations without having to manipulate the royalty rate which induces licensees to invest less resulting in lower project values and socially suboptimal solutions interestingly we also find that multiple milestone payments are beneficial even when the licensor is risk averse contrary to standard contract theory results which recommend that only an upfront payment should be used in terms of licensing timing we show that the optimal time depends on the licensor s risk aversion the characteristics of the licensee and the project value

bioenergy expansion in the eu cost effective climate change mitigation employment creation and reduced dependency on imported fuels presently the european union eu is promoting bioenergy the aim of this paper is to study the prospects for using domestic biomass resources in europe and specifically to investigate whether different policy objectives underlying the promotion of bioenergy cost effective climate change mitigation employment creation and reduced dependency on imported fuels agree on which bioenergy options that should be used we model bioenergy use from a cost effectiveness perspective with a linear regionalized energy and transport system model and perform supplementary analysis it is found that the different policy objectives do not agree on the order of priority among bioenergy options maximizing climate benefits cost effectively is in conflict with maximizing employment creation the former perspective proposes the use of lignocellulosic biomass in the stationary sector while the latter requires biofuels for transport based on traditional agricultural crops further from a security of supply perspective the appeal of a given bioenergy option depends on how oil and gas import dependencies are weighed relative to each other consequently there are tradeoffs that need to be addressed by policymakers promoting the use of bioenergy also the importance of bioenergy in relation to employment creation and fuel import dependency reduction needs to be further addressed

operationalizing technology improvements in product development decision making abstract achieving competitive advantage and price premiums in many technology based markets requires the incorporation of current technology in new products to do so firms in hyper competitive environments increasingly plan and design their products concurrent with the independent development and validation of underlying technologies simultaneous validation of a core technology has important implications for a company s product positioning and launch sequence decisions making these traditional marketing decisions relevant to operations managers prior research has shown that to minimize cannibalization in the absence of such improvements in technology a firm should not launch low end products before high end products however concurrent evolution of technology can make it desirable and even necessary to introduce low end products before high end products this is because in technology based industries improvements in technology delay the introduction of a high end product and a firm must trade off the benefit of launching the low end product earlier greater discounted profits against the cost of cannibalization of high end product sales high end product cannibalization can be further reduced by offering the customer an option to upgrade from the low end to high end product with important implications for the firm s product positioning and introduction sequence decisions based on our study in the high technology industry we model the product positioning and introduction sequence decisions under the simultaneous evolution of technology our analysis indicates that it may be optimal in a variety of circumstances for a firm to launch products in an increasing order of performance even in the absence of network externalities besides presenting analytical results for product positioning and profit from different introduction sequences the paper also makes a contribution to managerial practice by providing insights in the form of a conceptual framework

timing of investments and third degree price discrimination in intermediate good markets abstract this paper studies the discriminatory pricing of an intermediate good and compares two models with a different timing of investments undertaken by the downstream firms before or after the upstream monopolist sets the input prices when the more efficient downstream firm is charged a higher price than the less efficient firm in the first model in the second model when investments are made after input prices are set it may be charged a lower price due to the additional indirect effect of input prices on derived demands via the change of investment incentives it is illustrated that with linear market demand and quadratic investment cost whether a lower or higher price is charged to the more efficient firm depends on the ratio of the linear and quadratic coefficients in the cost function

price discrimination in input markets quantity discounts and private information we consider a monopolistic supplier s optimal choice of wholesale tariffs when downstream firms are privately informed about their retail costs under discriminatory pricing downstream firms that differ in their ex ante distribution of retail costs are offered different tariffs under uniform pricing the same wholesale tariff is offered to all downstream firms in contrast to the extant literature on price discrimination with nonlinear wholesale tariffs we find that banning discriminatory wholesale contracts often improves welfare this also holds if the manufacturer is not an unconstrained monopolist moreover uniform pricing increases downstream investments in cost reduction in the long run

woody biomass processing potential economic impacts on rural regions abstract this paper estimates the economic and environmental impacts of introducing woody biomass processing wbp into a rural area in central appalachia wbp is among the most promising additions to energy generation portfolios for reducing import dependency while at the same time providing economic opportunity to stimulate regional economies especially in rural regions where economic development options are often limited we use an input output framework to assess wbp under three different pathways fast pyrolysis ethanol and coal biomass to liquids we find that the proposed wbp will increase regional output by 0 5 1 3 of gross regional product it will increase income by 17 32 to 51 31 million dollars each year and regional employment by 218 1 1127 8 jobs depending on the chosen pathway of these impacts the direct portions are 63 77 of the total impact depending on the chosen pathway the economic analysis and the results from the accompanying environmental assessment show that only the ethanol pathway has both economic and environmental benefits we conclude that because long run economic development strategies in rural regions are limited and negative impacts do not alter dramatically the regional environmental profile regional policymakers should include wbp among their development portfolio options

implications of breach remedy and renegotiation design for innovation and capacity amanufacturer writes supply contracts with n buyers then the buyers invest in innovation and the manufacturer builds capacity finally demand is realized and the firms renegotiate the supply contracts to achieve an efficient allocation of capacity among the buyers the court remedy for breach of contract specific performance versus expectation damages affects how the firms share the gain from renegotiation and hence how the firms make investments ex ante the firms may also engage in renegotiation design inserting simple clauses into the supply contract to shape the outcome of renegotiation for example when a buyer grants a financial hostage to the manufacturer or is charged a per diem penalty for delay in bargaining the manufacturer captures the gain from renegotiation tradable options which grant buyers the right to trade capacity without intervention from the manufacturer return the gain from renegotiation to the buyers this paper proves that under surprisingly general conditions the firms can coordinate their investments with the simplest of supply contracts fixed quantity contracts this may require renegotiation design and certainly requires that the firms understand the breach remedy and set their contract parameters accordingly

signaling new product reliability with after sales service contracts prior studies on performance based contracting pbc for after sales services have highlighted its advantages over traditional resource based contracting rbc when products are established and their reliability is known to all parties we develop a game theoretic model to investigate how these insights are affected when the vendor is privately informed about the reliability of a newly developed product a novel feature of our model is the interaction between reliability signaling private information and the vendor s discretionary investment in spares inventory private action which arises naturally in the setting we consider we find that this interaction leads to contrasting equilibrium outcomes under the two contracts rbc induces the vendor to focus on inventory savings leading to underinvestment in spares whereas pbc induces the vendor to focus on reliability signaling achieved through overinvestment in inventory as a result neither contract is efficient we investigate two means to mitigate this inefficiency but either approach has caveats a making inventory verifiable removes the trade off between reliability signaling and inventory investment but results in diverging contract preferences between the vendor and the buyer b pooling inventories across multiple buyers saves inventory costs but it also hinders reliability signaling potentially exacerbating inefficiency this paper was accepted by yossi aviv operations management

developing a sustainability framework for the assessment of bioenergy systems the potential for biomass to contribute to energy supply in a low carbon economy is well recognised however for the sector to contribute fully to sustainable development in the uk specific exploitation routes must meet the three sets of criteria usually recognised as representing the tests for sustainability economic viability in the market and fiscal framework within which the supply chain operates environmental performance including but not limited to low carbon dioxide emissions over the complete fuel cycle and social acceptability with the benefits of using biomass recognised as outweighing any negative social impacts this paper describes an approach to developing a methodology to establish a sustainability framework for the assessment of bioenergy systems to provide practical advice for policy makers planners and the bioenergy industry and thus to support policy development and bioenergy deployment at different scales the approach uses multi criteria decision analysis mcda and decision conferencing to explore how such a process is able to integrate and reconcile the interests and concerns of diverse stakeholder groups

fees versus royalties and the private value of a patent we compare how much profit an owner of a patented cost reducing invention can realize by licensing it to an oligopolistic industry producing a homogeneous product by means of a fixed fee or a per unit royalty our analysis is conducted in terms of a noncooperative game involving n 1 players the inventor and the n firms in this game the inventor acts as a stackelberg leader and it has a unique subgame perfect equilibrium in pure strategies it is shown that licensing by means of a fixed fee is superior to licensing by means of a royalty for both the inventor and consumers only a drastic innovation is licensed to a single producer

product development decisions a review of the literature this paper is a review of research in product development which we define as the transformation of a market opportunity into a product available for sale our review is broad encompassing work in the academic fields of marketing operations management and engineering design the value of this breadth is in conveying the shape of the entire research landscape we focus on product development projects within a single firm we also devote our attention to the development of physical goods although much of the work we describe applies to products of all kinds we look inside the black box of product development at the fundamentaldecisions that are made by intention or default in doing so we adopt the perspective of product development as a deliberate business process involving hundreds of decisions many of which can be usefully supported by knowledge and tools we contrast this approach to prior reviews of the literature which tend to examine the importance of environmental and contextual variables such as market growth rate the competitive environment or the level of top management support

could good intentions backfire an empirical analysis of the bank deposit insurance the recent financial crisis led to the expansion of deposit insurance coverage in many countries we develop a structural model of the banking market in which banks act as financial intermediaries between consumers who have funds and businesses that seek loans and explore the implications of such policies for banks and depositors our results indicate the policy could erode market discipline and increase banks moral hazard as a result banks extend their lending to riskier loans than they would have in the absence of the policy we find this policy may even harm consumers moreover market competition magnifies the lack of market discipline and induces additional moral hazard for excessive risk taking counterfactuals indicate banks may reduce their deposit interest rates by 2 7 in a duopoly market and almost triple their risk caps under the new policy the estimated losses of depositors welfare are equivalent to at least a 3 27 drop in deposit interest rates data are available at https doi org 1

how to license intangible property we examine the optimal licensing strategy of a research lab selling to firms who are product market competitors we consider an independent lab as well as a research joint venture we show that 1 demands are interdependent and hence the standard price mechanism is not the profit maximizing licensing strategy 2 the seller s incentives to develop the innovation may be excessive 3 the seller s incentives to disseminate the innovation typically are too low 4 larger ventures are less likely to develop the innovation and more likely to restrict its dissemination in those cases where development occurs and 5 a downstream firm that is not a member of the research venture is worse off as a result of the innovation

demand forecast sharing in a dual channel supply chain abstract we assess the benefits of sharing demand forecast information in a manufacturer retailer supply chain consisting of a traditional retail channel and a direct channel the demand is a linear function of price with a gaussian primary demand i e zero price market potential both the manufacturer and the retailer set their price based on their forecast of the primary demand in this setting we investigate the value of sharing demand forecasts we analyze the make to order scenario in which prices are set before and production takes place after the primary demand is known and the make to stock scenario in which production takes place and prices are set before the primary demand is known we also compare the supply chain performance with and without the direct channel under some assumptions production cost is zero and each demand function has the same slope of price we find that the direct channel has a negative impact on the retailer s performance and under some conditions the manufacturer and the whole supply chain are better off our research extends and complements prior research that has investigated only the inventory and replenishment related benefits of information sharing

on the optimal frequency of multiple generation product introductions this paper considers a firm that introduces multiple generations of a product to the market at regular intervals we assume that the firm has only a single production generation in the market at any time to maximize the total profit within a given planning horizon the firm needs to decide the optimal frequency to introduce new product generations taking into account the trade off between sales revenues and product development costs we model the sales quantity of each generation as a function of the technical decay and installed base effects we analytically examine the optimal frequency for introducing new product generations as a function of these parameters c 2015 elsevier b v all rights reserved

regional economic impacts of biomass based energy service use a comparison across crops and technologies for east styria austria abstract biomass action plans in many european countries seek to expand biomass heat and fuel supply mainly to be supplied by peripheral agricultural regions we develop a two plus ten region energy focused computable general equilibrium cge model that acknowledges land competition in analysing the sub state local regional economic implications of such a strategy embedded within a global context our model is based on a full cost analysis of selected biomass technologies covering a range of agricultural and forestry crops as well as thermal insulation the local regional macroeconomic effects differ significantly across technologies and are governed by factors such as net labour intensity in crop production the high land intensity of agricultural biomass products crowds out conventional agriculture and thus lowers employment and drives up land prices and the consumer price index the regional economic results show that net employment effects are positive for all forestry based biomass energy and also show for which agriculture based biomass systems this is true even when accounting for land competition when regional consumer price development governs regional wages or when the agricultural sector is in strong enough competition to the international market positive employment and welfare impacts vanish fully for agriculture based bio energy

the effects of sensitization and habituation in durable goods markets abstract we develop a model to study the impact of changes in price sensitivity on the firm as it introduces multiple generations of a durable product where unit costs are a convex function of quality we incorporate the psychological processes of sensitization and habituation into a model of discretionary purchasing of replacement products motivated by past experience when price sensitivity decreases with each purchase sensitization the myopic firm offers a higher quality product at a much higher price with each generation when price sensitivity increases with each purchase habituation the myopic firm engages in price skimming when sensitization is followed by habituation the myopic firm eventually provides higher quality than the market is willing to pay for leading to a steep drop off in sales and profits the actions of the forward looking firm depend on the discount rate a firm with a low discount rate builds its customer base before offering a higher quality and higher priced product in contrast a firm with a high discount rate quickly increases price and quality following the same path to falling profits of the myopic firm these results provide insight into the firm and consumer behaviors underlying the phenomenon of performance oversupply identified in the innovation literature

delays in new product introductions and the market value of the firm the consequences of being late to the market this paper empirically estimates the impact of not meeting promised new product introduction dates on the market value of the firm we estimate the average abnormal change in the market value for a sample of 101 firms around the date when information about delaying the introduction of new products is publicly announced on average delay announcements decrease the market value of the firm by 5 25 the average dollar change in the market value in 1991 dollars is 119 3 million the evidence suggests that there are significant penalties for not introducing new products on time to provide further insight regression analyses are used to identify factors that influence the direction and magnitude of the change in market value we find that the competitiveness of the industry in which the firm operates the size of the firm and the firm s degree of diversification are statistically significant predictors for the change in the market value of firms that announce delays in the introduction of new products

managing inventory with multiple products lags in delivery resource constraints and lost sales a mathematical programming approach this paper develops an order up tos inventory model that is designed to handle multiple items resource constraints lags in delivery and lost sales without sacrificing computational simplicity mild conditions are shown to ensure that the expected average holding cost and the expected average shortage cost are separable convex functions of the order up to levels we develop nonparametric estimates of these costs and use them in conjunction with linear programming to produce what is termed the lp policy the lp policy has two major advantages over traditional methods first it can be computed in complex environments such as the one described above and second it does not require an explicit functional form of demand something that is difficult to specify accurately in practice in two numerical experiments designed so that optimal policies could be computed the lp policy fared well differing from the optimal profit by an average of 2 20 and 1 84 respectively these results compare quite favorably with the errors incurred in traditional methods when a correctly specified distribution uses estimated parameters our findings support the effectiveness of this mathematical programming technique for approximating complex real world inventory control problems

does amd spur intel to innovate more we estimate an equilibrium model of dynamic oligopoly with durable goods and endogenous innovation to examine the effect of competition on innovation in the personal computer microprocessor industry firms make dynamic pricing and investment decisions while consumers make dynamic upgrade decisions anticipating product improvements and price declines consistent with schumpeter we find that the rate of innovation in product quality would be 4 2 percent higher without amd present though higher prices would reduce consumer surplus by 12 billion per year comparative statics illustrate the role of product durability and provide implications of the model for other industries

a diffusion theory model of adoption and substitution for successive generations of high technology products this study deals with the dynamic sales behavior of successive generations of high technology products new technologies diffuse through a population of potential buyers over time therefore diffusion theory models are related to this demand growth furthermore successive generations of a technology compete with earlier ones and that behavior is the subject of models of technological substitution building upon the bass bass f m 1969 a new product growth model for consumer durables management sci 15january 215 227 diffusion model we develop a model which encompasses both diffusion and substitution we demonstrate the forecasting properties of the model by estimating parameters over part of the data and projecting shipments for later periods

designing a family of development intensive products faced with fragmented markets saturated and demanding customers and global competition firms increasingly must design and offer a line of innovative quality differentiated products to target customers with differing willingness to pay wtp in this context designing a special class of products that we term development intensive products dips for which the fixed costs of development far outweigh the unit variable costspresents some unique managerial challenges examples of such development intensive offerings abound in a number of industries including the pharmaceutical information and entertainment sectors of the economy our contributions in this paper are threefold a to show that managerial insights from the traditional approach to product line design developed for unit variable cost intensive products do not carry over to dips b to present new mechanisms and managerial guidelines for designing a family of products for which development costs cannot be ignored and c to illustrate the insights with an extended industry example we find that the design approach based on degrading or subtracting value from a high end product to obtain a subsumed low end edition shown in the literature to be an effective approach for designing unit cost intensive products can be inappropriate for dips this limitation of value subtraction has implications for the number of variants and the sequence in which they are developed as an alternative to a subsumed product design strategy we propose and examine the overlapped product design approach in which a low end product is not completely subsumed within its high end counterpart but differentiated on additional vertical quality dimensions our results both explain the recent challenges of firms with subsumed low end products and guide them in designing a product line to successfully address emerging low end market segments

winners and losers under the robinson patman act the 1936 robinson patman amendments to the clayton antitrust act prohibit differences in price that might be injurious to competition they also restrict certain practices for example brokerage payments unequal advertising allowances etc that could be used to give hidden discounts to favored buyers the robinson patman r p act has the distinction of being almost universally unpopular among antitrust scholars this is probably because it looks less like an antitrust measure than like legislated relief for small business 2 that the law wears an antitrust cloak is probably a measure of the cunning of its original proponents the statute s poor reputation owes more to theory than to evidence however there has been very little empirical work on the effects of the act and what there is has been largely concerned with the effects of individual prosecutions the purpose of this essay is to begin a broader empirical study i start by reviewing the act s history the impetus for the legislation came from the distributive wholesale and retail trades where a struggle had developed between the old wholesale retail order and the

strategic investment in technological innovations abstract the aim of this paper is to determine the optimal timing of technology investment of a single firm in a duopoly framework as time passes different technologies are invented which after sometime become available for the firm to adopt the question here is not only when a firm should invest but also which technology should be adopted for different scenarios the optimal technology investment decision is determined outcomes range from pre emption equilibria to equilibria with second mover advantages

the impact of corporate governance on investment returns in developed and developing countries we shed light on three conundrums in the literature on investment why investments out of different sources of finance earn different returns why different studies report different patterns of returns across sources of finance and why companies in developing countries make greater use of external equity capital to finance their investment than do companies in developed countries we show that the strength of corporate governance systems affects the preferred source of financing which in turn helps to explain why investments financed in different ways exhibit significantly different rates of return we find considerable differences between developed and developing countries in the effectiveness of corporate governance systems in aligning managers and shareholders interests

rates of return on corporate investment in the last two decades productivity has lagged in the united states markets have been lost to foreign competition real income per capita has grown slowly this experience has led to considerable discussion of possible causes 7 one possible cause often mentioned is the quality of managerial investment decisions managers have been accused of overinvesting in obsolete technologies of underinvesting in risky projects with long run payoffs of undertaking unprofitable mergers and of overall poor judgment in their investment policies 39 this paper presents evidence on the returns on investment over the 1970 88 period for a sample of 699 large corporations that is consistent with this view

the impact of royalty contract revision in a multistage strategic r d alliance this paper investigates the impact of royalty revision on incentives and profits in a two stage research and development r d stage and marketing stage alliance with a marketer and an innovator the marketer offers royalty contracts to the innovator we find that the potential for royalty revision leads to more severe distortions in the optimal initial royalty contracts offered by the marketer we show that if the innovator plays a significant role in the marketing stage the marketer should offer a low royalty rate initially and then revise the royalty rate up later otherwise she should do the opposite we identify two major effects of royalty revision first royalty revision provides the marketer with a flexibility to dynamically adjust royalty rates across the two stages of the alliance to better align the innovator s incentives this incentive realigning effect improves the marketer s profit second royalty revision makes it harder for the marketer to obtain private information from the innovator because the innovator worries that the marketer will take advantage of the information to revise the initial contract to a more favorable one to herself later this information revealing effect hurts the marketer s profit we characterize in what kind of alliances marketers would benefit the most from royalty revision so that managers should clearly establish the expectation for royalty revision and in what kind of alliances markerters would not benefit from royalty revision so that managers should commit not to revise the initial royalty contract with royalty contracts that are contingent on the r d outcome of the r d stage we find that contingent contract structure could be either substitutable by fully capturing the incentive re aligning effect or complementary by weakening the information revealing effect to royalty revision depending on whether the innovator plays a significant role in the marketing stage managers may need to use a contingent contract if possible either to replace or with royalty revision accordingly to improve profits this paper was accepted by kamalini ramdas entrepreneurship and innovation

managing new product definition in highly dynamic environments in highly dynamic environments characterized by changing customer preferences and uncertainty about competitive products managing the development of a new product is a complex managerial task the traditional practice recommended in the literature of reaching a sharp definition early in the new product development npd process may not be optimal desirable or even feasible in such dynamic situations under high uncertainty forcing early finalization of specifications may result in a firm getting locked into an incorrect definition based on our study of npd in the high technology industry we present a model of an approach called real time definition in which a firm adapts its product definition process to the market and competitive environment uncertainty in the product definition is resolved through frequent repeated interactions with customers and using a flexible development process we find that early definition is optimal only in a limited set of situations to maximize its anticipated profits a firm should tune its definition process to the prevailing level of market uncertainty the marginal value of information obtained from the customer during the npd process and its own risk profile and internal development capabilities effects of competition on a firm s definition approach are also examined and implications for managers of a npd process are presented using a conceptual framework