oligarchic family control social economic outcomes and the quality of government wealthy families as opposed to small public shareholders characterize ownership of the large corporate sectors of many countries around the world this paper shows that greater oligarchic family control over large corporations is associated with worse social economic outcomes it also correlates with more bureaucratic and more interventionist governments and less developed financial markets further tests show that red tape price controls and the lack of shareholder rights protection are the paramount factors relating to the extent of family control of large firms these results are broadly consistent with olson and others who argue that economically entrenched wealthy insiders pursue rent seeking activities to preserve the status quo and that this increases corruption and impedes growth

public enterprise reform privatization and the world bank abstract the objectives of this paper are i to review the importance and performance of public enterprises in developing countries ii to examine the questions of whether and why performance improvements should result from privatization and iii to discuss in light of the preceding analysis the approach used by the world bank concerning privatization

privatization public offerings and political objectives this paper empirically analyses the political and economic objectives underlying privatization on the stock market particularly the factors of sips underpricing are explained and the study analyses whether the change of political parties in government play a role on the issue the paper has two main findings first larger initial returns occurred in the early stages of privatization second the change of government from left wing to right wing did not lead to significantly higher levels of underpricing the results show that governments are quite pragmatic with respect to underpricing maximizing proceeds from sips shows to be more important than ideological differences between parties in government

churn versus diversion in antitrust an illustrative model an important question in horizontal merger analysis is what share of a firm s lost output from a unilateral price increase will divert to its merger partner this diversion ratio is often estimated using data on customer switching from a firm to its rivals churn we use a tractable oligopoly model to investigate the potential biases of such estimates depending on what caused the churn shifts in quality or marginal cost of the firm or of a rival or demand side shifts due to changed circumstances or learning about product attributes with demand side shifts churn can be greater between more distant competitors

an s 1 s inventory system with emergency orders in this paper we develop an approximate model of an inventory control system in which there exist two options for resupply with one having a shorter lead time we assume that demand and the fixed ordering costs are small relative to the holding cost so that a one for one ordering policy is appropriate we consider a policy for placing emergency orders that uses information about the age of outstanding orders we derive the steady state behavior of this policy and present some computational results

market provision of broadcasting a welfare analysis this paper presents a theory of the market provision of broadcasting and uses it to address the nature of market failure in the industry advertising levels may be too low or too high depending on the nuisance cost to viewers the substitutability of programs and the expected benefits to advertisers from contacting viewers market provision may allocate too few or too many resources to programming and these resources may be used to produce programs of the wrong type monopoly ownership may produce higher social surplus than competitive ownership and the ability to price programming may reduce social surplus

an approximate policy for a dual sourcing inventory model with positive lead times and binomial yield this paper studies the inventory system of a retailer who orders his products from two supply sources a local one that is responsive and reliable but expensive and a global one that is low cost but less reliable the deliveries from the global source only partially satisfy the quality requirements we model this situation with a dual sourcing inventory model with positive lead times and random yield we propose a dual index order up to policy dop based on approximating the inventory model with an unreliable supplier by a sequence of dual sourcing models with reliable suppliers and suitably modified demand distributions numerical results show that the performance of this heuristic is close to that of the optimal dop moreover we extend the heuristic to models with advance yield information and study its impact on the total inventory costs

price and variety in the spokes model the spokes model of nonlocalized spatial competition provides a new analytical tool for dierentiated oligopoly and a representation of spatial monopolistic competition an increase in the number of rms leads to lower equilibrium prices when consumers have relatively high product valuations but surprisingly to higher equilibrium prices for in termediate consumer valuations new entry alters consumer and social welfare through price market expansion and matching eects with free entry the market may pro vide too many or too few varieties from a social welfare perspective and the equilibrium price remains above marginal cost even when the number of rms is arbitrarily large

an inventory model with poisson demands and emergency orders abstract in this paper we explicitly consider the opportunity to use an emergency supply mode to hedge against demand uncertainty when replenishing a single item inventory normal orders with a relatively long and constant lead time are controlled by a standard r q policy these orders can only be issued when no other orders are outstanding when a normal order is outstanding emergency orders are controlled by a reorder point r j and an order up to level u j where j is a measure of the time remaining until the normal order is delivered the emergency orders have a short lead time and they may also have different ordering costs compared to normal orders demands not satisfied immediately from inventory are backordered we formulate a long run average cost model that includes ordering costs for the two types of orders backordering costs and holding costs backordering costs are considered both as a unit based cost and as a cost rate a tailor made policy iteration algorithm is designed and utilized to minimize the inventory cost rate with state dependent emergency orders for comparisons an algorithm for finding a best simple emergency order policy is also implemented simulation is used to check the validity of our model numerical results are presented for a set of parameter variations and compared to results without emergency orders as well as to results from an earlier model in the literature our results show that substantial cost savings might be obtained by using emergency orders especially when backordering costs are high however the marginal gains are fairly small if state dependent emergency orders are used instead of a simple emergency order policy

establishing property rights establishing secure property rights in transition economies amounts to solving two problems inefficiency structures of control rights over assets and poor contract enforcement politicians and bureaucrats still wield excessive control over assets which results in inefficient underinvestment by entrepreneurs corruption is one way of getting around political control but the drawbacks are considerable particularly the limited enforceability of corruption contracts more workable strategies for establishing property rights in transition economies are giving equity to the bureaucrats and other parties that have control reforming the civil service and removing bureaucratic control rights through privatization russia s experience shows how privatization combined with equity incentives for enterprise insiders transfers control rights from the bureaucrats and stimulates political and economic pressures to protect private property rights

competition and truth in the market for news in this essay we evaluate the case for competition in news markets from the perspective of economics first we consider the simple proposition that when more points of view are heard and defended beliefs will converge to the truth this concept of competition is several steps removed from market competition among actual media firms but it has played a prominent role in the legal arguments for a free press we then explore three mechanisms by which increasing competition or more precisely increasing the number of independently owned firms can limit bias or distortions that originate on the supply side of the media market first when governments attempt to manipulate news competition can increase the likelihood that the media remain independent second when news providers have an interest in manipulating consumers beliefs diversity in such incentives can reduce the risk of information being suppressed or distorted third competition may drive firms to invest in providing timely and accurate coverage overall we argue that there are robust reasons to expect competition to be effective in disciplining supply side bias next we ask how the effect of competition changes when distortions originate on the demand side of the market when consumers themselves demand biased or less socially relevant news we find that increased competition may or may not improve welfare in these cases though we caution against using this as a justification for concentrating media power in the hands of state controlled or regulated firms

quantity restrictions on advertising commercial media bias and welfare abstract we study the welfare effect of a quantity restriction on advertising in free to air television and other advertising financed media in the presence of commercial media bias broadcasters face a trade off between increasing the number of viewers by sending content that is highly valued by viewers and increasing the price of advertising by choosing advertiser friendly content a cap on advertising drives the per viewer price of ads up thus content improves for viewers therefore the cap can be welfare enhancing even when viewers are not ad averse competition among broadcasters makes it more likely that a cap on advertising improves welfare thus there is a complementarity between regulation and competition on this market we also show that a tax on advertising revenues has quite different effects than a cap on advertising quantity

concentration and self censorship in commercial media within a simple model of non localized hotelling type competition among arbitrary numbers of media outlets we characterize quality and content of media under dierent ownership structures assuming advertising sponsored prot maximizing outlets we show that i topics sensitive to advertisers can be underreported self censored by all outlets in the market ii self censorship increases with the concentration of ownership iii adding outlets while keeping the number of owners xed may even increase self censorship the latter result relies on consumers most preferred outlets being potentially owned by the same media companies we argue that externalities resulting from self censorship could be empirically large

an inventory system with two supply modes and capacity constraints abstract this paper analyses a periodic review inventory system with a main and an emergency supply mode where policies of the base stock type are used at both supply channels contrary to previously published models the capacity of the emergency channel is taken into account we examine two alternative ordering policies for that channel an early ordering policy that almost eliminates early stockouts in a replenishment cycle and a late ordering policy that delays the emergency order decision until more demand information has been accumulated approximate cost models are developed and properties of their optimal solutions are derived simulation results indicate that these solutions are near optimal conclusions are drawn about the relative effectiveness of the two emergency ordering policies

the financial and operating performance of newly privatized firms an international empirical analysis this study compares the pre and postprivatization financial and operating performance of 61 companies from 18 countries and 32 industries that experience full or partial privatization through public share offerings during the period 1961 to 1990 our results document strong performance improvements achieved surprisingly without sacrificing employment security specifically after being privatized firms increase real sales become more profitable increase their capital investment spending improve their operating efficiency and increase their work forces furthermore these companies significantly lower their debt levels and increase dividend payout finally we document significant changes in the size and composition of corporate boards of directors after privatization the last fifteen years have witnessed a significant global shift away from state socialism towards entrepreneurial capitalism one of the most important and visible aspects of this trend has been the enthusiasm with which governments of all political persuasions have sold their state owned enterprises soes to private investors in hopes that the generally unsatisfactory economic performance of these firms can be improved by the discipline of private ownership this denationalization process given its current title of privatization by the conservative government of margaret thatcher in

interactions between investment timing and management effort under asymmetric information costs and benefits of privatized firms abstract in this paper we examine the interactions between investment timing and management effort in the presence of asymmetric information between the owner and the manager where the manager has an informational advantage we find that investment timing is later under asymmetric information than under full information implying a decrease in the value of equity option however in order to minimize any distortion under underinvestment management effort is greater under asymmetric information than under full information we show that there are trade offs in the efficiencies of investment timing and management effort under asymmetric information these results fit well with the findings of past empirical studies concerning the costs and benefits of privatized firms

time scarcity and the market for news abstract we develop a theory of news coverage in environments of information abundance time constrained consumers browse through news items across competing outlets they choose which outlets to access and which stories to read or skip thus indirectly deciding how much time to spend on a given outlet firms decide on rankings of news items that maximize their profits we show that even when readers or television viewers and firms are rational and unbiased they spend more time on the news than they would like and not necessarily on the topics they prefer in particular relevant news items may be crowded out we then study how reader efficient standards can be restored and derive implications on diverse aspects of new and traditional media these include tabloidization and polarization of the news and other aspects relevant for the political economy of the media including political knowledge gaps and voter turnout

lessons from privatization in britain abstract the process of privatizing most of britain s major public enterprises yields interesting conclusions on the three related issues 1 a problem of policy assignment arose in the use of privatization and liberalization to achieve both allocative and productive efficiency 2 evidence on the behavior of the public enterprises is consistent with an organizational model of the relevant principal agent relationships predicting certain types of slack absorption 3 the privatization process entailed policy choices that bear on their future productive efficiency effectiveness of monitoring by the market for corporate control and allocative efficiency provision for regulation

paying positive to go negative advertisers competition and media reports this paper analyzes a two sided market for news where two rival advertisers may pay a media outlet to conceal negative information about the quality of their own product paying positive to avoid negative and or to disclose negative information about the quality of their competitor s product paying positive to go negative we show that competition in the product market does not necessarily prevent the emergence of commercial media bias whether or not competing advertisers end up having negative consequences on news accuracy ultimately depends on the extent of correlation in the quality of their products the lower the correlation the higher the expected accuracy of the media outlet s reports these findings provide a rationale to explain the observed differences in the extent of commercial media bias across seemingly similar industries or products within the same media market the results are robust to the presence of multiple media outlets and to asymmetries between the advertisers overall the paper provides theoretical insights for media regulators and for the empirical literature examining the link between advertising and news contents

on the existence of an optimal capital structure theory and evidence one of the most contentious issues in the theory of finance during the past quarter century has been the theory of capital structure the geneses of this controversy were the seminal contributions by modigliani and miller 18 19 the general academic view by the mid 1970s although not a consensus was that the optimal capital structure involves balancing the tax advantage of debt against the present value of bankruptcy costs no sooner did this general view become prevalent in the profession than miller 16 presented a new challenge by showing that under certain conditions the tax advantage of debt financing at the firm level is exactly offset by the tax disadvantage of debt at the personal level since then there has developed a burgeoning theoretical literature attempting to reconcile miller s model with the balancing theory of optimal capital structure e g deangelo and masulis 5 kim 12 and modigliani 17 the general result of this work is that if there are significant leverage related costs such as bankruptcy costs agency costs of debt and loss of non debt tax shields and if the income from equity is untaxed then the marginal bondholder s tax rate will be less than the corporate rate and there will be a positive net tax advantage to corporate debt financing the firm s optimal capital structure will involve the trade off between the tax advantage of debt and various leverage related costs the upshot of these extensions of miller s model is the recognition that the existence of an optimal capital structure is essentially an empirical issue as to whether or not the various leverage related costs are economically significant enough to influence the costs of corporate borrowing the miller model and its theoretical extensions have inspired several timeseries studies which provide evidence on the existence of leverage related costs trczinka 28 reports that from examining differences in average yields between taxable corporate bonds and tax exempt municipal bonds one cannot reject the miller hypothesis that the marginal bondholder s tax rate is not different from the corporate tax rate however trczinka is careful to point out that this finding does not necessarily imply that there is no tax advantage of corporate debt if the personal tax rate on equity is positive indeed buser and hess 1 using a longer time series of data and more sophisticated econometric techniques estimate that the average effective personal tax rate on equity is statistically positive and is not of a trivial magnitude more importantly they document evidence that is consistent with the existence of significant leverage related costs in the economy

privatization in the united kingdom lessons from experience abstract although the reasons for privatization vary across countries in the united kingdom as in other countries it also reflects a renewed belief in market forces the search for policy options that emerges from this renewal however needs to be tempered by an understanding of market as well as regulatory failures although problems facing government enterprises in developed and developing countries may differ the objective of privatization should be to reconstruct these enterprises so as to create conditions that make private sector operations effective and efficient at the same time one should recognize that this may require continued public sector activity in the sector

cointegration analysis of the advertising sales relationship the examination of stochastic properties of the annual advertising and sales data from the lydia pinkham company reveals that the series are cointegrated and therefore possess a long run equilibrium condition according to the estimates of the error correction model of the series in the short run advertising is found to be more responsive than sales in adjustments to eliminate departures from the long run equilibrium condition the author s analysis in general implies that the observed business firms decision rules fixing advertising spending as a percentage of sales revenue may hold as a long run equilibrium condition copyright 1991 by blackwell publishing ltd

mass media and special interest groups abstract media revenues are an important determinant of media behavior it is generally accepted that news coverage depends not only on the preferences of media consumers but also on the preferences of advertisers or subsidizing groups however existing models reach the opposite conclusions about the relationship between the profitability of advertising and media bias we present a theoretical model that reconciles these results the model shows that the sign of the effect of marginal costs of production or marginal advertising revenues on the level of distortion in news coverage depends on complementarity or substitutability between media bias and audience size for an interest group the existence of a budget constraint for an interest group and media outlets reliance on subscription in addition to advertising revenues

compensation and wealth transfers in the french nationalizations 1981 1982 abstract this paper studies the price reaction of french common stocks to the recent nationalization program and estimates the value that nationalized firms would have had if the nationalization program had not occurred it finds that expropriated holders of the nationalized portfolio received a government legislated takeover premium of about 20 percent premiums received for individual firms ranged from 3 to 44 percent industrial firm shareholders benefited most from the program the conditions surrounding the premium dispersion raise questions about equal treatment among expropriated shareholders

politicians and the ipo decision the impact of impending political promotions on ipo activity in china abstract this paper shows that incentives created by the impending turnover of local politicians can accelerate the pace of initial public offering ipo activity in certain politicized environments focusing on china we exploit a research setting where politicians are rewarded for capital market development firms rely on political connections for access to capital rent seeking behavior is rampant and the objectives of the state might not be to maximize capital market efficiency we find that the rate of exchange eligible firms engaging in an ipo temporarily increases in advance of impending political promotion events this effect holds for both state owned and non state owned entities for state owned firms the effect is strongest in those provinces where the politicians are more likely to be rewarded for market development activity for non state owned firms the temporary increase in ipo activity appears to be rationally opportunistic in nature with the effect stronger around events more likely to disrupt the firms political connections promotion period ipos underperform non promotion period ipos in terms of both future financial performance and long run stock returns have controlling shareholders who retain a larger fraction of the company and are more likely to divert proceeds away from their intended use after the offering

earnings management behaviors under different monitoring mechanisms the case of islamic and conventional banks abstract we investigate the impact of organizational religiosity on the earnings quality of listed banks in the middle east and north africa region we analyze islamic banking institutions which operate within strict religious norms and extended accountability constraints and compare them with their conventional counterparts during 2008 2013 we find that islamic banks are less likely to manage earnings and that they adopt more conservative accounting policies based on these findings we argue that religious norms and moral accountability constraints in these organizations have a significant impact on financial reporting quality and agency costs which have implications for both regulators and market participants

a periodic review inventory model with two delivery modes fractional lead times and age and period dependent backlogging costs abstract we examine a periodic review inventory model where the buyer has access to a mix of two delivery modes for the quantity it orders in a period these include an emergency delivery mode that delivers instantaneously and a regular delivery mode that delivers within the length of the review period the unmet demand is backordered and charged a backlogging cost that varies with the length of the backlogging time the excess inventory is charged a holding cost the unit costs for the delivery modes could be different we show that the well known base stock policy structure remains optimal for this problem under mild conditions

a periodic review inventory system with emergency replenishments this paper proposes and analyzes a periodic review inventory system with two replenishment modes regular orders are placed periodically following a base stock policy on inventory position and arrive at the stocking location after a deterministic lead time the location also has the option of placing emergency orders characterized by a shorter lead time but higher acquisition cost in case of imminent stockouts thus at some appropriate time in the replenishment cycle the necessity and size of an emergency order is determined according to a base stock policy on net stock the timing of the emergency order is such that this order arrives and can be used to satisfy the demand in the time period just before the arrival of a regular order when the likelihood of a stockout is highest an approximate cost model is developed which can easily be optimized with respect to the order up to parameters this model is used as the basis for a heuristic algorithm which leads to solutions that are very close to the exact optimal solutions determined through simulation it is shown that the proposed system offers substantial cost savings relative to a system without the emergency replenishment option

new policies for the stochastic inventory control problem with two supply sources we study an inventory system under periodic review in the presence of two suppliers or delivery modes the emergency supplier has a shorter lead time than the regular supplier but the unit price he offers is higher excess demand is backlogged we generalize the recently studied class of dual index policies veeraraghavan s a scheller wolf 2008 now or later dual index policies for capacitated dual sourcing systems oper res 56 4 850 864 by proposing two classes of policies the first class consists of policies that have an order up to structure for the emergency supplier we provide analytical results that are useful for determining optimal or near optimal policies within this class this analysis and the policies we propose leverage our observation that the classical lost sales inventory problem is a special case of this problem the second class consists of policies that have an order up to structure for the regular supplier here we derive bounds on the optimal order quantity from the emergency supplier in any period and use these bounds for finding effective policies within this class finally we undertake an elaborate computational investigation to compare the performance of the policies we propose with that of dual index policies one of our policies provides an average cost saving of 1 1 over the best dual index policy and has the same computational requirements another policy that we propose has a cost performance similar to the best dual index policy but its computational requirements are lower

television and voter turnout i use variation across markets in the timing of television s introduction to identify its impact on voter turnout the estimated effect is significantly negative accounting for between a quarter and a half of the total decline in turnout since the 1950s i argue that substitution away from other media with more political coverage provides a plausible mechanism linking television to voting as evidence for this i show that the entry of television in a market coincided with sharp drops in consumption of newspapers and radio and in political knowledge as measured by election surveys i also show that both the information and turnout effects were largest in off year congressional elections which receive extensive coverage in newspapers but little or no coverage on television

privatization in theory and practice privatization george yarrow this paper examines the theoretical and empirical case for private versus public ownership privatization usually leads managers to place greater emphasis on the pursuit of profits however whether this is beneficial to society depends on the trade off between possible market failures due to a lack of competition and deficiencies in government control of public firms the competitive and regulatory environment is more important than the question of ownership per se in competitive markets there is a presumption in favour of private ownership where there is a natural monopoly vigorous regulatory action is required the evidence suggests that privatization has led to improved performance by firms such as the national freight corporation and cable and wireless which operate in a relatively competitive environment the benefits are less clear in the case of firms like bp britoil and british aerospace however the most worrying case is that of british telecom and the projected privatization of british gas where little thought has been given to limiting the abuse of monopoly power rather the regulatory environment has been tailored to the needs of the existing management and to ensuring a successful share flotation privatization is also advanced as a weapon for reducing trade union power encouraging wider share ownership redistributing wealth and improving the public finances however there are other policy instruments better suited to achieving these objectives the existing privatization programme has not led to a marked widening of share ownership and has resulted in windfall gains to a small group of investors at the expense of taxpayers in general

a production inventory system with markovian capacity and outsourcing option we study the optimal production inventory outsourcing policy for a firm with markovian in house production capacity that faces independent stochastic demand and has the option to outsource we find very simple optimal policy forms under fairly reasonable assumptions in addition when the capacity markov process is stochastically monotone the policy parameters decrease in the firm s current capacity level under additional assumptions all these results extend to the infinite horizon and undiscounted cost cases we analyze comparative statics and the necessity of some technical conditions and discuss when the outsourcing option is more valuable

a continuous review inventory model with order expediting abstract in this paper we consider a continuous review inventory system in which the lead time l includes a part of fixed duration t and a part whose duration can be either t a or t e where t a t e when the net inventory reaches the reorder point r an order of size q is released if the net inventory at time t after the order release is equal to or smaller than r e the order is expedited at a cost comprising a fixed cost and a cost per unit and the lead time is l t t e otherwise the lead time is l t t a therefore the decision variables considered are the order quantity q the reorder point r and the order expediting point r e our aim is to find the inventory policy variables q r and r e that minimize the average cost rate we present an algorithm to obtain the policy variables with global minimal costs when the inventory policy decision variables are integers we also discuss the case in which the decision variables are real valued

the market for news we investigate the market for news under two assumptions that readers hold beliefs which they like to see confirmed and that newspapers can slant stories toward these beliefs we show that on the topics where readers share common beliefs one should not expect accuracy even from competitive media competition results in lower prices but common slanting toward reader biases on topics where reader beliefs diverge such as politically divisive issues however newspapers segment the market and slant toward extreme positions yet in the aggregate a reader with access to all news sources could get an unbiased perspective generally speaking reader heterogeneity is more important for accuracy in media than competition per se

regulation competition and liberalization in many countries throughout the world regulators are struggling to determine whether and how to introduce competition into regulated industries this essay examines the complexities involved in the liberalization process while stressing the importance of case specific analyses this essay distinguishes liberalization policies that generally are procompetitive from corresponding anticompetitive liberalization policies

global dual sourcing and order smoothing the impact of capacity and lead times after decades of offshoring production across the world companies are rethinking their global networks local sourcing is receiving more attention but it remains challenging to balance the offshore sourcing cost advantage against the increased inventories because of its longer lead time and against the cost and volume flexibility of each source s capacity to guide strategic allocation in this global network decision this paper establishes reasonably simple prescriptions that capture the key drivers we adopt a conventional discrete time inventory model with a linear control rule that smoothes orders and allows an exact and analytically tractable analysis of single and dual sourcing policies under normal demand distinguishing features of our model are that it captures each source s lead time capacity cost and flexibility to work overtime we use lagrange s inversion theorem to provide exact and simple square root bound formulae for the strategic sourcing allocations and the value of dual sourcing the formulae provide structural insight on the impact of financial operational and demand parameters and a starting point for quantitative decision making we investigate the robustness of our results by comparing the smoothing policy with existing single and dual sourcing models in a simulation study that relaxes model assumptions this paper was accepted by yossi aviv operations management

multiechelon procurement and distribution policies for traded commodities we consider a firm that procures and distributes a commodity from spot and forward markets under randomly fluctuating prices the commodity is distributed downstream to a set of nonhomogeneous retailers to satisfy random demand we formulate a model that allows one to compute approximate but near optimal procurement and distribution policies for this system and we explore the value of the commodity s market in providing managers with a additional flexibility in procurement and b information on price dynamics generated through the trading of futures contracts our results indicate that the presence of the commodity market and the information that it conveys may lead to significant reductions in inventory related costs however to obtain these benefits both the spot procurement flexibility and the term structure of prices generated by the commodity market must be incorporated in the formulation of the operating policy managerial insights on the procurement strategy as a function of variability in prices and demand are also discussed this paper was accepted by john birge focused issue editor

price and productivity change following deregulation the u s experience no real world market is likely to be perfectly contestable anymore than it is to be perfectly competitive yet like its predecessor the contestability benchmark proves highly useful as a framework for evaluating policies and outcomes under the contestability framework entry and price regulation is deemed inappropriate in industries which do not have system wide natural monopoly characteristics on this criterion brokerage airline trucking long distance telephone and terminal equipment should not be regulated true these industries may be characterised by some elements of scale economy such as economies of vehicle size so that at some level city pair routes only a few firms may serve but industry performance need not suffer in such an unregulated environment impediments to entry and exit not concentration or scale of operations may be the primary source of prices that are not welfare optimal even in the presence of natural monopoly characteristics it is important to isolate those markets which are not yet structurally competitive as in the case of coal shipments over which the railroads are judged to possess market dominance or in local telephone service it can be argued that the latter should continue to be overseen by regulators while markets which are controlled by competitive forces deriving from actual or potential competition or taking other indirect but effective forms should be free from traditional regulation thus unlike privatisation policy in the united kingdom described in the companion article by kay and thompson i985 us deregulatory policy can be construed as having a coherent rationale the nature and extent of deregulation match remarkably well with the policy prescription of the theory this paper analyses the consequences that have emerged under deregulation in terms of the following behavioural properties predicted by multi product competition and contestability theory a variety of products will emerge each of which will yield zero economic profit the revenues from any subset of the products must exceed the incremental costs of those products so that no cross subsidy can exist prices for each product will equal or exceed marginal costs and an equilibrium market structure will minimise costs for the industry see baumol

a continuous review model for an inventory system with two supply modes in this paper we develop an approximate model of an inventory control system in which there exist two options for resupply with one having a shorter lead time because the optimal policy appears to be extremely complex we consider a reasonable extension of the standard q r policy to allow for two different lot sizes q1 and q2 and two different reorder levels r1 and r2 expressions for the expected on hand inventory and the expected backorders are developed and a procedure for determining the policy parameters is given the model is validated by simulation and calculations are included which compare the average annual cost with and without emergency ordering

special interests and the media theory and an application to climate change a journalist reports to a voter on an unknown policy relevant state competing special interests can make claims that contradict the facts but seem credible to the voter a reputational incentive to avoid taking sides leads the journalist to report special interests claims to the voter in equilibrium the voter can remain uninformed even when the journalist is perfectly informed communication is improved if the journalist discloses her partisan leanings the model provides an account of persistent public ignorance on climate change that is consistent with narrative and quantitative evidence

mass media competition political competition and public policy if better informed voters receive favourable policies then mass media will affect policy because mass media provide most of the information people use in voting this paper models the incentives of the media to deliver news to different groups the increasing returns to scale technology and advertising financing of media firms induce them to provide more news to large groups such as taxpayers and dispersed consumer interests and groups that are valuable to advertisers this news bias alters the tradeoff in political competition and therefore introduces a bias in public policy the paper also discusses the effects of broadcast media replacing newspapers as the main information source about politics the model predicts that this change should raise spending on government programmes used by poor and rural voters

inventory control with generalized expediting we consider a single item periodic review inventory control problem in which discrete stochastic demand must be satisfied when shortages occur the unmet demand must be filled by some form of expediting we allow a very general form for the cost structure of expediting we explicitly consider the case where expedited production is allowed to produce up to a positive inventory level we also consider the case where expedited production beyond the deficit is not permitted an alternate application for this model is an inventory system with general lost sales costs for the infinite horizon discounted problem we characterize the structure of the optimal stationary expediting policy and show that an s s policy is optimal for regular production for the special cases where the expediting cost function is concave or consists of a fixed and linear per unit cost we show that the optimal stationary expediting policy is generalized s s or order up to respectively a numerical study allows us to gain insight into when expediting above and beyond the deficit is cost effective

privatization not the only answer abstract governments in many developing countries created state owned enterprises soes to produce goods or provide services the private sector seemed unwilling or unable to offer in many cases soes have turned out to be problem children at best inefficient and at worst unable to fulfill their original functions now the recommended solution to the problem of state owned enterprises is privatization but privatization is no more a solution to the problems of soes than soes were a solution to the problems they were created to solve the problem of soes is not ownership but rather a lack of explicit goals and objectives and an absence of organization cultures and systems that support and encourage fulfillment of those goals and objectives in some circumstances privatization may aid in fulfillment of an enterprise s goals and objectives because of the culture and systems it fosters in other cases not

the price of government ownership a study of the domtar takeover abstract this paper presents an analysis of how government ownership of an enterprise may affect its profitability in august 1981 two quebec crown corporations announced that they had gained control of domtar a private canadian corporation upon receipt of this information the stock s market value dropped significantly over six trading days domtar s shareholders suffered cumulative abnormal returns of minus 25 percent which is equivalent to a reduction in market value of approximately 150 million much of this loss can be attributed to government control and the anticipated pursuit of non profit objectives

performance and efficiency in colombia s power distribution system effects of the 1994 reform we assess evolution in performance efficiency and productivity of colombia s power distribution utilities before and after the 1994 regulatory reform that introduced electricity market activities for the power sector in 12 distribution companies from 1985 to 2001 performance is evaluated contrasting changes in mean and median by wilcoxon rank sum and pearson tests on financial and other performance indicators technical efficiency is measured by means of data envelopment analysis dea the nature of the dataset allows the estimation of malmquist productivity index and its evolution in time results show a recovery after the reform in the main performance indicators of profitability partial input productivity and output plant efficiency and productivity increased after the reform mainly in the largest utilities used as benchmarks in the dea efficiency scores measures meanwhile the less efficient power distribution companies did not improved after the reform and were not able to undertake plant restructuring to catch up in plant efficiency with respect to the pareto efficient input allocations econometric results on dea efficiency scores suggest a positive effect of policy reform

from state to private ownership issues from strategic industries abstract this paper investigates the effects of privatization for a panel of 189 firms from strategic industries headquartered in 39 countries and privatized between 1984 and 2002 strategic firms can hardly be compared to manufacturing or competitive industries as they are generally under state monopoly and involve specific issues such as regulation political and institutional constraints we examine the change in ownership and postprivatization means of control by the government and assess whether positive changes in performance obtain in these particular industries that include firms from the financial mining steel telecommunications transportation utilities and oil sectors we document that governments continue to exert influence on former state owned firms after three years by retaining golden shares and or appointing politicians to key positions in the firm our multivariate results reveal a negative effect of state ownership on profitability and operating efficiency which the presence of a sound institutional and political environment moderates

leadtime management in a periodic review inventory system a state dependent base stock policy we examine a single item periodic review inventory system with stochastic leadtimes in which a replenishment order is delivered immediately or one period later depending probabilistically on costly effort the objective is to determine a joint inventory policy and effort choice strategy that minimizes the expected total costs our analytical and computational analysis suggests that i a state dependent base stock policy is optimal ii the optimal effort strategy is such that the marginal cost of effort is equal to the value of immediate delivery and iii the cost impact of leadtime reduction can be very large we also provide some counter intuitive results compared with the traditional multi period newsvendor model

the macroeconomic relationship between advertising and consumption profit maximizing firms advertise in order to increase the demand for the goods they produce hence we would expect increases in a firm s advertising to be associated with increases in consumption of the firm s goods ceteris paribus the increased demand for the firm s goods may be associated with decreased demand of their rivals goods at the market level increases in advertising by the industry may not be accompanied by increased consumption of the industry s output this is because changes in the levels of advertising among firms in a particular industry could merely rearrange market shares if this is true then in that industry a firm which increases its advertising relative to its rivals will gain sales at the rivals expense advertising in this case is a zero sum game when we aggregate across markets to consider advertising at the national level the question of the effect of advertising upon consumption has still different implications if increased advertising levels for the economy are associated with increased consumption this suggests that consumers are increasing current consumption at the expense of future consumption i e savings if this is true then advertising affects aggregate consumption and the business cycle in this paper we consider the relationship between aggregate advertising and aggregate consumption while previous research e g ashley granger and schmalensee 2 and schmalensee 24 has suggested that consumption affects advertising most previous empirical studies of the causal relationship between aggregate advertising and aggregate consumption reject the hypothesis that advertising affects consumption 6 section 8 3 12 an early study was verdon mcconnell and roesler 28 who studied the relationship between advertising and aggregate demand gnp while they found advertising to be pro cyclical and to have a positive effect on aggregate demand correlations between various leads and lags led them to conclude that no clear pattern existed this study was followed by ekelund and gramm 14 who faulted the verdon mcconnell and roesler study for considering the relationship between advertising and aggregate demand instead ekelund and gramm concentrated upon the relationship between advertising and

the relative efficiency of public and private firms in a regulated environment the case of u s electric utilities abstract the relative efficiency of privately owned and publicly owned electric utilities is investigated using theoretical and econometric models that allow for the effects of both ownership type and regulation the estimation results indicate that the two types of firms are equally cost inefficient in the united states the average effect of inefficiency is to increase the cost of production by 2 4 percent holding output constant inefficiency increases the average quantities demanded of capital and labor and decreases the average quantity demanded of fuel