on the role of demand and strategic uncertainty in capacity investment and disinvestment dynamics abstract even mature industries seldom settle down into a long run steady state fluctuations in demand disrupt the status quo and call for firms to adjust their capacities on an ongoing basis we construct a fully dynamic model of an oligopolistic industry with lumpy capacity and lumpy investment disinvestment decisions in addition to uncertainty about the evolution of demand a firm faces strategic uncertainty concerning the decisions of its rivals we numerically solve the model for its markov perfect equilibria for one set of parameter values three equilibria exist and while all of them have simple intuitive structures they exhibit widely varying patterns of response to demand shocks at one extreme one firm dominates the industry almost as a monopolist and changes its capacity to accommodate demand at the other extreme the larger firm keeps its capacity nearly constant while the smaller firm acts as the swing producer

plant closings and exit behaviour in declining industries the plant closing and exit strategies of firms operating in a declining industry are examined a dynamic game theoretic model is utilized the perfectness criterion is used to restrict the set of nash equilibria there are two key equilibrium results first when firms have the same number of plants high cost plants close before lower cost plants second a larger firm i e a firm operating more plants begins closing plants before a smaller firm as long as cost differences are not large copyright 1988 by the london school of economics and political science

trade liberalisation and plant exit in new zealand manufacturing data on new zealand manufacturing plants are used to examine the impact of trade liberalization on plant exit recent theories suggest that the prospect of a declining market might cause firms to adopt strategic behavior that causes low cost plants to exit first this hypothesis is generally unsupported surviving plants were larger lower cost and were owned by specialized firms with few plants plant costs were more important than firm size for explaining the plant closing behavior of single plant firms diversified multiplant firms were more likely to close plants and were influenced by plant size but not plant costs copyright 1996 by mit press

cost differences and survival in declining industries a case for picking winners abstract in this paper we examine the relationship between firms cost structures and the order of exit from declining industries we distinguish between two fundamental causes of demand decline namely a shrinkage of the consumer base and a decrease in consumers willingness to pay we show that it is not necessarily best to be small and flexible the order of exit in a market driven outcome depends on the manner in which demand shrinks we find that from a welfare perspective the order of exit determined by market forces is not necessarily desirable however simple rules for picking winners based on current unit cost profitability or productive efficiency do not provide sound guidance for policy

incentive compatible and stable trade mechanisms on networks abstract we study a network of buyers and sellers where each seller owns an indivisible object and has no incentive to keep it while each buyer has a downward sloping demand curve which is private information only the connected buyer seller pairs can engage in trade we search for trade mechanisms that are efficient strategy proof bilateral trade stable and individually rational in general there does not exist a trade mechanism simultaneously satisfying these properties the tension between strategy proofness and bilateral trade stability is generated by the intersection between sets of competitors of a buyer at different sellers such intersections often allow the buyer to manipulate via demand reductions the prices paid in the network the observed tension can be resolved if and only if the underlying network is cycle free in such a case there is a unique trade mechanism which satisfies our four properties a generalized vickrey auction

who is vouching for the input voucher decentralized targeting and elite capture in tanzania input subsidy programs carry support as instruments to increase agricultural productivity provided they are market smart this requires especially proper targeting to contain the fiscal pressure with decentralized targeting of input vouchers currently the instrument of choice nonetheless despite clear advantages in administrative costs the fear of elite capture persists these fears are borne out in the experience from the 2008 input voucher pilot program in kilimanjaro tanzania examined here elected village officials received about 60 percent of the distributed vouchers a factor that significantly reduced the targeting performance of the program especially in more unequal and remote communities when targeting the poor greater coverage and a focus on high trust settings helped mitigate these concerns the findings highlight the continuing need for scrutiny when relying on decentralized targeting a clearer sense of purpose increasing productivity among poorer farmers versus increasing aggregate output could also enhance the targeting performance

entry deterrence in a finitely lived industry the ghemawat and nalebuff 1985 exit model is extended to include an entry stage demand is high at the time of entry but is expected to eventually decline it is shown that equilibrium entry decisions may be critically affected by the prospect of a future decline in demand even when the latter is scheduled to occur in the arbitrarily distant future or is expected to be of arbitrarily short duration in all cases a unique perfect equilibrium for the entry game exists this equilibrium exhibits counterintuitive features for example the incumbent s and sometimes even the industry s output may be larger if the incumbent is a monopoly than if faced with a potential entrant

excess capacity and rationalisation in the west european synthetic fibre industry this paper examines the process of rationalisation in an international oligopoly confronted by persistent excess capacity and losses in particular it analyses the pattern of capacity reduction plant closures and product area withdrawals as the firms strove to restore their profitability it compares the actual pattern of rationalisation achieved between 1975 and 1981 with the predicted patterns of rationalisation based on theory both under a cartel with government intervention and in a competitive solution free from such intervention the paper is divided into four sections the first contains a brief outline of developments in the industry 1967 80 the second section examines the producer cartel and government intervention framework the third section is devoted to the development of a predicted competitive pattern of rationalisation finally the fourth section examines the actual pattern of rationalisation and compares this with both the cartel plus government intervention and the competitive pattern predictions

strategic investment under uncertainty a synthesis abstract investment is a central theme in economics finance and operational research traditionally the focus of analysis has been either on assessing the value of flexibility investment under uncertainty or on describing commitment effects in competitive settings industrial organization research contributions addressing the intersection of investment under uncertainty and industrial organization have become numerous in recent years in this paper we provide an overview aimed at categorizing and relating these research streams we highlight managerial insights concerning the nature of competitive advantage first versus second mover advantage the manner in which information is revealed firm heterogeneity capital increment size and the number of competing firms

a note on the relation between size ownership status and plant s closure sunk costs vs strategic size liability abstract in this paper we test both sunk cost and strategic size liability predictions by looking at the exit behavior of a sample of italian manufacturing plants for this purpose we focus on plants size and ownership status in particular we distinguish independent plants from plants that belong to multi unit organizations as to these latter we further distinguish state owned from privately owned plants we also consider the impact upon the likelihood of closure of the size and nationality of the parent firm in addition and contrary to previous empirical work data allow us to control for differences in the cost structure of plants namely we use technology adoption dummies to take into account plants technological heterogeneity

bridging behavioral and economic theories of decline organizational inertia strategic competition and chronic failure this paper is another plea for bridging behavioral and economic approaches to the study of competition in markets and strategy making by firms the arguments focus on a specific case in point the behavioral theory of organizational decline and the economic modeling of immediate exit the arguments come in three steps first the literature on organizational decline is reviewed by organizing a framework that summarizes arguments from varying economic and organizational perspectives that have for the most part developed independently observations from empirical and theoretical studies are combined in order to investigate the causes conditions courses and consequences of organizational downturn second a theoretical argument is developed that explains voluntary exit and chronic failure by introducing a proxy of organizational inertia in a model of strategic cournot duopoly the key assumptions which have a behavioral flavour that seemingly contradicts orthodox economics are grounded in the theoretical and empirical literatures the results of the model support the claim that pure profit maximizing behavior may be at the expense of organizational survival d aveni 1990 p 135 third by formulating two hypotheses and presenting tentative evidence from the chemical industry the paper hopes to convincingly argue that such integrative models lead to empirical testing of interesting hypotheses a key finding here is that inefficient firms may outlast their efficient rivals cf d aveni 1989a

targeting the poor evidence from a field experiment in indonesia the brief summarizes the targeting the poor evidence from a field experiment in indonesia for the period december 2008 january 2009 this paper reports an experiment in 640 indonesian villages on three approaches to target the poor proxy means tests pmt where assets are used to predict consumption community targeting where villagers rank everyone from richest to poorest and a hybrid defining poverty based on ppp 2 per capita consumption community targeting and the hybrid perform somewhat worse in identifying the poor than pmt though not by enough to significantly affect poverty outcomes for a typical program elite capture does not explain these results instead communities appear to apply a different concept of poverty

reaching the poor cash transfer program targeting in cameroon identifying and selecting poor households with efficient targeting methods is essential for effective poverty alleviation programs this paper assesses the ex post performance of two popular targeting mechanisms proxy means testing pmt and community based targeting cbt in a pilot cash transfer program in cameroon several indicators and metrics to measure each method s performance in terms of inclusion of poor households and exclusion of non poor households are employed results consistently show that cbt performs poorly in terms of selecting households with low per capita consumption when compared to pmt cbt appears to select households with low physical and human capital regardless of actual consumption level however cbt also shows more variability in the selection decision than pmt even when alternative poverty definitions are used as robustness tests the pmt method used in the pilot slightly outperforms other targeting methods hybrid alternative pmt and universal targeting with equal budget but errors remain high when selecting 35 of the population for program participation the results suggest caution is needed in employing cbt methods to select households with low per capita consumption in an environment where poverty levels are high and administrative capacities are limited cbt performance may be improved through more uniform and consistent guidance on program selection criteria and process including explicit criteria that enable cbt monitoring as well as a better integration between pmt and cbt

exit with multiplant firms using an extension of ghemawat and nalebuff s 1985 model i analyze the outcome of industry decline when firms have multiplant operations the analysis reveals that no natural generalization of their strong empirical prediction that the larger of two single plant duopolists exits first holds in a multiplant setting the results also highlight a number of factors that affect the pattern of capacity removal during industry decline and lead to a discussion of the strategic implications of firms plant size choices in general the factors determining the pattern of capacity reduction can be quite complex and prediction in such settings often requires intimate knowledge of industry structure

a theory of buyer seller networks this paper introduces a new model of exchange networks rather than markets of buyers and sellers it begins with the empirically motivated premise that a buyer and seller must have a relationship a link to exchange goods networks buyers sellers and the pattern of links connecting them are common exchange environments this paper develops a methodology to study network structures and explains why agents may form networks in a model that captures characteristics of a variety of industries the paper shows that buyers and sellers acting strategically in their own self interests can form the network structures that maximize overall welfare

on industry life cycles delay entry and shakeout in beer brewing abstract this paper proposes a new explanation for industry shakeout an event evident in the life cycle of many industries in which the number of firms drops significantly in a short interval of time based on an in depth analysis of the shakeout in the united states beer brewing industry between 1880 and 1890 we propose that industry shakeouts naturally follow periods of mass entry by firms similar patterns are evident in two other industries we briefly examine the us automobile and tire industries while entry rates fluctuate broadly in all these industries we find that the timing of exit for a given cohort of entrants is remarkably similar over time the exit hazard rate is peaked in the first two years of every cohort s life and drops dramatically to low and stable levels for subsequent ages in this sense mass exit follows mass entry and does not require a deep explanation it is the mass entry evident in the data for these industries that requires an explanation we propose a theoretical model of information accumulation to explain entry into an industry entrepreneurs are uncertain about the profitability of the industry and this uncertainty is resolved through sufficient accumulation of information regarding the fortunes of incumbent firms delay in entry occurs solely due to the fact that it takes time to accumulate sufficient information to support more entry the resulting entry pattern from simulations of the model looks much like that observed in the industries we study

community based development and poverty alleviation an evaluation of china s poor village investment program we conduct the first systematic evaluation of the world s largest community based development program china s flagship poverty alleviation program began in 2001 which finances public investments in designated poor villages based on participatory village planning we use matching methods and a panel household and village data set with national coverage to compare changes from 2001 to 2004 in designated poor villages that began plan investments and in designated poor villages that had yet to begin plan investments we find that the program significantly increased both government and village financed investments while the program did not increase the income or consumption of poorer households it did increase the income and consumption of richer households by 6 1 to 9 2 we also find suggestive evidence that governance matters in the distribution of program benefits relative gains were greater for richer households in villages with more educated leaders and higher quality village committees delivered greater benefits to both richer and poorer households

survival duration of plants evidence from the us petroleum refining industry abstract this paper presents a duration analysis on the survival of us petroleum refining plants for the 1981 1986 period when the industry as a whole declines in response to the decontrol of crude oil markets the purpose is to examine the duration dependence and determinants of post deregulation plant lifetimes the weibull model with the correction for unobserved individual heterogeneity provides a better fit to the data empirical results show that plant size age regulatory subsidies technology use and multiplant coordination are key determinants of refinery life duration after deregulation in addition major integrated oil companies tend to make timely restructuring via refinery closures and sales the interactive effects of size and technology use and of multiplant coordination and integrated organization are also important to the refinery survival

free entry and social inefficiency our goal is to provide a simple yet general exposition of the conditions under which the number of entrants in a free entry equilibrium is excessive insufficient or optimal our analysis compares the number of firms that enter a market when there is free entry with the number that would be desired by a social planner who is unable to control the behavior of firms once they are in the market that is we consider the second best problem of choosing the welfare maximizing number of firms while we take as given their noncompetitive behavior after entry we demonstrate that the crucial conditions for establishing the presence of an entry bias can be stated quite simply in terms of the outcome of the postentry game played by entrants in contrast to previous work we do not need to model this postentry game explicitly

does more cash in conditional cash transfer programs always lead to larger impacts on school attendance abstract there is considerable evidence that conditional cash transfer cct programs can have large impacts on school enrollment including in very poor countries however little is known about what features of program design account for the observed outcomes in this paper we analyze the impact of a program in cambodia that made payments of varying magnitude to otherwise comparable households the identification is based on a sharp regression discontinuity design we find that a modest cash transfer equivalent to approximately 2 of the consumption of the median recipient household had a substantial impact on school attendance approximately 25 percentage points a somewhat larger transfer did not raise attendance rates above this level

technology use and plant closure abstract this paper aims to contribute to the empirical literature on industrial demography it analyzes a stratified sample of the italian metalworking industry composed of 810 plants with more than 10 employees it considers plant closure over the period 1989 1997 probit type econometric models are estimated in order to provide evidence on the explanatory factors of the likelihood of closure with special attention being devoted to technological variables the paper extends previous empirical results along a number of directions first in spite of the fact that use of advanced technologies especially in the design and engineering sphere favors survival remarkable differences do emerge between different individual technologies ceteris paribus plants having adopted technologies characterized by sizable product specific investments turn out to be less likely to be shut down in addition the ownership status of plants is found to influence the probability of closure likelihood of survival is lower for plants that belong to multi unit organizations than for those owned by single plant firms even though the difference between the two plant categories decreases with plant size altogether such results point to the relevance of irreversibility and sunk costs for understanding exit behavior

a theory of exit in duopoly we develop a duopoly model in which exit occurs because of the existence of fixed costs or opportunity costs each firm enters the market knowing its own cost but not that of its opponent as times goes on each firm becomes increasingly pessimistic about the cost of its remaining rival the time of exit is the only strategic variable so that our model is a war of attrition in contrast to the classic war of attrition however we assume that with positive probability each firm s costs may be low enough that staying in forever is a dominant strategy thus our model unlike the classic one has a unique equilibrium

bargaining and efficiency in networks abstract we study an infinite horizon game in which pairs of players connected in a network are randomly matched to bargain over a unit surplus players who reach agreement are removed from the network without replacement the global logic of efficient matchings and the local nature of bargaining in combination with the irreversible exit of player pairs following agreements create severe hurdles to the attainment of efficiency in equilibrium for many networks all markov perfect equilibria of the bargaining game are inefficient even as players become patient we investigate how incentives need to be structured in order to achieve efficiency via subgame perfect but non markovian equilibria the analysis extends to an alternative model in which individual players are selected according to some probability distribution and a chosen player can select a neighbor with whom to bargain

irreversible investment under uncertainty in oligopoly abstract an oligopoly is studied where firms facing a stochastic inverse demand curve use capacity as strategic variable capacity may be adjusted continuously over time with linear cost the analysis uses the technique of a fictitious social planner and the theory of irreversible investment under uncertainty examples indicate that qualitatively the price process will be similar in oligopoly and competitive equilibrium when firms are nonidentical e g in initial size and even if they are alike in other respects substantial time may pass until they are all the same size much of that time one firm may dominate the market

turbulence in growing and declining industries turbulence over the industry life cycle is examined for the case of portugal using the lowest possible level of industry aggregation thus allowing for the use of panel data to study the evolution of product markets replacement of exiting firms by subsequent entrants plays a primary role in generating turbulence in high growth markets while displacement of incumbents by recent entrants is the main selection force in declining markets as the industry life cycle progresses trial and error entry and entry mistakes decrease and turbulence subsides

an efficient ascending bid auction for multiple objects when bidders exhibit multi unit demands standard auction methods generally yield inefficient outcomes this article proposes a new ascending bid auction for homogeneous goods such as treasury bills or telecommunications spectrum the auctioneer announces a price and bidders respond with quantities items are awarded at the current price whenever they are clinched and the price is incremented until the market clears with private values this dynamic auction yields the same outcome as the sealed bid vickrey auction but has advantages of simplicity and privacy preservation with interdependent values this auction may retain efficiency whereas the vickrey auction suffers from a generalized winner s curse

r d induced industry polarization and shake outs abstract we consider the standard two stage game of r d and cournot competition with ex ante identical firms but depart from the literature in assuming that r d is characterized by mildly instead of strongly decreasing returns to scale we establish that only extreme r d levels are possible at equilibrium and that for a broad range of parameters equilibria are asymmetric in r d levels possibly leading one firm to endogenously exit this provides a simple link between returns to scale in r d and industry polarization including shake outs a novelty is that exit may be triggered by positive opportunities in a strategic setting given the original nature of our r d equilibrium a complete welfare analysis is conducted including a possible role for r d subsidies

estimating a war of attrition the case of the us movie theater industry this paper estimates the impact of competition and exogenous demand decline on the exit process of movie theaters in the us from 1950 1965 i modify fudenberg and tirole 1986 s model of exit in a duopoly with incomplete information to an oligopoly i estimate this model with panel data using variations in tv diusion across house holds and other market characteristics to identify the parameters in the theater s payo function and the distribution of unobservable exit values using the estimated model i show that theaters who are making negative pro ts may choose to remain in the market if they expect to outlast their competitors because at that point their pro ts would increase this creates a signi cant delay in the exit process in addition by decompos ing the across market variation in the exit process i nd that tv diusion explains a substantial proportion of the variation in the exit process

the impact of debt financing on entry and exit in a duopoly this article investigates the interaction between market entry company foreclosure and capital structure in a duopoly we find that the order in which firms foreclose is determined not only by differences in firm specific factors but also by common economic factors such as the interest rate and the market profit volatility we extend the exit model by allowing financially distressed firms to renegotiate their debt contracts through a one off debt exchange offer we find that firms with high bankruptcy costs or with prospects of profit improvement can get bigger reductions on their debt repayments investigating market entry we find that financial vulnerability of the incumbent induces earlier entry article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

a note on capacity reduction and the role of firm size in declining industries declining industries have been explained by game theoretic approaches with size as the determining factor as to who exits first benefits and costs of capacity reduction have been neglected and are discussed here when a strategically behaving firm initially reduces capacity it can force small competitors from the market by internalizing the benefits of capacity reduction the second factor that determines exit refers to transfering capacity to other markets first to exit are those firms that are good at reducing their exit costs by finding new markets for their assets

the short run shutdown decision when output price and initial wealth are random abstract this paper extends the research of hori 1983 and chavas 1985 by investigating the short run shutdown decision of the competitive firm under output price risk when initial wealth is random central to this endeavor are the results of doherty and schlesinger 1986 and doherty et al 1987 concerning global and local risk premia under multiple sources of risk using a local risk premium two novel and intuitively pleasing results are reported here the reservation price of the shutdown decision varies a according to the diversification of the decision maker s cash flows and b if the decision maker exhibits dara then according to the depth of decision maker s pockets

the probability of exit a firm may leave an industry in at least three ways through merger voluntary liquidation or bankruptcy there are important economic differences between forms of exit yet previous work has treated exits as homogeneous this article develops a model of the relation between the forms of exit and uses it to guide selection of simple estimated statistical models an empirical example from the cotton textile industry demonstrates the arguments the results in this data are that the form of exit is not related to profitability that there is some heterogeneity across forms of exit and that information about the characteristics of the firm alone is not sufficient to predict all forms of exit

second mover advantage and entry timing we describe a model of entry timing assuming that a second mover can benefit from observing the experience of a first mover we focus on how market attractiveness characteristics such as size and cost affect the time until first entry the effects depend on whether the number of participants is exogenous or endogenous in the former case a more attractive market leads to earlier entry in the latter case it leads to later entry treating the number of firms as an integer free entry leads to non monotone but testable effects of market attractiveness on entry timing

unionization and plant closure in canada this paper examines for the first time the role of unionization as a determinant of plant closings in canada using the 1999 to 2001 canadian workplace and employee survey the paper contributes to the north american evidence by showing that the share of a plant s workers covered by collective bargaining has a robust positive partial correlation with the probability of larger plants closing for smaller plants the extent of unionization tends to be much lower and its variation plays no role in plant closure the study highlights the theoretical and statistical importance of examining closure separately for large and small plants ce memoire examine pour la premiere fois le role de la syndicalisation en tant que determinant de la fermeture d usines au canada a l aide des resultats de l enquete sur le milieu de travail et les employes de 1999 et de 2001 emte le texte contribue a enrichir le dossier qui montre qu il y a correlation positive partielle robuste entre la portion des travailleurs d usines couverts par une convention collective et la probabilite de fermeture des grandes usines pour les plus petites usines le degre de syndicalisation tend aetre plus faible et sa variation ne joue pas de role dans le processus de fermeture d usines cette etude montre l importance theorique et pratique qu il y a aetudier separement les fermetures des grandes et des petites usines

exit in duopoly under uncertainty this paper examines a declining duopoly where the firms must choose when to exit from the market the uncertainty is modeled by letting the revenue stream follow a geometric brownian motion we consider the markovperfect equilibrium in firms exit strategies with a low degree of uncertainty there is a unique equilibrium where one of the fi rms always exits before the other however when uncertainty is increased another equilibrium with the reversed order of exit may appear ruining the uniqueness whether this happens or not depends on the degree of asymmetry in the firm specifi cp arameters

exit from the hospital industry we study the exit of hospitals from the market for inpatient services more generous hospital reimbursement significantly reduces the probability of exit throughout the 1990s conditional on reimbursement levels hospital efficiency was not a significant determinant in the early 1990s but in the mid to late 1990s less efficient hospitals were significantly more likely to exit throughout the period high tech services increased the probability of survival and for profit hospitals were more likely to exit the role of medicare as a determinant of exit became less important in the latter half of the 1990s

preferences for community based targeting field experimental evidence from zambia summary community based targeting is frequently used in low income countries to identify the poor yet evidence about its performance is inconclusive and factors of success are understudied drawing on controlled field experiments this paper studies how individual targeting preferences translate into group outcomes and which determinants of progressiveness prevail in rural zambia it finds that individuals pursue poverty motives but act selfishly if not restrained egalitarianism and favoritism are not as pronounced as critics suggest even if individual and group allocations vary considerably this does not result in individuals dissatisfaction better access to information and greater trust make targeting outcomes more progressive

impact of government intervention on employment change and plant closure in northern ireland 1983 97 harris r and trainor m 2007 impact of government intervention on employment change and plant closure in northern ireland 1983 97 regional studies 41 51 63 financial assistance to manufacturing industry is an important element of the industrial development policy in northern ireland this paper uses the individual plant level records of the annual respondents database ard for the northern ireland manufacturing sector 1983 97 matched to the plant level details of financial support provided by the industrial development board to examine the effect of selective financial assistance sfa on employment change and plant closure it is found that sfa concentrated on protecting existing rather than new enterprises in terms of employment change using a hazard model it is found that the receipt of sfa significantly reduced the probability of plant closure by on average between 15 and 24 harris r et trainor m 2007 l impact de l intervention gouvernementale sur l evolution de l emploi et la fe

reply on comment to small firms and the merger mania research on performance differences between small and large firms is booming it emerges relatively separated from the mainstream industrial organization literature inspired by levy s comment on an earlier paper we try to bridge the gap between the two areas especially we screen non cooperative game theoretical models for predictions on performance differences most of them forecast higher profits for larger firms but there exist also some models which predict the opposite for very specific circumstances

investigating the cause of death industrial relations and plant closures in australia this is the first study to focus on how unions affect the likelihood of plant closures in australia australia is of special interest in this connection the authors argue because of its unique industrial relations institutions which at the time of the study 1990 95 limited the capacity of established unionized firms to remove unions except through plant closure an analysis of australian workplace industrial relations survey data shows that two of three measures of unionization had a robust positive influence on the probability of plant closure and the third had a weaker positive influence depending on the specification for example a 10 percentage point increase in union density one of the two measures found to have strong influence was associated with a 1 3 1 7 percentage point increase in the probability of plant closure representing a substantial increment since the mean closure probability among these plants was about 16

risk aversion heterogeneity and contests we introduce a novel method of modellingcontests that avoids the complexitiesencountered by the best response function approach we analyse contests in which i there are many risk averse players ii attitudes to risk may differ acrossindividuals and iii the technology thattransforms rent seeking effort intoprobability of winning may also differacross individuals we establish that ifevery player has a constant degree ofabsolute risk aversion a uniqueequilibrium exists we also establishcomparative static results and examine howthe level of rent dissipation is affectedby the heterogeneity of attitudes towardsrisk and the precise nature of the technology

cash or condition evidence from a cash transfer experiment this brief summarizes the results of a gender impact evaluation study entitled cash or condition evidence from a cash transfer experiment conducted from 2008 to the end of 2009 in malawi the study observed the impact of conditionality in cash transfer programs with two distinct interventions unconditional transfers uct arm and transfers conditional on school attendance cct arm targeted at adolescent girls in malawi on individual level dropout rates declined in both treatment arms however the uct arm is 43 percent as large as the cct arm the fraction of days attended in the cct arm is significantly higher than the uct cognitive ability math and english scores significantly improve for the cct but not for the uct probability of pregnancy and marriage were much lower in the uct arm the delays in marriage and fertility in the uct arm are found entirely among adolescent girls who dropped out of school after the start of the intervention improvements in human capital for the recipients of the cct are achieved at the cost of worse outcomes for people who drop out of school funding for the study derived from the global development network bill and melinda gates foundation national bureau of economic research nber africa project world bank research support budget grant world bank knowledge for change trust fund world development report 2007 small grants fund spanish impact evaluation fund and gender action plan trust fund

impacts of community driven development programs on income and asset acquisition in africa the case of nigeria summary this study evaluates the impacts of a community driven development cdd project on household income and acquisition of productive assets in nigeria using recall data difference in differences and propensity score matching approaches the study finds that the project succeeded in targeting the poor and women farmers in its productive asset acquisition component participation in the project also increased the mean income of beneficiaries by about 40 60 but the impact of the project on income of the poorest beneficiaries was not statistically significant additionally sustainability of this achievement is uncertain since the project did not involve rural credit services the large cash transfer through its productive asset acquisition component is also unsustainable future studies should be undertaken using longer term panel data to capture the pattern and trend of the impact of this project

the devolution of declining industries in declining industries capacity must be reduced in order to restore profitability who bears this burden where production is all or nothing there is a unique subgame perfect equilibrium the largest firms exit first ghemawat and nalebuff 1985 in this paper firms continuously adjust capacity again there is a unique subgame perfect equilibrium all else equal large firms reduce capacity first and continue to do so until they shrink to the size of their formerly smaller rivals intuitively bigger firms have lower marginal revenue and correspondingly greater incentives to reduce capacity this prediction is supported by empirical findings

the persistence of market leadership evidence from japan this article explores the persistence of market leadership in japanese manufacturing industries over the period 1975 2004 by applying survival data techniques we examine how long market leadership persists and how the duration of market leadership varies according to industry specific characteristics our findings indicate that market leaders maintain their leadership positions for on average 20 years from 1975 in japanese manufacturing industries we provide evidence that market leadership tends to persist in capital intensive and legally cartelized industries whereas it is less likely to persist in demand volatile r d intensive and import intensive industries copyright 2009 the author 2009 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

conglomerate entrenchment under optimal financial contracting we provide a formal analysis of the notion that conglomerates are more entrenched as they have deeper pockets using the financial contracting model of bolton and scharfstein 1990 we can isolate two effects that confirm this conjecture the pooling of cash flows which allows to smooth out repayments and the ability to obtain better credit terms for less profitable business segments the internal capital market operated in a conglomerate may however work in the opposite direction increasing the sensitivity of operations to own cash flows and increasing the likelihood of exit

preemption games under levy uncertainty abstract we study a stochastic version of fudenberg tirole s preemption game two firms contemplate entering a new market with stochastic demand firms differ in sunk costs of entry if the demand process has no upward jumps the low cost firm enters first and the high cost firm follows if leader s optimization problem has an interior solution the leader enters at the optimal threshold of a monopolist otherwise the leader enters earlier than the monopolist if the demand admits positive jumps then the optimal entry threshold of the leader can be lower than the monopolist s threshold even if the solution is interior simultaneous entry can happen either as an equilibrium or a coordination failure the high cost firm can become the leader we characterize subgame perfect equilibrium strategies in terms of stopping times and value functions analytical expressions for the value functions and thresholds that define stopping times are derived

preemption and rent equalization in the adoption of new technology we study the adoption of a new technology to illustrate the effects of preemption in games of timing we show that the threat of preemption equalizes rents in a duopoly but that this result does not extend to the general oligopoly game if the gain to preemption is sufficiently small then the optimal symmetric outcome which involves late adoption is an equilibrium this contrasts with reinganum s result that in precommitment equilibria there must be diffusion we develop a new and richer formalism for modeling games of timing which permits a continuoustime representation of the limit of discrete time mixed strategy equilibria

industry competition and firm human capital this paper argues that objective and subjective human capital may have substantial impact upon organizational performance in a competitive context objective human capital pertains to such features as education and experience whereas subjective human capital relates to personality characteristics the argument is illustrated by presenting the results of two empirical studies 1 a cross section 1990 1991 analysis of about 50 incumbents in the flemish furniture industry concentrating on the impact of subjective human capital particularly the chief executive officer s ceo s locus of control personality on financial performance and 2 a longitudinal 1970 1992 analysis of a cohort of 100 entrants into the dutch audit industry focusing on the influence of objective human capital particularly education and experience on exit by merger and acquisition m a or diaspora both studies support the claim that objective and subjective human capital matters for example flemish furniture firms headed by a ceo with an internal locus of control trait reach higher levels of financial performance and dutch audit firms with a high proportion of personnel with business experience are more likely to exit the industry over the years as a result of diaspora finally the data of the flemish furniture and dutch audit industries are re analyzed so as to compare the impact of human capital variables on small firm performance in both industries this re analysis reveals that in both industries the impact of human capital variables is more pronounced in large firms compared to small businesses

multiplant firms and innovation adoption and diffusion 1 introductionone empirical regularity associated with the adoption of new technology is that large firms tend to adopt sooner than small firms e g see davies 1979 mansfield 1968 mansfield et al 1982 stoneman 1983 1995 or hoppe 2002 the usual explanation of course is that large firms expect a greater return from adoption than small firms however large firms do not always adopt first as can be seen from the diffusion of several new processes in the u s steel industry the basic oxygen furnace and continuous casting adams and mueller 1982 and thin slab casting ghemawat 1993 1995 this article develops a new theoretical model of innovation adoption and diffusion that explains why large firms tend to adopt first but admits conditions under which small firms adopt first the analysis focuses on the adoption of an innovation of uncertain profitability when a firm s size is measured by the number of plants it operates as is well known one reason for operating multiple plants is production costs that are increasing at the margin another reason is the existence of economies of multiplant operations cost savings that result solely from the operation of multiple plants theoretical and empirical support for these economies is mixed theoretically the operation of multiple plants can allow savings in nonproduction costs such as transportation distribution and inventory it can also allow economies of massed reserves cost savings associated with retaining proportionately fewer spare parts backup machines and repair persons in reserve information sharing between plants can reduce production and adoption costs however multiplant operation can also result in greater information costs van zandt and radner 2001 show that because information processing takes time computational constraints limit the amount of information that can be used in reaching a decision this informational crowding out effect can result in decreasing returns to size or diseconomies of multiplant operation in a seminal wide ranging study scherer et al 1975 find little empirical evidence in support of multiplant economies moreover when these economies do exist they involve savings in nonproduction costs more recently in their comparative study of the performance of light water nuclear reactor power plants in the united states and france lester and mccabe 1993 do find empirical support for production cost savings due to information sharing about learning by doing between plants in his study of the adoption of thin slab casting in the steel industry ghemawat 1995 1997 finds that nucor achieved cost savings due to information sharing between plants regarding both construction and production costs however he attributes these multiplant economies to specific aspects of nucor s organizational structure and observes that other steel firms with different organizational structures did not achieve these same cost savings given these conflicting results the analysis in this article assumes that if there are multiplant economies they take the form of savings in nonproduction costs in this case a large firm need not have a greater incentive to adopt first its increase in profit from the adoption of a success in all its plants is certainly greater however the existence of nonproduction cost economies can reduce the incentive of a large firm to adopt first suppose there are two firms a large firm with two plants and a small firm with one plant also suppose that when the innovation is first installed in a plant the adopter must shut down that plant for a finite amount of time in order to learn if the innovation is a success or not this shut down time can be considered as an experimental period during which the firm trains workers produces and tests prototypes attempts to overcome any problems associated with the use of the new technology or makes any necessary changes in its existing organization

entry and exit over the industry life cycle this article presents a theoretical model of the rivalry between two firms in a market that undergoes a life cycle of growth and eventual decline firms in this market have the option of exit and reentry in the equilibrium for the growth phase high entry costs can act like high exit costs thereby conveying a commitment advantage for some parameter configurations this advantage is sufficient to enable a high costfirm to preempt its lower cost rival during the decline phase the smaller duopolist is able to outlast its rival provided that the smaller firm s reentry costs are positive

on hotelling s competition with non uniform customer distributions abstract hotelling s competition in a two stage location price game is examined with increasing densities of consumers towards the centre it is shown that there is a range of rather even distributions for which firms locate at opposite ends of the market as the distribution becomes more concentrated duopolists will tend to move inside the market

horizontal mergers in declining industries theory and evidence abstract in a declining industry horizontal merger may allow firms to retire older capacity and to match state of the art capacity at high levels of market demand mergers may be privately profitable but socially undesirable and should be prohibited here rationalization of capacity to achieve matching economies is not a sufficient argument to support merger since at high demand levels efficiency is gained only at the expense of output suppression on the other hand once industry demand has declined to low levels relative to per firm capacity privately profitable mergers are socially desirable examples of horizontal mergers in declining industries illustrate the general implications of the model

the mne as a portfolio interdependencies in mne growth trajectory we conceptualize the mne as a portfolio of interdependent sub units and examine its growth trajectory in relation to its existing portfolio the empirical testing is based on a unique dataset that details all the location moves of us legal services mnes during 1949 2006 these mnes evolve in directions that follow from their past their portfolios affect their subsequent moves speaking for the impact of interdependencies among sub units on the evolution of mnes the portfolio exercises stronger impact on entry than on exit suggesting that different forces affect mnes expansion and contraction we outline strategic and organizational implications of the conceptualization of the mne as a portfolio

class versus industry cleavages inter industry factor mobility and the politics of trade domestic political conflict has been a constant companion to international trade but the nature of that conflict has varied greatly in western democracies over the last two centuries political battles over trade policy appear to have sometimes divided societies along broad class lines and at other times split them into narrow industry based coalitions i argue that this diversity stems from historical and cross national variation in inter industry factor mobility class coalitions are more likely where factor mobility is high whereas narrow industry based coalitions are more likely where mobility is low evidence from six western economies for the last two centuries indicates that levels of factor mobility have varied historically and cross nationally in accord with industrialization and regulation this variation corresponds broadly with observable differences in the formation of trade policy coalitions

exit with vertical product differentiation abstract this paper presents a duopoly model of exit from a declining industry with vertical product differentiation it extends previous io models on exit that have so far ignored demand effects the model shows how the interplay between demand and technological factors determine the order of exit therefore demand factors are relevant and should be taken into account thus the firm with a longer tenure as a profitable monopolist does not necessarily outlast its rival in addition this paper argues that the low quality firm may find it optimal to stay in the market despite making temporary losses to outlast its rival

consolidation by merger the uk beer market this paper examines the determinants of market structure in the uk brewing industry over 1949 1969 sutton sunk costs and market structure price competition advertising and the evolution of concentration 1991 points to technology and advertising races as two key drivers of market concentration this study uses an own built longitudinal data set of the population of firms and breweries and reveals the importance of institutional factors in explaining the dynamics of market structure the practice of tying outlets to brewers and legal restrictions on opening retail outlets together with a permissive policy towards mergers made acquisition of medium sized firms and brewery closure shortly after acquisition the main driving mechanism towards industry consolidation during this period the number of firms and plants fell sharply by 74 and 60 respectively and production rose by about 25 with no firm entry and just one new brewery opening as a result concentration increased and the market transformed from a highly fragmented one into a stable oligopoly