inertia and creeping rationality in strategic decision processes in two earlier studies comprehensiveness a characteristic of rational strategic decision making processes exhibited a positive relationship with organizational performance in a stable environmen

nonrenewable resources with switching costs abstract this paper considers a firm s decision to commence or to suspend extraction of a nonrenewable resource when there are start up or shut down costs for a given level of reserves the critical price that would cause an inactive mine to be opened exceeds the price that would induce an active mine to be closed as one would expect greater switching costs cause firms to be less inclined to change status this impact can be substantial even for modest switching costs possible implications of switching costs are considered including the potential for firms to abandon mines with economically valuable remaining reserves

nonrenewable resource scarcity nonrenewable resource theory often is summarized by hotelling s rule this paper reviews theoretical extensions and empirical investigations of resource extraction models observed data are often inconsistent with the hotelling rule suggesting that other characteristics of nonrenewable resource supply including exploration heterogeneous ore quality technological progress and capital investment are important determinants of the dynamic behavior of resource prices given the persistent recurrence of concern about nonrenewable resource scarcity measures of nonrenewable resource scarcity and the empirical evidence for the time trends of those measures are reviewed finally the implications of nonrenewable resource scarcity for economic growth are examined

inter city competition for foreign investment static and dynamic effects of china s incentive areas abstract china s open door policy has created a natural experiment for studying agglomeration externalities and the role of incentives designed to attract foreign direct investment we build a model which predicts that foreign firms will prefer cities where other foreign firms are located we estimate the model using data on 931 foreign ventures we then use simulations to explore the effect policies favoring particular cities had on the distribution of investment we find that attractive cities those with good infrastructure and an established industrial base gained most and that agglomeration effects greatly magnified the direct impact of policy

monopoly extraction of a nonrenewable resource facing capacity constrained renewable competition abstract this paper studies monopoly extraction of a nonrenewable resource with the presence of a competitively supplied capacity constrained renewable substitute the monopolist staves off the renewable supply when the latter becomes competitive and then lets the resource price jump up

technology agglomeration and regional competition for investment competition for firms by region has a long standing history and the academic literature has debated whether such competition is efficient we develop a model that explores technology development by firms facing regional competition for their invest ment and examine the endogenous determination of region policy firm technology and agglomeration externalities we find a new source of inefficiency regional competition leads firms to inefficiently distort their development and selection of production tech nology to improve their standing in the regional competition for their investment we show that these inefficient firm decisions on technology and location can also weaken agglomeration externalities jel classification h71 l2

agglomeration adjustment and state policies in the location of foreign direct investment in the united states abstract using u s state level data we show that agglomeration externalities influence the level of foreign invested capital in a location our empirical model allows the separation of agglomeration effects from the rate of capital stock adjustment two forces that previous research has conflated we estimate an agglomeration elasticity of investment of 0 11 to 0 15 with respect to same source country investment lower than previous estimates we also investigate the influence of state policies and find that although general investment incentives do not affect the location of fdi targeted policies such as unitary taxation and state foreign offices influence investment

foreign direct investment and wage inequality evidence from china summary this study provides micro level evidence on the close link between foreign participation and wage inequality we investigate the wage premium and the wage spillover effect of foreign invested enterprises in the chinese manufacturing sector the results indicate a significant foreign premium in both wage and non wage compensation the presence of foreign and hong kong macao and taiwan hmt investment results in a significantly negative spillover in terms the wage level in domestic firms and discourages wage growth in such firms overall the evidence suggests that exposure to foreign investment increases inter enterprise wage inequality

firm specific effects on location decisions of foreign direct investment in china s logistics industry hong j 2007 firm specific effects on location decisions of foreign direct investment in china s logistics industry regional studies 41 673 683 this paper uses conditional logit models to investigate firms specific effects on location decisions of foreign direct investment in china s logistics industry based on a recent census database the empirical results indicate that the importance of some location factors varies with firm characteristics small logistics firms are more sensitive to labour cost than large companies compared with independent firms branch companies are less responsive to local market demand and labour factors wholly owned foreign firms prefer cities with cheap labour while joint ventures put more emphasis on local market demand investors from hong kong macao and taiwan value local market size while those from foreign countries emphasize cheap labour and convenient airway transport location determinants also vary over time and differ across sectors implications for resear

a note on mining with investment in capital one of the principal predictions of the theory of the extractive firm is that its rate of output will decline steadily throughout time recently in this journal campbell 1980 presented an interesting analysis suggesting that this behaviour may be altered if one accounts for the fact that firms must invest in some level of fixed capital which is needed in combination with variable inputs to extract the resource in the campbell analysis the fixed capital places a constraint on the maximum rate of extraction it is shown that this constraint is binding and that extraction is therefore constant over some initial period of the mine when the firm behaves optimally this note demonstrates that the campbell result is due to a fixed proportions technology assumption in particular when a neoclassical technology is assumed one finds that the constraint imposed by the level of fixed capital is never binding and that the optimal extraction rate is strictly monotonically declining as a function of time i to demonstrate this an informal argument will suffice let k be the level of fixed capital chosen by the firm let lt be the amount of the variable factor employed in period t assume that the rate of extraction et is given by the production function2

the determinants of fdi location choice in china a discrete choice analysis this study addresses two questions what are the determinants of foreign direct investment fdi location choice in china what are the factors that determine investors choice between economic zo

on the optimal order of natural resource use when the capacity of the inexhaustible substitute is limited consider a general equilibrium framework where the marginal cost of extraction from several deposits of an exhaustible resource is constant in terms of an inexhaustible perfect substitute and differs between deposits the instantaneous rate of production form the inexhaustible resource is subject to a capacity constraint

extraction capacity and the optimal order of extraction the least cost first extraction rule for deposits with different extraction costs previously has been shown to be invalid in general equilibrium this paper demonstrates that this rule also does not hold in partial equilibrium when extraction capacity is limited necessary and sufficient conditions for several surprising extraction orders are presented if extraction from a high cost resource is constrained it may be optimal to begin extraction from a high cost deposit or backstop strictly before extracting from a lower cost deposit if extraction from a low cost resource is limited it may be optimal to exhaust a high cost deposit strictly before the low cost deposit is exhausted or to abandon extraction temporarily from a high cost deposit and then to exhaust it later the analysis demonstrates how extraction constraints affect the order of extraction and shows that certain cost reversals are caused by limited extraction capacity rather than by the general equilibrium definition of extraction costs

does fdi in manufacturing cause fdi in business services evidence from french firm level data this paper uses a large french firm level data set to evaluate the determinants of location choices in services in a first step estimates for four broad services sectors are compared with the estimates for the manufacturing sector using a discrete choice model we find that this framework does fairly well in explaining location choices in services and that the parameter estimates for services are close to the ones for manufacturing we then investigate whether the similarity in estimated parameters is due to a complementarity between location choices in manufacturing and in services in the sense that manufacturing location choices may cause the location of services a particularly appropriate services sector for this purpose is the business services sector for which input output linkages with the manufacturing sector are particularly strong it is found that the downstream demand of french manufacturing firms has a positive effect on the location choice probabilities of french business services firms this effect is robust jel classification f 13 f 15 l80

institutional constraints and ecological processes evolution of foreign invested enterprises in the chinese construction industry 1993 2006 in the current study expansion of foreign investment in transition economies such as china is analyzed as an organizational selection process in a community ecology setting insights from organizational ecology are used to explain how institutional forces constrain ecological processes together driving the evolution of the population size of foreign invested enterprises fies privately held domestic firms and state owned domestic organizations we argue that the variation in the relative forces of ecological processes and institutional constraints across fies and their domestic rivals accounts for the expansion of fies in china on the one hand in many transition economies institutional constraints are imposed on foreign enterprises by regulation that limits fdi opportunities on the other hand after entry foreign enterprises can benefit from their competitive advantages in their ecological struggle against domestic rivals this logic produces different sets of hypotheses as to foreign enterprises density and sales growth in interaction with domestic organizations using a data set of the chinese construction industry in 29 provinces over the 1993 2006 period estimation of a partial adjustment growth model produces support for our theoretical claim

agglomeration economies and location choice of korean manufacturers within the united states employing the micro data for 1997 2004 we investigate the location decision of korean affiliated manufacturing investments in the united states the conditional logit estimates confirm that although industry specific korean agglomeration and domestic agglomeration play an important role the foreign direct investment fdi location is more sensitively affected by the interstate difference in endowment conditions than by the same nationality agglomeration both business service and intermediate good agglomeration are main determinants of fdi location furthermore estimation results show substantial change in the location pattern after recovery from the asian financial crisis we find quite different patterns of location decision across industry groups dispersion forces work greater than the agglomeration force in the consumer goods industry forward linkages with us upstream firms can be seen in the assembly and processing industry and typical follow the leader pattern mixed with market potential effec

firm heterogeneity and location choices evidence from foreign manufacturing investments in china this paper develops a model which indicates that foreign firms location choices are determined jointly by site attributes and firm heterogeneity the model is estimated using data on 2565 foreign manufacturing investments in china the conditional logit estimates and simulation results provide supportive evidence an increase in a firm s labour intensity magnifies the impact of labour cost while a location s local communications infrastructure has a stronger influence on foreign firms that have adopted modern information technology it is also found that agglomeration effects decrease with firm size and labour quality implications for researchers and policy makers are discussed in the conclusion

the eclectic paradigm of international production a restatement and some possible extensions this article reviews some of the criticisms directed towards the eclectic paradigm of international production over the past decade and restates its main tenets the second part of the article considers a number of possible extensions of the paradigm and concludes by asserting that it remains a robust general framework for explaining and analysing not only the economic rationale of economic production but many organisational and impact issues in relation to mne activity as well

cadillac desert revisited property rights public policy and water resource depletion to alleviate arizona s dependence on groundwater the federal government subsidized construction of the central arizona project cap to import water from the colorado river in exchange for the subsidy arizona reformed its groundwater law to eliminate common property pumping and to ban groundwater mining after the year 2025 we build a model of water resource development in which imported water is a capacity constrained backstop the model is applied to quantify the welfare effects of alternative cap construction dates and arizona groundwater laws we reach two general conclusions first cap was completed 86 years too early in 1987 at a deadweight loss of 2 612 billion ironically construction in 1987 yielded lower surplus than never constructing cap second the political exchange of reform for subsidy introduced a greater loss 2 612 billion than it corrected 0 810 billion the exchange was worse than doing nothing at all

the alberta dilemma optimal sharing of a water resource by an agricultural and an oil sector we fully characterize the optimal time paths of production and water usage by an agricultural and an oil sector that share a limited water resource we show that for any given water stock if the oil stock is sufficiently large it will become optimal to have a phase during which the agricultural sector is inactive followed by a phase during which both sectors are active again the agricultural sector will always be active in the end as the oil stock is depleted if agriculture is not constrained by the given natural inflow of water then oil extraction will always end with a phase during which oil production follows a pure hotelling path otherwise oil production never follows a pure hotelling path because its full marginal cost must always reflect not only the imputed rent on the finite oil stock but also the positive opportunity cost of water usage the case of oil and agriculture sharing a water resource is but one example our analysis provides a framework to generalize the hotelling rule to other cases where the full marginal opportunity cost of extracting a nonrenewable resource depends on the endogenous activity of some other sector of the economy

optimal transition from coal to gas and renewable power under capacity constraints and adjustment costs this paper studies the optimal transition from existing coal power plants to gas and renewable power under a carbon budget it solves a model of polluting exhaustible resources with capacity constraints and adjustment costs to build coal gas and renewable power plants it finds that optimal investment in renewable energy may start before coal power has been phased out and even before investment in gas has started because doing so allows for smoothing investment over time and reduces adjustment costs gas plants may be used to reduce short term investment in renewable power and associated costs but must eventually be phased out to allow room for carbon free power one risk for myopic agents comparing gas and renewable investment is thus to overestimate the lifetime of gas plants e g when computing the levelized cost of electricity and be biased against renewable power these analytical results are quantified with numerical simulations of the european commission s 2050 energy roadmap

licensing versus direct investment a model of internalization by the multinational enterprise a firm must decide whether to serve a foreign market by exporting building a foreign branch plant or licensing the production to an existing foreign producer the existence of reputations implies that any licensing agreement must provide a licensee with the incentive to maintain the reputation this creates a motive for the firm to internalize transactions by building a branch plant i e by becoming a multinational the model reflects a more general notion that the inability of the firm to control a licensee s agent s actions can provide incentives for multinational activity the paper explores the determinants of the firm s mode of operation as well as the consequences of certain government policies

acquisition versus greenfield investment the location and growth of japanese manufacturers in the united states o huallacha in b and reid n 1997 acquisition versus greenfield investment the location and growth of japanese manufacturers in the united states reg studies 31 403 416 investigating foreign direct investment by principal modes of entry helps explain the location of japanese manufacturers in the united states japanese greenfield start ups and acquired plants had distinct interregional distributions in different decades we use ordinary least squares and tobit regression analyses to account for interstate variation in the levels of japanese acquired and greenfield establishment in 1979 1989 and 1992 and their expansion in the 1970s 1980s and early 1990s the greenfield plants propelled the formation of automobile based industrial complexes in the midwest and southeast regions greenfield investors also avoided states with strong unions and over time they became unconstrained by the general distribution of american manufacturing although supplies of procurable assets consistently constrained

peak oil profiles through the lens of a general equilibrium assessment abstract this paper disentangles the interactions between oil production profiles the dynamics of oil prices and growth trends we do so through a general equilibrium model in which peak oil endogenously emerges from the interplay between the geological technical macroeconomic and geopolitical determinants of supply and demand under non perfect expectations we analyze the macroeconomic effects of oil production profiles and demonstrate that peak oil dates that differ only slightly may lead to very different time profiles of oil prices exportation flows and economic activity we investigate middle east s trade off between different pricing trajectories in function of two alternative objectives maximisation of oil revenues or households welfare and assess its impact on oecd growth trajectories a sensitivity analysis highlights the respective roles of the amount of resources inertia on the deployment of non conventional oil and short term oil price dynamics on peak oil dates and long term oil prices it also examines the effects of these assumptions on oecd growth and middle east strategic tradeoffs

information costs agglomeration economies and the location of foreign direct investment in china1 he c 2002 information costs agglomeration economies and the location of foreign direct investment in china reg studies 36 1029 1036 foreign investors suffer from adverse information asymmetry and face internal and external uncertainties in host economies better access to information and a variety of agglomeration economies could attenuate the disadvantages that foreign investors encounter statistical results strongly buttress the argument that foreign investors are inclined to favour such locations that could minimize information costs and offer a variety of agglomeration economies theoretical and policy implications and further research directions are discussed at the end 1 this paper was presented at the 63rd annual meeting of the association of pacific coast geographers sept 13 16 2000 arcata ca

views on peak oil and its relation to climate change policy abstract definitions of fossil fuel reserves and resources and assessed stock data are reviewed and clarified semantics explain a large stake of conflict between advocate and critical voices on peak oil from a holistic sources sinks perspective limited carrying capacity of atmospheric sinks not absolute scarcity in oil resources will impose tight constraints on oil use eventually observed peaks in oil production in nearby years will result from politically imposed limits on carbon emissions and not be caused by physical lack of oil resources peak oil belief induces passive climate policy attitudes when suggesting carbon dioxide emissions will peak naturally linked to dwindling oil supplies active policies for reducing emissions and use of fossil fuels will also encompass higher energy end use prices revenues obtained from higher levies on oil use can support financing energy efficiency and renewable energy options but when oil producers charge the higher prices they can pump new oil for many decades postponing peak oil to occur while extending carbon lock in

taxing the multinational enterprise on the forced redesign of global value chains and other inefficiencies the taxation of the multinational enterprise mne has been a continuing concern for policymakers we argue that the changing nature of the mobile mne e g its improved ability to fine slice the value chain and disperse it geographically makes it increasingly important to rethink current tax policies first there should be more focus on the inefficiencies that arise when taxation leads to the inefficient location of mne activities thus mnes may shift activities to low tax jurisdictions that offer lucrative pecuniary and non pecuniary incentives but do not enable their investments to maximize their contribution to global value creation second international tax regimes should ensure that mnes pay for their consumption of local public goods and public finance scholars have long known that the taxation based distortions are minimized when the tax objects are immobile however the bulk of current tax policies are aimed at corporate profits that are both poor proxies for the consumption of local public goods as well as extremely mobile integrating theory from international business public finance and economic geography our analysis demonstrates that moving the incidence of taxation from corporate profits to dividends and consumption would unambiguously improve both wealth creation and efficiency

managing foreign subsidiaries agents of headquarters or an interdependent network in this study two different theoretical perspectives are used to develop sets of hypotheses regarding the mechanisms used to manage foreign subsidiaries of multinational corporations first agency theory serves as the basis for a model that predicts the use of monitoring mechanisms and incentive compensation then it is argued that these mechanisms are insufficient for managing subsidiaries characterized by high levels of intra firm international interdependence the management of which is critical to many of today s complex global firms a second set of hypotheses is argued linking international interdependence to several social control mechanisms primary and secondary data from u s based multinational corporations were used to test both sets of hypotheses the results indicate that agency theory although a useful foundation for studies of control within mncs is limited in its ability to explain fully the phenomenon of foreign subsidiary control however the model based on intra firm interdependence had much greater predictive ability copyright 2000 john wiley sons ltd

simultaneous supplies of dirty energy and capacity constrained clean energy is there a green paradox the effects of two popular second best clean energy policies are analysed using an extended hotelling type resource extraction framework this model features first heterogenous energy sources and second a capacity constrained backstop technology this setup allows for capturing the following two empirical observations first different types of energy sources are used simultaneously despite different production cost second experiences from various european countries show that a further expansion of the use of climate friendly technologies faces substantial technological as well as political constraints we use this framework to analyse if under two policy scenarios a so called green paradox occurs a subsidy for the clean energy as well as an expansion of the capacity of the clean energy are considered the analysis shows that under plausible parameter values both policy measures lead to a weak green paradox however a strong green paradox is only found for the capacity expansion scenario in addition the subsidy is found to be welfare enhancing while the capacity increase is welfare enhancing only if the cost of adding the capacity is sufficiently small we also show the effects of the policies crucially depend on the initial capacity and that under certain scenarios even an extreme green paradox is found

firm and industry as determinants of executive perceptions of the environment this study examines variation in top executives environmental perceptions within firms and within industries more specifically we investigate how industry and organizational membership affect top executives perceptions of five environmental attributes results indicate that significant homogeneity of perceptions exists within firms and also within industries approximately 40 percent of the variance in individual top level executives perceptions of aspects of their respective organization s environment is explained by their organizational and industry membership implications of the findings for strategic management and organization theory and for future research are presented 1998 john wiley sons ltd commonality of views about a firm s environment among a firm s top managers is frequently discussed but there is little empirical evidence to validate the notion we do not know whether homogeneity of perceptions within top management teams tmts is more imaginable than real an assumed executive team property corresponding to what common sense says should be the case further if there is within firm commonality of views concerning the environment we do not know whether this might not actually be an industry effect the purpose of the research reported here is to assess the degree of homogeneity in executives perceptions within firms and within industries and to compare organizational vs industry membership as explanations of the relative proportion of agreement about organizational environments one of the most compelling reasons to examine the homogeneity of top managers environmental perceptions within firms and within industries

regional characteristics and the location of foreign firms within poland this article investigates the location determinants of firms with foreign capital participation within poland using the regional data set from 1993 to 1998 it is found that the concentration of foreign economic activity is positively related to industry and service agglomeration and the road network and negatively to the unemployment rate traditional regional characteristics such as gdp wage rate and education often regarded as important location determinants are not robust with respect to the specification of the estimating equation the special economic zone variable is not found to be statistically significant in any specification estimated geographic location dummies confirm that foreign firms prefer central and south western regions over eastern parts of poland having controlled for their characteristics

the conservationist s dilemma it is typically thought that conservation of natural resources is encouraged by low interest rates however when capital goods are used to extract the resource low interest rates may discourage rather than encourage conservation using a model of a capacity constrained extractive industry in competitive equilibrium i find the relationship between the initial rate of exploitation and the interest rate if capital is so important that for sufficiently high interest rates the industry is nonviable the graph of initial quantity versus the interest rate is u shaped the traditional result holds at small interest rates but not at large ones copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

modeling nonrenewable resources use with multiple demands and multiple sources the theoretical literature following hotelling j polit econ 39 137 175 1931 assumed that all nonrenewable resource needs are satisfied by one type of resource e g oil extractible at different per unit costs this formulation implicitly assumes that all users are the same distance from each resource pool that all users can switch costlessly from one type of resource to another e g liquid fossil fuels to coal or vice versa and that all users are subject to the same regulations these assumptions imply as herfindahl extractive resources and taxation university of wisconsin press madison pp 63 90 1967 showed that in competitive equilibrium all users will exhaust a lower cost resource completely before beginning to extract a higher cost resource simultaneous extraction of different grades of oil or of oil and coal should never occur in trying to apply the single demand curve model during the last twenty years several teams of authors have independently found a need to generalize it to account for users differing in their 1 location 2 resource needs or 3 regulatory environment each research team found that herfindahl s strong unrealistic conclusion disappears in the generalized model in its place a weaker herfindahl result emerges since each research team focussed on a different application however it has not always been clear that everyone has been describing the same generalized model the goal in this paper is to integrate the findings of these teams and to present an easily accessible generalization of the nonrenewable resource model to multiple demand curves

are renewable energy policies climate friendly the role of capacity constraints and market power abstract this paper studies the impacts of renewable energy support policies on energy prices fossil fuel supply and thus carbon emissions from fossil fuels such supports are climate friendly if the renewables are already competitive against fossil fuels but if the renewables are not yet competitive the climate change impacts are often ambiguous and are sensitive to capacity constraints of renewables production and to the fossil fuel market structure if the renewables do not have capacity constraints then the subsidies are subject to the green paradox under perfect competition but might be climate friendly under monopoly supports for capacity constrained renewables under perfect competition lead to more current fossil fuel supply but delay fossil fuel exhaustion time and these effects are reversed under monopoly our results highlight the importance of considering the long term effects on fossil fuel supply as well as capacity constraints and market power in designing renewable energy policies and evaluating their carbon footprints

strike when the force is with you optimal stopping with application to resource equilibria optimal investment in a nonrenewable resource project occurs when the rate of increase of the project s forward value falls to the force of interest this stopping rule yields a financial interpretation of resource quality as being a property of the project rather than of individual units of reserves it also leads to re interpretations of a rent as the present value of the project rather than of units of reserves and b hotelling s insight as not a rule for the path of rents but an equilibrium algorithm for price the analysis is extended to sequential development of pesticides antibiotics and forests

transactions cost economics and the multinational enterprise an assessment abstract this paper applies transactions cost principles to the multinational enterprise in order to ascertain its distinctive properties as a mode of economic organization the analysis helps identify just when and where contractual alternatives to the multinational firm are likely to be viable this turns out to depend upon the nature of the technology the regime of appropriability within which the firm operates and the characteristics of the markets in question transactions cost analysis is also extended to the multinational enterprise host country relationship implications for management and public policy are derived

endogenous growth with a limited fossil fuel extraction capacity campbell 1980 and following authors have discussed a limited resource extraction capacity as an augmentation of the well known hotelling model we integrate a limited extraction capacity and related investments in the endogenous growth model of tsur and zemel 2005 to study its effect on economic development the capacity constraint gives rise to three effects on the one hand higher energy costs and the reallocation of production towards capacity investments decrease production available for consumption research and or capital investments energy costs and reallocation effect on the other hand research investments may increase which boosts available production research effect depending on the capital endowment and the strength of the effects long run consumption may be boosted or depressed in particular the capacity constraint may render everlasting consumption growth non optimal in a resource rich economy furthermore we find that capacity investments may be postponed to later points in time if the capital endowment is high

the application of organizational learning theory to japanese and american management karl weick in the social psychology of organizing theorized in effect that organizational learning must be governed by a theory of action such a theory can be described in terms of variety amplification by senior managers and variety reduction by junior managers in a study of senior american and japanese executives the japanese showed a stronger commitment to this theory of action than the americans did implications for strategy setting behavior in both cultures are discussed

economic transition dynamic externalities and city industry growth in china using data on two digit manufacturing industries for prefecture level cities during the period of 2000 05 this study found a significant non linear relationship between dynamic externalities and city industry growth industrial specialisation and local competition may help city industry growth but may harm growth when they exceed a certain level diversity helps industry growth but only when it reaches a certain level liberalised globalised and locally protected industries are more likely to benefit from dynamic externalities industries located in cities with greater authorities are also found to grow faster the empirical findings indicate that economic transition has created conditions to allow a larger role of dynamic externalities in stimulating city industry growth

emission regulation of markets with sluggish supply structures i examine regulation in the presence of convex investment costs and technology specific capacity stocks announcement of future emission taxes reduces current emissions unless fossil fuels are scarce in which case the effect is ambiguous substantial future emission reductions require action today because it takes time to build up clean production capacity and phase out dirty capacity the pigou tax must be coupled with sector specific investment taxes or subsidies to induce the socially optimal trajectory if the private discount rate differs from the social discount rate if such investment taxes or subsidies are unavailable a time inconsistent second best alternative may be to tax emissions above the pigouvian level during the transition phase the theory is complemented with a stylized numerical model of the us electricity market

effects of cultural ethnicity firm size and firm age on senior executives trust in their overseas business partners evidence from china we investigate trust relationships between senior business executives and their overseas partners drawing on the similarity attraction paradigm social categorization theory and the distinction between cognition and affect based trust we argue that executives trust their overseas partners differently depending on the partners cultural ethnicity in a field survey of 108 chinese senior executives we found that these executives have higher affect based trust in overseas partners of the same cultural ethnicity as themselves cognition based trust is associated with affect based trust differently when overseas partners are of the same or different cultural ethnicity we also examine the role of relative firm size and age in shaping intra and intercultural trust relative firm size has a stronger negative effect on executives cognition based trust if their partners are of a different cultural ethnicity although firm age does not have a negative effect on executives affect based trust as hypothesized we found firm age to be positively associated with affect based trust for partners of the same cultural ethnicity we discuss theoretical and practical implications of this pattern of inter and intra cultural trust on international business and networking guanxi dynamics in china

intertemporal depletion of resource sites by spatially distributed users mineral deposits and other exhaustible resources are scattered around the globe as are their users yet the theory for analyzing depletion of such resources assumes that all resource sites and all users are located in the same place when applying the theory therefore one is forced to disregard what often seems to be an important real world consideration our purpose here is to generalize harold hotelling s 1931 theory of exhaustible resources to accommodate situations in which resource sites and their users are spatially distributed our analysis has many applications it can be applied to a conventional exhaustible resource like oil alternatively it can be applied to an unconventional exhaustible resource like scarce landfill space shipments of solid waste to landfills in other states or countries have become a prominent public policy issue eduardo ley et al 2000 finally our analysis can be applied in situations where the space reflects not geographical location but characteristics of the resource e g the sulfur content hardness and so forth of coal which users find distinctive 2 only two theoretical papers in resource economics have introduced spatial considerations 3 jean jacques laffont and michel moreaux 1986 studied the extraction of resources from sites located along a line segment with all users at one end charles kolstad 1994 was the first to consider spatially distributed users in his formulation consumers are distributed uniformly along a line segment with resource sites at each end kolstad s approach although innovative requires that the set of users be parti

globalization and the skilled city abstract the location of economic activity both across and within countries has undergone dramatic shifts over the last five decades three key trends stand out first cross country inequality has declined as many developing countries have grown rapidly second economic geography within countries has instead grown more unequal in both the developed and the developing world third within country spatial disparities have grown mainly because of the disproportionate success of skilled cities in this paper i develop a model that jointly explains these patterns as a consequence of deepening international economic integration my model explains the faster population and output growth of skilled cities as well as their tendency to increase their initial skill advantage consistent with the evidence my theory predicts a non monotonic path of urban growth in developed countries the model predicts a future shift in worldwide urban hierarchies as some developing world cities overtake unskilled cities in industrialized countries along global supply chains

a critical assessment of the eclectic theory of the multinational enterprise the paper critically deals with the electric theory of the multinational enterprise it examines firstly the theoretical redundancy of the ownership advantage secondly the inseparability of the ownership advantage from the location advantage thirdly the conceptual ambiguity of the location advantage and lastly possible methodological dangers of a multi factor analysis under the three headings of the eclectic theory

rational decision making and firm performance the moderating role of environment this study investigates the moderating roles of environmental munificence and dynamism in the relationship between process rationality and organizational performance based on a sample of 62 manufacturing firms the study found that environmental munificence and dynamism moderate the relationship between rationality and performance further the study found that rationality is strongly associated with performance in environments high in munificence and dynamism 7997 by john wiley sons ltd the relationship between rationality in strategic decision processes and firm performance has been a subject of continuing controversy in the strategic management field one school of thought favors the rational comprehensive approach ansoff 1965 another feels that an incremental political approach offers better descriptive accuracy and normative validity quinn 1980 in recent years the emphasis has moved away from a search for universal relationships that juxtapose these two ideal types to a focus on the context specificity of the rationality performance relationship empirical research on the perfonnance implications of the comprehensiveness of decision processes has yielded confiicting results in a recent review of this literature rajagopalan rasheed and datta point out that most previous studies have focused on one aspect of the

impact of historical conflict on fdi location and performance japanese investment in china historical relations between countries bring important explanatory power for foreign direct investment fdi decisions yet little is known on whether a home host country relation exhibits heterogeneous effects on fdi across the country s subnational regions in this study we examine the long term impact of historical conflict on fdi location choices and performance using a sample of 8 646 japanese fdi in china we show that civilian casualties in different provinces of china during the second sino japanese war exert deterring effects on japanese fdi location choices furthermore we demonstrate that civilian casualties negatively affect japanese fdi performance and political capital accumulation strategies in the forms of excessive tax payment and local employment can reduce this negative effect this study contributes to the discussion on how within country differences of historical factors affect fdi location decisions and performance the findings on firms political capital accumulation strategies also provide important implications for fdi operation in an environment characterized by historical animosity

the location decisions of foreign investors in china untangling the effect of wages using a control function approach there is almost no support for the proposition that capital is attracted to low wages from firm level studies we examine the location choices of 2 884 firms investing in china between 1993 and 1996 to offer two main contributions first we find that the location of labor intensive activities is highly elastic to provincial wage differences generally investors wage sensitivity declines as the skill intensity of the industry increases second we find that unobserved location specific attributes exert a downward bias on estimated wage sensitivity using a control function approach we estimate a downward bias of 50 to 90 in wage coefficients estimated with standard techniques i introduction

strategic fdi and industrial ownership structure we argue that different industrial ownership structures generate different incentives for firms to engage in fdi a comparison is made between partially cooperative structures such as the japanese kieretsu and korean chaebol systems and competitive structures such as u s firms it is found that ownership structure has significant implications for the probability of initial fdi whether or not a cooperative structure is also coordinated turns out to be crucial in predicting fdi behaviour this has further implications for the optimal fdi incentives of potential host countries and for how empirical studies might be designed jel classification f10 f21 f23 strategie d investissements directs a l etranger et structure de propriete de l industrie les auteurs suggerent que des structures differentes de propriete dans l industrie engendrent des incitations diverses pour les entreprises a investir directement a l etranger on fait des comparaisons entre des structures partiellement cooperatives comme celles des kieretsus au japon et des chaebol en coree et des structures concurrentielles comme celles qui existent aux etats unis il appert que la structure de propriete a un impact significatif sur la probabilite de faire initialement un investissement direct a l etranger le fait que la structure de cooperation engendre aussi une coordination s avere d une importance centrale pour predire le comportement d investissement direct a l etranger voila qui a des implications pour le design des incitations a investir par les pays hotes potentiels et pour le design des etudes empiriques de ces phenomenes

the effect of the discount rate on depletion of exhaustible resources this paper argues that despite its widespread acceptance in the literature the basic proposition that a reduction an increase in the discount rate leads to greater conservation faster depletion of an exhaustible resource is not generally valid it shows that the effect of the discount rate on the rate of resource depletion depends on capital requirements for production of the substitute and extraction of the resource and on the size of the resource stock in fact it shows that there always exist at least two ranges of the resource stock size for which the effect is opposite to that conventionally believed

service multinationals conceptualization measurement and theory the application of mne definitions measurements and theories to international services is still in its infancy despite the considerable size and growth of this sector there are problems in defining classifying measuring comparing and explaining service mnes but they do not require special definitions and theories still research to date suggests 1 delinking the concepts of multinational enterprise and foreign direct investment under certain conditions and 2 qualifying the nature of ownership internalization and location advantages in fdi theory as far as service mnes are concerned

environmental scanning behavior in a transitional economy evidence from russia we examined the effects of perceived strategic uncertainty in seven environmental sectors on the scanning behavior of russian executives strategic uncertainty was highest in sectors influenced by

the location choices of foreign investors a district level analysis in india this paper analyzes the determinants of the location choices made by foreign investors at the district level in india to gauge the relative importance of economic geography factors local business conditions and the presence of previous foreign investors we employ a discretechoice model and poisson regressions to control for the potential violation of the assumption of independence of irrelevant alternatives our sample includes about 19 500 foreign investment projects approved in 447 districts from 1991 2005 we find that foreign investors strongly prefer locations where other foreign investors are they are also attracted to industrially diverse locations and those with better infrastructure we conclude that the concentration of fdi in a few locations could fuel regional divergence in post reform india

market power of the firm and international transfer of technology a historical excursion abstract the power of the multinational enterprise to influence or control the international transfer of technology over the past century has shifted from that based upon a priviledged possession of a specific intangible asset to that based on the governance of a set of interrelated activities this changing form of economic leverage has had important consequences on both the structure of the international technology market and economic policies of home and host governments

equilibrium transitions from non renewable energy to renewable energy under capacity constraints abstract we study the transition between non renewable and renewable energy sources with adjustment costs over the production capacity of renewable energy assuming constant variable marginal costs for both energy sources convex adjustment costs and a more expensive renewable energy we show the following with sufficiently abundant non renewable energy endowments the dynamic equilibrium path is composed of a first time phase of only non renewable energy use followed by a transition phase substituting progressively renewable energy to non renewable energy before a last time phase of only renewable energy use the investment into renewable energy may either begin before actual production of renewable energy or be delayed until the energy price achieves a sufficient gap with respect to the renewable energy cost with an initially abundant non renewable resource the features of the transition between non renewable and renewable energy do not depend upon the initial resource stock

coming home and not moving in examining reshoring firms subnational location choices in the united states the relation between firm characteristics i e size and domestic location choice i e home state versus other of reshoring firms contingent on place i e labour cost innovation intensity

an imperfect competition theory of the mne the multinational firm as the central actor in international business has been studied extensively across countries and intensively within companies no single theoretical structure can deal with all important aspects of these firms nonetheless some powerful explanatory tools such as the international product cycle and the transactions cost internalization theory have shed substantial light on mne activities the imperfect competition theory presented here explains 6 major mne decisions for example production location and market servicing methods with a simple model which can be extended to explore other important issues

does final market demand elasticity influence the location of export processing evidence from multinational decisions in china given the importance many developing countries attach to attracting foreign investors engaged in export processing activities surprisingly little is known about the sensitivity of these investors to local wage differences and the role played by final product market conditions using data on 2 884 foreign invested manufacturing projects in china we estimate the importance of host province wages to firm s location choice and investigate how this sensitivity varies with demand conditions facing the industry in china s largest export market the united states we use the profit function to show theoretically that firms ability to pass wage costs through to final markets matters for location choice and we test the implications of the theory using a control function technique for conditional logit developed by petrin and train as predicted we find that investors facing more elastic demand in the us market are more sensitive to wages across export processing locations taking both the factor intensity of the activity and final market demand elasticity into account we find that investors producing homogenous goods such as metals chemicals and food processing are more likely to be attracted by relatively low wages than those producing differentiated goods we also find that while oecd investors are more responsive to wage differences than are investors from hong kong taiwan and macau they are less likely to choose a location that has received a large share of prior foreign investment

technology agglomeration and regional competition for investment technology agglomeration the active courting of firms by municipalities regions and even nations has a long standing history and the competition for firm location through a wide variety of incentives seems to have escalated to new heights in recent years we develop a model that explores technology development by firms that face regional competition for their investment and examine the endogenous determination of regions policies firm technology and agglomeration externalities in particular we find that regional competition leads firms to inefficiently distort their research and development efforts in hopes of improving their standing in the competition amongst regions for their investment this loss in efficiency is aggravated by the agglomeration externalities that are inherently present in many industries we offer several case studies that provide evidence consistent with our theoretical conclusions

optimal timing of carbon capture policies under learning by doing abstract using a standard hotelling model of resource exploitation we determine the optimal energy consumption paths from three options dirty coal which is non renewable and carbon emitting clean coal which is also non renewable but carbon free thanks to carbon capture and storage ccs and solar energy which is renewable and carbon free we assume that the atmospheric carbon stock cannot exceed an exogenously given ceiling taking into account learning by doing in ccs technology we show the following results i clean coal exploitation cannot begin before the outset of the carbon constrained phase and must stop strictly before the end of this phase ii the energy price path can evolve non monotonically over time and iii when the solar cost is low enough an unusual energy consumption sequence along with solar energy is interrupted for some time and replacement by clean coal may exist