labor supply of husbands and wives a simultaneous equations approach labor supply functions for married men and women are formulated as a dynamic simultaneous equations system which is estimated using panel data controlling for fixed individual effects allows marginal labor supply responses to be disentangled from permanent patterns in hours worked due to assortative mating the results suggest that the labor supply of husbands and wives without pre school children is not jointly determined in the short run while families with young children exhibit strong interactions in work hours and negative cross earnings effects neither the joint utility model of family labor supply nor an ad hoc traditional family model is supported by these results the data are for the united states and concern 381 couples from the denver income maintenance experiment excerpt

an empirical analysis of self employment in the u k the paper formulates a self employment paid employment choice problem that draws upon knight s notion that the individual responds to the risk adjusted relative earnings opportunities in each sector based on a development of such choice theoretic considerations an econometric model is developed with the purpose of empirically examining the determinants of self employment the model features simultaneous determination of employment status and earnings which allows for self selectivity the model is estimated using a sample of 4762 individuals from the general household survey for 1978 the estimation of the earnings equation enables a calculation of the self employment paid employment earnings differential and the estimated probit equation for self employment paid employment status facilitates the prediction of the probability of self employment the paper finds that there is positive selection bias in the observed earnings of employees that the probability of self employment depends positively on the earnings difference between the two sectors and that education and age are significant determinants of self employment

market dynamics in the netherlands competition policy and the role of small firms a recent literature analyzing the dynamics of firms and industries suggests that the contribution of new and small firms to the dynamics of competition is significantly greater than found in a static analysis policy makers have responded by implementing a wide range of programs to reduce barriers to new firm startup at the same time a number of european countries have maintained systems of collective agreements imposing industry wide standards on the deployment and remuneration of inputs particularly labor the purpose of this paper is to examine whether the ability to deviate from the industry standards practiced by the incumbent firms promotes the viability of small and new firms we examine this using a longitudinal data base from the netherlands where a system of rigid industry wide collective agreements was abandoned in favor of greater flexibility whether or not the ability of small firms to deviate from the standards and practices of the incumbent firms in the industry promotes their viability in the dutch context is instructive to other european countries such as germany and france the latter countries have identified the startup of new firms as a central policy goal but have maintained systems of industry wide collective agreements the important finding emerging from this paper is that wage flexibility promotes the viability of small firms and thus can be considered to be an instrument of competition policy in a dynamic context

the estimation of wage gains and welfare gains in self selection models the authors modify the basic self sele ction model for the effects ofeducation training unions and other activities on wages by including heterogeneity of rewards to the activity i e diffe rences across individuals in the rate of return to the activity the authors sho w that such heterogeneity creates a new form of selectionbias they provide tes ts for its presence and draw out its implications for the wage and welfare gains to the activity an empirical application provides strong support for such hete rogeneityin one particular training program copyright 1987 by mit press

dis incentivizing sustainable intensification the case of zambia s maize fertilizer subsidy program abstract poor and declining soil fertility is a major constraint to increased cereal yields in sub saharan africa while input subsidy programs isps for inorganic fertilizer are a popular and expensive tool used by african governments to increase smallholder farmers cereal yields far fewer resources are devoted to promoting other soil fertility management sfm practices that can improve soil health increase cereal yield response to inorganic fertilizer and support sustainable agricultural intensification moreover little is known about how isps affect farmers use of such sfm practices we examine whether and to what extent household participation in zambia s maize fertilizer subsidy program affects the household s use of fallowing intercropping crop rotation and animal manure using nationally representative panel survey data from zambian smallholder farm households we find that zambia s maize fertilizer subsidy program reduces the probability and extent of fallowing and intercropping of maize with other crops in addition we find some evidence that the program induces an increase in continuous maize cultivation on the same plot over time however the weight of the evidence suggests no statistically significant isp effects on the use of animal manure the analysis uses the mundlak chamberlain device to control for time invariant unobserved heterogeneity and addresses concerns related to the endogeneity of selection into the subsidy program with an instrumental variables control function approach overall our results suggest that zambia s maize fertilizer subsidy program may have dis incentivized sustainable intensification rather than promoted it

efficient adaptation in long term contracts take or pay provisions for natural gas to mitigate the inflexibility of long term contracting for natural gas parties will look for terms that minimize the need for costly adjudication while maintaining incentives for appropriate adaptation the authors examine the incident of take or pay provisions in contracts between natural gas producers and pipelines from this perspective they argue that take obligations can be viewed as a mechanism for effecting appropriate incentives for contractual performance and show that efficient breach considerations define an optimal take percentage as a function of characteristics of the transaction these incentives are distorted by regulated price ceilings which cause the adoption of take obligations in excess of optimal levels the findings refute the common perception that take or pay provisions are just an artifact of wellhead price regulation and serve no useful purpose in the absence of regulation 20 references 1 figure 1 table

solutions for flexible container leasing contracts with options under capacity and order constraints abstract the container shipping market becomes prosperous with the development of the global economy as shipping networks become more complex and heterogeneous container capacity planning becomes more difficult this paper tackles the container planning problem from the carrier s perspective in a two echelon container shipping service chain cssc which includes one carrier and one upstream rental company a flexible contract with options is introduced into the one period container planning mechanism with the flexible options contract the rental company requires the carrier to make a commitment or place an order in advance options give buyer the right to modify the initial orders to better match the supply with the demand based on the carrier s decision tendency i e aggressive or conservative we analyze the application strategies of the unilateral options and the bidirectional options in different practical scenarios in particular for the applicability of the decision models we further consider the shipping capacity and the minimum order constraints and formulate the carrier s option policies with constrained nonlinear programs numerical examples show that the proposed decision strategies with option contract cannot only effectively increase the container trading quantity between the rental company and the carrier but also significantly reduce the carrier s container capacity risk while increasing its profit

a switching regression model for wage determinants in the public and private sectors of a developing country governments in less developed countries face severe budgetary constraints given that public sector employment is a large part of modern sector employment the government wage bill h as come under increased scrutiny the central question is how do gove rnment wages compare with those in the private sector in this paper the authors develop and estimate a model to answer this question an important aspect of this model is the endogenous treatment of sector choice the estimation results full information maximum likelihood sound a strong warning against the use of ordinary least squares est imates that are based on sector specific samples data are from the i vory coast copyright 1988 by mit press

designing a firm s coordinated manufacturing and supply decisions with short product life cycles in this paper we consider a problem of joint coordination between a firm s manufacturing and supply departments the manufacturing department is responsible for meeting random demand of a product with a short life cycle the supply department s responsibility is to provide the sufficient amount of raw materials so that the required production level can be achieved when coordination prevails both departments decisions are jointly made otherwise decisions are made independently without an exchange of information if the random demand exceeds the amount produced a second production run can be expedited at a substantially higher cost our analysis yields insightful results to such a coordination problem between the two departments we provide conditions under which it is desirable to coordinate resulting in a significant increase in expected profit if coordination is optimal then the supply department would purchase additional reserved material for the second run under this scenario we analyze the effects of joint coordination on the expected profit we also find explicit conditions for which joint coordination is not beneficial i e the supply department should only order sufficient material to meet the first production run requirements we provide a detailed set of numerical examples and generate response surfaces indicating the desirability of coordination for different pairs of parameter combinations

soil conservation as an investment in land abstract most studies on the problem of optimal soil conservation have analyzed soil conservation measures as being time limited in their effect this paper extends previous analyses of the soil conservation decision by allowing farmers to make investments in soil conservation structures such as terraces bundles and ditches it shows that the main conclusions arrived at in previous studies remain valid the long term effects of unanticipated permanent changes in prices and discount rates may go either way independent of whether conservation measures are time limited or have lasting effects on the soil base

an economic model of soil conservation by introducing soil depth and soil loss into a simple model of agricultural production this paper seeks to determine when the private path of erosion differs from the socially optimal path considering the depletion of soil only and abstracting from the environmental disruption caused by erosion the paper argues that under most institutional arrangements the social and private rates of erosion are the same the paper concludes that public policy should be directed toward reducing erosion only when it leads to significant pollution externalities

coordination of supply chains by option contracts a cooperative game theory approach manufacturer retailer supply chains commonly adopt a wholesale price mechanism this mechanism however has often led manufacturers and retailers to situations of conflicts of interest for example due to uncertain market demand retailers prefer to order flexibly from manufacturers so as to avoid incurring inventory costs and to be able to respond flexibly to market changes manufacturers on the other hand prefer retailers to place full orders as early as possible so that they can hedge against the risks of over and under production such conflicts between retailers and manufacturers can result in an inefficient supply chain motivated by this problem we take a cooperative game approach in this paper to consider the coordination issue in a manufacturer retailer supply chain using option contracts using the wholesale price mechanism as a benchmark we develop an option contract model our study demonstrates that compared with the benchmark based on the wholesale price mechanism option contracts can coordinate the supply chain and achieve pareto improvement we also discuss scenarios in which option contracts are selected according to individual supply chain members risk preferences and negotiating powers

quantity discounts under demand uncertainty to motivate buyers to increase their order quantity suppliers often rely on a well established and widely used approach they offer quantity discounts this practice is in large part driven to obtain improved economies in transportation through higher truckload utilization recently transportation rates which are increasing faster than other costs have become a larger portion of total net landed cost placing the traditional quantity discount practices under scrutiny many suppliers are left perplexed as to why their approach is not effective anymore and some are even concerned that their overall profits may have actually decreased due to their discount parameters in this paper we study a multiperiod model with a buyer facing stochastic end item demand and a supplier offering an all units quantity discount to him to understand better the dynamics of such systems we provide guidelines and insights on how to set effective discount parameters and when not to expect much from them we derive the opt

firm size wage differentials in the netherlands an unsolved problem in modern labor economics is the positive relation between the size of the firm in which a worker is employed and his wage one line of research that has been developed quite recently in this field is the application of endogenous switching regression models in this paper we utilize such a model to investigate firm size wage differentials in the netherlands the principal findings are that larger firms pay higher returns on schooling whereas smaller firms tend to reward iq combined with the finding that high iq workers are sorted into the largest firms the results are consistent with a model of job screening furthermore we find that employed sons of self employed fathers are more likely to work in small firms and that wage prospects for all types of workers are indeed most favorable in larger firms

the earnings impact of training duration in a developing country an ordered probit selection model of colombia s servicio nacional de aprendizaje sena this study estimates the earnings impact of one of the most extensive in service training programs in the developing world colombia s sena through a comparison of nongraduates and graduates earnings profiles the possible influence of selection is corrected through the use of an ordered probit model to determine participation in short and long courses the correction causes a significant decline in sena s earnings effect the results are robust with respect to alternative specifications of the selection model

an infinite horizon inventory model with periodic order commitment abstract this paper studies an infinite horizon inventory model of a buyer with a periodic order commitment the commitment requires the buyer to purchase at least a certain fixed amount on a periodic basis there is no extra adjustment cost should the buyer decide to order more than the basic amount we consider general discrete demand distributions we formulate a markov chain to represent the behavior of the inventory system stimulated by the solution approach to the classical gi m 1 queue we derive the steady state results and obtain the exact closed form cost function numerical examples are provided

job complexity and wages the authors estimate a model inspired by j tinbergen s 1956 article with utility maximizing job choice where utility depends on job complexity and the wage rate and where the equilibrium wage structure provides for compensation for more complex jobs it involves maximum likelihood estimation of a two equation model with heteroscedastic errors in which one of the equations is an ordered probit in the wage function individual characteristics and job level interact comparative advantage females face a steeper wage slope across job levels individuals marginal rate of substitution between wage and job complexity is increasing both in job complexity and wages copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

efficient supply contracts for fashion goods with forecast updating and two production modes we examine the problem of developing supply contracts that encourage proper coordination of forecast information and production decisions between a manufacturer and distributor of high fashion seasonal products operating in a two mode production environment the first production mode is relatively cheap but requires a long lead time while the second is expensive but offers quick turnaround we focus on contracts of the form w1 w2 b wherewi is the wholesale price offered for production modei andb is a return price offered for items left over at the end of the season we find that such a contract can coordinate the manufacturer and distributor to act in the best interest of the channel the pricing conditions needed to ensure an efficient solution vary depending on the degree of demand forecast improvement between periods and the manufacturer s access to forecast information we also examine whether these conditions ensure a pareto optimal solution with respect to two traditional production settings

diversification under supply uncertainty supply chain management is becoming an increasingly important issue especially when in most industries the cost of materials purchased comprises 40 60 of the total sales revenue despite the benefits cited for single sourcing in the popular literature there is enough evidence of industries having two three sources for most parts in this paper we address the operational issue of quantity allocation between two uncertain suppliers and its effects on the inventory policies of the buyer based on the type of delivery contract a buyer has with the suppliers we suggest three models for the supply process model i is a one delivery contract with all of the order quantity delivered either in the current period with probability or in the next period with probability 1 model ii is also a one delivery contract with a random fraction of the order quantity delivered in the current period the portion of the order quantity not delivered is cancelled model iii is similar to model ii with the remaining quantity delivered in the next period we derive the optimal ordering policies that minimize the total ordering holding and penalty costs with backlogging we show that the optimal ordering policy in period n for each of these models is as follows for x a n order nothing for vi n x a n use only one supplier and for x vi n order from both suppliers for the limiting case in the single period version of model i we derive conditions under which one would continue ordering from one or the other or both suppliers for model ii we give sufficient conditions for not using the second more expensive supplier when the demand and yield distributions have some special form for the single period version of models ii and iii with equal marginal ordering costs we show that the optimal order quantities follow a ratio rule when demand is exponential and yields are either normal or gamma distributed

adjustment strategies for a fixed delivery contract we consider a long term contractual agreement between buyer and seller in whichq units are delivered to the buyer at regular time intervals it must be true that the delivery quantity q is less than the mean demand per period in order to manage the inventory the buyer has the option of adjusting the delivery quantity upwards just prior to a delivery but must pay a premium to do so demand is assumed random and we model the system in a continuous review setting we show that the equations one must solve to find optimal adjustment strategies are intractable a diffusion approximation is developed which when coupled with the solution to an even simpler deterministic version of the problem yields very simple but effective approximations extensive computations are included to compare the performance of the optimal and approximate policies we also empirically derive a formula for computingq whose accuracy is established computationally we prove that the fixed delivery contract results in lower variance of orders to the seller we also include a computational study to find the unit cost discount that equalizes the expected costs for the fixed delivery contract and the base stock contract for a large parameter set

the right to return this article studies the allocation of responsibility for unsold inventory provision for which is made in practically every distribution contract the two extreme cases are the consignment contract which allocates all the burden to the manufacturer and the no return contract in which retailers purchase the merchandise outright and assume responsibility for unsold inventory contract choices are shown to vary across countries industries products and types of transactions the article identifies six main factors affecting this choice optimal inventory policy in a stochastic retail demand environment relative advantage in disposing of the unsold inventory optimal risk allocation incentives to invest in promotions and provide services to increase consumer demand information asymmetry and costs associated with the consignment contract per se several testable implications are presented and the choice of contracts in the publishing industry is shown to be consistent with the predictions of the model

supply contract with bidirectional options the buyer s perspective abstract this paper develops a single period two stage supply contract with bidirectional options by which the buyer can adjust the initial order both upward and downward at the beginning of the planning horizon the buyer places an initial order and purchases options after updating the demand forecast the buyer exercises options to adjust the initial order we analyze the contract from the buyer s perspective and formulate the buyer s optimal policies in particular we obtain closed form formulae to describe the buyer s optimal behavior when the demand is uniformly distributed we also analyze how the parameters affect the buyer s behavior and prove numerically that using bidirectional options can improve the buyer s profit

optimal soil conservation and the reform of agricultural pricing policies abstract soil degradation is often blamed for the poor performance of agriculture in developing economies so too are policies which keep the prices of both outputs and inputs artificially low some economists have argued that pricing reforms will encourage soil depletion others say that such reforms will encourage soil conservation to evaluate these claims this paper develops models of the optimal control of soil erosion and soil fertility it is shown that the effect could go either way but that there are strong reasons for suspecting that pricing reforms will not affect soil conservation dramatically

the employer size wage gap evidence for britain university of edinburgh and university of sussexfinal version received 5 may 1992 this paper presents estimates for the employer plant size wage gap for britain using anordered probit model selectivity corrected wage equations are estimated for three plant sizecategories in a comparison between plants with more than 500 workers and those with lessthan 100 a wage gap estimate of over 17 per cent is detected the wage effects of unionizationin plants with more than 500 workers is reported as insignificant in contrast to evidenceprovided by idson and feaster 1990 for the united states no evidence of non randomsorting of workers across plant size is detected

information distortion in a supply chain the bullwhip effect this article originally appeared in management science april 1997 volume 43 number 4 pp 546 558 published by the institute of management sciences consider a series of companies in a supply chain each of whom orders from its immediate upstream member in this setting inbound orders from a downstream member serve as a valuable informational input to upstream production and inventory decisions this paper claims that the information transferred in the form of orders tends to be distorted and can misguide upstream members in their inventory and production decisions in particular the variance of orders may be larger than that of sales and distortion tends to increase as one moves upstream a phenomenon termed bullwhip effect this paper analyzes four sources of the bullwhip effect demand signal processing rationing game order batching and price variations actions that can be taken to mitigate the detrimental impact of this distortion are also discussed

myopic optimal policy for a multi period two delivery lead times stochastic inventory problem with minimum cumulative commitment and capacity abstract this paper studies a single product multi period stochastic inventory problem that imposes the lower and upper bounds on the cumulative order quantity during a planning horizon and allows two delivery lead times this model includes three features the first one is that a buyer purchases a fixed capacity from a supplier at the beginning of a planning horizon and the buyer s total cumulative order quantity during the planning horizon is constrained with the capacity the second one is that the buyer agrees to purchase the product at least a certain percentage of the purchased capacity during the planning horizon the third one is that the supplier allows the buyer to order the product with two delivery lead times we identify conditions under which a myopic ordering policy is optimal we also develop an algorithm to calculate the optimal capacity when the minimum cumulative order quantity commitment is a certain percentage of the capacity we then use the algorithm to evaluate the effect of the various parameters on the buyer s minimum expected total cost during the planning horizon our computation shows that the buyer would benefit from the commitments and two delivery lead times

endogenous default risk in supply chain and non linear pricing abstract based on incomplete contract theories we studied the strategic behaviors of up stream and down stream manufacturers by option game model and obtain some conclusions first the down stream s pay off function is a concave function of its investment in fixed assets so there is an optimal investment which ensures the down stream s maximal pay off and prevents it from being holdup second in presence of endogenous default risks the up stream can improve its pay off level through non linear pricing last increasing business risks of the down stream may lead to an increased price fluctuation of the up stream while the down stream s technological advancement can make such fluctuation less

a selectivity model of employer size wage differentials this article investigates wage differentials for employees of different size firms utilizing an econometric methodology that allows the size of employer to be treated as endogenous in the context of discrete ordered employer size data as a result we are able to estimate i employer size wage gaps which are corrected for selectivity bias and ii the magnitude and direction of the selection bias decompositions of the resulting wage differentials are computed with comparisons of the conditional on sorting across employer size and unconditional wage gaps

procurement planning to maintain both short term adaptiveness and long term perspective we study the fuel procurement problem for electrical utilities under uncertain demand and market price long term contractual supply commitments are made at a set price with fuel suppliers at the beginning of each year each month the procurement planner can use fuel from these contracts or purchase fuel at the current market price motivated by practical insights from this market we propose a two phase dynamic procedure to determine a procurement plan in the first phase the minimum contract purchases for each month are determined at the beginning of the year in the second phase given the minimum contract purchases the more detailed procurement decisions are determined at the beginning of each month with the most up to date information we perform intensive computational experiments that show that this procedure produces high quality solutions comparable to a rolling horizon stochastic programming heuristic is easier to maintain and generalize is computationally faster and is robust to random fluctuations in demand requirements spot market prices and other sources of uncertainty

optimal policies for inventory systems with priority demand classes we consider a periodic review inventory system with two priority demand classes one deterministic and the other stochastic the deterministic demand must be met immediately in each period however the units of stochastic demand that are not satisfied during the period when demand occurs are treated as lost sales at each decision epoch one has to decide not only whether an order should be placed and how much to order but also how much demand to fill from the stochastic source the firm has the option to ration inventory to the stochastic source i e not satisfy all customer demand even though there is inventory in the system we first characterize the structure of the optimal policy we show that in general the optimal order quantity and rationing policy are state dependent and do not have a simple structure we then propose a simple policy called s k s policy wheres ands ordering policy determine when and how much to order whilek rationing policy specifies how much of the stochastic demand to satisfy we report the results of a numerical study which shows that this simple policy works extremely well and is very easy to compute

optimal policy for a dynamic non stationary stochastic inventory problem with capacity commitment abstract this paper studies a single product dynamic non stationary stochastic inventory problem with capacity commitment in which a buyer purchases a fixed capacity from a supplier at the beginning of a planning horizon and the buyer s total cumulative order quantity over the planning horizon is constrained with the capacity the objective of the buyer is to choose the capacity at the beginning of the planning horizon and the order quantity in each period to minimize the expected total cost over the planning horizon we characterize the structure of the minimum sum of the expected ordering storage and shortage costs in a period and thereafter and the optimal ordering policy for a given capacity based on the structure we identify conditions under which a myopic ordering policy is optimal and derive an equation for the optimal capacity commitment we then use the optimal capacity and the myopic ordering policy to evaluate the effect of the various parameters on the minimum expected total cost over the planning horizon

the impact of customer returns and bidirectional option contract on refund price and order decisions abstract this study investigates the impacts of customer returns and a bidirectional option contract on a newsvendor firm s refund price and order decisions the stochastic demand is refund price sensitive we show that the optimal refund price increases with the option price and decreases with both the wholesale and exercise prices while the optimal order quantity increases with the exercise price but decreases with both the wholesale and option prices furthermore we illustrate that in the presence of customer returns the optimal refund price and order quantity decrease the firm should cut the refund price and order more products if a bidirectional option contract is available we identify the conditions under which a firm should offer a full partial or no refund policy we also show that a bidirectional option contract can reduce the negative impact of customer returns and enhance the firm s profit especially under high demand uncertainty

on the economics of the optimal fallow cultivation cycle abstract this paper considers the so called fallow cultivation problem in traditional agriculture the paper specifies the problem and determines the optimal duration of the fallow cultivation cycle we study and deduce results on the impact of the switching costs and the output price on this cycle finally we discuss the relation between soil fertility and the output price the fallow cultivation problem is an important economic problem since traditional farming provides the food in most low income countries however it is also worth studying since it is an interesting specimen case in a class of dynamic models in which sensible controls split process variables in distinctive phases

a value based approach to option pricing the case of supply chain options chapter 6 explores the pricing issue for supply chain options in classical research this issue is generally considered in the stackelberg game framework such a pricing scheme however is usually unacceptable to the follower since the leader always captures all the surplus derived from the options being different from the existing literature this chapter develops a value based pricing scheme for supply chain options with two modeling scenarios including a single retailer and multiple retailers the intuition behind such a pricing scheme is to price the option based on the value inherent in the option right as shown in the research such a pricing scheme can assure that each of the contracting partners captures a share of the surplus derived from the options as a result the pricing schemes developed in this chapter are more objective and fair and consequently are more likely to be accepted by the contracting partners as compared with those that follow the stackelberg game approach

comments on information distortion in a supply chain the bullwhip effect in this commentary we trace back how we pursued research on the bullwhip effect which resulted in the article published in management science we reflect on the evolution of this concept the impact that our work has had on industry the way our work has been used in the teaching of supply chain management and the key directions of research that have taken place since then

comment managing channel profits comment in a recent paper in this journal jeuland and shugan jeuland a s shugan 1983 managing channel profits marketing sci 2 summer 239 272 proposed a quantity discount schedule as a way of coordinating a channel as they put it on p 253 of their paper a quantity discount schedule which would fix the retailer s and hence the manufacturer s profits to some fixed linear function of total channel profits would lead the channel to maximize profits the purpose of this note is to show that a quantity discount schedule is not necessary for channel coordination

commodity options purchasing and credit financing under capital constraint abstract this paper investigates a purchasing contract with options under capital constraint and credit support from a financial institution the buyer who has limited capital can buy commodity options and a fixed order and choose to exercise all or part of the options at a later time we characterize the buyer s optimal ordering strategy with limited capital there is one critical value for the capital that is the buyer will only purchase a fixed order when the capital is less than the value with more capital the buyer will reduce the fixed order quantity and increase the option orders until the capital is used up or the global optimization is reached this result implies that the option is a risk hedging tool only for easy finance companies furthermore we find that when the buyer obtains funding from a financial institution such as a bank the buyer s profit will be increased with bank financing and the buyer s optimal purchasing decision will follow the similar policy and order less options and more fixed orders compared with the case when there is sufficient capital numerical examples are provided to demonstrate the theoretical results

work characteristics firm size and wages a positive wage firm size relationship is well documented in the empirical literature in industrial organization and labor economics firm size seems to proxy various unobserved determinants such as job satisfaction monitoring costs more complex technologies and worker participation in monopoly profits it is generally argued that the greater the possibility of controlling for these latent factors the less likely that a significant size effect will appear this paper attempts to distinguish firm size from other wage determinants for a rich data source for west germany and demonstrates the persistence of the size premium

an economic theory of vertical restraints vertical restraints imposed by manufacturers on the prices locations and sales of retail firms represent a puzzling departure from the simple price mediated exchange of conventional markets in this article we analyze the theoretical basis for these restraints in a setting where retailers inform consumers and are imperfectly competitive and where a manufacturer has some monopoly power we identify three potential externalities affecting retailers decisions these externalities lead to the failure of simple uniform price contracts to coordinate the incentives of retailers with the objective of maximizing combined manufacturer and retailer profits we identify the packages of vertical restraints that are minimally sufficient under various conditions to neutralize the externalities and to achieve the joint profit maximum

contingent claims contracting for purchasing decisions in inventory management option pricing is a common and important practice in the financial community and has become a fundamental theoretical construct in financial economics the theory is quite rich and has potential uses in many other problem domains this paper develops a variant of the theory as applied to inventory planning in particular we consider a risk management approach that uses negotiated option contracts for hedging against price and quantity uncertainty in inventory procurement we derive conditions for the inclusion of options in inventory control as a function both of managerial attitudes toward risk and of the correlation between price and demand

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

education and earnings in the netherlands an empirical analysis abstract in this paper three models which describe the relation between earnings and education are estimated using one single data set one model is a simple dummy regression model in which the educational variables are exogenous both other models take account of the fact that individuals choose their optimal amount of education and is therefore endogenous in all three models i try to specify the equations in the same way as others have done with other data sets it turns out that in each model important conclusions reached in earlier research are not supported by the empirical findings reported here

sole versus dual sourcing in stochastic lead time s q inventory models when supply lead times are uncertain the simultaneous procurement from two sources offers savings in inventory holding and shortage costs economies are achieved if these savings outweigh the increase in ordering costs in this paper we analyze dual sourcing in the context of the reorder point order quantity inventory model with constant demand and stochastic lead times and compare it with single sourcing two cases are studied using the uniform and the exponential distributions which may be thought of as two extreme ways of representing stochastic lead times in our two vendor model the order quantity is split equally between the two vendors and the split orders are placed simultaneously when the inventory position reaches the reorder level a comparison of the total expected costs suggests that when the uncertainty in the lead times is high and the ordering costs are low dual sourcing could be cost effective

job creation and job destruction by small firms an empirical investigation for the dutch manufacturing sector this paper studies the differences in behaviour of small and large firms concerning job creation and job destruction in the dutch manufacturing sector over the period 1978 1991 we find that both job creation and job destruction rates are higher in small firms than in large ones in addition we found that the persistence of jobs created in slumps are much higher for small firms than for large firms persistence rates of job destruction are however less connected to the state of the business cycle and increase with firm size more importantly small firms seem to reallocate their jobs in a continuous way as job turnover moves independent of the business cycle large firms on the other hand reallocate counter cyclically an obvious explanation for this phenomenon is that small firms are better equipped to adjust to shifts in economic circumstances large firms adjust only slowly and for them reallocating jobs in a recession is more advantageous than in a boom

sodbusting crop insurance and sunk conversion costs we build a real option model that articulates sodbusting incentives arising from risk interventions in the presence of conversion costs the model shows that risk interventions reduce expected costs of switching land use between cropping and noncropping activities and hence incentivize sodbusting based on data for south central north dakota over 1989 2012 our simulations show that offsetting 20 of a cropping return shortfall by a risk intervention increases the sodbusting cost threshold below which sodbusting will occur by 41 or 43 7 acre omitting cropping return risk across time underestimates the sodbusting cost threshold by 23 or 24 35 acre and hence underestimates sodbusting caused by crop production

note the role of returns policies in pricing and inventory decisions for catalogue goods manufacturers often use returns policies to encourage retailers to stock and price items more aggressively we focus on the effect that such policies have on both a retailer s and a manufacturer s profits when the retailer must commit prior to the selling season to both a stocking quantity and a price at which to sell an item such a commitment is often necessary for retailers who sell primarily through catalogues

optimal ordering decisions with uncertain cost and demand forecast updating we determine the optimal ordering policy for a retailer who has two instants to order a seasonal product from a manufacturer prior to a single selling season while the demand is uncertain the retailer can improve the forecast by utilizing the market signals observed between the first and second instants however because of the nature of the manufacturing environment the unit cost at the second instant is uncertain and could be higher or lower than the unit cost at the first instant to determine the profit maximizing ordering strategies at both instants the retailer has to evaluate the trade off between a more accurate forecast and a potentially higher unit cost at the second instant we present a nested newsvendor model for determining the optimal order quantity at each instant and characterize the conditions under which it is optimal for the retailer to delay its order until the second instant

heterogeneous firms and the organization of production firms in the same industry exhibit systematic differences in the organization of production and the structure of employment entrepreneurial ability is the specific scarce input that limits the size of a firm this input must be allocated to two activities coordinating production and monitoring workers able entrepreneurs can convert calendar time into larger supplies of coordinating effort that enable them to assemble large firms greater ability implies a higher shadow price of time which increases the implicit costs of monitoring a dispersion of entrepreneurial abilities generates an equilibrium size distribution of firms differences in monitoring costs affect the choice of worker productivities the design of products and the organization of production the monitoring cost hypothesis advanced in this paper goes a long way in explaining the equilibrium of an industry containing heterogeneous firms that differ in size and behavior

the quantity flexibility contract and supplier customer incentives consider a supply chain consisting of two independent agents a supplier e g a manufacturer and its customer e g a retailer the latter in turn serving an uncertain market demand to reconcile manufacturing procurement time lags with a need for timely response to the market such supply chains often must commit resources to production quantities based on forecasted rather than realized demand the customer typically provides a planning forecast of its intended purchase which does not entail commitment benefiting from overproduction while not bearing the immediate costs the customer has incentive to initially overforecast before eventually purchasing a lesser quantity the supplier must in turn anticipate such behavior in its production quantity decision this individually rational behavior results in an inefficient supply chain this paper models the incentives of the two parties identifying causes of inefficiency and suggesting remedies particular attention is given to the quantity flexibility qf contract which couples the customer s commitment to purchase no less than a certain percentage below the forecast with the supplier s guarantee to deliver up to a certain percentage above under certain conditions this method can allocate the costs of market demand uncertainty so as to lead the individually motivated supplier and customer to the systemwide optimal outcome we characterize the implications of qf contracts for the behavior and performance of both parties and the supply chain as a whole

the stochastic rotation problem a generalization of faustmann s formula to stochastic forest growth abstract in the present paper we study the optimal cutting strategy 1 2 for an ongoing forest by using stochastic impulse control we show how faustmann s formula can be generalized to stochastic growing forests the paper extends and clarifies previous studies by miller and voltaire 1983 clarke and reed 1989 and reed and clarke 1990

worker heterogeneity job screening and firm size a model of job screening is developed in which firms make wage offers to workers based on an imperfect evaluation of their abilities if large firms have higher costs of acquiring information about workers they screen workers with less accuracy and choose a wage compensation scheme different from the one small firms choose this generates the often observed positive correlation between firm size and wages the model also predicts that wage structure and perhaps wage dispersion will differ by firm size and that individuals who acquire more schooling will also choose to work in a larger firm these hypotheses are tested and supported using data from the national longitudinal survey