estimating the foreclosure effect of exclusive dealing evidence from the entry of specialty beer producers this paper estimates an entry model to study the effect of exclusive dealing between anheuser busch and its distributors on rival brewers entry decisions and consumer surplus the entry model accounts for post entry demand conditions and strategic spillover effects i recover a brewer s fixed costs using a two step estimator and find spillover effects on brewers entry decisions i find that a brewer has higher fixed costs at locations where anheuser busch employ exclusive distributors but the effect is only statistically significant in certain local areas the estimates also show that a brewer is less likely to enter a location that is farther from its brewery has lower expected demand or is smaller in store size i implement counterfactual experiments to study the effect of banning exclusive contracts between anheuser busch and its distributors the results show that the welfare improvement associated with banning such contracts is very small

the control of technology alliances an empirical analysis of the biotechnology industry we examine the determinants of control rights in biotechnology alliances through three case studies and a quantitative analysis aghion and tirole 1994 argue that control rights will be assigned so as to maximize the value of the final output as long as the r d firm has sufficient financial resources consistent with this framework the allocation of control rights to the r d firm increases with the firm s financial resources the empirical evidence regarding the relationship between control rights and the stage of the project at the time the alliance is signed is more ambiguous

estimating a model of strategic network choice the convenience store industry in okinawa this paper investigates a determinant of location choice for multistore retailing firms the trade off between the business stealing effect and the cost saving effect from clustering their own stores i present an empirical model of network choice by two multistore firms i use lattice theoretical results to address the computational burden of solving for an equilibrium in store networks the framework integrates the static entry game of complete information with post entry outcome data while using simulations to correct for the selection of entrants i present an application of the model to the case of the convenience store industry in okinawa island japan using unique cross sectional data on store networks and revenues i use parameter estimates to examine the impact of a hypothetical horizontal merger on store configurations costs and profits results suggest a retailer s trade off between cost savings and lost revenues from clustering its stores is positive across markets and negative within a market i find an acquirer of a hypothetical merger of two multistore firms would decrease its number of stores in suburbs but increase its number in the city center

specialized supply firms property rights and firm boundaries the proper specification of intellectual property rights iprs is a delicate and controversial matter in this paper we consider one specialized context in which iprs can add to efficiency we build on contributions of both firm capabilities scholars e g teece pisano et al and property rights economists e g hart to show that iprs can affect efficiency by influencing the location of technological innovation using a simple set up where the key choice is whether a technology intensive input will be supplied by an independent firm or produced in house we analyze how the choice is affected by the strength of iprs and by the existence and nature of information spillovers specifically we show that when the supply relationship is likely to produce new information of value to the supplier stronger property rights favor independent suppliers over vertical integration an important implication of our model backed by empirical case studies is that strong iprs therefore encourage investments in specialized firms with strong firm capabilities in the area of innovative input supply iprs therefore may play a role along with multiple other factors in the location of firm boundaries in some cases this contribution to the viability of small specialized firms with their superior ability to innovate in some cases must be taken into account in evaluating recent criticisms of over fragmented ipr ownership i e the anticommons problem it also contributes to an understanding of iprs in the post chandlerian economy where smaller specialized firms play a prominent role copyright 2004 oxford university press

learning from failure towards an evolutionary model of collaborative ventures this paper reports on a longitudinal case study of the interaction between two partners to a failed international joint venture we develop a model of the collaboration process in partnership and alliances based on earlier work by ring and van de ven 1994 and by doz 1996 we employ a series of events that occurred in the course of the relationship as the unit of analysis in order to trace the interactions between the partners and to explicate the impact that external shocks have on their perceptions of efficiency and equity the impact of these events as well as the responses they elicit on the quality of the relationship and vice versa are also considered we find that the partners assessments cause them to either engage in renegotiation of the terms of the contract or to modify their behavior unilaterally in an attempt to restore balance to the relationship the process feeds back until a new mutual understanding of equity is restored or else the relationship deteriorates gradually until a point when the venture is dissolved we conclude that positive feedback loops are critical in the evolutionary process that relationship quality is both an outcome and a mediating variable and that procedural issues are critical from the start in fostering a climate for positive reinforcement and the building of mutual trust and confidence in the relationship

discussion of the effects of accounting diversity evidence from the european union this paper evaluates the effects of accounting diversity on financial ratios and the stock market valuation of accounting data reported by companies in france germany and the united kingdom and investigates the effectiveness of european union eu efforts to reduce accounting diversity the study contributes to research on the effects of measurement differences by using a capital markets approach and by introducing several capital markets based measures of diversity in accounting measurement practice the original focus of this paper was accounting harmonization the term harmonization is used loosely in the accounting literature and most commonly refers to narrowing the choice among alternative measurement methods a second use of harmonization concerns the amount and detail of information disclosed in the financial report van der tas 1992 finally harmonization may mean comparability and transparency of information consistent with the eu accounting directives emphasis on the true and fair view concept walton 1993 harmonization operates at different levels concepts principles regulations and practice tay and parker 1990 harmonization achieved at one level such as regulations does not necessarily imply harmonization at a different level such as accounting practice the eu accounting directives narrow the choice of accounting measurement principles require a specified set of annual report disclosures and emphasize the true and fair view tfv which appears to aim for comparability and transparency thus testing for the effects of

on success and dissolution of the labor managed firm in the capitalist economy labor managed firms lmfs in the developed capitalist economy exhibit an interesting life cycle pattern often they come into existence as a way of reorganizing insolvent entrepreneurial profit maximizing firms yet successful lmfs tend to be assimilated to the entrepreneurial modus operandi in the long run i propose a simple theoretical model that explains this lmf phenomenon as the outcome of the lmf s interaction with outside markets especially competitive spot labor markets the interpretations and limitations of the model are also discussed as the basic framework is extended to deal with imperfections in capital markets and with contractual labor markets

productivity and distribution effects of codetermination in an efficient bargaining model codetermination can be regarded as an extreme regulatory intervention of the legislator in the labor market which might affect the efficiency of production and the bargaining power of labor based on a model that covers both efficient bargaining and employment bargaining a simple equation is derived that is suited to empirical testing the empirical test is based on german data and includes years before and after the extension of german codetermination law in 1976 the estimates determine the productivity of labor and relative bargaining power of capital and labor it turns out that codetermination does not affect productivity but leads to a significant increase in workers bargaining power and the distribution of rents

labor participation in corporate policy making decisions west germany s experience with codetermination if workers are wealth maximizers codetermination should lead to less risky investments smaller dividends reduced firm leverage higher and more stable salaries and more capital intensive production processes unless codetermination also increases productivity by raising wokers morale and satisfaction or reduces information asymmetries within the firm shareholder wealth and firm value will decline an analysis of west germany s case however indicates that codetermination has little if any effect on corporate operations and performance

contractibility and the design of research agreements we analyze how contractibility affects contract design a major concern when designing research agreements is that researchers may use their funding to subsidize other projects we show that when research activities are not contractible an option contract is optimal the financing firm obtains the option to terminate the agreement and in case of termination broad property rights the threat of termination deters researchers from cross subsidization and the cost of exercising the termination option deters the financing firm from opportunistic termination we test this prediction using 580 biotechnology research agreements contracts with termination options are more common when research is non contractible

do consumers search for the highest price oligopoly equilibrium and monopoly optimum in differentiated products markets we develop a model of search among substitutes for the best combination of commodity variant and price in which the structure of search costs is manipulable by the suppliers of these variants e g by joining an existing market or opening a new one we analyze the subgame perfect equilibria arising in a multistage game involving specialized firms choice of entry variant and price and we compare them to a multiproduct monopolist s optimal choice we show that equilibrium prices increase in the number of substitutes sold in one market and that in the situation considered here monopoly increases welfare

internal bargaining and strategic innovation in the theory of the firm abstract the transaction cost analysis of the firm has identified asset idiosyncrasy and the risk of ex post opportunism as key determinants of organizational form simultaneously several writers have modeled the distribution of quasi rents among input suppliers as a bargaining game these complementary ideas are used to formalize the notion of strategic innovation where capital and labor attempt to redistribute firm income after specialized assets are in place through unilateral modifications in production technology because strategic behavior can enlarge the quasi rent component of fifirm income this process may persist in equilibrium asset idiosyncrasy therefore creates room for an autonomous theory of organizational dynamics partially insulated from events at the market level of analysis

monitoring physicians a bargaining model of medical group practice this paper challenges the proposition that large physician owned groups will be inefficient because of failures to control opportunism a bargaining model implies that even large partnerships will make efficient resource and monitoring decisions in addition opportunism has much the same payoff for employees and partners the data show that most large medical practice organizations are physician owned empirical analyses of nine forms of monitoring by large groups generally show no clear link between monitoring and ownership there is one exception physician owned firms tend to base compensation on productivity which may help explain the continued dominance of professional partnerships

termination outcomes of research alliances abstract we draw upon evolutionary economics and transaction cost economics to examine how alliance experience accumulation at the parent firm level and alliance features at the transaction level jointly and interactively shape the favorability of research alliances termination outcomes fifteen percent of the terminated alliances we examined were successful 34 were failures and 51 experienced an intermediate outcome in the form of contract expiration or unilateral withdrawal by a partner we find that the effect of partner specific experience on the favorability of termination outcomes is greater for non equity alliances than for equity structures affording stronger formal governance mechanisms other forms of experience such as general alliance experience or prior alliances in the same technological area as the focal agreement have no such favorable consequences for alliance termination the findings also indicate that alliance complexity adversely influences firms termination outcomes in alliances we therefore find evidence in partial support of both evolutionary and transaction cost based arguments for the explanation of termination outcomes in research alliances

mcdonald s and kfc in china competitors or companions in this paper we study the entry and expansion decisions of mcdonald s and kfc in china using an originally assembled data set on the two chains expansion in the china market from their initial entry up to year 2007 we analyze how the presence of a rival affects each firm s strategies the results indicate that a rival s presence has a net positive effect on a chain s expansion decision we focus on testing two possible explanations for a positive rival impact market learning and demand expansion first we derive a set of theoretical predictions on how a chain s optimal expansion decision would react to its rival s expansion patterns when market learning versus demand expansion is the driving force of the rival s positive influence the empirical analysis based on these predictions consistently suggests that market learning is more likely to explain the positive effect of kfc on mcdonald s and that demand expansion is more plausible with mcdonald s positive spillover on kfc in other words the results are consistent with the presence of kfc signaling market demand potential and growth to mcdonald s and the presence of mcdonald s helping to cultivate consumer taste and generate demand for western fast food which benefits kfc

retail agglomeration and competition externalities evidence from openings and closings of multiline department stores in the u s from the perspective of an existing retailer the optimal size of a cluster of retail activity represents a trade off between the marginal increases in consumer attraction from another store agains

on the economic rationale for codetermination law abstract this paper develops a positive efficiency economic case for codetermination law resting on the correction of labor and capital market and organizational failures a legally mandated codetermination structure is shown to provide employee checks on several structural incentives for management opportunism codetermination is shown to offer advantages for technical efficiency skill development and knowledge generation through its protection of specific human capital investments financial markets cannot enforce codetermination due to a set of free rider problems

entry in monopoly market this paper develops new empirical models of market concentration from game theoretic models of entry we construct our models from inequality conditions that describe entrants equilibrium strategies in simultaneous move and sequential move games and use them to study the effects of entry in isolated monopoly markets for new automobiles from estimates of the market size necessary to support one and two dealers we conclude that monopoly dealers do not block the entry of a second dealer we also find that entry does not cause price cost margins to fall by much

entry and managerial incentives abstract this paper presents a two period full information model of entry where owners of incumbent and entrant firms endogenously select the incentive schemes for their managers it is shown that when output decisions are delegated to managers the incumbent s owner chooses to base incentive schemes only partly on profit but if output decisions are reached via nash bargaining between managers the incumbent s owner will base the reward on profit alone the entrant never bases the incentive scheme solely on profit if there is a sufficiently high fixed cost of entry then the incumbent can deter entry by providing management with appropriate incentive schemes

wage pressure bargaining and price cost margins in uk manufacturing to the extent that union employer bargaining is efficient price cost margins in oligopolistic industries are predicted to depend on wage rents and on the elasticity of substitution between wages and employment in union preferences unanticipated wage inflation will also affect margins cross section and time series analysis of price cost margins in u k manufacturing industries finds that margins tend to be eroded by the level of wage rents and are invariant to the rate of wage inflation copyright 1990 by blackwell publishing ltd

does privatization improve job satisfaction the case of ghana this paper analyzes the impacts of privatization in ghana on the basis of a survey of 300 workers in privatized and state owned enterprises the findings indicate a significant positive relationship between privatization and job satisfaction whereas monthly wage is an important determinant of job satisfaction in state owned enterprises education and the availability of training opportunities are strong determinants in privatized enterprises the study also shows that there exists a variety of instruments to implement a privatization program smoothly

the stability of joint ventures reciprocity and competitive rivalry the focus of the following empirical analysis is the influence of reciprocity and long term relationships on the stability of joint ventures these cooperative incentives are offset by industry structural conditions which may promote competitive rivalry among the partners to separate these effects on joint venture survival the hypothesized relationships are proxied by variables drawn from industry and questionnaire data and estimated under a hazard model specification a theoretical implication of the findings is to suggest a shift of attention from the transaction to the economic relationship as the unit of analysis copyright 1989 by blackwell publishing ltd

economic effects of codetermination the success of west german scandinavian and japanese economies particularly when compared with lagging productivity and competitiveness of the u s and the u k have focused attention on comparative institutions in labour markets and corporate control declining unions and increasing reliance on competitive market pressures in the angloamerican countries contrast with more state intervention and regulation of the european social market economies as noted by henzler 1992

ideas for rent an overview of markets for technology this article surveys some of the recent literature on technology markets and summarizes its main issues and insights we structure our analysis in three parts the supply and demand of technology the factors that condition the formation and growth of technology markets industry structure and dynamic issues in addition we summarize some of the studies that have tried to document the size and growth of these markets we find that the literature has focused mainly on the supply of technology but several other aspects of these markets remain under studied including the demand for external technology the role of uncertainty in technology markets and the dynamic interaction between industry structure and the market for technology understanding these will illuminate whether markets for technology will continue to grow or remained confined to pockets of the economy copyright 2010 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

empirical entry games with complementarities an application to the shopping center industry abstract the author proposes a strategic model of entry that allows for positive and negative spillovers among firms the model is applied to a novel data set containing information about the store configurations of all u s regional shopping centers and is used to quantify the magnitude of interstore spillovers the author addresses the estimation difficulties that arise due to the presence of multiple equilibria by formulating the entry game as a mathematical problem with equilibrium constraints mpec although this study constitutes the first attempt to use this direct optimization approach to address a specific empirical problem the method can be used in a wide range of structural estimation problems the empirical results support the agglomeration and clustering theories that predict that firms may have incentives to colocate despite potential business stealing effects the author shows that the firms negative and positive strategic effects help predict both how many firms can operate profitably i

employee participation in management bargaining power and wages the paper analyzes the impact of employee participation in management on bargaining power and wages it presents an empirical model which allows for variable bargaining powers of the parties who jointly control the firm and it tests this model with postwar west german data the results suggest that parity codetermination has had a positive effect on earnings in iron and steel but not in coal mining moreover it appears that the positive effect in iron and steel could be due to increased profitability rather than an increase in the bargaining power of labor as defined in this study

power in a theory of the firm transactions take place in the firm rather than in the market because the firm offers power to agents who make specific investments past literature emphasizes the allocation of ownership as the primary mechanism by which the firm does this within the contractibility assumptions of this literature we identify a potentially superior mechanism the regulation of access to critical resources access can be better than ownership because i the power agents get from access is more contingent on their making the right investment and ii ownership has adverse effects on the incentive to specialize the theory explains the importance of internal organization and third party ownership

price reactions to rivals local channel exits in this paper we study the effect of a firm s local channel exits on prices charged by incumbents remaining in the marketplace exits could result in higher prices due to tempered competition or lower prices due to reduced colocation or agglomeration benefits the net effect of these two countervailing forces remains unknown in addition little is known about how this effect could change depending on incumbents geographic locations we address this research gap by examining new car price reactions by incumbent multiproduct automobile dealerships who experience the exit of a chrysler dealership in their local markets we find evidence that the competition effect exceeds the colocation effect prices increase by about 1 318 following an exit relative to the price change in the absence of an exit more important we find that the price increase is lower at dealerships more proximate to the exiting dealership than dealerships farther away for the same set of cars available across these locations this

worker participation and productivity in labor managed and participatory capitalist firms a meta analysis using meta analytic techniques the author synthesizes the results of 43 published studies to investigate the effects on productivity of various forms of worker participation worker participation in decision making mandated codetermination profit sharing worker ownership employee stock ownership or individual worker ownership of the firm s assets and collective ownership of assets workers collective ownership of reserves over which they have no individual claim he finds that codetermination laws are negatively associated with productivity but profit sharing worker ownership and worker participation in decision making are all positively associated with productivity all the observed correlations are stronger among labor managed firms firms owned and controlled by workers than among participatory capitalist firms firms adopting one or more participation schemes involving employees such as esops or quality circles

competition by choice the effect of consumer search on firm location decisions this paper relates firm location choice and consumer search firms that cluster together attract consumers by facilitating price comparison but clustering increases the intensity of local competition the author constructs a simple model which shows that firms may choose head on competition by locating together under reasonable conditions this is the only equilibrium outcome copyright 1990 by american economic association

price induced patterns of competition this research focuses on how price changes influence the observed pattern of brand competition the paper begins with a basic utility model formulation and examines the implications of three major classes of preference distributions on the expected patterns of competition a price tier model is proposed to operationalize the theory and to allow predictive testing the price tier model is estimated on 28 brands across four product categories the results show a specific asymmetric pattern of price competition higher price higher quality brands steal share from other brands in the same price quality tier as well as from brands in the tier below however lower price lower quality brands take sales from their own tier and the tier below brands but do not steal significant share from the tiers above the results are consistent with a bimodal preference distribution with the regular price indifference point being located toward the lower quality end of the preference distribution for the categories analyzed

employment determination in enterprises under communism and in transition evidence from central europe the authors present a comparative analysis of employment determination in four transition economies as they moved from central planning to a market economy in the early 1990s they use firm level panel data sets from the czech republic hungary poland and slovakia to estimate dynamic employment equations for the period from immediately before to immediately after the start of transition for the most part firms appear to have been quick to adjust employment to wage levels and there is little evidence of labor hoarding there were important cross country variations in the determinants of employment during the reform process however hungarian and polish firms started the transition already substantially reformed and became even more responsive to market signals as transition proceeded in contrast firms in the czech and slovak republics started in the completely unresponsive mode characteristic of central planning but rapidly caught up with their counterparts in hungary and poland

the dynamic spillovers of entry an application to the generic drug industry this paper examines whether experience from entry in one market can potentially enhance profitability at a future market opportunity for a related product we formulate and estimate a dynamic game of entry in which forward looking firms make decisions not just based on present benefits of past entry but also anticipating potential future benefits of current entry dynamic spillovers of entry are incorporated through a firm specific unobservable to the researcher cost that depends on past entry decisions the unobserved costs may also be serially persistent thus the model allows for firm specific unobserved heterogeneity that evolves based on firm actions the challenge of estimating a dynamic game with serially correlated unobserved state variables subject to endogenous feedback is overcome by embedding a particle filter based technique in a nested fixed point algorithm using an application to a stylized model of entry in the generic pharmaceutical industry we underscore the motivation for the model specification and the methodology developed our estimates imply positive spillover effects of entry moreover these spillovers suggest heterogeneity not just across firms but also within firms over time based on their history of entry decisions our results illustrate that entry may potentially provide firms with additional strategic advantage in later markets and that entry spillovers may be an important factor to consider in the equilibrium evolution of the generic drug industry the web appendix is available at https doi org 10 1287 mnsc 2016 2648 this paper was accepted by j miguel villas boas marketing

unemployment collective bargaining and the demand for protection there is a widespread consensus among nonacademic observers that labor unions with large numbers of unemployed members have been central actors in political coalitions demanding protectionist trade policies since the mid 1970s in advanced industrial societies yet trade unions and unemployment are hardly mentioned in most theories of the politics of international trade the purpose of this paper is to develop a theoretical framework for understanding the importance of unemployment as a determinant of protectionist demands that is consistent with optimizing behavior on the part of union members and firms models of labor negotiations derived from cooperative bargaining theory are used to illustrate why the material benefits of protection received by union members and their employers in protected industries increase when union members are unemployed even when workers are risk neutral and capital is immobile

on the contractual governance of research collaborations allocating control and intellectual property rights in the shadow of potential termination abstract this paper investigates the governance design problem of a large company that wants to engage a small and cashless firm into a research collaboration this analysis reflects the frequently observed collaborations between pharma companies and biotechs and an actual research contract is assessed to link theory to practice the governance form refers to the allocation of control rights over the research process and property rights over research output s as determined by the initial contract yet this contract is incomplete the parties negotiate at a later stage from bargaining positions that depend on the initial choice of the governance but they also contemplate the possibility that the collaboration will be terminated by means of a simple model that captures the core aspects of the contractual environment i answer a key research question how should governance be designed in the shadow of potential termination to provide the research firm with the incentives to invest in the collaboration first it is in the company s interest to choose a governance form that eliminates the possibility of termination and stabilizes the collaboration whenever possible second if the collaboration cannot be stabilized the company faces a trade off between reducing the probability of termination and providing incentives which is ultimately resolved by making the collaboration highly unstable third property rights and control are substitutes in the governance design if the company collects more property rights it must relinquish more control rights

control and contract design in research collaborations a complete contract perspective abstract incumbent firms especially in high tech industries often contract and collaborate with small research units on single projects a delicate resulting contracting decision thus is how to allocate control this paper considers the incumbent s problem to design a research contract that specifies the allocation of control the unit s research input and its monetary compensation contracting is complicated by the unit s private information about its technological skills research outputs also are not verifiable control affects the distribution of the private benefits from research and can be shared from a complete contract perspective an allocation of control that is contingent on the unit s reported information provides the incumbent an additional instrument for designing the incentives control can generate countervailing incentives and mitigate the limitations of contracts in research environments to the point of extracting the full surplus the analysis further clarifies when control is centralized by the incumbent when it is shared between the parties and when it is delegated to the unit

behavior of participatory firms in yugoslavia lessons for transforming economies this paper develops a multiparty model of enterprise behavior with the management workers and government authorities being the decisionmakers the model captures the behavior of yugoslav enterprises in the 1970s and 1980s enterprises in transitional economies and public sector bargaining in western countries estimating the model on yugoslav firm level data from the 1970s and 1980s indicates that the perverse behavior predicted by the ward domar vanek model of labor managed firms is not supported by the data as firms place emphasis on both wages and employment a direct test shows that the employment response to output price changes is insignificant coauthors are jan svejnar dubravko mihaljek and vesna prasnikar copyright 1994 by mit press

strategic investment and the co existence of labour managed and profit maximising firms the authors examine firm profitability in mixed duopoly equilibrium with one labor managed lm firm and one profit maximizing pm firm and with strategic investment conventional wisdom suggests that firms deviating from profit maximization will suffer forced exit in the long run the authors reverse this conclusion in mixed lm pm duopoly with strategic investment no equilibrium can have both firms making zero profits and pm profitability implies lm profitability but not the converse adverse parameter shifts would cause the pm firm to exit first empirical evidence is consistent with this prediction of robust market survivability of lm firms

estimation of a model of entry in the airline industry this paper considers the effect of an airline s scale of operation at an airport on the profitability of routes flown out of that airport the empirical methodology uses the entry decisions of airlines as indicators of underlying profitability the results extend the empirical literature on airport presence by providing a new set of estimates of the determinants of city pair profitability these estimates imply that city pair profits increase in airport presence and decrease rapidly in the number of entering firms the literature on empirical models of oligopoly entry is also extended via a focus on the role of differences between firms

market imperfections labor management and earnings differentials in a developing country theory and evidence from yugoslavia in this paper we evaluate empirically the relative importance of two explanations of yugoslav interindustry income differentials one explanation proposed initially by vanek and jovicic 1975 stresses capital market imperfections which permit capital rents to be appropriated as workers incomes the second explanation points to labor allocation problems under self management we first present a critique of the vanek jovicic original formulation and then respecify the problem to permit simultaneous evaluation of the two schools of thought results based on two data sets suggest that labor allocation factors and monopoly power rather than capital rents are the main source of yugoslav earnings dispersion

internal bargaining labor contracts and a marshallian theory of the firm the theme of this paper is due to alfred marshall who states that nearly the whole income of a business may be regarded as a composite quasi rent divisible among different persons in the business by bargaining supplemented by custom and by notion of fairness and the division of quasi rents entails de facto some sort of profit loss sharing between almost every business and its employees principles of economics 8th ed book vi ch viii sec 10 pp 520 21 marshall emphasizes that a significant portion of composite quasi rent is derived from the organization of business and would be lost if employer employee connections were dissolved in this view bargaining can even be tacit insofar as there is an organizational basis which ensures agreement among the concerned parties consequently internal bargaining models of the firm may be applicable to the analysis of european style codetermination and japanese style labor management also as the relative bargaining strength between labor and management changes such a view of the firm admits as its extrema the organization of a labor managed firm lmf and the textbook case of a profit maximizing firm pmf masahiko aoki 1980 1982 and jan svejnar 1982 have recently explored models of an internal bargaining firm their analyses however consider the firm s long run behavior only under restricted circumstances without market uncertainty the relevance of the internal bargaining approach to profit sharing and labor management would be enhanced if we integrated the firm s short run wage employment policies with its long run plans for the rate of growth and capital labor substitutions this i do by underscoring the firm s organizational basis which is essentially a long term contractual association between workers and management i combine costas azariadis 1975 and martin baily s 1974 apparatus of labor contracting with efficient bargaining to investigate the effect of varying degrees of labor s bargaining power upon the firm s shortand long run policies under uncertainty these results are then contrasted with the empirical findings of collective bargaining for example richard freeman and james medoff 1981 conventional results of lmf models jaroslav vanek 1970 benjamin ward 1958 and the recent macroeconomic approaches to wage employment adjustments ian mcdonald and robert solow 1981

models of modern sector labor market institutions in developing countries abstract the paper argues that policy conclusions derived from existing theories of economic development may be seriously flawed because the theories do not model correctly the modern sector labor market the paper first presents evidence that trade unions and governments frequently exert positive influence not only on firms wages but also on their employment levels it then presents models that capture this phenomenon and permit one to determine whether the observed levels of employment are insufficient optimal or excessive from the private and social standpoints the paper concludes with a discussion of how the analysis could be implemented in empirical studies and in practical policy work

an empirical model of firm entry with endogenous product type choices i describe a model of entry with endogenous product type choices these choices are formalized as the outcomes of a game of incomplete information in which rivals differentiated products have nonuniform competitive effects on profits i estimate the model for location choices in the video retail industry using a nested fixed point algorithm solution the results imply significant returns to product differentiation simulations illustrate the tradeoff between demand and intensified competition and the extent to which markets with more scope for differentiation support greater entry

keeping your enemies closer when market entry as an alliance with your competitor makes sense we present an analytical framework of multimarket competition and supporting empirical analysis to explain why and when competing firms in an existing market may prefer an alliance entry over independent entry into a new market our findings suggest that an alliance entry is more profitable than an independent entry i when the new market is larger relative to the existing market and ii when the competition in the existing market is stronger relative to the new market we compare these key predictions with archival data from the regional shopping center industry in the united states and find that instances of alliance formation in this industry are consistent with our model based predictions data as supplemental material are available at http dx doi org 10 1287 mksc 2016 0988

priorities and sequencing in privatization evidence from czech firm panel data abstract while privatization of state owned enterprises has been one of the most important aspects of the economic transition from a centrally planned to a market system no transition economy has privatized all its firms simultaneously this raises the question of whether governments privatize firms strategically in this paper we examine the determinants of the sequencing of privatization to obtain testable predictions about the factors that may affect sequencing we investigate the following competing government objectives i maximizing efficiency through resource allocation ii maximizing public goodwill from the free transfers of shares to the public iii minimizing political costs iv maximizing efficiency through information gains and v maximizing privatization revenues next we use firm level data from the czech republic to test the competing predictions about the sequencing of privatization consistent with the hypotheses of a government priority on revenues and public goodwill we find strong evidence that more profitable firms were privatized first the sequencing of privatization is also consistent with maximizing efficiency through information gains our results indicate that many empirical studies of the effects of privatization on firm performance suffer from a selection bias

on the management of open innovation abstract in an open innovation relationship the party that owns a key asset enjoys bargaining power that discourages the investments of the other party in the collaboration we show that these incentives can be restored by conferring on the weak party the power to take decisions during the research process e g a pharmaceutical firm with manufacturing and commercialization assets offers the direction of a joint research project to a biotech partner however on many occasions the strong party still captures more value from the collaboration by retaining the power to take decisions during research even if it produces less innovation value and fewer aggregate profits we conclude that the potential of open innovation is underexploited in particular owners may not release enough power to take decisions on the use of their assets

optimal membership employment and income distribution in unionized and labor managed firms this article presents a static and dynamic intertemporal analysis of employment and income distribution in unionized and labor managed firms motivated by theoretical considerations and institutional features of western trade unions and labor managed firms we examine firms in which worker members share the risk of layoffs by acting as if compensating laid off members in the static framework we show that although the firms do not behave perversely their behavior depends crucially on the initial membership since the issue of optimal initial membership has been virtually ignored in the literature we analyze it next within a dynamic framework

ownership and control rights in internet portal alliances 1995 1999 we examine the structure of more than 100 alliances by internet portals and other firms between 1995 to 1999 from a contract theory perspective models of incomplete contracts frequently invoke unforeseen contingencies the cost of writing contracts and the cost of enforcing contracts in justifying the assumption of incompleteness the setting in which internet portals formed alliances was rife with these sorts of transaction costs we argue that these alliances can be viewed as incomplete contracts and find that the division of ownership and the allocation of control rights are consistent with the incomplete contracting literature copyright 2003 by the rand corporation

information production decisions and intra firm bargaining a firm s factor suppliers often receive private signals which are useful in managerial decision making productive efficiency requires the pooling of such decentralized information however factor suppliers may threaten to withhold private signals in order to secure side payments from the potential beneficiaries of this information j harsanyi s theory of the n person cooperative game is applied to a model where both physical inputs and information can be withheld by factor owners for the special case of a binary decision problem the central limit theorem is used to approximate the harsanyi solution by a linear combination of are as under the standard normal curve copyright 1988 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

on illyrian macroeconomics the ward vanek labor managed economy macro models are found to contain errors in capital pricing treatment which when correct ed removes perverse responses and leads to monetary neutrality vanek s 1977 open model is shown not to be a labor managed econ omy model but rather one of any economy with fixed output a rational e xpectations macro model is developed in which labor managed firms mus t decompose price movement into its nominal and real parts this unce rtainty about the information content of observed prices leads to out put effects similar in spirit to the ward vanek models implications for monetary policy are explored copyright 1988 by the london school of economics and political science

relative wage effects of unions dictatorship and codetermination econometric evidence from germany t he present study estimates the effects of trade unions hitler s regime and codetermination on relative wages in germany i each of these establishments is considered to have had important implications for germany s labor market moreover a thorough understanding of their effects can be valuable for comparative purposes following a brief discussion of these phenomena and their hypothesized effects on wages the analytical model is developed in section ii the empirical results are reported in section iii and section iv contains the summary and conclusions the extensive literature on the relative wage effects of trade unions has focused almost exclusively on the union impact in north america2 and more recently in great britain 3 since the german institutions of industrial and labor relations differ considerably from their angloamerican counterparts4 and often have been studied as a successful possibly superior system which might be adopted by others it is worthwhile exploring the magnitude of the union wage effect in the german institutional setting in particular it has been argued that compared to their american and british counterparts the continental unions tend to place more emphasis on political and social rather than economic achievements 5 if this hypothesis is correct then ceteris paribus the estimated relative wage effect of german unions ought to be smaller than that found in the united states and great britain with the advent of hitler s regime in 1933 there was a dramatic transformation of the existing political and economic institutions trade unions which in 1932 represented over 40 of the industrial labor force were promptly abolished6 and replaced by a government operated labor front 7 strikes and lockouts were forbidden and wages were determined centrally 8 while the effects of these changes on the cultural political and social life have been well documented few economic studies attempted to analyze the effect of hitler s regime on wages and incomes moreover those that did used a qualitative or only a loose quantitative approach partially as a result of the lack of a systematic wage series prior to 1934 9 w krelle 1962 p 17 has shown for example that labor income received for publication july 30 1979 revision accepted for publication may 1 1980 cornell university i would like to thank orley ashenfelter albert rees and two anonymous referees for helpful comments i have also benefited from discussions with j s butler william greene louis phlips and katherine terrell any remaining errors are of course my own this research was in part supported by a grant to the princeton university economics department from the sloan foundation i the term codetermination refers to the german participatory system of management as it was originally established in the federal republic by the 1951 codetermination act and the 1952 works constitution act 2 the most important work and collection of references on the subject is still lewis 1963 among the later studies in the private sector are ashenfelter 1972 ashenfelter and johnson 1972 bloch and kuskin 1978 boskin 1972 de menil 1971 rosen 1969 and schmidt and strauss 1976 public sector studies are summarized by lewin 1977 x see especially pencavel 1974 mulvey 1976 and metcalf 1977 4 needless to say there are important differences between the u s and british systems of industrial and labor relations they exhibit considerable homogeneity however when compared to the systems in continental europe historically the relatively most salient features of the german system have been 1 trade union affiliation with political parties and or religioiis organizations 2 industrial unionism 3 governmental interference in industrial and labor relations and 4 paternalistic management world war ii led to the unification of the formerly splintered unions in the deutsches gewerkschafts bund dgb close collaboration with the social democratic party sdp and the establishment of codetermination for institutional references see almanasreh 1977 fiirstenberg 1969 1977 schregle 1978 and vollmer 1976 1979 5 see kassalow 1969 1980 and windmuller 1969 6 employers associations followed their lead in 1934 7 the labor front included all employees and employers it represented the nazi government in the factories and possessed broad powers over its member subjects 8 in fact the entire economy underwent considerable centralization as hitler proclaimed his first four year plan in 1933 and a second one in 1936 9 among the most thorough and informative of these conventional studies is that of bry 1960 for a discussion of the data see gerss 1977

the impact of walmart supercenter conversion on consumer shopping behavior this paper presents an empirical study of the impact of walmart supercenter conversion on consumer shopping behavior by using a difference in difference estimator we find that walmart gains 41 in weekly revenue from the conversion decomposing the revenue gains into components attributable to store visits and per visit expenditures we find that the majority of these gains were due to larger expenditures with a much smaller impact from store visits by contrast among competing retailers grocery stores experience the most significant loss 20 weekly revenue mostly from fewer store visits with a much smaller impact attributable to per visit expenditure taken together these findings show that consumers may benefit from reduced shopping costs by making fewer overall trips and increasing their walmart basket sizes in addition we find that overall revenue gains for walmart from conversion outweigh the small cannibalization loss at the existing walmart supercenters located farther away finally fro

wage bargaining imperfect competition and the markup optimizing microfoundations abstract combining the conjectural variations and nash bargaining approaches it is shown that the demand insensitive markup depends on the bargaining power of unions relative to owners of firms in addition to more standard product market characteristics

codetermination as a strategic advantage abstract a theoretical model of codetermination is considered where consistent with german institutions firm owners bargain with employees representatives about employment but not about wages a duopoly and a more general oligopolistic situation are analyzed for some range of bargaining power a prisoner s dilemma exists codetermination leads to increased profits if the other firm is a traditional profit maximizer bargaining is the dominant strategy although joint profits would be maximized with unrestricted profit maximization the theory is tested with data from 22 german firms who operate in the same markets over 23 years codetermined firms actually show a different behavior than other companies

the scope of alliances we develop the notion that the choice of alliance scope materially affects the character of benefits that alliance participants receive and thereby affects a range of issues having to do with the initiation evolution and termination of the alliance indeed while under emphasized by academics determining alliance scope ranks among the most important tasks undert aken by practitioners of alliances restricting ourselves to alliances where mutual learning is the primary raison d etre we first define private benefits as those that accrue to subsets of participants in an alliance and common benefits as those that accrue collectively to all participants we demonstrate how the choice of alliance scope affects the mix of private and common benefits and draw on earlier work to show how this in turn affects alliance partners incentives to invest in learning as illustrations of the utility of the framework of private and common benefits we consider two applications a simple model illustrates the relationship between the choice of alliance scope the realization of private and common benefits and the stability or lack thereof of the alliance a second application sheds light on alliance evolution it examines factors affecting both a how a particular alliance evolves and b how firms manage sequences of alliances two broader theoretical points also emerge from this discussion of alliance scope first we argue that an analytical focus solely on the individual alliance may be inappropriate for studying a wide range of issues of the multiple sources of benefits that accrue to alliance participants there are some whose realization depends on activities in which the firm is engaged but that may have little to do with the alliance in question second in contrast to much of the literature on alliances our analysis is based upon the primitives of benefit streams rather than on transaction cost reasoning this complementary perspective is better suited to the task of highlighting how activities not governed by an alliance might nonetheless affect multiple aspects of the alliance

firm expansion size spillovers and market dominance in retail chain dynamics we develop and estimate a dynamic game of strategic firm expansion and contraction decisions to study the role of firm size in future profitability and market dominance modeling firm size is important because retail chain dynamics are more richly driven by expansion and contraction than de novo entry or permanent exit additionally anticipated size spillovers may influence the strategies of forward looking firms making it difficult to analyze the effects of size without explicitly accounting for these in the expectations and hence decisions of firms expansion may also be profitable for some firms while detrimental for others thus we explicitly model and allow for heterogeneity in the dynamic link between firm size and profits as well as potential for persistent brand effects through firm specific unobservable factors as a methodological contribution we surmount the hurdle of estimating the model by extending a two step procedure that circumvents solving the game the first stage combines semipar