optimal incentive schemes with many agents the grossman hart principal agent model of moral hazard is extended to the multiple agent case to explore the use of relative performance in optimal incentive contracting under the assumption that the principal chooses incentive schemes to implement agent actions as nash equilibria necessary and sufficient conditions are derived for the optimality of independent contracts of rank order tournaments and for attainability of the first best in this context the relation of the principal s welfare to the correlation between the underlying randomness in outputs of different agents is also investigated finally some problems with the nash equilibrium implementation assumption are discussed in this paper we extend the grossman hart analysis of the principal agent problem to a multiple agent setting in this version of the problem a risk neutral principal is assumed to observe the output or a performance index for each risk averse agent the output of any agent depends on a privately observable action chosen by the agent and an exogenous random variable the realization of which is not observed either by the principal or by the agent before choosing its action we especially focus attention on the role of relative performance evaluation in optimal incentive contracts and the way this depends on properties of the underlying production technology and the joint distribution of the random variables affecting the outputs of different agents in section 2 of the paper we consider the principal s problem of finding an optimal incentive scheme and an action tuple for agents subject to the constraint that the latter be implemented as a nash equilibrium between agents by the chosen incentive scheme where agents must attain at least their reservation utilities a characterization of optimal incentive schemes is derived analogous to the grossman hart characterization for the single agent problem this characterization is then utilized to find sufficient and generically necessary conditions for a optimal contracts for any agent to be independent of the performance of other agents and b optimality of rank order tournaments where payments depend solely on ordinal comparisons of output across agents we then describe a necessary and sufficient condition for the principal to extract maximum advantage from relative performance clauses i e achieve the first best level of expected utility in the multiagent situation an implication of this result is that under fairly weak conditions perfect correlation in the underlying production uncertainties for different agents enables the principal to attain the first best if and only if sufficiently heavy penalties can be inflicted on agents we then enquire what happens in intermediate cases of non perfect correlation it turns out that while in general the principal s welfare is a continuous function of the correlation coefficient it is not always nondecreasing in the latter because the correlation coefficient is not a general measure of association between two random variables but rather a measure of linear association between them

institutionalizing end user demand steering in agricultural r d farmer levy funding of r d in the netherlands abstract the purpose of this paper is to critically examine the institutionalization of demand driven modes of working in the r d planning process and reveal possible weaknesses through an analysis of a system of collective r d funding by farmers the findings indicate that although end users have the opportunity to raise issues that lead to r d queries are influenced by several actors in the r d planning process in such a way that they do not adequately reflect farmers innovation needs conclusions are that more emphasis is required on joint demand articulation and involvement of end users and other stakeholders in the innovation process and on the institutional development of r d funding organizations in order to adopt a more inclusive view on innovation

green revolution in sub saharan africa implications of imposed innovation for the wellbeing of rural smallholders green revolution policies are again being pursued to drive agricultural growth and reduce poverty in sub saharan africa however conditions have changed since the well documented successes of the 1960s and 1970s benefitted smallholders in southern asia and beyond we argue that under contemporary constraints the mechanisms for achieving improvements in the lives of smallholder farmers through such policies are unclear and that both policy rationale and means of governing agricultural innovation are crucial for pro poor impacts to critically analyze rwanda s green revolution policies and impacts from a local perspective a mixed methods multidimensional wellbeing approach is applied in rural areas in mountainous western rwanda here malthusian policy framing has been used to justify imposed rather than induced innovation the policies involve a substantial transformation for rural farmers from a traditional polyculture system supporting subsistence and local trade to the adoption of modern seed varieties inputs and credit in order to specialize in marketable crops and achieve increased production and income although policies have been deemed successful in raising yields and conventionally measured poverty rates have fallen over the same period such trends were found to be quite incongruous with local experiences disaggregated results reveal that only a relatively wealthy minority were able to adhere to the enforced modernization and policies appear to be exacerbating landlessness and inequality for poorer rural inhabitants negative impacts were evident for the majority of households as subsistence practices were disrupted poverty exacerbated local systems of knowledge trade and labor were impaired and land tenure security and autonomy were curtailed in order to mitigate the effects we recommend that inventive pro poor forms of tenure and cooperation none of which preclude improvements to input availability market linkages and infrastructure may provide positive outcomes for rural people and importantly in rwanda for those who have become landless in recent years we conclude that policies promoting a green revolution in sub saharan africa should not all be considered to be pro poor or even to be of a similar type but rather should be the subject of rigorous impact assessment such assessment should be based not only on consistent objective indicators but pay attention to localized impacts on land tenure agricultural practices and the wellbeing of socially differentiated people

the private sector in agricultural research systems will it fill the gap abstract this article examines whether the private sector can fill the gap of declining public research in developing countries economic theory suggests private for profit research will focus on areas where returns to research are appropriable and reasonable profits are generated actual private for profit research activities concentrate on countries and industries with large markets appropriable returns strong science infrastructure and favorable government policies governments and donors can promote private research by easing constraints to private entry and operations but if governments stop funding research on public goods and technologies with limited market potential the private sector is unlikely to fill the gap completely

collective action for market chain innovation in the andes the papa andina network employs collective action in two novel approaches for fostering market chain innovation the participatory market chain approach pmca and stakeholder platforms engage small potato producers together with market agents and agricultural service providers in group activities to identify common interests share market knowledge and develop new business opportunities these forms of collective action have generated commercial technological and institutional innovations and created new market niches for andean native potatoes grown by poor farmers in remote highland areas these innovations have benefited small farmers as well as other market chain actors this paper describes papa andina s experiences with collective action for market chain innovation it then discusses the implications of these experiences for the understanding of collective action and the policy implications for research and development organizations

modeling the experimentally organized economy complex dynamics in an empirical micro macro model of endogenous economic growth abstract the swedish micro to macro model moses is used to show how complex economic behavior emerges from interacting boundedly rational agents the simulation model has been calibrated using business firm data non linearities arise in its specification of technology the distribution of firm characteristics and in the rules that govern entry and exit the model economy is characterized by a restless competitive growth process that is normally robust but that now and then generates phases of local disorderly behavior including for some parameter settings the collapse of entire sectors the model explains why government agents have difficulty predicting the reactions of the economy to policies suggesting that government treads cautiously in order not to do more harm than good

promoting the sustainability of development institutions a framework for strategy abstract this article presents a generic framework for understanding institutional sustainability in development its lessons draw from the agriculture and health sectors the framework treats institutions as a systems that function in relationship to their environments b organized and managed entities whose organizational structures and procedures must match the tasks products people resources and contexts they deal with and c settings intimately concerned with the exchange of resources where economic and political relationships intertwine to create varying patterns of power and incentive application of the analytic framework has shown that institutional sustainability depends upon maintaining responsive output flows high quality and valued goods and services cost effective goods and services delivery mechanisms organization and management and resource flows recurrent costs capital investments human resources

monetary policy and regional availability of debt financing the relative availability of bond and bank financing should affect the firm s external financing and investment decisions we define a measure that proxies for the regional borrowing inflexibility to substitute between bank and bond financing debt inflexibility debt inflexibility tilts the firm s financial structure towards equity and reduces investment the impact is stronger during the period of tight monetary policy particularly for smaller firms and firms without banking relationships debt inflexibility increases the sensitivity of cash holdings to cash flows reduces the likelihood of dividend payment and makes the firm more likely to pay equity in mergers and acquisitions

sovereign stress and smes access to finance evidence from the ecb s safe survey abstract we study the effect of sovereign stress on smes capital structure using restricted access data from the european central bank we find that during the sovereign debt crisis and controlling for borrowers quality firms in stressed countries became more likely to be denied credit to be credit rationed and to face higher loan rates less creditworthy firms were not more likely to become credit constrained suggesting no flight to quality in lending we also find that in order to make up for the decline in bank credit firms in stressed countries began relying considerably more on retained earnings and government subsidies

is there complementarity or substitutability between internal and external r d strategies abstract the various strands of extant empirical research are inconclusive about the complementarity or substitutability between different innovation mechanisms such as internal and external r d using a panel sample of 83 incumbent pharmaceutical firms covering the period 1986 2000 our empirical analysis suggests that instead of a clear cut answer to the question of whether internal and external r d are complementary or substitutive innovation activities there appears to be a contingent relationship between internal and external r d strategies in shaping a firm s innovative output the results from our study indicate that the level of in house r d investments which is characterized by decreasing marginal returns is a contingency variable that critically influences the association between internal and external r d strategies in particular internal r d and external r d through either r d alliances or r d acquisitions are complementary innovation activities at higher levels of in house r d investments whereas at lower levels of in house r d efforts internal and external r d turn out to be substitutive strategic options

sources of innovation in agricultural technology abstract this paper focuses attention on environmental and biological characteristics of agriculture which shape the process of technical innovation the interaction of natural selection and human purposive selection and experimentation is shown to result in a continuous process of innovation placing farmers in the informal r and d systems as well as scientists in formal r and d systems in an innovative treadmill the importance and limitations of informal r and d are reviewed a discussion of the characteristics and potential of formal r and d systems leads to the identification of some major problems of policy inherent in and specific to the organization and management of agricultural research resources these include genetic vulnerability choices between environmentally specific or widely adapted technologies the location of research activity the linkages between agricultural producers and scientists and methods for maintaining and strengthening informal r and d systems

contracts without memory in multiperiod agency models abstract settings are considered in which optimal multiperiod contracts can have no memory i e where second period payments do not need to depend on first period outcomes if contracts have no memory a repeated agency game can be played myopically there are no gains to long term relationships conditions on preferences for a no memory contract are presented in an agency game with moral hazard on the act selection preference separability and domain additivity imply the existence of a no memory contract in a setting without moral hazard but with asymmetric information on the outcome domain additivity implies no memory

finding default understanding the drivers of default on contracts with farmers organizations under the world food programme purchase for progress pilot during the past two decades food assistance policy has shifted toward local or regional food purchases and away from purchases from donor countries while most local and regional procurement occurs through hard tendering processes open to large scale firms and farms there is growing interest in identifying how and whether to procure from smallholder farmer organizations to date little is known about the drivers of successful contracting with farmers organizations fos we utilize data from the united nations world food programme purchase for progress pilot in three east african countries to predict defaults on contracts we examine four possible explanations country contexts fo characteristics prior experience with contracts and contract modalities and their relationship to local spot market prices the single most important predictor of default is the increase in market prices between contract approval and delivery yet while increases in market prices are linked to increases in default this relationship is decreasing in contract size indicating search costs associated with breaking contracts our findings yield both generalizable and context specific insights about whether and when procuring from smallholder farmers can be successfully integrated into the food assistance toolkit this article is protected by copyright all rights reserved

an analysis of the principal agent problem most analyses of the principal agent problem assume that the principal chooses an incentive scheme to maximize expected utility subject to the agent s utility being at a stationary point an important paper of mirrlees has shown that this approach is generally invalid we present an alternative procedure if the agent s preferences over income lotteries are independent of action we show that the optimal way of implementing an action by the agent can be found by solving a convex programming problem we use this to characterize the optimal incentive scheme and to analyze the determinants of the seriousness of an incentive problem

agricultural research effort conceptual clarity and measurement abstract this paper emphasizes the need for basic conceptual clarity regarding the measures of research effort in econometric analyses this conceptual clarity could help reduce the misinterpretation of historical and institutional contexts underlying agricultural research effort after a brief review of econometric studies estimating the returns to and determinants of research the centrality of the conceptual contextual and causal significance of this measure is examined conceptualized and measured at the input frontier of the research process an expenditure measure of research reveals the institutional features and changes in the research process in india over time this basic understanding is essential to develop appropriate econometric specifications and correspondingly effective research policy statements

a multiple source of innovation model of agricultural research and technology promotion abstract two models of agricultural research and technology diffusion are described and contrasted the central source of innovation model frequently underlies the theories and rhetoric of agricultural research and extension institutions the multiple source of innovation model places agricultural research and diffusion processes in the historical political economic agroclimatic and institutional context in which technological change takes place the paper discusses the evidence and reasons for the dominance of the central model and reviews the significance of the multiple source model for agricultural research policy

matching demand and supply in the agricultural knowledge infrastructure experiences with innovation intermediaries abstract the privatization of agricultural research and extension establishments worldwide has led to the development of a market for services designed to support agricultural innovation however due to market and systemic failures both supply side and demand side parties in this market have experienced constraints in effecting transactions and establishing the necessary relationships to engage in demand driven innovation processes to mitigate these constraints a field of intermediary organizations has emerged to assist agricultural entrepreneurs to articulate demand forge linkages with those that can provide innovation support services and manage innovation processes this article aims to give an overview of the different kinds of the so called innovation intermediaries that have emerged in the netherlands and to report on their contributions and the tensions that are being experienced with regard to their functioning the article concludes with a discussion in which it is argued that the state should play a role as a market facilitator by funding such innovation intermediaries

cyclicality of credit supply firm level evidence abstract we quantify fluctuations in bank loan supply in the time series by studying firms substitution between loans and bonds using firm level data any firm that raises new debt must have a positive demand for external funds conditional on the issuance of new debt we interpret firms switching from loans to bonds as a contraction in bank credit supply we find strong evidence of this substitution at times that are characterized by tight lending standards depressed aggregate lending poor bank performance and tight monetary policy we show that this substitution behavior has strong predictive power for bank borrowing and investments by small firms

distance and private information in lending we study the effects of physical distance on the acquisition and use of private information in informationally opaque credit markets using a unique data set of all loan applications by small firms to a large bank we show that borrower proximity facilitates the collection of soft information leading to a trade off in the availability and pricing of credit which is more readily accessible to nearby firms albeit at higher interest rates ceteris paribus analyzing loan rates and firms decision to switch lenders provides further evidence for banks strategic use of private information however distance erodes our lender s ability to collect proprietary intelligence and to carve out local captive markets suggesting that the requisite soft information is primarily local the author 2010 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oxfordjournals org oxford university press

systems of innovation theory and the changing architecture of agricultural research in africa abstract this paper examines the on going evolution of the organisational architecture of agricultural research in africa once considered a rural backwater populated by agronomists extension agents and farmers agricultural research is now being explicitly placed within global debates about innovation technology institutions and development this is reflected in a growing interest in the use of systems of innovation theory to both understand and reform innovation processes within agriculture the basic argument put forward in the paper is that the conception of a global agricultural research system and associated efforts to create a coordinated multi layered supra national research infrastructure are at odds with both the realities of research at national level and the bio physical and socio economic heterogeneity that characterises rural africa it is suggested that a less directive approach to support for agricultural research is required to allow national characteristics and differences to come to the fore and to give more room for the development of the all important demand side

innovation systems and technical efficiency in developing country agriculture this article examines how different components of an agricultural innovation system interact to determine levels of technical inefficiency in developing country agriculture the analysis draws on data from 85 low and middle income countries for the period 2004 2011 to estimate latent class stochastic frontiers in which the technological class to which the country belongs is determined within the model to enable efficiency comparisons between countries across these technological classes we estimate a meta frontier that encompasses all the class frontiers we embed components of an agricultural innovation systems framework in this estimation to explain countries technical inefficiency with respect to their respective class frontiers mobile phone subscriptions as a measure of institutions that facilitate the transfer of knowledge and information as well as the number of scientific and technical journal articles as a measure of research productivity and knowledge production are found to improve technical efficiency of agricultural production in these countries the mean technical efficiency score of agricultural production between 2004 and 2011 for countries in class one is 44 1 whereas it is 62 7 for countries in class two indicating sizeable potential to improve agricultural production from the same level of agricultural inputs through efficiency enhancing investments

relationship lending and the transmission of monetary policy abstract repeated interactions allow lenders to uncover private information about their clients decreasing the informational asymmetry between a borrower and his lender but introducing one between the lender and competing financiers this paper constructs a credit based model of production to analyze how learning through lending relationships affects monetary transmission i examine how monetary policy changes the incentives of borrowers and lenders to engage in relationship lending and how these changes then shape the response of aggregate output the results demonstrate that relationship lending prevails in equilibrium smoothes the steady state output profile and induces less volatile responses to certain monetary shocks

the role of installment payments in contracts for services this article studies the role of installment payments in relationships characterized by moral hazard and sunk costs we rule out vertical integration and payments contingent on the product of the contractor instead each payment is negotiated as and when made in such circumstances an initial down payment serves to redress the weakness of the contractor in ex post renegotiations if higher effort by the contractor in thefirst stage increases the marginal product of effort in the second stage a second installment payment induces the contractor to invest greater effort initially

an analysis of cause related marketing implementation strategies through social alliance partnership conditions and strategic objectives cause related marketing crm is an effective marketing tool for promoting corporate social responsibility csr activities and the bulk of campaigns are designed and delivered through collaborative social alliances with non profit organisations npos the authors seek to uncover some of the factors that explain how firms and npos choose their potential partners in the development of their crm strategy the rationales for the observed patterns are investigated through semi structured interviews conducted with managers employed by the uk based firms and npos the authors find that each party has specific preferences when choosing the particular crm implementation strategies in different situations as well as different initial positions when negotiating the formation of the social alliance this article contributes to our understanding of the crm implementation strategies and both the company s and the npo s behaviours toward each of the strategies

seniority and monopsony in the academic labor market workers with high seniority usually have higher wages than workers with low seniority and the same total labor marke t experience in contrast the results of this paper indicate that higher seniority is associated with lower salaries for university professors the author documents this finding for national surveys a nd individual institutions and explains it as due to monopsonistic discrimination by employers copyright 1993 by american economic association

perspectives on positive political economy this volume serves as an introduction to the field of positive political economy and the economic and political processes with which it is concerned this new research tradition is distinct from both normative and historical approaches to political economy grounded in the rational actor methodology of microeconomics positive political economy is the study of rational decisions in a context of political and economic institutions more analytical than traditional approaches it is concerned with the derivation of principles and propositions against which real world experience may be compared its focus is on empirical regularities and its goal is theoretical explanation the field has focused on three main areas of research models of collective action constraints on competitive market processes and the analysis of transaction costs developments in all of these areas are covered in the book the first part of the volume surveys the field while the second part displays positive political economy at work examining a variety of subjects the final part contains essays by leading political economists on the theoretical foundations of the field

loan syndication and credit cycles cyclicality in the supply of business credit has been the focus of a considerable amount of research this cyclicality can stem from shocks to borrowers collateral which affect firms ability to raise capital if agency and information problems are significant ben s bernanke and mark gertler 1989 or it can stem from shocks to bank capital which affect the supply of bank loans if agency and information problems limit the ability of banks to raise additional capital bernanke 1983 both of these channels may have been at work during the financial crisis that started in 2007 ran duchin oguzhan ozbas and berk a sensoy 2010 show that firms with more collateral were better able to withstand the contraction in credit and victoria ivashina and david scharfstein 2010 show that reductions in bank capital had an adverse effect on lending in this paper we examine cyclicality in the supply of credit in the context of modern forms of banking often referred to as the originateto distribute model in particular we are interested in the role of syndicated lending in traditional bank lending the focus of most models of banking banks originate and hold loans on their balance sheets this exposes banks to risk but provides them with strong incentives to screen and monitor borrowers douglas w diamond 1984 over the last 20 years however the development and growth of the syndicated loan market has enabled a bank to originate a loan but retain only a fraction of it on average the originating bank or lead bank retains about a third of each syndicated loan and sells the remaining share to a syndicate of investors which includes banks and institutional investors such as pension funds mutual funds hedge funds and sponsors of structured loan syndication and credit cycles

does the source of capital affect capital structure prior work on leverage implicitly assumes capital availability depends solely on firm characteristics however market frictions that make capital structure relevant may also be associated with a firm s source of capital examining this intuition we find firms that have access to the public bond markets as measured by having a debt rating have significantly more leverage although firms with a rating are fundamentally different these differences do not explain our findings even after controlling for firm characteristics that determine observed capital structure and instrumenting for the possible endogeneity of having a rating firms with access have 35 more debt copyright 2006 oxford university press

why research partnerships really matter innovation theory institutional arrangements and implications for developing new technology for the poor abstract this paper explores the conceptual basis for existing and emergent institutional patterns in the context of partnership approaches to technology development drawing examples from recent studies of private enterprise activity in india smallholder horticulture it suggests that agricultural innovation as a process involves a wider range of organizational types than the conventional policy focus on public sector research organizations would tend to suggest it uses the concept of a national innovation system to argue that a partnership approach is adopted as a core methodology for engaging science and technology development with the livelihood demands of the poor