global commodity chains and endogenous growth export dynamism and development in mexico and honduras summary mexico s garment exports to the united states soared in the mid 1990s and recently honduras has become one of the fastest growing exporters in the americas we find little evidence that the apparel sector s dynamism is generating conditions for endogenous growth and sustainable development in either country however in spite of differences in the industrial organization of export oriented garment production in mexico and honduras the countries face similar challenges regulatory regimes with rules of origin designed to benefit us fabric manufacturers competitive pressures from china and the broader institutional and macroeconomic environments associated with the region s liberalization strategy

does economic upgrading lead to social upgrading in global production networks evidence from morocco summary this paper contributes to the global production networks gpns literature by analyzing the relationship between economic upgrading increase in the value added of production and social upgrading improvements for workers in gpns it does so by drawing on primary data from moroccan garment supplier firms showing that economic upgrading can lead to social upgrading with mixed outcomes especially in a fast fashion model the most advanced form of economic upgrading functional upgrading often translates into social upgrading and downgrading simultaneously for different workers this is due to contradictory commercial requirements imposed by global buyers in gpns

upgrading in global value chains lessons from latin american clusters it has been shown that clustering helps local enterprises in industrial districts overcome growth constraints and compete in distant markets in advanced and less developed countries nevertheless recent contributions have stressed that more attention needs to be paid to external linkages and to the role played by global buyers to foster upgrading at cluster levels in this study we contribute to this debate focusing on the analysis of the relationships existing between clustering global value chains upgrading and sectoral patterns of innovation in latin america we find that sectoral specificities matter and influence the mode and the extent of upgrading in clusters integrated in global value chains

the discrete charm of the bourgeoisie quantum and continuous perspectives on innovation and growth this paper discusses the relative merits of discrete versus continuous perspectives on innovation technical change and economic growth it discusses the innovation time series literature in some detail to extract the continuous and clustering properties of the historical record on innovation it then proposes a mosaic avalanche model based on percolation theory and self organized criticality to address this question

globalisation and unequalisation what can be learned from value chain analysis although many have gained from the process of globalisation there remains a stubbornly large number of people living in absolute poverty and a rise in inequality within and between countries the issue is thus not whether to participate in the global economy but how to do so in a manner which provides for sustainable and equitable income growth this study shows how value chain analysis can be used to chart the growing disjuncture between global economic activity and global income distribution and to provide causal explanations for this outcome in so doing value chain analysis provides valuable insights into policy formulation and implementation

manufacturer allowances and retailer pass through rates in a competitive environment a commonly held belief has grocery and mass merchandise retailers gaining power relative to the upstream consumer package goods manufacturers one of the major justifications for this belief is that manufacturers are now giving retailers more side payments such as trade allowances slotting allowances etc however a number of researchers have shown that these concessions have not translated into increased profit for the retailer relative to the manufacturer this paper explores via an analytic model why one might see retailers getting concessions from the manufacturer without being able to translate them into high profits we do this by representing the interaction between the channel members as a one period profit maximizing game where manufacturers decide on how large a side payment i e a concession to give to each retailer and retailers decide on how much of this side payment to use to promote the manufacturer s product at the heart of our model is a demand function for each product offering i e a specific brand sold by a specific retailer this demand function is linear in own and other s prices but based on empirical evidence is assumed to be nonlinear in the effects of merchandising activities e g short term price discounts better shelf space advertising etc specifically merchandising effects are modeled with a square root function that also acknowledges most short term promotional effects result in brand or store switching versus increase category volume the model is composed of six parameters these are the inherent popularity of the brand at a particular outlet own price sensitivity cross but within the store price sensitivity customer s sensitivity to within store promotion activities customer s sensitivity to between store promotional activities and the degree to which promotional activities yield incremental product category sales we use our underlying demand formulation to find the equilibrium solution to the full information stackelberg leader game for different store and brand loyalty environments as captured by our six parameters these parameters are chosen based on empirical evidence to span possible market conditions that each channel member might have our findings and modeling efforts should be of interest to analytic channel modelers and scholars interested in the mass merchandising and grocery store industries for a theoretical point of view we build upon the case 4 model of lee and staelin 1997 to allow for promotional activities from a substantive point of view we show that manufacturers will freely give retailers side payments even though they know these retailers will pocket a substantial portion of this concession moreover we identify conditions within our model that lead to larger allowances lower pass through rates and lower retail profits outcomes that are compatible with recent industry trends in addition we highlight the difference in effect on profits prices etc of changes in consumers sensitivity to inter store differences in storewide merchandising activities one of the more counter intuitive results of these analyses is that it is in the manufacturer s best interest to help retailers increase their spatial monopoly by decreasing consumers tendency to cross store shop because of merchandising activities

pass through and consumer search an empirical analysis retail price pass through is one of the most important issues facing manufacturers of consumer packaged goods although retailers tend to pass higher wholesale prices through to consumers quickly and completely they often do not pass on trade promotions currently asymmetric pass through is commonly thought to result from retailers exercise of market power alternatively it may be because of consumer search behavior and retailers competitive response we test this theory using a panel threshold asymmetric error correction model applied to wholesale and retail scanner data for ready to eat cereal for a number of retailers in the los angeles metropolitan market we find that consumer search behavior contributes significantly to imperfect pass through by allowing pass through to depend on market power and consumer search costs we find results that are contrary to the conventional wisdom namely market power causes retail prices to fall quickly and rise slowly whereas consumer search behavior causes retail prices to rise quickly and fall slowly precisely the rockets and feathers phenomenon

do we have a new e conomy used properly the term new e conomy is warranted since 1995 there has been a wave of innovation associated with both the production and use of information technology that has been translated into improved us economic performance in particular there has been a substantial acceleration in trend total factor productivity growth most of this acceleration actually took place outside of the computer sector almost none of the acceleration was cyclical there is now clear supportive evidence of an acceleration of productivity in service industries that are major purchasers of information technology such as finance and wholesale and retail trade these gains reflect not only increased investment in information technology but also complementary innovations in business organization and policy to be sure as evidenced by recent financial market volatility there have been speculative excesses but these should not obscure the fundamental gains that have been made this abstract was borrowed from another version of this item

side payments in marketing side payments known politely as gainsharing and pejoratively as bribery are prevalent in marketing indeed many management schools have added ethics modules to their basic marketing courses to discuss these issues and there is much discussion of side payments in the literature e g adams 1995 borrus borrus amy 1995 a world of greased palms business week november 6 36 38 mauro mauro paolo 1997 why worry about corruption international monetary fund washington d c mohl mohl bruce 1996 auto dealers color surveys to polish image buyer s say salesmen tamper with makers questionnaires boston globe august 11 b1 b6 murphy murphy kate 1995 corporate gifts what s naughty or nice business week december 11 122 peterson peterson barbara s 1996 taxing question will the government make you pay for your next travel benefits frequent flyer february 27 30 and rose ackerman rose ackerman susan 1996 bribes and gifts proc conf economics values and organization april 19 20 yale university new haven ct we seek to provide insight with respect to one class of marketing side payments we hope that our analyses clarify some of the issues and suggest how these side payments affect marketing activities we begin by focusing on one common example of potential side payments salesforce ratings of internal sales support we derive two formal results and speculate on how these results generalize the two results are 1 that having one group of employees rate another implies that there are almost always incentives for side payments but 2 the side payments need not reduce the firm s profit at least in theory the firm is always able to revise the reward system to factor out these side payments the first result based on a straightforward proof has important practical implications for managers who may wish to preclude side payments they may be unable to design a ratings based reward system that does not have inherent incentives for side payments the second result in our opinion is quite surprising it suggests that marketing managers might be advised to invest more time into understanding how side payments affect employee reactions to reward systems they might want to reconsider costly efforts to monitor police or preclude such side payments while our results do not substitute for a moral discussion of side payments we hope that the formal structure for one common marketing situation provides valuable insight the system we analyze is based on a practical managerial problem we have observed the salesforce evaluates a sales support group with a real valued rating the sales support group is rewarded based on that rating whereas the sales force is rewarded based on outcomes such as sales or customer satisfaction that indicate incremental profits to the firm the reward to the salesforce might also depend upon how it rates sales support for example the salesforce might be held to a higher standard whenever it rates sales support as excellent we argue in the paper that the firm will want this to happen in addition the salesforce might ask for a side payment from the sales support group as compensation for high ratings we cast the practical problem as a formal game and incorporate the following issues 1 incremental actions taken by the salesforce and by sales support are perceived to be onerous 2 the measure of incremental profit is a noisy measure 3 both the salesforce and sales support are risk averse 4 given the reward system imposed by the firm both the salesforce and sales support will maximize their well being and 5 given the structure of the reward system the firm will seek to maximize expected profits we first show that there are almost always incentives for side payments specifically we demonstrate that sales support is better off with a side payment while the salesforce is no worse off this is not surprising because the reward to sales support is increasing in the rating while in the absence of a side payment the salesforce will select a rating such that its net marginal returns to increasing the rating are zero the exception occurs when the rating is constrained by the firm to be less than this optimal rating but even then there might be incentives for side payments we next show that the firm can anticipate these side payments and design a reward system to factor them out at no loss of profit the intuition is straightforward the firm first adjusts the marginal returns in the reward functions for sales support and for the salesforce such that they will each take the optimal actions even though they engage in side payments then the firm adjusts their fixed compensation so that the firm extracts its full profit the proof is difficult because we must show that adjusted reward systems exist and we must show that they allow the full profit to be extracted throughout the paper we discuss the practical implications of our results we close by highlighting future research opportunities

comment cross brand pass through fact or artifact cross brand pass through implies that a retailer responds to wholesale promotional support from a target brand by changing the retail prices of competitive brands besanko et al 2005 model a target brand s retail price as a function of its own and other brands wholesale prices using 780 observations 15 price zones 52 weeks and take the many significant coefficients for other brands wholesale prices that they find as evidence of cross brand pass through because price zones do not react independently to wholesale prices when they set a brand s retail price besanko et al s 2005 estimation overstates the number of independent observations by a factor of 15 when we correct for this overstatement of independent observations we find that the number of stable significant coefficients for other brands wholesale prices is lower than one would expect by chance we conclude that there is no evidence of cross brand pass through in the 11 categories analyzed by besanko et al 2005

the eclipse of the state reflections on stateness in an era of globalization the economic logic of the current international economy does not predict the eclipse of the state economic globalization does restrict state power but transnational capital needs capable states as much or more than does domestically oriented business national success in the current global political economy has been associated not with minimal states but with states that are capable active and engaged pressure for eclipse flows from the conjunction between transnational economic forces and the political hegemony of an anglo american ideology that in j p nettl s words simply leaves no room for any valid notion of the state even this combination of economic and political pressure is unlikely to eclipse the state but it is likely to put public institutions on the defensive eclipsing any possibility of the embedded liberalism described by john ruggie a leaner meaner state is the likely outcome the possibility of a more progressive alternative outcome would depend in part on whether current zero sum visions of the relation between the state and civil society can be replaced by a more synergistic view

the african growth and opportunity act and the global commodity chain for clothing abstract this paper examines responses to the african growth and opportunity act in sub saharan africa s clothing sector the paper reviews statistical evidence on supply response as well as presenting recent fieldwork findings from southern africa using a modified version of global commodity value chain analysis it argues that while there has been a significant level of response this has been largely confined to enterprises of a particular type the latter has evolved globally in relation to the specificities of the us clothing market this has consequences both for chain analysis and for broader debates concerning industrial upgrading and trade vs aid

u s economic growth since 1870 one big wave it is now 25 years since the growth rate of labor productivity and of multi factor productivity mfp decelerated sharply both in the united states and in most other industrialized nations this productivity slowdown has eluded many attempts to provide single cause explanations slow productivity growth in the past 25 years echoes slow productivity growth in the late 19th century perhaps both were normal and what needs to be explained is not the post 1972 slowdown but rather the post1913 speedup that ushered in the glorious 60 years between world war i and the early 1970 s in which u s productivity growth was much faster than before or after this paper makes a sharp distinction between mfp growth calculated from inputs that combine simple measures of labor hours and the capital stock and growth based on measures that adjust for the changing composition of labor and capital the first step toward an understanding of long term trends is to compare like with like splicing mfp data based on unadjusted inputs prior to 1950 with post1950 data based also on unadjusted inputs as contrasted to the composition adjusted inputs that are now desirably incorporated into our official mfp measures the mfp record prior to 1929 still rests largely on the monumental work of john kendrick 1961 which however is based almost entirely on input quantities that lack any adjustment for changes in composition edward denison 1962 1985 and zvi griliches 1960 pioneered the development of composition adjustments for labor input dale jorgenson and zvi griliches 1967 introduced a framework that treats the problem of composition adjustment in both labor and

the solow productivity paradox what do computers do to productivity 1 you don t see computers everywhere in a meaningful economic sense computers and information processing equipment are a relatively small share of gdp and of the capital stock 2 you only thinkyou see computers everywhere government hedonic price indexes for computers fall too fast according to this position and therefore measured real computer output growth is also too fast 3 you may not see computers everywhere but in the industrial sectors where you most see them output is poorly measured examples are finance and insurance which are heavy users of information technology and where even the concept of output is poorly specified 4 whether or not you see computers everywhere some of what they do is not counted in economic statistics examples are consumption on the job convenience better user interface and so forth 5 you don t see computers in the productivity statistics yet but wait a bit and you will this is the analogy with the diffusion of electricity the idea that the productivity implications of a new technology are only visible witlh a long lag 6 you see computers everywhere but in the productivity statistics because computers are not as productive as you think here there are many anecdotes such as failed computer system design projects but there are also assertions from computer science that computer and software design has taken a wrong turn 7 there is no paradox some economists are counting innovations and new products on an arithmetic scale when they should count on a logarithmic scale

own brand and cross brand retail pass through in this paper we describe the pass through behavior of a major u s supermarket chain for 78 products across 11 categories our data set includes retail prices and wholesale prices for stores in 15 retail price zones for a one year period for the empirical model we use a reduced form approach that focuses directly on equilibrium prices as a function of exogenous supply and demand shifting variables the reduced form approach enables us to identify the theoretical pass through rate without specific assumptions about the form of consumer demand or the conduct of a category pricing manager thus our measurements of pass through are not constrained by specific structure on the underlying economic model the empirical pricing model includes costs of all competing products in the category on the right hand side not only the cost of the focal brand and yields estimates of both own brand and cross brand pass through rates our results provide a rich picture of the retailer s pass through behavior we find that pass through varies substantially across products and across categories own brand pass through rates are on average more than 60 for 9 of 11 categories a finding that is at odds with the claims of manufacturers about retailers in general importantly we find substantial evidence of cross brand pass through effects indicating that retail prices of competing products are adjusted in response to a change in the wholesale price of any given product in the category we find that cross brand pass through rates are both positive and negative we explore determinants of own brand and cross brand pass through rates and find strong evidence in multiple categories of asymmetric retailer response to trade promotions on large versus small brands for example brands with larger market shares and brands that contribute more to retailer profits in the category receive higher pass through we also find that trade promotions on large brands are less likely than small brands to generate positive cross brand pass through i e induce the retailer to reduce the retail price of competing smaller products on the other hand small share brands are disadvantaged along three dimensions trade promotions on small brands receive low own brand pass through and generate positive cross brand pass through for larger competing brands moreover small share brands do not receive positive cross pass through from trade promotions on these larger competitors we also find that store brands are similarly disadvantaged with respect to national brands

the latte revolution regulation markets and consumption in the global coffee chain abstract coffee is a truly global commodity and a major foreign exchange earner in many developing countries the global coffee chain has changed dramatically as a result of deregulation new consumption patterns and evolving corporate strategies from a balanced contest between producing and consuming countries within the politics of international coffee agreements power relations shifted to the advantage of transnational corporations a relatively stable institutional environment where proportions of generated income were fairly distributed between producing and consuming countries turned into one that is more informal unstable and unequal through the lenses of global commodity chain analysis this paper examines how these transformations affect developing countries and what policy instruments are available to address the emerging imbalances

editorial the scientific process at its best i write this editorial to point out a recent research trilogy in marketing science that shows the scientific process and author efforts at its best in particular in 2005 an article the first of the trilogy was published in marketing science by besanko dube and gupta hereafter bdg that focused on the issue of crossbrand retail pass through that is are retail prices of competing brands adjusted by the retailer in response to a change in the wholesale price of any given brand in the category bdg address this issue by fitting a reduced form model log price regressed on log cost to data from the well utilized dominick s finer foods dff data set on 78 products 11 product categories across 15 price zones looking at cross brand pass through coefficients bdg find significant evidence supporting their claim and also describe how these effects vary according to the size share of the brand clearly this is an important problem with important empirical findings then two years later the second part of the trilogy was published by mcalister 2007 who raises some concern about bdg 2005 because prices are not set independently across the 15 zones by dff and hence the effective degrees of freedom may not be as assumed in bdg 2005 as a result mcalister 2007 reports that if the data are not disaggregated to the level of the price zone as in bdg 2005 one finds a large proportion of nonsignificant elasticities this was taken as nonevidence of cross brand pass through and hence if you will the debate however just as with bdg 2005 the mcalister data left a number of unanswered issues because no formal test for nonzero elasticities was done nor were explorations of longer data series performed that may allow for more powerful tests clearly mcalister 2007 is also an important paper as it re examined both the methods used and the data generating assumptions of bdg 2005 something that is commonly swept under the rug and it also left more questions to explore finally in 2008 in this issue we have the last part of the research trilogy where dube and gupta dg 2008 reanalyze the original bdg 2005 data this time using more appropriate hierarchical bayesian methods rossi and allenby 2003 applied both at the disaggregate store level and at the aggregate chain level to address concerns raised in mcalister 2007 and using formal bayes factors to test the null hypothesis of zero cross brand pass through elasticities their new findings now reinforce bdg s conclusion 2005 that cross brand pass through does exist but at a significantly reduced level than originally claimed so why this editorial and why is the dg article the scientific process at its best first and foremost let us see what the field has gained from this research 1 the original bdg 2005 paper addressed an important topic one important enough that another scholar spent the effort to read it carefully and reanalyze it 2 through mcalister 2007 we can see the importance of testing hypotheses in only as powerful a way as the data will allow for and in dg 2008 those methods are applied both to the original bdg 2005 data and to a longer time series of data so a reinquiry in this case led to a more appropriate aggregation of the data and an exploration of the effects of nonaggregation and a more powerful set of techniques to be applied 3 as is common great research sometimes raises more questions than it answers in this case my belief is that this empirical debate is far from over but because the authors all invested their time we now are at a better place at which to continue the discussion

paradox lost firm level evidence on the returns to information systems spending the productivity paradox of information systems is is that despite enormous improvements in the underlying technology the benefits of is spending have not been found in aggregate output statistics one explanation is that is spending may lead to increases in product quality or variety which tend to be overlooked in the aggregate statistics even if they increase output at the firm level furthermore the restructuring and cost cutting that are often necessary to realize the potential benefits of is have only recently been undertaken in many firms our study uses new firm level data on several components of is spending for 1987 1991 the dataset includes 367 large firms which generated approximately 1 8 trillion dollars in output in 1991 we supplemented the is data with data on other inputs output and price deflators from other sources as a result we could assess several econometric models of the contribution of is to firm level productivity our results indicate that is spending has made a substantial and statistically significant contribution to firm output we find that the gross marginal product mp for computer capital averaged 81 for the firms in our sample we find that the mp for computer capital is at least as large as the marginal product of other types of capital investment and that dollar for dollar is labor spending generates at least as much output as spending on non is labor and expenses because the models we applied were similar to those that have been previously used to assess the contribution of is and other factors of production we attribute the different results to the fact that our data set is more current and larger than others explored we conclude that the productivity paradox disappeared by 1991 at least in our sample of firms

the effect of content on global internet adoption and the global digital divide a country s human capital and economic productivity increasingly depend on the internet as a result of its expanding role in providing information and communications this has prompted a search for ways to increase internet adoption and narrow its disparity across countries the global digital divide previous work has focused on demographic economic and infrastructure determinants of internet access that are difficult to change in the short run internet content increases adoption and can be changed more quickly however the magnitude of its impact and therefore its effectiveness as a policy and strategy tool has until now been unknown quantifying the role of content is challenging because of feedback network effects between content and adoption more content stimulates adoption which in turn increases the incentive to create content we develop a methodology to overcome this endogeneity problem we find a statistically and economically significant effect implying that policies promoting content creation can substantially increase adoption because it is ubiquitous internet content is also useful to effect social change across countries content has a greater effect on adoption in countries with more disparate languages making it a useful tool to overcome linguistic isolation our results offer guidance for policymakers on country characteristics that influence adoption s responsiveness to content and for internet firms on where to expand internationally and how to quantify content investments this paper was accepted by lorin hitt information systems

creating micro marketing pricing strategies using supermarket scanner data micro marketing refers to the customization of marketing mix variables to the store level this paper shows how prices can be profitably customized at the store level rather than adopting a uniform pricing policy across all stores historically there has been a trend by retailers to consolidate independent stores into large national and regional chains this move toward consolidation has been driven by the economies of scale associated with these larger operations however some of these large chains have lost the adaptability of independent neighborhood stores micro marketing represents an interest on the part of managers to combine the advantages of these large operations with the flexibility of independent neighborhood stores a basis for these customized pricing strategies is the result of differences in interbrand competition across stores these changes in interbrand competition are measured using weekly store level scanner data at the product level obviously this presents a huge estimation problem since we wish to measure substitution between each product at a store level for a chain with 100 stores and 10 products in a category we would need to estimate over 100 000 parameters to reliably estimate these individual store differences we phrase our problem in a hierarchical bayesian framework essentially each store level parameter can be thought of as a combination of chain level and random store specific effects the improvement in estimating this model comes from exploiting the common chain level component in addition we relate these store specific changes to demographic and competitive characteristics of the store s trading area which helps explain why these differences are present these estimated differences in price response are in turn used to set store level prices to simplify and focus the problem we limit our attention to everyday price changes i e the prices of products that are not advertised there are many marketing variables that can be adjusted at a storelevel e g promotions and product assortments the reason we concentrate upon everyday pricing is driven by its importance in the marketing mix that most profits are earned on products sold at their everyday price and the amenability of everyday prices to store level customizations a limitation of this approach is that it yields only a partial solution to the retailer s global optimization problem a challenge for the retailer in implementing micro marketing pricing strategies is to retain a consistent image while altering prices that adapt to neighborhood differences in demand our approach is to search for price changes that leave image unchanged we argue that a sufficient condition for holding the input to store image constant from everyday pricing is to hold average price and revenues at their current levels we implement this condition by introducing constraints into the profit maximization problem future research into store choice may yield more efficient conditions a benefit of holding the retailer s image constant is that it does not require costly new information about competitors and promotional activity instead retailers are able to derive these store level customizations based largely upon scanner data this is very advantageous since this information is already being collected and is readily available our results indicate that micro marketing pricing strategies would be profitable and could increase gross profit margins by 4 percent to 10 percent when these gross profit gains are considered after administrative and operating costs are taken into account they could increase operating profit margins by 33 percent to 83 percent these gains come from encouraging consumers through everyday price changes to switch to more profitable bundles of products and not through overall price changes at the chain level these results show that the information contained in the retailer s store level scanner data is an under utilized resource by exploiting this information using newer and more powerful computational techniques managers can better appreciate its value the implication is that profits could be increased and gains can be made by using this information as the basis for micro marketing

the dynamo and the computer an historical perspective on the modern productivity paradox the dynamo and the computer an historical perspective on the modern productivity paradox author s paul a david source the american economic review vol 80 no 2 papers and proceedings of the hundred and second annual meeting of the american economic association may 1990 pp 355 361 published by american economic association stable url http www jstor org stable 2006600 accessed 08 12 2010 01 40

structural analysis of manufacturer pricing in the presence of a strategic retailer consumer goods manufacturers usually sell their brands to consumers through common independent retailers theoretical research on such channel structures has analyzed the optimal behavior of channel members under alternative assumptions of manufacturer retailer interaction vertical strategic interaction research in empirical industrial organization has focused on analyzing the competitive interactions between manufacturers horizontal strategic interaction decision support systems have made various assumptions about retailer pricing rules e g constant markup category profit maximization the appropriateness of such assumptions about strategic behavior for any specific market however is an empirical question this paper therefore empirically infers 1 the vertical strategic interaction vsi between manufacturers and retailer 2 the horizontal strategic interaction hsi between manufacturers simultaneously with the vsi and 3 the pricing rule used by a retailer the approach is particularly appealing because it can be used with widely available scanner data where there is no information on wholesale prices researchers usually have no access to wholesale prices even manufacturers who have access to their own wholesale prices usually have limited information on competitors wholesale prices in the absence of wholesale prices we derive formulae for wholesale prices using game theoretic solution techniques under the specific assumptions of vertical and horizontal strategic interaction and retailer pricing rules we then embed the formulae for wholesale prices into the estimation equations while our empirical illustration is using scanner data without wholesale prices the model itself can be applied when wholesale prices are available early research on the inference of hsi among manufacturers in setting wholesale prices using scanner data e g kadiyali et al 1996 1999 made the simplifying assumption that retailers charge a constant margin this assumption enabled them to infer wholesale prices and analyze competitive interactions between manufacturers in this paper we show that this model is econometrically identical to a model that measures retail price coordination across brands hence the inferred cooperation among manufacturers could be exaggerated by the coordinated pricing category management done by the retailer we find empirical support for this argument this highlights the need to properly model and infer vsi simultaneously to accurately estimate the hsi when using data at the retail level functional forms of demand have been evaluated in terms of the fit of the model to sales data but recent theoretical research on channels lee and staelin 1997 tyagi 1999 has shown that the functional form has serious implications for strategic behavior such as retail passthrough while the logit and linear model implies equilibrium passthrough of less than 100 lee and staelin call this vertical strategic substitute vss the multiplicative model implies optimal passthrough of greater than 100 vertical strategic complement vsc because passthrough rates on promotions have been found to be below or above 100 chevalier and curhan 1976 armstrong 1991 we empirically test the appropriateness of the logit vss and the multiplicative vsc functional form for the data we perform our analysis in the yogurt and peanut butter categories for the two biggest stores in a local market we found that the vss implications of the logit fit the data better than the multiplicative model we also find that for both categories the best fitting model is one in which 1 the retailer maximizes category profits 2 the vsi is manufacturer stackelberg and 3 manufacturer pricing hsi is tacitly collusive the fact that the retailer maximizes category profits is consistent with theoretical expectations the inference that the vsi is manufacturer stackelberg reflects the institutional reality of the timing of the game retailers set their retail prices after manufacturers set their wholesale prices note that in the stores and product categories that we analyze the two manufacturers own the dominant brands with combined market shares of about 82 in the yogurt market and 65 in the peanut butter market the result is also consistent with a balance of power argument in the literature the finding that manufacturer pricing is tacitly collusive is consistent with the argument that firms involved in long term competition in concentrated markets can achieve tacit collusion managers use decision support systems for promotion planning that routinely make assumptions about vsi hsi and the functional form the results from our analysis are of substantive import in judging the appropriateness of assumptions made in such decision support systems

technical note sequential multiproduct price competition in supply chain networks we analyze a general model in which at each echelon of the supply process an arbitrary number of firms compete offering one or multiple products to some or all of the firms at the next echelon with firms at the most downstream echelon selling to the end consumer at each echelon the offered products are differentiated and the firms belonging to this echelon engage in price competition the model assumes a general set of piecewise linear consumer demand functions for all products potentially brought to the consumer market where each product s demand volume may depend on the retail prices charged for all products consumers preferences over the various product retailer combinations are general and asymmetric similarly the cost rates incurred by the firms at the most upstream echelon are general as well we fully characterize the equilibrium behavior under linear price only contracts and we show how all equilibrium performance measures can be computed via a simple recursive scheme moreover we establish how changes in the model parameters in particular exogenous cost rates or intercept values in the demand functions impact the system wide equilibrium these comparative statics results allow for the quantification of cost pass through effects and the measurement and characterization of the firms brand value lastly we illustrate what qualitative impacts various changes in the structure of the supply chain network may bring forth

projecting the economic impact of the internet in this paper we analyze the impact of the internet on the performance of the economy and the standard of living of average americans our analyses illustrate that even though the stock market s speculative bubble has burst the internet will continue to have a significant impact on old economy industries and as a result generate real benefits for the overall economy this abstract was borrowed from another version of this item

a general theory of pass through in channels with category management and retail competition i provide a general formulation of the channel pass through problem as a comparative static of the retail price equilibrium and i analyze the impact of category management and retail competition on pass through focusing on brand and retailer differences and the nature of the cost change being passed through whether it is brand specific retailer specific both or neither with category management a retailer s response to a brand specific cost change is not limited to that brand in general a retailer will also change the prices of other brands the cross brand effect can be positive or negative and depending on its sign it either enhances or attenuates pass through i explain the cross brand effect as an interaction between two forces a demand substitution force that pushes for a negative cross brand effect and a strategic complementarity force that pushes for a positive cross brand effect retail competition adds another layer of strategic complementarity causing other retailers to respond even for retailer specific cost changes and increasing pass through of categorywide cost changes but its effect for brand specific cost changes is ambiguous i apply the theory to two commonly used demand functions linear demand and nested logit and show that they have significantly different pass through properties the paper concludes with a discussion of how the theory relates to the empirical literature including the companion piece by besanko et al besanko d j p duba s gupta 2005 own brand and cross brand retail pass through marketing sci 24 1 123 137

computers obsolescence and productivity this paper develops a new technique for measuring the effect of computer usage on u s productivity growth standard national income and product accounts nipa measures of the computer capital stock which are constructed by weighting past investments according to a schedule for economic depreciation the rate at which capital loses value as it ages are shown to be inappropriate for growth accounting because they do not capture the effect of a unit of computer capital on productivity this is due to technological obsolescence machines that are still productive are retired because they are no longer near the technological frontier and anticipation of retirement affects economic depreciation using a model that incorporates obsolescence alternative stocks are developed that imply a larger computer usage effect this effect together with the direct effect of increased productivity in the computer producing sector accounted for the improvement in u s productivity growth over 1996 1998 relative to the

computers productivity and input substitution i introduction the last two decades has been a puzzling time for many productivity analysts while computer prices fell at extraordinary rates and firms invested hundreds of billions of dollars in new computer equipment aggregate productivity growth remained sluggish this computer productivity paradox has generated a large literature that examines the economic impact of the computer revolution 1 this paper offers a simple solution to the computer productivity paradox by making careful distinction between computers as an output from one sector and an input to other sectors data for 35 manufacturing and service sectors for 1947 1991 show that sectoral differences are crucial in understanding the impact of computers aggregate analysis is inappropriate since it obscures basic distinctions between a shifting production function in the computer producing sector multi factor productivity growth and movements along production functions in the computer using sectors substitution and capital accumulation once these differences are isolated the growth impact of computers is readily observable the computer producing sector experienced fundamental technological progress and now produces cheaper better computers the sectoral data show this as rapid multi factor productivity mfp growth for 1973 1991 although aggregate mfp growth remains below historic averages the computer producing sector has clearly done its part mfp growth in this sector is many times the economy average and has contributed over one third of aggregate mfp growth for 19811991 the sectoral detail shows that the slowdown in aggregate productivity would have been much more severe were it not for such large mfp gains in the computer producing sector for the other sectors of the economy computers affect growth in a more traditional although less glamorous way when the price of real computing power fell so dramatically in the 1970s and 1980s firms responded by substituting away from relatively expensive labor and non computer capital and investing heavily in cheap computers for these sectors the computer revolution affects output growth not by raising mfp but by inducing firms to accumulate computers at extraordinary rates real computer services for example grew in excess of 20 per year in 14 out of 35 sectors for 1973 1991 although virtually all sectors are rapidly accumulating computer equipment computers remain small in levels in 1991 for example computer investment was only 10 of private fixed investment so the growth contribution of computers remains small relative to sectoral aggregates of labor and non computer capital the rapid rates of accumulation however are clearly making computers a more important source of growth across sectors with this heavy investment also came the wide spread expectation that computers would fundamentally alter the way firms operate and lead to higher mfp the reality has been very different as the most computer intensive sectors show steep declines in mfp growth after 1973 with three quarters of all computers concentrated in three service sectors trade fire and other services however this finding must be interpreted with caution as griliches 1994 notes output in these sectors is largely unmeasurable and thus mfp growth will be understated nonetheless it is quite reasonable that even computer using sectors where output is easier to measure show no mfp gains computer investment creates a capital input that enters the production function like any other purchased input since constant quality deflators embody productivity improvements in investment the direct impact is seen through the rapid capital accumulation only if the adoption of computers leads to production externalities or spillovers would computer investment also increase mfp growth the data however show no evidence of this ii computers and growth the national statistics most clearly show the computer revolution in the investment data

logit demand estimation under competitive pricing behavior an equilibrium framework discrete choice models of demand have typically been estimated assuming that prices are exogenous since unobservable to the researcher product attributes such as coupon availability may impact consumer utility as well as price setting by firms we treat prices as endogenous specifically prices are assumed to be the equilibrium outcomes of nash competition among manufacturers and retailers to empirically validate the assumptions we estimate logit demand systems jointly with equilibrium pricing equations for two product categories using retail scanner data and cost data on factor prices in each category we find statistical evidence of price endogeneity we also find that the estimates of the price response parameter and the brand specific constants are generally biased downward when the endogeneity of prices is ignored our framework provides explicit estimates of the value created by a brand i e the difference between consumers willingness to pay for a brand and its cost of production we develop theoretical propositions about the relationship between value creation and competitive advantage for logit demand systems and use our empirical results to illustrate how firms use alternative value creation strategies to accomplish competitive advantage

does the new economy measure up to the great inventions of the past abstract during the four years 1995 99 u s productivity growth experienced a strong revival and achieved growth rates exceeding that of the golden age of 1913 72 accordingly many observers have declared the new economy to be an industrial revolution even more important than the second industrial revolution of 1860 1900 which made the golden age of productivity growth possible this paper dissects the recent productivity revival subtracts out a cyclical component and concludes that there is no revival of the productivity growth trend in the 88 percent of the private economy lying outside of the durables manufacturing sector the paper explains this surprising finding by pointing to limitations in computers and the internet in comparison with the great inventions of the past

tools or toys the impact of high technology on scholarly productivity i introduction and motivation in the past several decades investment that makes communication easier has increased rapidly in the united states and other developed economies since the mid 1980s a combination of technical change and deregulation has also reduced long distance telephone rates in the united states by 50 reported by allen 1995 pitney bowes 1997 reported that fax usage increased by 20 between 1996 and 1997 alone and electronic mail e mail unknown before 1985 is ubiquitous today popular discussion of a wide range of additional examples of rapidly declining prices and explosive growth of the use of telecommunications is provided by cairncross 1997 attempts to measure the impact on aggregate total factor and labor productivity of these supposedly productivity enhancing investments in broad reaching technical improvements such as computing machinery and communications equipment have not met with great success as in morrison 1997 but see greenan and mairesse 1996 1 an alternative to measuring effects on the broader economy is to measure the impact of generalized technical change on productivity in specific activities observed at the micro level an earlier literature including griliches 1958 and trajtenberg 1989 has clearly traced the effect of specific innovations in raising productivity in specific sectors of the economy this article expands on that tradition by trying to identify the effect of the recent broad revolution in communications on one activity scholarly publishing we propose studying scholarly publishing before and after technical change greatly lowered communication costs we examine in particular whether increasing ease of communication has altered scholars choices about their methods of production and whether those methods yielded changes in the productivity of scholarly activity that are consistent with increasing access to new communications technologies 2 in section ii we discuss a model of the production process in scholarly writing in relation to the cost of communications in section iii we describe the unique data set we assembled to examine the relation between technical change and scholarly productivity section iv presents the results of using these data to test the hypotheses that we develop and section v compares coauthored to solo authored studies and provides a suggestion for the increased prevalence of the former section vi offers a consistent explanation for most of the results ii a model of scholarly production the example that we use in this study of the impact of technology is the nature and outcomes of the choices of co workers by authors of scholarly publications in economics the importance of team research has been stressed by a number of authors studying the economics of innovation including dasgupta 1988 who also presents a research summary so that our specific example has broader implications for the study of technical change has the decline in the cost of communication altered scholars choices in a way consistent with these technologies increasing scholarly productivity in examining scholarly productivity we focus on research output in particular we view scholars as having three production choices 1 work solo s 2 work with close by coauthor s c or 3 work with distant coauthor s d in the model in this section the scholar is assumed to choose a production technology that maximizes his or her scholarly productivity measured as the quality of the article produced in section vi we a dopt an alternative characterization of a scholar s choices we assume that the scholar has a wide range of potential research activities to choose among and has perfect knowledge of the productivity p valued in dollars of all potential matches s c sub i member of c and d sub i member of d 3 each match generates one solo equivalent article per period

determinants of store level price elasticity using weekly scanner data representing 18 product categories the authors estimated store specific price elasticities for a chain of 83 supermarkets they related these price sensitivities to a com

decision stages and asymmetries in regular retail price pass through we study the pass through of wholesale price changes onto regular retail prices using an unusually detailed data set obtained from a major retailer we model pass through as a two stage decision process that reflects both whether as well as how much to change the regular retail price we show that pass through is strongly asymmetric with respect to wholesale price increases versus decreases wholesale price increases are passed through to regular retail prices 70 of the time while wholesale price decreases are passed through only 9 of the time pass through is also asymmetric with respect to the magnitude of the wholesale price change with the magnitude affecting the response to wholesale price increases but not decreases finally we show that covariates such as private label versus national brand 99 cent price endings and the time since the last wholesale price change have a much stronger impact on the first stage of the decision process i e whether to change the regular retail price than on th

local means in value chain ends dynamics of product and social upgrading in apparel manufacturing in guatemala and colombia summary this paper contributes to existing discussions of global value chains gvc and industrial upgrading by examining observations from eight months of field research in guatemala and colombia where upgrading firms have their own nationally distinct form of labor relations despite producing the same products for the same overseas buyers analysis of these observations leads to the conclusion that labor relations show significant leeway in relation to upgrading outcomes and that local history merits more attention as a driver of management strategy the paper concludes with a discussion of relevant theory and implications for future research

channel pass through of trade promotions packaged goods manufacturers spend in excess of 75 billion annually on trade promotions even though their effectiveness has been hotly debated by academics and practitioners for decades one reason for this ongoing debate is that empirical research has been limited mostly to case studies managerial surveys and data from one or two supermarket chains in a single market in this paper we assemble a unique data set containing information on prices quantities and promotions throughout the entire channel in a category our study extends the empirical literature on pass through in three important ways first we investigate how pass through varies across more than 1 000 retailers in over 30 states second we study pass through at multiple levels of the distribution channel third we show how the use of accounting metrics such as average acquisition cost rather than transaction cost yields biased estimates of pass through and therefore overstates the effectiveness of trade promotions we find that mean pass through elasticities are 0 71 0 59 and 0 41 for the wholesaler retailer and total channel respectively more importantly at each level of the channel we observe large variances in pass through estimates that we explain using various measures of cost and competition surprisingly we find that market structure and competition have a relatively small impact on pass through we conclude by showing how the profitability of manufacturer and wholesaler deals can be improved by utilizing detailed effectiveness estimates for example a manufacturer using an inclusive trade promotion strategy might offer a 10 off invoice deal to all retailers on every product this strategy would decrease manufacturer and wholesaler profits for 56 of product store combinations whereas retailers experience a profit boost in 96 of cases manufacturers and wholesalers can avoid unprofitable trade deals for specific products and retailers by utilizing estimates of pass through consumer price elasticity and margins compared to the inclusive strategy such a selective trade promotion strategy would improve deal profitability by 80 and reduce costs by 40

spurred to upgrade a review of triggers and consequences of industrial upgrading in the global value chain literature summary the global value chains gvc literature intervenes in today s challenging development context by focusing on the means by which developing country industries can upgrade their market positions and outcomes for workers yet while this literature has produced hundreds of rich empirical case studies there has to date been no attempt to systematically analyze this case literature for lessons regarding the antecedents and consequences of the key outcome of upgrading this paper undertakes a systematic analysis of a representative sample of 45 case studies of primary product and light manufacturing industries in developing countries these studies were coded for factors involved in initiating and sustaining upgrading processes the results of upgrading and the role of local institutions in these processes we find that contrary to the major assumptions of the literature advanced country buyers are not the main force in the initiation of industrial upgrading rather in most cases developing country firms initiate upgrades when pushed by shocks of market vulnerability usually produced by state policies that force them to seek to change their status quo operations once initiated upgrading processes can produce a wide spectrum of results from little to no advancement in market position treadmilling to vaulting to the forefront of a global industry leaps forward on the basis of the sources of learning present in the local institutional environment such as state agencies and business associations we also identify conditions under which state participation in upgrading processes can lead to increased local institutional capacity together these findings suggest a framework for upgrading that we refer to as an induced search model this model has important implications for future research on the dynamics of industrial upgrading in developing countries techniques of state intervention and processes of mutually supportive learning between actors in the public and private sector

creating win win trade promotions theory and empirical analysis of scan back trade deals manufacturer trade promotion spending is second only to cost of goods sold as a profit and loss item yet manufacturers often lose money on these deals as a result of forward buying by retailers the search for more effective forms of trade promotion and the availability of scanners at cash registers has led to the emergence of a new type of trade deal the scan back that gives retailers a discount on unitssoldduring the promotion rather than on unitsbought we develop a theory to compare retailer pricing decisions and profitability under scan back and traditional off invoice trade deals we show that when the terms of the trade deal are identical retailers prefer off invoice trade deals and manufacturers prefer scan backs manufacturers can however redesign the scan back to leave the retailer weakly better off and leave themselves strictly better off using proprietary data from the beverage category we conduct an empirical analysis and find that during the promotion period scan back trade deals relative to off invoice deals 1 do not cause excess ordering and 2 generate higher retail sales through lower retail prices implications for researchers and managers are discussed

computing productivity firm level evidence we explore the effect of computerization on productivity and output growth using data from 527 large us firms over 1987 1994 we find that computerization makes a contribution to measured productivity and output growth in the short term using one year differences that is consistent with normal returns to computer investments however the productivity and output contributions associated with computerization are up to five times greater over long periods using five to seven year differences the results suggest that the observed contribution of computerization is accompanied by relatively large and time consuming investments in complementary inputs such as organizational capital that may be omitted in conventional calculations of productivity the large long run contribution of computers and their associated complements that we uncover may partially explain the subsequent investment surge in computers in the late 1990s

the nairu unemployment and monetary policy this paper examines the precision of conventional estimates of the nairu and the role of the nairu and unemployment in forecasting inflation the authors find that although there is a clear empirical phillips relation the nairu is imprecisely estimated forecasts of inflation are insensitive to the nairu and there are other leading indicators of inflation that are at least as good as unemployment this suggests deemphasizing the nairu in public discourse about monetary policy and instead drawing on a richer variety of leading indicators of inflation