do firms differ much with finn profitability data for a cross section of geographic markets it is possible to determine the relative importance of firm and market effects on profitability analysis of variance from a panel of multihank holditig companies in texas suggests that finn effects are more important than market effects in determining profitability and that the magnitudes of the effects vary over time in a 1985 article schmalensee takes a new approach to analysis of the structure conduct performance paradigm schmalensee chooses a purely descriptive approach to distinguish among the classical tradition of bain 1956 which takes markets as the basic unit of analysis with a particular focus on market concentration the revisionist views of demsetz 1973 and peltzman 1977 who view the observed relation between profitability and concentration as reflecting underlying inter firm profitability differences and the managerial view that profitability is determined by firm wide management practices but not necessarily by differences in market share this descriptive approach has two advantages over a structural analysis a descriptive analysis avoids imposition of the troublesome maintained hypotheses inherent in structural models further as scott and pascoe 1986 point out the explanatory power of structural models is generally only a small fraction of that of descriptive models

pension regulation and the market value of pension liabilities a contingent claims analysis using parisian options abstract we analyze the market consistent valuation of pension liabilities in a contingent claim framework whereby a knock out barrier feature is applied to capture early regulatory closure of a pension plan we investigate two cases which we call immediate closure procedure and delayed closure procedure in an immediate closure procedure when the assets value hits the regulatory boundary the pension plan is terminated immediately whereas in a delayed closure procedure a grace period is given to the pension fund for reorganization and recovery before premature closure is executed the framework is then used to construct fair pension deals furthermore we provide rules for deriving the optimal recovery period in pension regulation using utility analysis and interconnect the recovery period to the regulatory liquidation probability

constrained non concave utility maximization an application to life insurance contracts with guarantees abstract we study a problem of non concave utility maximization under a fair pricing constraint the framework finds many applications in for example the optimal design of managerial compensation or equity linked life insurance contracts deriving closed form solutions we observe that the fair pricing constraint will reduce the riskiness of the optimal strategies substantially in an extensive numerical section we analyze innovative retirement products that adapt the investment strategy of the premium pool according to the policyholder s preferences modeled as constant relative risk aversion crra such products are a response to the loss of attractiveness of traditional life insurance contracts with guarantees that are negatively affected by increasing solvency requirements for return guarantees and a general decrease in interest rate levels taking into account that retirement products are usually tax privileged we find that fairly priced guarantee contracts that follow this optimal investment strategy lead to a higher expected utility level than asset investments

the exchange rate regime and the currency composition of corporate debt the mexican experience abstract this paper analyzes the effect that the change from a fixed to a floating exchange rate regime that took place in mexico in december 1994 had on the currency composition of corporate debt in particular the paper asks whether a fixed exchange rate regime biases corporate borrowing towards foreign currency due to an implicit exchange rate guarantee given by the government therefore under a predetermined regime firms will not fully internalize their exchange rate risk and will be more likely to engage in balance sheet mismatches than under a floating regime we study the main determinants of foreign currency borrowing of those firms listed in the mexican stock exchange from 1992 to 2000 to test whether balance sheet currency mismatches fell after the adoption of the floating exchange rate regime the results found support the view that the floating exchange rate regime has been useful in reducing exchange rate exposure

the two faces of competition dynamic resourcefulness and the hypercompetitive shift competition in the american economy has fundamentally changed over the last few decades from static to dynamic this study labels this important change the hypercompetitive shift and documents it across 200 industries of the us manufacturing sector during i958 to 1991 for industries that undergo a hypercompetitive shift there is an increase in the cross firm variance in performance and a rotation in the value rivalry relationship from a negative association to an inverted u as a consequence of these competitive changes the strategic focus of firms shifts from careful exploitation of given highly durable strategic assets to the steady creation of many new rapidly depreciable ones the key driver of hypercompetitive shift is the dynamic resourcefulness of an industry or the ease with which new strategic assets can be created determinants of dynamic resourcefulness include the dynamism of related transactors notably consumers and suppliers the knowledge base of the industry and structural condi

does corporate strategy matter a revisionist view that corporate strategy does not matter has gained considerable influence in recent years this view largely stems from empirical results of early variance decomposition studies that found negligible corporate effects associated with profitability differences between businesses our analysis of the variance decomposition literature shows this view to be incorrect not only do the studies as a group show that factors at the corporate level of organizations contribute to profitability differences but also evidence suggests that factors specifically associated with corporate strategy contribute to corporate effects corporate strategy in fact does matter copyright 2001 john wiley sons ltd

the intertemporal stability of the concentration margins relationship using a longitudinal data base we find that there has been a substantial narrowing of the spread between the price cost margins of concentrated and unconcentrated industries including measures of macroeconomic fluctuations into standard price cost margin regressions we find significant differences in cyclical behavior across market structure we also explore a possible explanation unionization for differences in cyclical behavior finally we investigate the degree to which our results are affected by the potential simultaneity of concentration advertising and the price cost margin

is tourism firm competitiveness driven by different internal or external specific factors new empirical evidence from spain abstract the quest to understand the multilevel antecedents of competitiveness has led to a separation of approaches on one side of the question are the environment theories that analyze the structural characteristics of the general and competitive environment on the other side are the resource based view and its extensions that highlight firm specific resources and capabilities as the main basis of firms competitiveness however in recent years the nature of competition and shifting economic conditions have given rise to new theoretical approaches that complement the assumptions underlying both environmental and firm theories specifically this study contributes by examining the regional environment effect the district effect and the strategic group effect through a study of 364 spanish tourism firms this research explores the relative importance of distinct external forces such as the general environment or country effect the regional effect the competitive environment or industry effect the district effect and internal factors such as the firm s tangible resources capabilities and strategy selection the results demonstrate that firms capabilities are more important than environment effects and tangible resources

circumstance and choice the role of initial conditions and policies in transition economies the experience of countries in transition from a planned to a market oriented economy has varied greatly the clearest differences are between the east asian countries china and vietnam and the countries of central and eastern europe cee and the former soviet union fsu china and vietnam have contained inflation and benefited from continued high growth in gdp since the beginning of their reforms while all cee and fsu countries have experienced large declines in output and most have experienced hyperinflation but even in cee and the fsu differences are marked some countries have lost over half of their gdp and growth performance in a number of countries is still poor while others are growing strongly some are still suffering from high inflation while others have successfully reduced annual inflation what determines this divergence of outcomes across transition countries no study so far has analyzed the interaction of all factors including initial conditions political change and reforms in a unified framework including cee the fsu china and vietnam the authors examine these broader interactions but focus first on the role of initial conditions such as initial macroeconomic distortions and differences in economic structure and institutions which have been emphasized less in the literature they find that initial conditions and economic policy jointly determine the large differences in economic performance among the 28 transition economies in the sample initial conditions dominate in explaining inflation but economic liberalization is the most important factor determining differences in growth but reform policy choices are not exogenous they depend in turn on both initial conditions and political reform with political reform the most important determinant of the speed and comprehensiveness of economic liberalization other findings provide additional insight into these relationships results show that liberalization has a negative contemporaneous impact but a stronger positive effect on performance over time the results also show that macroeconomic and structural distortions are negatively related to both policy and performance regarding the former unfavorable initial conditions discourage policy reforms but do not diminish their effectiveness once they are implemented the authors find some evidence that the influence of initial conditions diminishes over time this is in part because many of the initial conditions are themselves modified in the course of transition monetary overhangs are dissipated through inflation industrial overhang is eroded as plants shut down and market memory returns through experience

oligopoly supergames some empirical evidence on prices and margins this paper is a panel data study on the behavior of prices and margins of oligopolies involved in repeated games the authors examine two supergame models which generate very different predictions about the cyclical behavior of prices and margins evidence on the levels of price cost margins indicates that oligopolies achieve equilibria that more closely resemble a one shot cournot nash outcome than monopoly the authors find however that industries with high price cost margins exhibit cyclical price behavior which is quite different from that of unconcentrated industries little evidence of price wars during either recessions or booms is found copyright 1987 by blackwell publishing ltd

profit margins and the business cycle evidence from uk manufacturing firms this paper presents some empirical models of profitability using panel data covering 709 large u k companies ove r the 1970s and 1980s focusing specifically on the role of aggregate demand shocks in shaping firm level profitability in basic regressi ons and in quite complex econometric models the results suggest that firm level profit margins fell heavily during the deep manufacturing recession of the early 1980s and as such are consistent with model s predicting the procyclical nature of profit margins this result hol ds across different product groups producer goods consumer durables a nd nondurables though the timing of the impact of aggregate shocks appears to differ copyright 1993 by blackwell publishing ltd

optimal portfolio choice under loss aversion this paper analyzes the optimal investment strategy for loss averse investors assuming a complete market and general ito processes for the asset prices the loss averse investor follows a partial portfolio insurance strategy when the investor s planning horizon is short less than 5 years he or she considerably reduces the initial portfolio weight of stocks compared to an investor with smooth power utility the empirical section of the paper estimates the level of loss aversion implied by historical u s stock market data using a representative agent model we find that loss aversion and risk aversion cannot be disentangled empirically

u s canada trade liberalization and mnc production location using confidential firm level panel data from the bureau of economic analysis we examine how the bilateral trade flows of u s multinational corporations mncs and their canadian affiliates responded to u s canadian tariff reductions from 1983 to 1992 we find that canadian affiliate sales to the united states are negatively correlated with canadian tariffs but u s parent sales to canadian affiliates have little association with canadian tariffs these results contradict the notion that canadian tariff reductions would lead to a hollowing out of canadian manufacturing we also find substantial heterogeneity in mnc responses to tariff changes within narrowly defined manufacturing industries overall bilateral trade liberalization is trade creating as u s mncs integrated their north american production such that canadian affiliates increased sales to the united states and reduced domestic sales

successful in the long run a meta regression analysis of persistent firm profits we study the profit persistence literature by applying meta regression analysis mra to a set of 36 empirical papers which analyze the persistence of abnormal firm profits over time the analyzed literature provides evidence for a mediocre degree of persistence in abnormal profits an initial analysis of the distribution of reported profit persistence estimates reveals some degree of excess variation this points toward publication bias that favors significant results independent of their algebraic sign the mra however reveals that publication bias is particularly favoring results that indicate profit persistence and thus contradict the neoclassical model of perfect competition moreover the mra enables to control for heterogeneity driven by the study design we find that the analyzed country developing vs developed the applied econometric approach as well as the analyzed period of time are significant drivers of heterogeneity in reported persistence estimates

optimal pension insurance design abstract in this paper we analyze how the traditional life and pension contracts with a guaranteed rate of return can be optimized to increase customers welfare given that the contracts have to be priced correctly we use individuals preferences to find the preferred design assuming crra utility we cannot explain the existence of any form of guarantees through numerical solutions we quantify the difference measured in certainty equivalents to the preferred merton solution of direct investments in a fixed proportion of risky and risk free assets the largest welfare loss seems to come from the fact that guarantees are effective by the end of each year not only by the expiry of the contract however the demand for products with guarantees may be explained through behavioral models we use cumulative prospect theory as an example showing that the optimal design is a simple contract with a life time guarantee and no default option

portfolio choice and trading volume with loss averse investors this paper presents a model of portfolio choice and stock trading volume with lossaverse investors the demand function for risky assets is discontinuous and non monotonic as wealth rises beyond a threshold investors follow a generalized portfolio insurance strategy this behavior is consistent with the evidence in favor of the disposition effect in addition loss averse investors will not hold stocks unless the equity premium is quite high the elasticity of the aggregate demand curve changes substantially depending on the distribution of wealth across investors in an equilibrium setting the model generates positive correlation between trading volume and stock return volatility but suggests that this relationship should be non linear

structure conduct and performance a simultaneous equations investigation for the brazilian manufacturing industry the article investigated structure conduct performance scp relationships in the context of the brazilian manufacturing industry in 1996 for that purpose it considered a system with four equations pertaining concentration advertising r d and profitability that was estimated with simultaneous equation models in addition to the usual explanatory variables proxying barriers to entry and demand conditions the article considered organizational practices and incentive schemes variables the evidence indicated an important role for variables related to barriers to entry in affecting market structure an important and nonlinear effect of concentration on advertising a relevant impact of firm size on the propensity to exert r d effort and finally a significant positive impact of concentration on profitability and were similar to the previous evidence for developed countries additionally no important roles were detected for organizational practices and incentive schemes on the scp relationships

new frontiers in international strategy this paper studies a new frontier in the understanding of international strategy is to explore it we propose the analogy of the ecology of firms and places as a way to emphasize that the real problem is the colocation of different places with different types of firms locations are in fact the distinctive content of international business strategy we deal with this problem with four different perspectives first differences across countries must be addressed with integrative frameworks able to represent the multidimensionality of semiglobalization or intermediate states between total localization and total integration second differences in the development of intermediary markets in a particular place influence firm positioning and industry structure in that place but their impact also crosses different places and it is endogenous to the ecology of places and firms in a systemic integrative way that makes simplifications extremely risky in the design of competitive strategy in an international context third places firms and strategies form a complex ecology that can be studied with a framework focused in understanding the geography strategy link that incorporates different levels of analysis new economic actors and a set of primitives finally firms around the ecology of places face the challenge of developing strategies and business models to serve the majority of humanity today excluded from world trade it is a fundamentally different way to think about the ecology of places and firms overall we present an intriguing new frontier with the capacity to impact both research and practice in the field of international strategy based in understanding the interplay among firms and places

in pursuit of monopoly power recent quantitative work in industrial economics this paper reviews empirical work in industrial organization devoted to the question of inferring the existence of monopoly power from data on observed market outcomes like profits and prices the discussion covers inter industry work long conventional in the area newer developments in intra industry analysis and case studies and concludes with some remarks on a small but growing body of work assessing market dynamics the wide range of studies reviewed all generally reveal that market power exists in many industries

the determination of profit margins in uk manufacturing this paper examines the determinants of profit margins in 91 u k manufacturing industries over the period 1983 86 it considers how the inclusion of labor market characteristics in empirical industrial organization specifications affects the estimated concentration margins relationship the empirical work pays detailed attention to the endogenous nature of variables derived from structural industrial organization models the authors report instrumental variables estimates of margins equations in which there emerges a significant role for labor market characteristics indeed both unionization and industrywide unemployment are found to depress profit margins the impact of concentration is seen to be biased downward when these variables are omitted

the voyage of the beagle into innovation explorations on heterogeneity selection and sectors the aim of the paper is to assess heterogeneity of the innovation process using exploratory factor analysis on micro data from the third community innovation survey in 13 countries we identify four patterns that can be interpreted as research user external and production ingredients of innovation all too often it is assumed that how firm innovate can be represented by differences across sectors and or countries to put this proposition under scrutiny we partition variability of the factors scores into components identified by these higher levels sectors and countries matter to a certain extent but far more of the variance is given by heterogeneity among firms within both of them however groups of firms produced by cluster analysis account for much higher share of the variance which indicates that the most relevant stratification of the data cuts across the established sectoral and national boundaries we discuss implications of these findings for understanding of selection in evolutionary economics and for the literature on innovation systems

estimating the performance effects of business groups in emerging markets business groups confederations of legally independent firms are ubiquitous in emerging economies yet very little is known about their effects on the performance of affiliated firms we conceive of business groups as responses to market failures and high transaction costs in doing so we develop hypotheses about the effects of group affiliation on firm profitability affiliation could either boost or depress firm profitability and members of a group are likely to earn rates of return similar to other members of the same group using a unique data set compiled largely from local sources we test for these effects in 14 emerging markets argentina brazil chile india indonesia israel mexico peru the philippines south africa south korea taiwan thailand and turkey we find evidence that business groups indeed affect the broad patterns of economic performance in 12 of the markets we examine group affiliation appears to have as profound an effect on profitability as does industry membership yet strategy scholars have a much clearer grasp of industries than of groups moreover membership in a group raises the profitability of the average group member in several of the markets we examine this runs contrary to the wisdom conventional in advanced economies that unrelated diversification depresses profitability overall our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts conclusions drawn in one context may well not apply to another copyright 2001 john wiley sons ltd

management and ownership effects evidence from five countries despite the growing recognition in the corporate governance literature that the relationship between ownership concentration and profitability is context dependent this issue has not yet been subjected to direct empirical investigation using a single cross national sample this study empirically examines the ownership concentration performance relationship across the nations of canada france germany the united kingdom and the united states essentially we argue that the correlation if any between ownership concentration and firm profitability differs across countries in a systematic way determined by the national system of corporate governance results indicate that important and statistically significant differences do in fact exist across the countries studied 1998 john wiley sons ltd

market structure and price cost margins in a paper that has become a standard reference in the structure conductperformance approach to industrial economics cowling and waterson 1976 developed a theoretical rationale for expecting industry profitability to be positively correlated with the level of concentration their model based on a simple algebraic description of oligopoly behaviour has been interpreted as providing a justification for the common empirical practice of cross industry regression analysis of price cost margins in terms of concentration levels in the present paper we show that on further examination this model implies a joint determination of margins and concentration this provides some interesting comparative static results of relevance to inter industry differences in concentration levels equally however it leads to various cautionary insights concerning the meaning of price cost margin versus concentration regressions

the persistence of shocks to profitability in this study we use data for 1981 through 1994 on a large sample of u s companies to examine the persistence of incremental industry corporate parent and business specific effects on profitability our results indicate that the incremental effects of industry on profitability persist longer than the incremental effects of the corporate parent and of the specific business changes in industry structure have a more persistent impact on profitability than do changes in firm structure

estimating the mark up over marginal cost a panel analysis of japanese firms 1971 1994 abstract in this paper we propose a new method to estimate mark ups over marginal cost at the firm level this method is based on the identity between the short run elasticity of output to inputs the mark up rate and the factor shares we then apply this method to a panel of japanese firms in 21 industries over 24 years we have three main results first there is strong evidence of imperfect competition in this panel in which internationally competitive industries show low mark ups second the mark up rate differs considerably among firms and its distribution is skewed third the mark up rate over marginal cost shows strong procyclicality and its sensitivity is uniform within the industry

a utility and cpt based comparison of life insurance contracts with guarantees abstract some recent literature studies whether contracts including financial guarantees can be preferred by a utility maximizing investor the main result for contracts exposed solely to financial risk e g doskeland and nordahl 2008 dichtl and drobetz 2011 is that expected utility theory eut fails to interpret demand for guarantees while cumulative prospect theory cpt is able to support the demand while the development of the financial market has a significant impact on the portfolio choice some other non financial risk might play an important role too in the present paper we take life insurance products as an example where the long term nature of these contracts places a special emphasis on the uncertain lifetime of the investor we incorporate the mortality risk and investigate its effect on the attractiveness of contracts offering minimum interest rate guarantees to eut and cpt investors for this purpose we introduce two approaches for the consideration of multiple risk sources within cpt we illustrate the theoretical framework with numerous simulations and our numerical results show that a long term risk averse eut investor prefers products with guarantees

from boom til bust how loss aversion affects asset prices this article studies the impact of heterogeneous loss averse investors on asset prices in very good states loss averse investors become gradually less risk averse as wealth rises above their reference point pushing up equity prices when wealth drops below the reference point the investors become risk seeking and demand for stocks increases drastically eventually leading to a forced sell off and stock market bust in bad states heterogeneity in reference points and initial wealth of the loss averse investors does not change the salient features of the equilibrium price process such as a relatively high equity premium high volatility and counter cyclical changes in the equity premium

a closer look at the effect of market growth on industries profits everybody talks about the relation of industries profit rates to their markets rates of growth but nobody does anything about it specifically researchers have confirmed the effect of the growth of nominal output on profits in many multivariate studies without specifying closely the hypothesis under test or the measure of demand growth appropriate to test it a profits growth relationship could stem from several mechanisms the lagged adaptation of capacity to unexpected changes in demand reactions of oligopolists to disturbances in their consensus etc these mechanisms how and where they work hold their own normative interest therefore knowing what behavior and what structure lying behind it accounts for the profits growth relationship should do more than improve the specifications of our studies of allocative efficiency it should also expand our knowledge of adaptive processes that are important and hard to observe directly in this paper we shall synthesize the available explanations of why changes in market demand should affect an industry s profits then present a statistical test of the relative significance of the competing explanations

institutional and individual investors saving for old age this paper brings together the academic literature on individual and institutional investors in order to understand the nature of difficulties faced by them and set the background for the special issue this introductory article and the papers in the special issue contribute to the debate on how to support individuals in their savings commitments and investment decision making and whether and how institutional investors have fulfilled their role in supporting the development of the funded pension industry there are three main conclusions i individual investors are not ready for the role that has been assigned to them in the pension industry ii institutional investors are a long way short of establishing healthy relational contracts and trustworthy relationships with their clients and iii more effective regulation may be needed

corporate and industry effects on business unit competitive position we partition the variances of market shares which we use as surrogates for competitive position of the business units of all public manufacturing companies available in the trinet data base into industry factors corporate parent specific factors and business unit specific factors our results differ somewhat from rumelt s 1991 which decomposed variances in profitability we find that corporate parent effects on market share are considerably greater than zero when lines of business are defined more narrowly when small business units are included and when firms are medium sized our results suggest that the relative importance of corporate industry and business unit effects depends on the types of criteria such as the level of industry aggregation whether small business units are included and firm size that are used to construct samples copyright 2000 john wiley sons ltd

risk and return on long lived tangible assets abstract assuming rational expectations a specialization of ross arbitrage pricing theory is used to obtain a simple securities market valuation formula when dividends follow linear stochastic processes the implications of this model for the use of accounting data to measure risk and for capital budgeting are explored a new measure of riskiness based on accounting data is derived and the use of risk adjusted discount rates is evaluated

technical efficiency market share and profitability of manufacturing firms in cote d ivoire the technology trap this paper investigates the sources of inefficiency of firms in cote d ivoire and exam ines to what extent these effects translate into poor performance a large majority of firms is technically inefficient producing far below the maximum attainable output level major cost savings can also be realised through enlarging the scale of activities of firms efficiency gains and scale advantages translate into a better competitive position and via their impact on market share into higher profitability however severe growth barriers and imperfect markets keep firms from realising these gains and prevent firms from catching up in technology with respect to their larger older and often foreign owned competitors

asset and liability management for insurance products with minimum guarantees the uk case abstract modern insurance products are becoming increasingly complex offering various guarantees surrender options and bonus provisions a case in point are the with profits insurance policies offered by uk insurers while these policies have been offered in some form for centuries in recent years their structure and management have become substantially more involved the products are particularly complicated due to the wide discretion they afford insurers in determining the bonuses policyholders receive in this paper we study the problem of an insurance firm attempting to structure the portfolio underlying its with profits fund the resulting optimization problem a non linear program with stochastic variables is presented in detail numerical results show how the model can be used to analyze the alternatives available to the insurer such as different bonus policies and reserving methods

profit margins and business cycles in the brazilian industry a panel data study the paper investigates the relationship between profit margins and business cycle in the brazilian industry during the 1992 1998 period taking as reference a dynamic panel data model founded around a conjectural variation framework the empirical results indicate procyclical behaviour of profit margins for the aggregate business cycle but is less clear in the case of sector specific business cycle variables among the most robust results one can highlight the roles of lagged profitability and import intensity and the negligible role of union density schmalensee in 1985 american economic review 75 pp 341 51 outlined three theoretical interpretations associated with the empirical model classical revisionist and managerial econometric tests on the related restrictions do not allow one to exclusively legitimate any of the three interpretations

is there a causal effect of concentration on persistent profitability differentials this article searches for a causal effect of industry concentration on estimates of persistent profitability differentials i offer solutions to identification problems that plague related analyses by applying an iv and a natural experiment this is the first study that explains estimates of persistent profit differentials using business segments data allowing to match micro and industry level data more consistently testing linear relations critical concentration levels and interactions with mobility barriers i find no evidence that concentration has any positive effect on long run profitability differences results rather tend to point to a statistically and economically significant negative causal effect

capacity and competition empirical evidence on uk panel data following d kreps and j scheinkman 1983 it is common to view the difference between cournot and bertrand competition as depending on production capacity bertrand undercutting is only feasible if firms have capacity to serve the market gained if firms are capacity constrained the cournot model is more appropriate this paper tests the capacity and competition idea by looking at the relationship between profits and capacity constraints if capacity constrained firms become more cournot like it should be positive using survey data on capacity constraints merged into a panel industry data set for the united kingdom the authors find a robust positive relationship copyright 1994 by blackwell publishing ltd

margins concentration unions and the business cycle theory and evidence for britain abstract a number of recent studies have examined the cyclical relationship between price cost margins concentration and unions u s data has concluded that unions reduce margins margins vary over the cycle and concentration unionisation and the cycle interact in their effect on margins however there is almost no theory to account for these results we propose a simple theory that assumes only that there is overhead labour present at the firm this produces theoretical predictions that can explain these results and discriminate between existing theories we present results of our own using u k panel data and show similar findings to the u s

do markets differ much this essay reports the results of a crosssection study of differences in accounting profitability that sheds light on some basic controversies in industrial economics most previous cross section studies in this field have been concerned with testing hypotheses about structural coefficients in models meant to apply to essentially all markets as we have learned more about the difficulties of constructing such general models and of performing tests on their structural parameters properly structural cross section analysis has fallen out of fashion in contrast to most of the cross section literature the analysis reported here is fundamentally descriptive it does not attempt directly to estimate or to test hypotheses about structural parameters i hope to show by example that one can perform illuminating analysis of cross section data without a host of controversial maintained hypotheses cross section data can yield interesting stylized facts to guide both general theorizing and empirical analysis of specific industries even if they cannot easily support full blown structural estimation one can view the sort of search for stylized facts conducted here as either a replacement for or an input to interindustry structural estimation depending on one s feeling about the long run potential of that research approach this study also departs from much of the cross section literature by being fundamentally concerned with the importance of various effects not just with coefficient signs and t statistics in particular this essay provides estimates of the relative importance of firm market and market share differences in the determination of business unit divisional profitability in u s manufacturing using 1975 data from the line of business program of the u s federal trade commission ftc i find support neither for the existence of firm effects nor for the importance of market share effects moreover while industry effects apparently exist and are important they appear to be negatively correlated with seller concentration in these data section i relates firm market and share effects to current issues and controversies in industrial economics and thus supplies the motivation for our empirical analysis the remainder of the essay treats the data and

do unions capture monopoly profits this paper challenges the conclusion reached in recent studies that unions reduce profits exclusively in highly concentrated industries from their review of previous studies and their analysis of 1977 data on 367 fortune 500 firms the authors conclude that there is no convincing evidence that concentration produces monopoly profits for unions to capture moreover they find that the union wage effect is not greater in concentrated industries as suggested by the hypothesis that unions capture concentration related profits evidence is found suggesting that a firm s market share its expenditures on research and development and its protection from foreign competition provide more likely sources for union rents than does industry concentration several recent studies have found that unions reduce profits significantly and some have concluded that this profit reduction is restricted to highly concentrated industries both conclusions are important the finding that unions reduce profitability indicates that in general the cost increasing effects of unions outweigh any positive productivity effects they may bring to the workplace such a

the mirage of exchange rate regimes for emerging market countries this paper argues that much of the debate on choosing an exchange rate regime misses the boat it begins by discussing the standard theory of choice between exchange rate regimes and then explores the weaknesses in this theory especially when it is applied to emerging market economies it then discusses a range of institutional traits that might predispose a country to favor either fixed or floating rates and then turns to the converse question of whether the choice of exchange rate regime may favor the development of certain desirable institutional traits the conclusion from the analysis is that the choice of exchange rate regime is likely to be of second order importance to the development of good fiscal financial and monetary institutions in producing macroeconomic success in emerging market countries this suggests that less attention should be focused on the general question whether a floating or a fixed exchange rate is preferable and more on these deeper institutional arrangements a focus on institutional reforms rather than on the exchange rate regime may encourage emerging market countries to be healthier and less prone to the crises that we have seen in recent years

do government guarantees really matter in fixed exchange rate regimes abstract since the mid 1990s theories of speculative attacks have argued that fixed exchange rate regimes induce excessive borrowing in foreign currency as an optimal response to implicit guarantees that the government will not devalue the domestic currency using data on brazilian firms before and after the end of the fixed exchange rate regime in 1999 we estimate the relevance of the government guarantees by comparing the changes in foreign debt of two groups of firms those that hedged their foreign currency debt prior to the exchange rate float and those that did not using the difference in differences approach in which firm specific characteristics are introduced as control variables we exclude the macroeconomic effects of the change in the exchange rate regime and the possible differences in foreign debt trends of the two groups of firms thus obtaining an estimate of the impact of the government guarantees on borrowing in foreign currency the results suggest that the guarantees do not induce excessive borrowing in foreign currency

margin rate and the cycle the role of trade openness abstractusing three datasets of french manufacturing firms this article studies the role of trade openness in relation with the cycle as a determinant of company margin rate margin rates increase as capacity utilization tightens and vice versa reflecting the procyclicality of margin rates however high import rates are limiting this procyclicality when capacities are tight domestic producers may not be able to serve demand but foreign producers may substitute for them if they are already present on the market as reflected by the level of import rates

the dynamics of company profits an international comparison 1 profits and the process of competition dennis c mueller 2 modelling persistent profitability paul a geroski 3 the persistence of profits in the united states dennis c mueller 4 the persistence of profits in us manufacturing industries ioannis kessides 5 the persistence of profitability in canada r shyam khemani and d m shapiro 6 persistence of corporate profits in the federal republic of germany joachim schwalbach and talat mahmood 7 the persistence of profits in france frederic jenny and andre paul weber 8 the persistence of profits in japan hiroyuki odagiri and hideki yamawaki 9 the persistence of profits in the uk john cubbin and paul a geroski 10 the persistence of profits international comparison hiroyuki odagiri and hideki yamawaki 11 the persistence of profits in perspective paul a geroski and dennis c mueller