bluuebunny/crossref_metadata_2025 huggingface dataset:
Influence of malate and 2‐oxoglutarate on the NIA transcript level and nitrate reductase activity in tobacco leaves
Authors: Müller C. , Scheible W.‐R. , Stitt M. , Krapp A.
Published: January 2004

Nitrate assimilation in leaves requires synthesis of malate to counteract alkalinization, and synthesis of 2‐oxoglutarate to act as an acceptor in the GOGAT pathway. We have investigated whether malate or 2‐oxoglutarate regulate nitrate reductase (NIA, EC 1·6.6·1) expression. (i) Diurnal changes of NIA expression and organic acid levels were compared in tobacco leaves. The NIA transcript rose during the night and decreased during the day, and NIA activity rose to a maximum during the first 4 h of the light period and fell during the second part of the light period. Malate accumulated to high levels during the light period and decreased during the night. The 2‐oxoglutarate increased by 40% at the beginning and decreased towards the end of the light period. The glutamine : 2‐oxoglutarate ratio was steady during the first part of the light period and increased markedly during the second part of the light period. The diurnal changes of the NIA transcript level were inversely correlated to the diurnal changes of malate, and unrelated to the changes of 2‐oxoglutarate or the glutamine : 2‐oxoglutarate ratio. The decrease of NIA activity in the second part of the light period correlated with an increase of the glutamine : 2‐oxoglutarate ratio. (ii) Leaves were detached 4 h into the light period and supplied with malate or 2‐oxoglutarate via the petiole, to investigate their impact on the gradual decrease of the NIA transcript and NIA activity during the second part of the light period. Physiologically relevant changes of malate led to a further decrease of the NIA transcript level and a 27–60% decrease of NIA activity. A large increase of 2‐oxoglutarate stabilized the NIA transcript level but had only slight effects on NIA activity. (iii) Plants were darkened for 16–24 h to reduce the NIA transcript level and NIA activity to low levels, and leaves were then detached and supplied with malate or 2‐oxoglutarate for 4 h in the light to investigate their impact on the light‐induction of NIA. The increase of the NIA transcript and NIA activity was antagonized by malate, and slightly accelerated by 2‐oxoglutarate. (iv) Plants were placed in the dark for 60 h to reduce NIA activity to the limit of detection, and leaf discs were then incubated in the dark on sucrose to achieve a photosynthesis‐independent increase of NIA activity. This was strongly inhibited by malate. (v) It is concluded that malate inhibits NIA expression, affecting both the NIA transcript level and NIA activity. Although the results are consistent with a role for 2‐oxoglutarate in the regulation of NIA expression, the impact is less marked and no endogenous changes of 2‐oxoglutarate were found that are likely to have a significant effect on NIA expression.
Elevated expression of metal transporter genes in three accessions of the metal hyperaccumulatorThlaspi caerulescens
Authors: Assunção A. G. L. , Martins P. Da Costa , De Folter S. , Vooijs R. , Schat H. , Aarts M. G. M.
Published: January 2004

Heavy metal hyperaccumulation in plants is an intriguing and poorly understood phenomenon. Transmembrane metal transporters are assumed to play a key role in this process. We describe the cloning and isolation of three zinc transporter cDNAs from the Zn hyperaccumulatorThlaspi caerulescens. TheZTP1gene is highly similar to the ArabidopsisZATgene. Of the other two, one is most probably an allele of the recently clonedZNT1gene fromT. caerulescens(Penceet al;Proceedings of the National Academy of Science USA97, 4956–4960, 2000). The second, calledZNT2, is a close homologue ofZNT1. All three zinc transporter genes show increased expression inT. caerulescenscompared with the non‐hyperaccumulator congenerT. arvense, suggesting an important role in heavy metal hyperaccumulation.ZNT1andZNT2are predominantly expressed in roots andZTP1is mainly expressed in leaves but also in roots. InT. arvense,ZNT1andZNT2are exclusively expressed under conditions of Zn deficiency. Their expression inT. caerulescensis barely Zn‐responsive, suggesting that Zn hyperaccumulation might rely on a decreased Zn‐induced transcriptional downregulation of these genes.ZTP1expression was higher in plants from calamine soil than in plants from serpentine or normal soil. The calamine plants were also the most Zn tolerant, suggesting that highZTP1expression might contribute to Zn tolerance.
Carbonic anhydrases in plants and algae
Authors: Moroney J. V. , Bartlett S. G. , Samuelsson G.
Published: January 2004

Carbonic anhydrases catalyse the reversible hydration of CO2, increasing the interconversion between CO2 and HCO3− + H+ in living organisms. The three evolutionarily unrelated families of carbonic anhydrases are designated α‐, β‐and γ‐CA. Animals have only the α‐carbonic anhydrase type of carbonic anhydrase, but they contain multiple isoforms of this carbonic anhydrase. In contrast, higher plants, algae and cyanobacteria may contain members of all three CA families. Analysis of the Arabidopsis database reveals at least 14 genes potentially encoding carbonic anhydrases. The database also contains expressed sequence tags (ESTs) with homology to most of these genes. Clearly the number of carbonic anhydrases in plants is much greater than previously thought. Chlamydomonas, a unicellular green alga, is not far behind with five carbonic anhydrases already identified and another in the EST database. In algae, carbonic anhydrases have been found in the mitochondria, the chloroplast thylakoid, the cytoplasm and the periplasmic space. In C3 dicots, only two carbonic anhydrases have been localized, one to the chloroplast stroma and one to the cytoplasm. A challenge for plant scientists is to identify the number, location and physiological roles of the carbonic anhydrases.
Metabolic regulation of leaf respiration and alternative pathway activity in response to phosphate supply
Authors: Gonzàlez‐Meler M. A. , Giles L. , Thomas R. B. , Siedow J. N.
Published: January 2004

In this study the question whether the alternative respiratory pathway acts as an electron bypass for the cytochrome pathway under conditions of growth on limited phosphorus in leaves of bean (Phaseolus vulgaris L.), tobacco (Nicotiana tabacum L.) and Gliricidia sepium Walp was investigated. The oxygen isotope fractionation technique was used to assess the in vivo activities of the cytochrome and alternative respiratory pathways in the absence of added inhibitors. The response of respiration to low phosphorus supply varied among species. Growth at low phosphorus reduced cytochrome pathway activity in bean and tobacco. Alternative pathway activity increased only in bean leaves in response to low phosphorus and not in tobacco. In the case of G. sepium, cytochrome pathway activity remained unchanged whereas the alternative pathway activity increased with low nutritional phosphorus. At low phosphorus, alternative oxidase protein levels increased in the leaves of bean and G. sepium but not in tobacco, suggesting a dependence of alternative pathway activity on protein level. Alternative pathway activity was also not correlated with soluble carbohydrate concentration in bean or tobacco at any phosphorus level. These results show that the alternative pathway does not always act as an electron bypass in response to the downstream restriction of the cytochrome pathway imposed by low phosphorus supply. These results suggest that factors in addition to cellular carbohydrate level and adenylate control can act to regulate alternative pathway activity.
The immediate cause of the diurnal changes of nitrogen metabolism in leaves of nitrate‐replete tobacco: a major imbalance between the rate of nitrate reduction and the rates of nitrate uptake and ammonium metabolism during the first part of the light period
Authors: Matt P. , Geiger M. , Walch‐Liu P. , Engels C. , Krapp A. , Stitt M.
Published: January 2004

To assess how diurnal changes of nitrate reductase (NIA) expression in leaves interact with upstream and downstream processes during nitrate utilization, nitrate uptake, and nitrate and ammonium metabolism were investigated at several times during the diurnal cycle in wild‐type tobacco. Plants were grown hydroponically on 2 mM nitrate to exclude possible complications due to changes in the external availability of nitrate, and to allow nitrate uptake to be measured in the growth conditions. (a) In leaves, the NIA transcript decreases during the day and recovers at night, and NIA activity increases three‐fold during the first part and declines during the second part of the light period. Nitrate decreases during the day and recovers at night, ammonium, glutamine, glycine and serine increase during the day and decrease at night, and 2‐oxoglutarate increases three‐fold after illumination and decreases during the last part of the light period. The amplitudes of the diurnal changes are similar to or larger than in tobacco grown on high nitrate in sand. The transcript for plastid glutamine synthetase (GLN2) is low at the end of the night and increases during the day, and glutamine synthetase activity increases to a peak at the end of the day and decreases at night. (b) In the roots, transcript levels for the high affinity nitrate transporter (NRT2) increase in the day and decrease at night. Nitrate uptake is about 40% higher during the day than at night. (c) Comparison of the diurnal changes of the leaf metabolite pools with the rate of nitrate uptake allows diurnal changes in fluxes to be estimated. During the first part of the light, the rate of nitrate assimilation is about two‐fold higher than the rate of nitrate uptake, and also exceeds the rate at which reduced nitrogen is metabolized in the GOGAT pathway. The resulting decrease of leaf nitrate and accumulation of nitrogen in intermediates of ammonium metabolism and photorespiration represent about 40 and 15%, respectively, of the total nitrate that enters the plant in 24 h. Later in the diurnal cycle as NIA expression and activity decline, this imbalance is reversed. NRT2 expression and nitrate uptake remain relatively high, and nitrate taken up during the night is used to replenish the leaf nitrate pool. Increased GLN2 expression in leaves during the second part of the light period allows continued assimilation of ammonium released during photorespiration and remobilization of the reduced nitrogen that accumulated earlier in the diurnal cycle.
New avenues to be opened for social protection in the Arab world: the case of Egypt*
Authors: Loewe Markus
Published: January 2004

This article looks at social protection in the Arab world. Giving the example of Egypt, it asks why poverty is so widespread and why – despite the country's numerous social protection systems – social risks are a major contributing factor to it. It concludes that reforms are due. The existing systems are well funded but inefficient and more to the benefit of the better‐off than the poor. A reform approach is proposed which builds on both conventional and more innovative strategies: campaigns should be launched to raise public awareness of social risks; social assistance spending should be increased; and the operating public pension schemes should be reformed. At the same time, new avenues have to be opened to meet the specific needs of informal sector workers who have extreme difficulty in being covered by social insurance or social assistance. To this purpose, micro‐insurance is a promising approach for the Arab‐world region.
Balancing work and welfare: activation and flexicurity policies in The Netherlands, 1980–2000
Authors: van Oorschot Wim
Published: January 2004

As a result of the flexibilisation of labour and the trend towards the ‘activating welfare state’, social policies show an increasing interconnection of work and welfare issues. The Netherlands is no exception. It is generally believed that the Dutch welfare state is successfully activating its unemployed labour potential (often referred to as the ‘Dutch Miracle’), and that flexible and part‐time work is protected by adequate ‘flexicurity’. This article critically reviews Dutch activation and flexicurity policies. It concludes that there is still more unemployment than the miracle‐story suggests; that important target groups of activation policies have not profited from ‘the miracle’; that part‐time workers have sufficient social protection but that social security for flex‐workers still needs major improvements, despite favourable adjustments of labour law.
Patterns of social assistance receipt in Sweden
Authors: Andrén Thomas , Gustafsson Björn
Published: January 2004

This article analyses the situation of Swedish‐born people who became first‐time receivers of social assistance in 1987 and 1992. The macroeconomic situation at the time of entry was rather different for the two cohorts and the number of new entrances increased by almost 50%. Much of the increase consisted of young adults and experience of social assistance has been shown to be fairly widespread among persons under the age of 25. Bridging the period when individuals are supported by their parents to their becoming established as wage earners has become an important function of social assistance in Sweden. The pattern of social assistance receipt is rather heterogeneous across new recipients. The complex pattern of receipt means that the duration of social assistance can appear to vary depending on one's choice of perspective. On the one hand, the median duration of social assistance receipt is as low as two years when an eleven‐year follow‐up period is applied. On the other hand, among people who receive social assistance during a given year, as many as half had entered receipt more than four years earlier.
Social and health‐care priorities of local politicians in Finland: do the attitudes of politicians reflect the actual processes in municipalities?
Authors: Lammintakanen Johanna , Kinnunen Juha
Published: January 2004

The aim of this study was to find out whether elected politicians’ attitudes influence policy‐making processes in terms of social and health‐care resource allocation. A preliminary hypothesis was developed on the basis of previous empirical findings on the attitudes of politicians. If health‐care costs decreased during the period 1993–1999, then secondary care costs should have increased and vice versa; if the total amount of resources increased, then secondary care must have been allocated fewer resources. However, the results of this study showed that the actual resource‐allocation processes did not reflect the attitudes of local politicians. Expenditure on secondary health care increased during this period, while primary health‐care services were allocated fewer resources. Analysing the actual decision‐making processes rather than investigating attitudes to priority setting may prove more useful in gaining a better understanding of priority‐setting processes and the mechanisms used in different contexts.
Exclusionary Equilibria in Health‐Care Markets
Authors: Gal‐Or Esther
Published: January 2004

We have demonstrated that when providers of health insurance are perceived to be differentiated by consumers, circumstances may arise under which they find it advantageous to restrict the set of health‐care providers that they approve to their customers. Even if all health‐care providers are equally qualified and efficient, payers may choose to contract with a selected subset of them in order to secure more favorable contract terms. Moreover, in a concentrated health‐care market that consists of two health insurance companies (payers) and two health‐care providers (hospitals), both payers may choose to contract with only one of the hospitals while excluding the other completely from the market. When consumers' valuation of an extended choice of providers is small in comparison with the extent of differentiation that exists between the payers, such an exclusionary outcome is the unique equilibrium of the game.
Dynamic Equilibrium in the Hospital Industry
Authors: Gowrisankaran Gautam , Town Robert J.
Published: January 2004

We present a dynamic model of the hospital industry in which nonprofit and for‐profit hospitals coexist and compete and are differentiated by their objective functions, investment technologies, and taxation rates. In our model, patients differ by income and type of insurance coverage, and choose admission to their preferred hospital, while hospitals choose investment, entry, exit, and pricing strategies. We estimate the parameters of the model with aggregate data and a GMM procedure. We then use the model to examine the effects of changes in the Medicare reimbursement system, universal health‐care coverage, and taxation of nonprofits.
Generic Entry and the Pricing of Pharmaceuticals
Authors: Frank Richard G. , Salkever David S.
Published: January 2004

During the 1980s the share of prescriptions sold by retail pharmacies that was accounted for by generic products roughly doubled. The price response to generic entry of brand‐name products has been a source of controversy. In this paper we estimate models of price responses to generic entry in the market for brand‐name and generic drugs. We study a sample of 32 drugs that lost patent protection during the early to mid‐1980s. Our results provide evidence that brand‐name prices increase after generic entry and are accompanied by large decreases in the price of generic drugs.
Hospital Reimbursement Incentives: An Empirical Analysis
Authors: McClellan Mark
Published: January 2004

Reimbursement systems for health‐care providers are very complex, like the production systems that they regulate. This complexity has led to some important misperceptions about the incentive consequences of major reimbursement reforms. One example is the prospective payment system (PPS), developed to provide “high‐powered” incentives through fixed prices for hospital admissions for the US elderly. In fact, various features of the DRG system allow reimbursement to vary with actual treatment decisions during an admission, and so are not prospective. This paper develops a general method for measuring actual reimbursement incentives in complex regulated price systems. The method uses regression techniques with variance decompositions to quantify the effects of particular features of the payment system on prospective and retrospective cost sharing, as well as overall generosity of payments. I apply this method to microdata on 20 percent of Medicare hospital admissions in 1987 and 1990 to summarize the incentives created by PPS in practice, and how the incentives are evolving over time. I show that PPS involves limited and decreasing cost sharing with hospitals, most of which is not prospective. The reimbursement incentives vary substantially across diagnoses, demographic groups, and types of intensive treatments, possibly with important implications for hospital behavior and medical expenditure growth. The techniques developed here can be used to analyze a broad range of provider reimbursement mechanisms.
Competition among Health Maintenance Organizations
Authors: Encinosa William E. , Sappington David E. M.
Published: January 2004

We develop a model of competition among health maintenance organizations (HMOs) to analyze the effects of market power, scale economies, and asymmetric knowledge of health risk on market outcomes. We find that competition among HMOs may, but need not, ensure socially preferred outcomes. Market power or scale economies can sometimes admit socially preferred outcomes when they would otherwise not arise. Asymmetric knowledge of health risk may or may not be constraining. When it is constraining, a variety of patterns of incomplete health insurance can arise, along with excessive or insufficient treatment and preventive care for either high‐risk or low‐risk individuals.
Buyer Alliances and Managed Competition
Authors: Che Yeon‐Koo , Gale Ian
Published: January 2004

In a health insurance market, a large employer or an organized “buyer alliance” is in a position to influence the design of plans offered to its members. We study how the sponsors of buyer alliances manage competition among insurance firms by focusing on their choices of the format of competition, the number of firms allowed to compete, and the quality of care offered by the firms. We find deviations from optimality in all three dimensions. Specifically, we find a tendency toward too many firms and too much quality, and a bias toward a format involving the prescreening of insurance plans by the sponsor.
The Firm as a Multicontract Organization
Authors: Laffont Jean‐Jacques , Martimort David
Published: January 2004

The firm is often considered as a nexus of contracts linking the management and its different stakeholders: claim‐holders, workers, unions, customers, suppliers, and the state, among others. This paper surveys recent work in contract theory, the multiprincipal incentive theory, and the theory of side contracts, which provides some insights into the structure of those contracts and therefore into the structure of the firm. First, we discuss the incomplete contracting assumptions underlying these variations of the usual grand contract approach. Second, we explain how the theoretical lessons learned from this work—the distribution of contracting rights, the power of incentive schemes within organizations, and the design of communication channels—apply to the theory of the firm.
Contract Complexity, Incentives, and the Value of Delegation
Authors: Melumad Nahum , Mookherjee Dilip , Reichelstein Stefan
Published: January 2004

In settings where the revelation principle applies, delegation arrangements are frequently inferior to centralized decision making, and at best achieve the same level of performance. This paper studies the value of delegation when organizations are constrained by a bound on the number of contingencies in any contract. For a principal‐agent setting with asymmetric information, we compare centralized mechanisms where the principal retains sole responsibility for contracting and coordinating production, with delegation mechanisms where one agent (a manager) is delegated authority to contract with other agents and coordinate production. Relative to centralization, delegation entails a control loss, but allows decisions to be more sensitive to the manager's private information. We identify circumstances under which the flexibility gain outweighs the control loss, so that delegation emerges superior to centralized contracting.
Capacity Commitment versus Flexibility
Authors: Boyer Marcel , Moreaux Michel
Published: January 2004

We show how technological flexibility choices and equilibrium configurations (both simultaneous and sequential duopoly) depend on six industry characteristics. Low market volatility combined with intermediate market size favors inflexible technologies; large values of either volatility or size favor flexible technologies; low or intermediate values of both favor the coexistence of flexible and inflexible technologies. The possibility of a flexibility trap exists in industries of low volatility and intermediate size. Entry prevention can sometimes be achieved by inflexible technologies or flexible technologies, depending on the industry characteristics.
Firm Characteristics and the Speed of FDA Approval
Authors: Olson Mary K.
Published: January 2004

This paper empirically examines the effect of firm‐specific characteristics on the length of time required by the Food and Drug Administration (FDA) to review and approve new‐drug applications between 1990 and 1992. The approach treats regulatory decisions as endogenous and explains the variation in regulatory behavior as a function of differences that exist between firms and drugs. Results show that, controlling for drug‐specific characteristics, regulators respond to firm‐specific characteristics when evaluating new drug applications. For instance, firms that are less diversified and more R&D‐inten‐sive receive shorter review times for their new‐drug applications than more diversified and less R&D‐intensive firms. The reason is that most firm characteristics signal information to reviewers about either firm reputation or application quality. This information reduces reviewers' uncertainty about approving a dangerous or ineffective drug and leads to faster review times. The results suggest that regulators respond to the heterogeneities among firms in the pharmaceutical market in systematic ways.
Division of Labor in Teams
Authors: Lin Y. Joseph
Published: January 2004

This paper examines the incentive effects of division of labor on worker effort, in the absence of the scale effects studied by Adam Smith. The game‐theoretic model gives two results. (1) Suppose workers are identical and risk‐neutral, and there is stochastic observation of group output by the firm offering compensations subject to some worker‐participation constraint. Then the firm can arrive at the same first‐best outcome with or without division of labor. However, if workers are risk‐averse, division of labor can give the firm strictly greater profit. (2) A deepening division of labor magnifies this positive incentive effect; but if workers are heterogeneous, or if there are certain informational imperfections in the production process, this incentive advantage of division of labor could be impaired or even reversed. The first result may help explain the emergence of division of labor in the early stages of industrialization without relying on the Smithian advantages, which are also present in some labor deployment schemes without division of labor. The second result throws light on some recent anecdotal evidence of a shallowing division of labor in some areas of modern manufacturing. These factors affecting the efficiency of division of labor are then further discussed in the light of recent empirical findings on division of labor and team work, such as those in Katzenbach and Smith (1993).
Synergies in Wireless Telephony: Evidence from the Broadband PCS Auctions
Authors: Ausubel Lawrence M. , Cramton Peter , McAfee R. Preston , McMillan John
Published: January 2004

We examine bid data from the first two broadband PCS spectrum auctions for evidence of value synergies. First, we estimate a benchmark regression for the determinants of final auction prices. Then, we include variables reflecting the extent to which bidders ultimately won or already owned the adjacent wireless properties. Consistent with geographic synergies in an ascending‐bid auction, prices were higher when the highest losing bidder had adjacent licenses. The footprints of winning bidders suggest that they were often successful in realizing these synergies.
Making More from Less: Strategic Demand Reduction in the FCC Spectrum Auctions
Authors: Weber Robert J.
Published: January 2004

When multiple items are sold through the use of simultaneous ascending‐bid auctions, bidders can find it in their mutual interests to reduce their aggregate demand for the items while prices are still low relative to the bidders' valuations. The FCC's first broadband PCS auction provides examples of how such mutual reductions might be arranged even when the bidders are not allowed to communicate with one another outside of the auction arena.
Up in the Air: GTE's Experience in the MTA Auction for Personal Communication Services Licenses
Authors: Salant David J.
Published: January 2004

In late 1994, GTE, one of the largest telecommunications firms in the world, entered an auction for the rights to provide personal communications services (PCS) using the electromagnetic spectrum. The administering agency, the Federal Communications Commission, adopted a novel multiple‐round format for the PCS auction. The format presented GTE with a complex bidding problem. This article describes how the GTE bidding team answered the following question: Given its budget and valuations and the information available about rival bidders, how should GTE bid to achieve the best attainable outcome?
Second‐Price Auctions with Asymmetric Payoffs: An Experimental Investigation
Authors: Avery Christopher , Kagel John H.
Published: January 2004

A series of two‐player, second‐price common‐value auctions are reported. In symmetric auctions, bidders suffer from a winner's curse. In asymmetric auctions in which one bidder has a private value advantage, the effect on bids and prices is proportional rather than explosive (the prediction of Nash equilibrium bidding theory). Although advantaged bidders are close to making best responses to disadvantaged bidders, the latter bid much more aggressively than in equilibrium, thereby earning negative average profits. Experienced bidders consistently bid closer to the Nash equilibrium than inexperienced bidders, although these adjustments towards equilibrium are small and at times uneven.
Entry and Predation: British Shipping Cartels 1879–1929
Authors: Morton Fiona Scott
Published: January 2004

I examine the outcomes of cases of entry by merchant shipping lines into established markets around the turn of the century. These established markets are completely dominated by an incumbent cartel composed of several member shipping lines. The cartel makes the decision whether or not to begin a price war against the entrant; some entrants are formally admitted to the cartel without any conflict. I use characteristics of the entrant to predict whether or not the entrant will encounter a price war conditional on entering. I find that weaker entrants are fought, where “weaker” means having fewer financial resources, less experience, smaller size, or poor trade conditions. The empirical results provide most support for the long‐purse theory of predation. Due to the small number of observations available, 47, I discuss qualitative evidence (such as predatory intent expressed in correspondence between cartel members) that supports the empirical results. The results are also found to be robust to misclassification of the dependent variable, which is a particular concern when dealing with historical data.
Option Contracts and Vertical Foreclosure
Authors: Ma Ching‐To Albert
Published: January 2004

A model of vertical integration is studied. Upstream firms sell differentiated inputs; downstream firms bundle them to make final products. Downstream products are sold as option contracts, which allow consumers to choose from a set of commodities at predetermined prices. The model is illustrated by examples in telecommunication and health markets. Equilibria of the integration game must result in upstream input foreclosure and downstream monopolization. Consumers may or may not benefit from integration.
Nonlinear Supply Contracts, Exclusive Dealing, and Equilibrium Market Foreclosure
Authors: O'Brien Daniel P. , Shaffer Greg
Published: January 2004

We examine how the feasibility of both nonlinear pricing and exclusive dealing arrangements affect incentives for market foreclosure when two manufacturers contract with a retail monopolist. Surprisingly, we find that although market foreclosure equilibria exist, they are Pareto‐dominated (from each manufacturer's perspective) by all nonforeclosure equilibria. If one believes that Pareto‐dominated equilibria are unlikely to arise, then the difference between our results and those of Mathewson and Winter (1987), who do not allow for nonlinear pricing, suggests an ironic twist on the notion that quantity discounts and other kinds of nonlinear pricing can provide an additional way for a manufacturer to foreclose a rival. By providing a manufacturer with increased flexibility (beyond linear pricing) to extract a retailer's surplus, nonlinear pricing may instead have the effect of reducing the incidence of observed market foreclosure.
Tender Offers, Proxy Contests, and Large‐Shareholder Activism
Authors: Dasgupta Sudipto , Nanda Vikram
Published: January 2004

The paper analyzes tender offers and proxy contests as alternative means of resolving corporate governance conflicts between dissidents and incumbent management. We show that when a dissident shareholder is sufficiently confident about the potential benefits from changing corporate policy, he will seek majority control by making a tender offer rather than initiating a proxy contest. When the dissident is relatively uninformed, however, he may opt for a proxy contest, thereby utilizing the information of other shareholders to implement the better policy. Consistent with empirical evidence, the model predicts that announcements of tender offers will tend to be associated with larger positive stockprice reactions than announcements of proxy contests. The model is easily extended to allow for promanagement bias in proxy voting by institutional investors. Empirical observations that have been viewed as evidence of such promanagement bias are shown to be quite consistent with the absence of such bias. Policy issues are discussed as well. An interesting result is that even policies targeted at reducing the costs of conducting proxy contests may have ambiguous social consequences, given the possibility of substitution between tender offers and proxy contests.
Regulation of Duopoly: Managed Competition vs Regulated Monopolies
Authors: Wolinsky Asher
Published: January 2004

This paper discusses the regulation of oligopolistic differentiated‐product industries. The regulator can control prices and impose quantity restrictions, but cannot control the quality choices of the firms. We inquire about the optimal choice of regulatory regime—whether and under what conditions managed competition or segmentation of the market between regulated monopolies achieves better results. In the spatial duopoly model analyzed here, unhindered competition generally results in an inefficient allocation. When the regulator knows the technologies, optimal managed competition results in distortions of the quality choice, but an optimal regulated‐monopolies regime achieves the first best outcome. When the regulator is uncertain about the technologies, neither of these methods yields the first‐best outcome. The regulated‐monopolies regime still tends to produce better quality choices, but managed competition tends to be more effective at extracting rents from the firms. The overall comparison depends on some finer details of the environment.
The Regulation of Predatory Firms
Authors: Faure‐Grimaud Antoine
Published: January 2004

This article investigates the issue ofpredation by a regulated firm. Since it has private information, a regulated firm obtains higher rents in case of successful predation: the fewer the competitors, the higher the marginal social value of the regulated firm's effort and the higher the informational rents. Both principals (the investor of a “target” firm and the regulator) have to provide some incentives to prevent predation: the investor has to reduce the sensitivity of refinancing to predation; the regulator has to lower the gain of successful predation. It is shown that there is a trade‐off between the power of the regulatory incentive scheme and the regulated firm's incentives to prey. In addition, as deterring predation is costly, the investor and the regulator compete when offering contracts: each wants to free‐ride on the other. Hence, predation may occur in equilibrium although it makes both principals worse off.
Paying Customers to Switch
Authors: Chen Yongmin
Published: January 2004

This paper studies the business practice of offering discounts to new customers in markets with switching costs. In a two‐period homogeneous‐good duopoly model, it is shown that the equilibrium amount of discounts increases continuously in the expected switching costs of a typical consumer. In equilibrium, firms offer the same prices and discounts in a mature market even if they have different market shares, and the demands faced by these firms in a new market become more elastic. Firms are worse off engaging in the discriminatory pricing, while consumers need not necessarily benefit from it. There is costly equilibrium switching of consumers, which creates a dead‐weight loss to the society.
Limited Liability and Bonus Contracts
Authors: Kim Son Ku
Published: January 2004

This paper studies the nature of incentive contracts between a risk‐neutral principal and a risk‐neutral agent under the constraint that the agent's liability is limited. A necessary and sufficient condition is derived for the existence of a first‐best contract under this constraint, and a bonus‐based contract is shown to be the most efficient contractual form. Implications of bonus contracts are also discussed.
The Regulation of Predatory Firms
Authors: Faure‐Grimaud Antoine
Published: January 2004

This article investigates the issue of predation by a regulated firm. Since it has private information, a regulated firm obtains higher rents in case of successful predation: the fewer the competitors, the higher the marginal social value of the regulated firm's effort and the higher the informational rents. Both principals (the investor of a “target” firm and the regulator) have to provide some incentives to prevent predation: the investor has to reduce the sensitivity of refinancing to predation; the regulator has to lower the gain of successful predation. It is shown that there is a trade‐off between the power of the regulatory incentive scheme and the regulated firm's incentives to prey. In addition, as deterring predation is costly, the investor and the regulator compete when offering contracts: each wants to free‐ride on the other. Hence, predation may occur in equilibrium although it makes both principals worse off.
Patent Breadth, Patent Life, and the Pace of Technological Progress
Authors: O'Donoghue Ted , Scotchmer Suzanne , Thisse Jacques‐François
Published: January 2004

In active investment climates where firms sequentially improve each other's products, a patent can terminate either because it expires or because a non‐infringing innovation displaces its product in the market. We define the length of time until one of these happens as the effective patent life, and show how it depends on patent breadth. We distinguish lagging breadth, which protects against imitation, from leading breadth, which protects against new improved products. We compare two types of patent policy with leading breadth: (1) patents are finite but very broad, so that the effective life of a patent coincides with its statutory life, and (2) patents are long but narrow, so that the effective life of a patent ends when a better product replaces it. The former policy improves the diffusion of new products, but the latter has lower R&D costs.
Task Shifts vs. Termination as Devices for Eliciting Optimal Effort Supply
Authors: Mori Pier Angelo
Published: January 2004

This paper contrasts assignments to punitive tasks and terminations as alternative incentive devices. The basic question we ask here is: does the threat of assigning employees to a punitive task allow one to attain higher effort levels than termination threats? The answer critically depends on whether employers are able or not to commit themselves not to fire. We show that in the no‐commitment case the only relevant incentive device is termination threats. In contrast, when employers commit themselves not to fire, by threatening punitive task reassignments there obtain effort levels that are not implementable by termination. The implementation results are then applied to the study of incentive problems arising when investment infirm‐specific human capital is unverifiable.
Competition for Managers and Product Market Efficiency
Authors: Barros Fátima , Macho‐Stadler Inés
Published: January 2004

We investigate whether competition between two firms to hire managers with different abilities might affect efficiency in the product market, when a manager's effort is his/her private information. We conclude that competition for managers might lead to an improvement in efficiency in the market of the firm that attracts the most efficient manager. Competition for managers might even eliminate the productive efficiency loss due to the asymmetry of information in the firm‐manager relationship.
Health‐Care Payment Systems: Cost and Quality Incentives—Reply
Authors: Ma Ching‐to Albert
Published: January 2004

I reconsider the implementation of efficient cost and quality efforts when health‐care providers may refuse services to consumers, and introduce a mechanism that is a combination of prospective payment and cost reimbursement. Conditions are derived for the prospective payment level and the margin above cost reimbursement for the implementation of efficient efforts.
The Vertical Organization of Industry: Systems Competition versus Component Competition
Authors: Farrell Joseph , Monroe Hunter K. , Saloner Garth
Published: January 2004

We discuss two contrasting styles of vertical organization of complementary activities or components in an industry: systems competition versus component competition. When firms' competencies differ, systems competition is not a perfect substitute for component competition, even with Bertmnd behavior. Costs, prices, industry profits, and the distribution of those profits among firms all differ between the two styles of organization. Moreover, firms' profit incentives do not generally guide them towards the socially efficient form of vertical organization. In duopoly, there is a bias towards open organization (component competition), but with enough firms (three or more, in an exponential example) this bias is reversed.
Statistical Causality and Strategic Behavior in Industrial Markets
Authors: Gilligan Thomas W. , Sarkar Subrata
Published: January 2004

This paper proposes a simple test of the leader‐follower model of strategic behavior. This test relates the temporal notions of leadership central to such models to the empirical methods of statistical causality. This test is performed using data from the US softwood plywood industry of the last three decades. Others have productively explored the spatial pricing practices of this industry by applying a leader‐follower model. Similarly, we find that a leader‐follower model explains well the temporal relations between key strategic variables (prices) in the industry. We conclude that the leader‐follower model imposes meaningful restrictions on observable time‐series data and that statistical causality is a useful method for testing these restrictions.
Time Schedule and Program Profile: TV News in Norway and Denmark
Authors: Nilssen Tore , Sørgard Lars
Published: January 2004

Two TV channels compete on programming with respect to both time schedule (continuous choice) and program profile (discrete choice), with a directional constraint concerning time schedule (viewers cannot watch TV before they get home). We show how the relative importance of program profile and time schedule, as perceived by the viewers, determines the equilibrium outcome. Furthermore, we find that there is a first‐mover disadvantage in a sequential game where one channel sets its two choice variables before its rival does, and a first‐mover advantage in a semise‐quential game where the channels set time schedules sequentially and thereafter set program profiles simultaneously. The results are applied to the Norwegian and Danish markets for TV news, where number‐two channels have challenged the incumbents.
Influence Costs, Structural Inertia, and Organizational Change
Authors: Schaefer Scott
Published: January 2004

This paper builds an economic model of the relationship between influence activity and resistance to change in organizations. I show that influence activity can create harmful barriers to change and that the influence costs of change are positively related to the firm's prospects. The model rationalizes the widely held view that firms often must endure a survival‐threatening crisis before meaningful change can be achieved. I show that employees' choices of whether to engage in influence activity can depend on their beliefs as to whether the firm will choose to change its organizational form. If employees expect change, their best response is to try to affect the form of the change in their favor.
Disciplinary Takeovers and Industry Effects
Authors: Kerschbamer Rudolf
Published: January 2004

This paper presents a disciplinary explanation for some seemingly paradoxical stylized facts from the takeover literature. Most notable among these are: (1) hostile takeovers are predicted better by industry‐wide than by firm‐specific performance failures; and (2) gains from a successful bid for a specific firm extend to other firms in the same industry. Our explanation is based on the idea that managerial incentives based on relative performance evaluation may induce an inefficient industry‐wide equilibrium in which all firms underperform with respect to a value‐maximizing firm, but no firm underperforms with respect to the industry average. A takeover can serve as a means to destroy such an inefficient industry‐wide incentive equilibrium.
Profitability under an Open versus a Closed System
Authors: Kende Michael
Published: January 2004

This paper explores the conditions under which a monopolist selling a system consisting of a main component and differentiated secondary components can increase profits by allowing competition in the aftermarket for the secondary components. Opening the system in this fashion can increase profits by giving consumers an added incentive to incur the setup cost of purchasing the main component. This paper extends the second‐sourcing literature by showing the explicit effects of various parameters of demand on the decision to open the system. The results show that an open system is likely to be more profitable than a closed one when demand for the system is more elastic, when secondary‐component variety is more valued, and when the share of the main component in the total system budget of the consumer is high.
Increases in Executive Pay Following Privatization
Authors: Wolfram Catherine D.
Published: January 2004

The average chief executive at one of Britain's twelve regional electricity distribution companies experienced nearly a threefold salary increase in the two years following the industry privatization in 1990. It is hard to account for the tremendous pay raises with conventional explanations for executive compensation rates. They are not attributable to increases in managerial talent, because privatization brought virtually no changes in personnel at the top rank. In addition, the salary increases did not coincide with dramatic changes in firm scale, and cross‐firm differences in the raises are uncorrelated with stock‐market returns and other measures of firm performance. By contrast, salary increases are highly correlated with firms' potential profits (as measured by the administratively assigned price cap). The findings presented here thus provide new perspectives on the determinants of executive compensation.
Contract Renegotiation with Time‐Varying Valuations
Authors: Blume Andreas
Published: January 2004

The paper characterizes optimal renegotiation‐proof rental contracts in a model with adverse selection and hidden information. It generalizes the work of Hart and Tirole (1988) to the case of time‐varying valuations. The paper considers a durable‐goods monopolist who serves a nonanonymous buyer with time‐varying valuation for the seller's good. The buyer's valuation has a persistent and a transient component; both are private information. The paper shows that for some range of prior beliefs the seller strictly prefers leasing to selling.
Seller Financing of Consumer Durables
Authors: Sen Arijit
Published: January 2004

Sellers of consumer durables often provide financing to customers. This paper shows that when customers desire consumption smoothing and when financial markets are imperfect, a seller can find it optimal to offer a menu of deferred‐payment plans. A monopolist seller price discriminates among customers with different intertemporal income profiles by making such menu offers, and the interest rate on the seller credit can be significantly lower than the market borrowing rate. Seller financing can be an equilibrium outcome in a game where sellers and banks with market power choose payment plans and interest rates strategically.