Essays in Firm Responses to Demand and Competition Shocks

The aim of this dissertation is to examine, model and estimate firm responses to

demand shocks by focusing on specific industries where demand shocks are well

identified. Combining reduced-form evidence and structural analysis, this dissertation

extends the economic literature by focusing on within-firm responses of firms

to two important demand shocks that are identifiable in empirical settings. First,

I focus on how firms respond to a decrease in effective demand due to competition

shocks coming from globalization. By considering China's accession to the World

Trade Organization in 2001 and its impact on the apparel industry, the aim of these

chapters is to answer how firms react to the increase in Chinese import competition,

what is the mechanism behind these responses, and how important they are in explaining

the survival of the Peruvian apparel industry. Second, I study how suppliers'

survival probability relates to the sudden disruption of their main customer-supplier

relationships with downstream manufacturers, conditional on suppliers' own idiosyncratic

characteristics such as physical productivity.

An examination of the effects of government purchases in an open economy

This paper examines the effects of permanent and transitory changes in government purchases in the context of a model of a small open economy that produces and consumes both traded and nontraded goods. The model incorporates an equilibrium interpretation of the business cycle that emphasizes the responsiveness of agents to intertemporal relative price changes. It is demonstrated that transitory increases in government purchases lead to an appreciation of the real exchange rate and an ambiguous change (although a likely worsening) in the current account, while permanent increases have an ambiguous impact on the real exchange rate and no effect on the current account. When agents do not know whether a given increase in government purchases is permanent or transitory the effect is a weighted average of these separate effects. The weights depend on the relative variances of the transitory and permanent components of government purchases. © 1985.

Sexual selection and canine dimorphism in New World monkeys.

Social and ecological factors are important in shaping sexual dimorphism in Anthropoidea, but there is also a tendency for body-size dimorphism and canine dimorphism to increase with increased body size (Rensch's rule) (Rensch: Evolution Above the Species Level. London: Methuen, 1959.) Most ecologist interpret Rensch's rule to be a consequence of social and ecological selective factors that covary with body size, but recent claims have been advanced that dimorphism is principally a consequence of selection for increased body size alone. Here we assess the effects of body size, body-size dimorphism, and social structure on canine dimorphism among platyrrhine monkeys. Platyrrhine species examined are classified into four behavioral groups reflecting the intensity of intermale competition for access to females or to limiting resources. As canine dimorphism increases, so does the level of intermale competition. Those species with monogamous and polyandrous social structures have the lowest canine dimorphism, while those with dominance rank hierarchies of males have the most canine dimorphism. Species with fission-fusion social structures and transitory intermale breeding-season competition fall between these extremes. Among platyrrhines there is a significant positive correlation between body size and canine dimorphism However, within levels of competition, no significant correlation was found between the two. Also, with increased body size, body-size dimorphism tends to increase, and this correlation holds in some cases within competition levels. In an analysis of covariance, once the level of intermale competition is controlled for, neither molar size nor molar-size dimorphism accounts for a significant part of the variance in canine dimorphism. A similar analysis using body weight as a measure of size and dimorphism yields a less clear-cut picture: body weight contributes significantly to the model when the effects of the other factors are controlled. Finally, in a model using head and body length as a measure of size and dimorphism, all factors and the interactions between them are significant. We conclude that intermale competition among platyrrhine species is the most important factor explaining variations in canine dimorphism. The significant effects of size and size dimorphism in some models may be evidence that natural (as opposed to sexual) selection also plays a role in the evolution of increased canine dimorphism.

Optimization of treatment strategy used during shockwave lithotripsy to maximize stone fragmentation efficiency.

BACKGROUND AND PURPOSE: Previous studies have demonstrated that treatment strategy plays a critical role in ensuring maximum stone fragmentation during shockwave lithotripsy (SWL). We aimed to develop an optimal treatment strategy in SWL to produce maximum stone fragmentation. MATERIALS AND METHODS: Four treatment strategies were evaluated using an in-vitro experimental setup that mimics stone fragmentation in the renal pelvis. Spherical stone phantoms were exposed to 2100 shocks using the Siemens Modularis (electromagnetic) lithotripter. The treatment strategies included increasing output voltage with 100 shocks at 12.3 kV, 400 shocks at 14.8 kV, and 1600 shocks at 15.8 kV, and decreasing output voltage with 1600 shocks at 15.8 kV, 400 shocks at 14.8 kV, and 100 shocks at 12.3 kV. Both increasing and decreasing voltages models were run at a pulse repetition frequency (PRF) of 1 and 2 Hz. Fragmentation efficiency was determined using a sequential sieving method to isolate fragments less than 2 mm. A fiberoptic probe hydrophone was used to characterize the pressure waveforms at different output voltage and frequency settings. In addition, a high-speed camera was used to assess cavitation activity in the lithotripter field that was produced by different treatment strategies. RESULTS: The increasing output voltage strategy at 1 Hz PRF produced the best stone fragmentation efficiency. This result was significantly better than the decreasing voltage strategy at 1 Hz PFR (85.8% vs 80.8%, P=0.017) and over the same strategy at 2 Hz PRF (85.8% vs 79.59%, P=0.0078). CONCLUSIONS: A pretreatment dose of 100 low-voltage output shockwaves (SWs) at 60 SWs/min before increasing to a higher voltage output produces the best overall stone fragmentation in vitro. These findings could lead to increased fragmentation efficiency in vivo and higher success rates clinically.

A Study of How Economic Attitudes Are Shaped by Environmental Shocks and Life Experiences

Social attitudes, attitudes toward financial risk and attitudes toward deferred gratification are thought to influence many important economic decisions over the life-course. In economic theory, these attitudes are key components in diverse models of behavior, including collective action, saving and investment decisions and occupational choice. The relevance of these attitudes have been confirmed empirically. Yet, the factors that influence them are not well understood. This research evaluates how these attitudes are affected by large disruptive events, namely, a natural disaster and a civil conflict, and also by an individual-specific life event, namely, having children.

By implementing rigorous empirical strategies drawing on rich longitudinal datasets, this research project advances our understanding of how life experiences shape these attitudes. Moreover, compelling evidence is provided that the observed changes in attitudes are likely to reflect changes in preferences given that they are not driven just by changes in financial circumstances. Therefore the findings of this research project also contribute to the discussion of whether preferences are really fixed, a usual assumption in economics.

In the first chapter, I study how altruistic and trusting attitudes are affected by exposure to the 2004 Indian Ocean tsunami as long as ten years after the disaster occurred. Establishing a causal relationship between natural disasters and attitudes presents several challenges as endogenous exposure and sample selection can confound the analysis. I take on these challenges by exploiting plausibly exogenous variation in exposure to the tsunami and by relying on a longitudinal dataset representative of the pre-tsunami population in two districts of Aceh, Indonesia. The sample is drawn from the Study of the Tsunami Aftermath and Recovery (STAR), a survey with data collected both before and after the disaster and especially designed to identify the impact of the tsunami. The altruistic and trusting attitudes of the respondents are measured by their behavior in the dictator and trust games. I find that witnessing closely the damage caused by the tsunami but without suffering severe economic damage oneself increases altruistic and trusting behavior, particularly towards individuals from tsunami affected communities. Having suffered severe economic damage has no impact on altruistic behavior but may have increased trusting behavior. These effects do not seem to be caused by the consequences of the tsunami on people’s financial situation. Instead they are consistent with how experiences of loss and solidarity may have shaped social attitudes by affecting empathy and perceptions of who is deserving of aid and trust.

In the second chapter, co-authored with Ryan Brown, Duncan Thomas and Andrea Velasquez, we investigate how attitudes toward financial risk are affected by elevated levels of insecurity and uncertainty brought on by the Mexican Drug War. To conduct our analysis, we pair the Mexican Family Life Survey (MxFLS), a rich longitudinal dataset ideally suited for our purposes, with a dataset on homicide rates at the month and municipality-level. The homicide rates capture well the overall crime environment created by the drug war. The MxFLS elicits risk attitudes by asking respondents to choose between hypothetical gambles with different payoffs. Our strategy to identify a causal effect has two key components. First, we implement an individual fixed effects strategy which allows us to control for all time-invariant heterogeneity. The remaining time variant heterogeneity is unlikely to be correlated with changes in the local crime environment given the well-documented political origins of the Mexican Drug War. We also show supporting evidence in this regard. The second component of our identification strategy is to use an intent-to-treat approach to shield our estimates from endogenous migration. Our findings indicate that exposure to greater local-area violent crime results in increased risk aversion. This effect is not driven by changes in financial circumstances, but may be explained instead by heightened fear of victimization. Nonetheless, we find that having greater economic resources mitigate the impact. This may be due to individuals with greater economic resources being able to avoid crime by affording better transportation or security at work.

The third chapter, co-authored with Duncan Thomas, evaluates whether attitudes toward deferred gratification change after having children. For this study we also exploit the MxFLS, which elicits attitudes toward deferred gratification (commonly known as time discounting) by asking individuals to choose between hypothetical payments at different points in time. We implement a difference-in-difference estimator to control for all time-invariant heterogeneity and show that our results are robust to the inclusion of time varying characteristics likely correlated with child birth. We find that becoming a mother increases time discounting especially in the first two years after childbirth and in particular for those women without a spouse at home. Having additional children does not have an effect and the effect for men seems to go in the opposite direction. These heterogeneous effects suggest that child rearing may affect time discounting due to generated stress or not fully anticipated spending needs.

Institutional Persistence in Eastern Europe: Economic and Political Legacies of Empires and Communism

This dissertation seeks to advance our understanding of the roles that institutions play in economic development. How do institutions evolve? What mechanisms are responsible for their persistence? What effects do they have on economic development?

I address these questions using historical and contemporary data from Eastern Europe and Russia. This area is relatively understudied by development economists. It also has a very interesting history. For one thing, for several centuries it was divided between different empires. For another, it experienced wars and socialism in the 20th century. I use some of these exogenous shocks as quasi-natural social experiments to study the institutional transformations and its effects on economic development both in the short and long run.

This first chapter explores whether economic, social, and political institutions vary in their resistance to policies designed to remove them. The empirical context for the analysis is Romania from 1690 to the 2000s. Romania represents an excellent laboratory for studying the persistence of different types of historical institutional legacies. In the 18th and 19th centuries, Romania was split between the Habsburg and Ottoman Empires, where political and economic institutions differed. The Habsburgs imposed less extractive institutions relative to the Ottomans: stronger rule of law, a more stable and predictable state, a more developed civil society, and less corruption. In the 20th century, the Romanian Communist regime tried deliberately to homogenize the country along all relevant dimensions. It was only partially successful. Using a regression discontinuity design, I document the persistence of economic outcomes, social capital, and political attitudes. First, I document remarkable convergence in urbanization, education, unemployment, and income between the two former empires. Second, regarding social capital, no significant differences in organizational membership, trust in bureaucracy, and corruption persist today. Finally, even though the Communists tried to change all political attitudes, significant discontinuities exist in current voting behavior at the former Habsburg-Ottoman border. Using data from the parliamentary elections of 1996-2008, I find that former Habsburg rule decreases by around 6 percentage points the vote share of the major post-Communist left party and increases by around 2 and 5 percentage points the vote shares of the main anti-Communist and liberal parties, respectively.

The second chapter investigates the effects of Stalin’s mass deportations on distrust in central authority. Four deported ethnic groups were not rehabilitated after Stalin’s death; they remained in permanent exile until the disintegration of the Soviet Union. This allows one to distinguish between the effects of the groups that returned to their homelands and those of the groups that were not allowed to return. Using regional data from the 1991 referendum on the future of the Soviet Union, I find that deportations have a negative interim effect on trust in central authority in both the regions of destination and those of origin. The effect is stronger for ethnic groups that remained in permanent exile in the destination regions. Using data from the Life in Transition Survey, the chapter also documents a long-term effect of deportations in the destination regions.

The third chapter studies the short-term effect of Russian colonization of Central Asia on economic development. I use data on the regions of origin of Russian settlers and push factors to construct an instrument for Russian migration to Central Asia. This instrument allows me to interpret the outcomes causally. The main finding is that the massive influx of Russians into the region during the 1897-1926 period had a significant positive effect on indigenous literacy. The effect is stronger for men and in rural areas. Evidently, interactions between natives and Russians through the paid labor market was an important mechanism of human capital transmission in the context of colonization.

The findings of these chapters provide additional evidence that history and institutions do matter for economic development. Moreover, the dissertation also illuminates the relative persistence of institutions. In particular, political and social capital legacies of institutions might outlast economic legacies. I find that most economic differences between the former empires in Romania have disappeared. By the same token, there are significant discontinuities in political outcomes. People in former Habsburg Romania provide greater support for liberalization, privatization, and market economy, whereas voters in Ottoman Romania vote more for redistribution and government control over the economy.

In the former Soviet Union, Stalin’s deportations during World War II have a long-term negative effect on social capital. Today’s residents of the destination regions of deportations show significantly lower levels of trust in central authority. This is despite the fact that the Communist regime tried to eliminate any source of opposition and used propaganda to homogenize people’s political and social attitudes towards the authorities. In Central Asia, the influx of Russian settlers had a positive short-term effect on human capital of indigenous population by the 1920s, which also might have persisted over time.

From a development perspective, these findings stress the importance of institutions for future paths of development. Even if past institutional differences are not apparent for a certain period of time, as was the case with the former Communist countries, they can polarize society later on, hampering economic development in the long run. Different institutions in the past, which do not exist anymore, can thus contribute to current political instability and animosity.

Do technology shocks drive hours up or down? A little evidence from an agnostic procedure

This paper analyzes the robustness of the estimate of a positive productivity shock on hours to the presence of a possible unit root in hours. Estimations in levels or in first differences provide opposite conclusions. We rely on an agnostic procedure in which the researcher does not have to choose between a specification in levels or in first differences. We find that a positive productivity shock has a negative impact effect on hours, but the effect is much shorter lived, and disappears after two quarters. The effect becomes positive at business-cycle frequencies, although it is not significant. © 2005 Cambridge University Press.

Moral masochism: on the connection between guilt and self-punishment.

Do people sometimes seek to atone for their transgressions by harming themselves physically? The current results suggest that they do. People who wrote about a past guilt-inducing event inflicted more intense electric shocks on themselves than did those who wrote about feeling sad or about a neutral event. Moreover, the stronger the shocks that guilty participants administered to themselves, the more their feelings of guilt were alleviated. We discuss how this method of atonement relates to other methods examined in previous research.

Four-decade responses of soil trace elements to an aggrading old-field forest: B, Mn, Zn, Cu, and Fe.

In the ancient and acidic Ultisol soils of the Southern Piedmont, USA, we studied changes in trace element biogeochemistry over four decades, a period during which formerly cultivated cotton fields were planted with pine seedlings that grew into mature forest stands. In 16 permanent plots, we estimated 40-year accumulations of trace elements in forest biomass and O horizons (between 1957 and 1997), and changes in bioavailable soil fractions indexed by extractions of 0.05 mol/L HCl and 0.2 mol/L acid ammonium oxalate (AAO). Element accumulations in 40-year tree biomass plus O horizons totaled 0.9, 2.9, 4.8, 49.6, and 501.3 kg/ha for Cu, B, Zn, Mn, and Fe, respectively. In response to this forest development, samples of the upper 0.6-m of mineral soil archived in 1962 and 1997 followed one of three patterns. (1) Extractable B and Mn were significantly depleted, by -4.1 and -57.7 kg/ha with AAO, depletions comparable to accumulations in biomass plus O horizons, 2.9 and 49.6 kg/ha, respectively. Tree uptake of B and Mn from mineral soil greatly outpaced resupplies from atmospheric deposition, mineral weathering, and deep-root uptake. (2) Extractable Zn and Cu changed little during forest growth, indicating that nutrient resupplies kept pace with accumulations by the aggrading forest. (3) Oxalate-extractable Fe increased substantially during forest growth, by 275.8 kg/ha, about 10-fold more than accumulations in tree biomass (28.7 kg/ha). The large increases in AAO-extractable Fe in surficial 0.35-m mineral soils were accompanied by substantial accretions of Fe in the forest's O horizon, by 473 kg/ha, amounts that dwarfed inputs via litterfall and canopy throughfall, indicating that forest Fe cycling is qualitatively different from that of other macro- and micronutrients. Bioturbation of surficial forest soil layers cannot account for these fractions and transformations of Fe, and we hypothesize that the secondary forest's large inputs of organic additions over four decades has fundamentally altered soil Fe oxides, potentially altering the bioavailability and retention of macro- and micronutrients, contaminants, and organic matter itself. The wide range of responses among the ecosystem's trace elements illustrates the great dynamics of the soil system over time scales of decades.

Mergers, Acquisitions, and Alliances

© 2012 by Oxford University Press. All rights reserved.This article considers the determinants and effects of M&As in the pharmaceutical industry, with a particular focus on innovation and R&D productivity. As is the case in other industries, mergers in the pharmaceutical field are driven by a variety of company motives and conditions. These include defensive responses to industry shocks as well as more proactive rationales, such as economies of scale and scope, access to new technologies, and expansion to new markets. It is important to take account of firms' characteristics and motivations in evaluating merger performance, rather than using a broad aggregate brushstroke. Research to date on pharmaceuticals suggests considerable variation in both motivation and outcomes. From an antitrust policy standpoint, the larger horizontal mergers in pharmaceuticals have run into few challenges from regulatory authorities in the United States and the European Union, given the option to spin off competing therapeutic products to other drug firms.

Oldest known cranium of a juvenile New World monkey (Early Miocene, Patagonia, Argentina): implications for the taxonomy and the molar eruption pattern of early platyrrhines.

A juvenile cranium of Homunculus patagonicus Ameghino, 1891a from the late Early Miocene of Santa Cruz Province (Argentina) provides the first evidence of developing cranial anatomy for any fossil platyrrhine. The specimen preserves the rostral part of the cranium with deciduous and permanent alveoli and teeth. The dental eruption sequence in the new specimen and a reassessment of eruption patterns in living and fossil platyrrhines suggest that the ancestral platyrrhine pattern of tooth replacement was for the permanent incisors to erupt before M(1), not an accelerated molar eruption (before the incisors) as recently proposed. Two genera and species of Santacrucian monkeys are now generally recognized: H. patagonicus Ameghino, 1891a and Killikaike blakei Tejedor et al., 2006. Taxonomic allocation of Santacrucian monkeys to these species encounters two obstacles: 1) the (now lost) holotype and a recently proposed neotype of H. patagonicus are mandibles from different localities and different geologic members of the Santa Cruz Formation, separated by approximately 0.7 million years, whereas the holotype of K. blakei is a rostral part of a cranium without a mandible; 2) no Santacrucian monkey with associated cranium and mandible has ever been found. Bearing in mind these uncertainties, our examination of the new specimen as well as other cranial specimens of Santacrucian monkeys establishes the overall dental and cranial similarity between the holotype of Killikaike blakei, adult cranial material previously referred to H. patagonicus, and the new juvenile specimen. This leads us to conclude that Killikaike blakei is a junior subjective synonym of H. patagonicus.