Dynamic product diversity

The goal of this paper is to study the frequency of new product introductions in monopoly markets where demand is subject to transitory saturation. We focus on those types of goods for which consumers purchase at most one unit of each variety, but repeat purchases in the same product category. The model considers infinitely-lived, forward-looking consumers and firms. We show that the share of potential surplus that a monopolist is able to appropriate increases with the frequency of introduction of new products and the intensity of transitory saturation. If the latter is sufficiently strong then the rate of introduction of new products is higher than socially desirable (excessive dynamic product diversity.)

Three essays in international finance

Executive Summary The first essay of this dissertation investigates whether greater exchange rate uncertainty (i.e., variation over time in the exchange rate) fosters or depresses the foreign investment of multinational firms. In addition to the direct capital financing it supplies, foreign investment can be a source of valuable technology and know-how, which can have substantial positive effects on a host country's economic growth. Thus, it is critically important for policy makers and central bankers, among others, to understand how multinationals base their investment decisions on the characteristics of foreign exchange markets. In this essay, I first develop a theoretical framework to improve our knowledge regarding how the aggregate level of foreign investment responds to exchange rate uncertainty when an economy consists of many firms, each of which is making decisions. The analysis predicts a U-shaped effect of exchange rate uncertainty on the total level of foreign investment of the economy. That is, the effect is negative for low levels of uncertainty and positive for higher levels of uncertainty. This pattern emerges because the relationship between exchange rate volatility and 'the probability of investment is negative for firms with low productivity at home (i.e., firms that find it profitable to invest abroad) and the relationship is positive for firms with high productivity at home (i.e., firms that prefer exporting their product). This finding stands in sharp contrast to predictions in the existing literature that consider a single firm's decision to invest in a unique project. The main contribution of this research is to show that the aggregation over many firms produces a U-shaped pattern between exchange rate uncertainty and the probability of investment. Using data from industrialized countries for the period of 1982-2002, this essay offers a comprehensive empirical analysis that provides evidence in support of the theoretical prediction. In the second essay, I aim to explain the time variation in sovereign credit risk, which captures the risk that a government may be unable to repay its debt. The importance of correctly evaluating such a risk is illustrated by the central role of sovereign debt in previous international lending crises. In addition, sovereign debt is the largest asset class in emerging markets. In this essay, I provide a pricing formula for the evaluation of sovereign credit risk in which the decision to default on sovereign debt is made by the government. The pricing formula explains the variation across time in daily credit spreads - a widely used measure of credit risk - to a degree not offered by existing theoretical and empirical models. I use information on a country's stock market to compute the prevailing sovereign credit spread in that country. The pricing formula explains a substantial fraction of the time variation in daily credit spread changes for Brazil, Mexico, Peru, and Russia for the 1998-2008 period, particularly during the recent subprime crisis. I also show that when a government incentive to default is allowed to depend on current economic conditions, one can best explain the level of credit spreads, especially during the recent period of financial distress. In the third essay, I show that the risk of sovereign default abroad can produce adverse consequences for the U.S. equity market through a decrease in returns and an increase in volatility. The risk of sovereign default, which is no longer limited to emerging economies, has recently become a major concern for financial markets. While sovereign debt plays an increasing role in today's financial environment, the effects of sovereign credit risk on the U.S. financial markets have been largely ignored in the literature. In this essay, I develop a theoretical framework that explores how the risk of sovereign default abroad helps explain the level and the volatility of U.S. equity returns. The intuition for this effect is that negative economic shocks deteriorate the fiscal situation of foreign governments, thereby increasing the risk of a sovereign default that would trigger a local contraction in economic growth. The increased risk of an economic slowdown abroad amplifies the direct effect of these shocks on the level and the volatility of equity returns in the U.S. through two channels. The first channel involves a decrease in the future earnings of U.S. exporters resulting from unfavorable adjustments to the exchange rate. The second channel involves investors' incentives to rebalance their portfolios toward safer assets, which depresses U.S. equity prices. An empirical estimation of the model with monthly data for the 1994-2008 period provides evidence that the risk of sovereign default abroad generates a strong leverage effect during economic downturns, which helps to substantially explain the level and the volatility of U.S. equity returns.

Precursor-product relationship between vitellogenin and the yolk proteins as derived from the complete sequence of a Xenopus vitellogenin gene.

In Xenopus laevis four estrogen-responsive genes are expressed simultaneously to produce vitellogenin, the precursor of the yolk proteins. One of these four genes, the gene A2, was sequenced completely, as well as cDNAs representing 75% of the coding region of the gene. From this data the exon-intron structure of the gene was established, revealing 35 exons that give a transcript of 5,619 bp without the poly A-tail. This A2 transcript encodes a vitellogenin of 1,807 amino acids, whose structure is discussed with respect to its function. At the nucleic acid as well as at the protein level no extensive homologies with any sequences other than vitellogenin were observed. Comparison of the amino acid sequence of the vitellogenin A2 molecule with biochemical data obtained from the different yolk proteins allowed us to localize the cleavage products on the vitellogenin precursor as follows: NH2 - lipovitellin I - phosvitin (or phosvette II - phosvette I) - lipovitellin II - COOH.

Recommender System Based on Consumer Product Reviews

Consumer reviews, opinions and shared experiences in the use of a product is a powerful source of information about consumer preferences that can be used in recommender systems. Despite the importance and value of such information, there is no comprehensive mechanism that formalizes the opinions selection and retrieval process and the utilization of retrieved opinions due to the difficulty of extracting information from text data. In this paper, a new recommender system that is built on consumer product reviews is proposed. A prioritizing mechanism is developed for the system. The proposed approach is illustrated using the case study of a recommender system for digital cameras

Equine herpesvirus-2 E10 gene product, but not its cellular homologue, activates NF-kappaB transcription factor and c-Jun N-terminal kinase.

We have previously reported on the death effector domain containing E8 gene product from equine herpesvirus-2, designated FLICE inhibitory protein (v-FLIP), and on its cellular homologue, c-FLIP, which inhibit the activation of caspase-8 by death receptors. Here we report on the structure and function of the E10 gene product of equine herpesvirus-2, designated v-CARMEN, and on its cellular homologue, c-CARMEN, which contain a caspase-recruiting domain (CARD) motif. c-CARMEN is highly homologous to the viral protein in its N-terminal CARD motif but differs in its C-terminal extension. v-CARMEN and c-CARMEN interact directly in a CARD-dependent manner yet reveal different binding specificities toward members of the tumor necrosis factor receptor-associated factor (TRAF) family. v-CARMEN binds to TRAF6 and weakly to TRAF3 and, upon overexpression, potently induces the c-Jun N-terminal kinase (JNK), p38, and nuclear factor (NF)-kappaB transcriptional pathways. c-CARMEN or truncated versions thereof do not appear to induce JNK and NF-kappaB activation by themselves, nor do they affect the JNK and NF-kappaB activating potential of v-CARMEN. Thus, in contrast to the cellular homologue, v-CARMEN may have additional properties in its unique C terminus that allow for an autonomous activator effect on NF-kappaB and JNK. Through activation of NF-kappaB, v-CARMEN may regulate the expression of the cellular and viral genes important for viral replication.

Profitability, uncertainty and multi-product firm product proliferation: The Spanish car industry

This article studies how product introduction decisions relate to profitability and uncertainty in the context of multi-product firms and product differentiation. These two features, common to many modern industries, have not received much attention in the literature as compared to the classical problem of firm entry, even if the determinants of firm and product entry are quite different. The theoretical predictions about the sign of the impact of uncertainty on product entry are not conclusive. Therefore, an econometric model relating firms’ product introduction decisions with profitability and profit uncertainty is proposed. Firm’s estimated profits are obtained from a structural model of product demand and supply, and uncertainty is proxied by profits’ variance. The empirical analysis is carried out using data on the Spanish car industry for the period 1990-2000. The results show a positive relationship between product introduction and profitability, and a negative one with respect to profit variability. Interestingly, the degree of uncertainty appears to be a driving force of entry stronger than profitability, suggesting that the product proliferation process in the Spanish car market may have been mainly a consequence of lower uncertainty rather than the result of having a more profitable market

Análise de métricas de risco na otimização de portfolios de ações

RESUMOOs trabalhos de Markowitz e Sharpe formaram as bases da chamada Moderna Teoria do Portfolio. Com o passar dos anos, os trabalhos desses autores foram revisados e medidas alternativas para formação de carteiras foram propostas. Diante disso, há necessidade de avaliar quais as diferenças entre tais medidas. Segundo Roman e Mitra, esse problema constitui uma nova fase de estudos, denominada de Teoria do Portfolio Pós-Moderna. Neste artigo, o objetivo é comparar os modelos de otimização com a utilização das medidas de risco desvio padrão (DP), momento parcial inferior (LPM) e valor em risco condicional (CVaR), para o estudo de suas diferentes formas de alocações em carteiras de ações negociadas na BM&FBovespa. A realização do artigo foi dividida em duas etapas: na primeira, houve a seleção das medidas de risco e a definição do período de análise; na segunda, houve a divisão dos ativos de acordo com a forma da distribuição de probabilidade dos retornos, um grupo composto por ações com retornos normalmente distribuídos e outro grupo por ações com retornos que não possuem distribuição normal. Quanto às medidas de risco, os testes apresentaram características similares entre os modelos; em relação aos retornos, os modelos que minimizaram o LPM e o CVaR demonstraram resultados superiores em comparação ao DP. Esses resultados são relevantes porque põem em contraposição os trabalhos que defendem não existir diferenças significativas entre os modelos.

Full diversity product codes for block erasure and block fading channels

We show how to build full-diversity product codes under both iterative encoding and decoding over non-ergodic channels, in presence of block erasure and block fading. The concept of a rootcheck or a root subcode is introduced by generalizing the same principle recently invented for low-density parity-check codes. We also describe some channel related graphical properties of the new family of product codes, a familyreferred to as root product codes.

Vertical Product Differentiation, Entry-Deterrence Strategies, and Entry Qualities, September 2005

We analyze the entry of a new product into a vertically differentiated market in which an entrant and an incumbent compete in prices. Here the entry-deterrence strategies of the incumbent firm rely on “limit qualities.” With a sequential choice of quality, a quality-dependent marginal production cost, and a fixed entry cost, we relate the entry-quality decision and the entry-deterrence strategies to the level of entry cost and the degree of consumer heterogeneity. Quality-dependent marginal production costs in the model entail the possibility of inferior-quality entry as well as an incumbent’s aggressive entry-deterrence strategies of increasing its quality level toward potential entry. Welfare evaluation confirms that social welfare is not necessarily improved when entry is encouraged rather than deterred.

Managing Quality under Heterogeneous Consumer Demand and Product Quality, October 2005

Based on accepted advances in the marketing, economics, consumer behavior, and satisfaction literatures, we develop a micro-foundations model of a firm that needs to manage the quality of a product that is inherently heterogeneous in the presence of varying customer tastes or expectations for quality. Our model blends elements of the returns to quality, customer lifetime value, and service profit chain approaches to marketing. The model is then used to explain several empirical results pertaining to the marketing literature by explicitly articulating the trade-offs between customer satisfaction and costs (including opportunity costs) of quality. In this environment firms will find it optimal to allow some customers to go unsatisfied. We show that the relationship between the expected number of repeated purchases by an individual customer is endogenous to the choice of quality by the firm, indicating that the number of purchases cannot be chosen freely to estimate a customer’s lifetime value.

Katepillarista kauppakassiin : product placement suomalaisessa tv-ohjelmatuotannossa

Product placement has become more and more common in Finnish television programmes lately. Product placement, as with the whole of the television industry, is strictly regulated and monitored by law. Surreptitious advertising, sponsorship, cooperative partnerships and product placement are often confused with each other. Partially these activities are interpenetrative. Present legislation doesn't recognise product placement, therefore it doesn't have any specific position in law, thus causing problems. Product placement in domestic tv-programmes is still relatively modest. More extensive activity is perceivable at the movies where the restrictions are considerably more liberal. In the United States, product placement is a part of a production's budget. Pressure to increase financing has grouwn in both Finland and Europe. There has been considerable preparation in advance of a new television directive in the European Union which would allow more liberal advertising and product placement as a part of financing tv-programmes. The proposal for a new directive is currently only on its first round so product placement probably won't become better defined in law in the near future. Finnish television producers were interviewed as part of the research for this thesis, in order to clarify product placement position and usage in domestic televion programmes. Surreptitious advertising, sponsorship, different kinds of cooperative partnerships and the need for guidance were also discussed in the course of the themed interviews. Even though product placement does not currently play a significant part in the financing of a production, there are certainly pressures in that direktion. In the field of television, the legal boundaries of product placement are presently being explored in order to assess its position as a part of budgeting and covering expenses.

Pharmaceutical Generics, Vertical Product Differentiation, and Public Policy

This paper studies oligopolistic competition in off-patent pharmaceutical markets using a vertical product differentiation model. This model can explain the observation that countries with stronger regulations have smaller generic market shares. It can also explain the differences in observed regulatory regimes. Stronger regulation may be due to a higher proportion of production that is done by foreign firms. Finally, a closely related model can account for the observed increase in prices by patent owners after entry of generic producers.