Managing a duopolistic water market with confirmed proposals. An experiment

We report results from experimental water markets in which owners of two different sources of water supply water to households and farmers. The final water quality consumed by each type of consumer is determined through mixing of qualities from two different resources. We compare the standard duopolistic market structure with an alternative market clearing mechanism inspired by games with confirmed strategies (which have been shown to yield collusive outcomes). As in the static case, complex dynamic markets operating under a confirmed proposals protocol yield less efficient outcomes because coordination among independent suppliers has the usual effects of restricting output and increasing prices to the users. Our results suggest that, when market mechanisms are used to allocate water to its users, the rule of thumb used by competition authorities can also serve as a guide towards water market regulation.

Corporate capital structure revisited: incomplete markets and default

After Modigliani and Miller (1958) presented their capital structure irrelevance proposition, analysis of corporate Önancing choices involving debt and equity instruments have generally followed two trends in the literature, where models either incorporate informational asymmetries or introduce tax beneÖts in order to explain optimal capital structure determination (Myers, 2002). None of these features is present in this paper, which develops an asset pricing model with the purpose of providing a positive theory of corporate capital structure by replicating main aspects of standard contractual practice observed in real markets. Alternatively, the imperfect market structure of the economy is tailored to match what is most common in corporate reality. Allowance for default on corporate debt with an associated penalty of seizure of Örmís future cash áows by creditors is introduced, for instance. In this context, a qualitative assessment of Önancial managersídecisions is carried out through numerical procedures.

Domestic Market-based Industrial Cluster Development in Modern China

China’s huge domestic market is constantly expanding, and is low-end demand oriented and highly dispersed. The domestic market-based development of China’s industrial cluster, however, is not only a quantitative expansion, but has also been accompanied with remarkable qualitative upgrading. Specialized markets are a microcosm that clearly indicate this paradoxical phenomenon. By analyzing three typical cases of industrial clusters that have specialized markets, this paper will make the case that under modern China’s market conditions, the local public sector is the crucial driving force for upgrading industrial clusters, which organize complicated transactions, promote quality control, and stimulate the division of labor.

Industry-specific human capital, knowledge labour, and industry wage structure in Taiwan

This paper investigates the role of industry-specific human capital (ISHC) in determining industry wage structure. The model presented in this paper distinguishes between knowledge labour and physical labour. Knowledge labour is physical labour embodied with ISHC. It is postulated that more ISHC-intensive industries, such as high-tech industries, pay higher wages and the wage premiums increase with workers' experience. The hypothesis is tested using a merged sample of 1997 - 1999 manpower utilization survey data from a newly industrialized economy - Taiwan. The findings show support for the effect of ISHC.

Market definition in industrial high-technology markets

This dissertation analyzes how marketers define markets in technology-based industries. One of the most important strategic decisions marketers face is determining the optimal market for their products. Market definition is critical in dynamic high technology markets characterized by high levels of market and technological uncertainty. Building on literature from marketing and related disciplines, this research is the first in-depth study of market definition in industrial markets. Using a national, probability sample stratified by firm size, 1,000 marketing executives in nine industries (automation, biotechnology, computers, medical equipment and instrumentation, pharmaceuticals, photonics, software, subassemblies and components, and telecommunications) were surveyed via a mail questionnaire. A 20.8% net response rate yielding 203 surveys was achieved. The market structure-conduct-performance (SCP) paradigm from industrial organization provided a conceptual basis for testing a causal market definition model via LISREL. A latent exogenous variable (competitive intensity) and four latent endogenous variables (marketing orientation, technological orientation, market definition criteria, and market definition success) were used to develop and test hypothesized relationships among constructs. Research questions relating to market redefinition, market definition characteristics, and internal (within the firm) and external (competitive) market definition were also investigated. Market definition success was found to be positively associated with a marketing orientation and the use of market definition criteria. Technological orientation was not significantly related to market definition success. Customer needs were the key market definition characteristic to high-tech firms (technology, competition, customer groups, and products were also important). Market redefinition based on changing customer needs was the most effective of seven strategies tested. A majority of firms regularly defined their market at the corporate and product-line level within the firm. From a competitive perspective, industry, industry sector, and product-market definitions were used most frequently.

Does market upgrading benefit farmers? : market differentiation, contract farming, and professional cooperatives in China's pork processing industry

This study tested whether contract farming or farmers professional cooperatives (FPCs) improved the social benefit of pork production and income of breeding farmers in China. The main concern of this study is whether institutional arrangement like contract farming or FPCs actually improved the welfare of farmers as expected. To answer this question accurately, we estimated the differentiated market demand of pork products in order to quantify the benefit by transaction types. Our study finds that contract farming or FPCs improved the benefits of pork products, but farmer's income remained lower than that of traditional transaction types. This finding is new in terms of quantifying distribution of the economic values among sales outlets, agro-firms and farmers. It is more reliable because it explicitly captures impacts from both demand side and supply side by structural estimation. In practice, we need to keep it mind the bargaining power of small farmers will not improve instantly even when the contract farming or FPCs are introduced.

Cross-cultural consumer/consumption research : dealing with issues emerging from globalization and fragmentation

To understand the effects of globalization and fragmentation, macromarketing scholars need insights about links between individual consumer behavior and societal outcomes. The challenge in this regard is to create a program of macrooriented cross-cultural research. This article offers a crosscultural consumer behavior research framework for this purpose. The framework encompasses four key areas of consumer behavior that are related to the forces of globalization and fragmentation, including the environment, identity, wellbeing,and market structure and policy. A discussion of these substantive areas is followed by a suggested macro-microoriented research agenda and a call for paradigm plurality in pursuing this agenda.

The gender wage gap : a comparison of Australia and Canada

Using data from the 1989 Canadian Labour Market Activity Survey and, for Australia, the 1989-90 Income Distribution Survey, the authors investigate the reasons for the significantly lower gender wage gap in Australia than in Canada. Key similarities and differences between these two countries, the authors argue, make them a good basis for a "natural experiment" to investigate the effects of different labor market institutions. In particular, Australia has a stronger union movement and a greater degree of centralization in wage determination than Canada, and most of its workers are covered by legally binding minimum working conditions. The authors conclude that several differences between the countries in labor market structure-notably, a lower rate of return to education, a lower rate of return to labor market experience, and a lower level of wage inequality in Australia than in Canada- are largely responsible for the smaller gender wage gap in Australia.

Principles of investments

"Emphasises asset allocation while presenting the practical applications of investment theory. The authors concentrate on the intuition and insights that will be useful to students throughout their careers as new ideas and challenges emerge from the financial marketplace. It provides a good foundation to understand the basic types of securities and financial markets as well as how trading in those markets is conducted. The Portfolio Management section is discussed towards the end of the course and supported by a web-based portfolio simulation with a hypothetical $100,000 brokerage account to buy and sell stocks and mutual funds. Students get a chance to use real data found in the Wall Street Survivor simulation in conjunction with the chapters on investments. This site is powered by StockTrak, the leading provider of investment simulation services to the academic community. Principles of Investments includes increased attention to changes in market structure and trading technology. The theory is supported by a wide range of exercises, worksheets and problems."--publisher website Contents: Investments: background and issues -- Asset classes and financial markets -- Securities markets -- Managed funds and investment management -- Risk and return: past and prologue -- Efficient diversification -- Capital asset pricing and arbitrage pricing theory -- The efficient market hypothesis -- Bond prices and yields -- Managing bond portfolios -- Equity valuation -- Macroeconomic and industry analysis -- Financial statement analysis -- Investors and the investment process -- Hedge funds -- Portfolio performance evaluation.

Predicting price-tag for customized goods

We discuss a dynamic pricing model which will aid automobile manufacturer in choosing the right price for customer segment. Though there is oligopoly market structure, the customers get "locked" into a particular technology/company which virtually makes the situation akin to a monopoly. There are associated network externalities and positive feedback. The key idea in monopoly pricing lies in extracting the customer surplus by exploiting the respective elasticities of demand. We present a Walrasian general equilibrium approach to determine the segment price. We compare the prices obtained from optimization model with that from Walrasian dynamics. The results are encouraging and can serve as a critical factor in Customer Relationship Management (CRM) and thereby effectively manage the lock-in.

Screening Cycles

We demonstrate how endogenous information acquisition in credit markets creates lending cycles when competing banks undertake their screening decisions in an uncoordinated way, thereby highlighting the role of intertemporal screening externalities induced by lending market competition as a structural source of instability. We show that uncoordinated screening behavior of competing banks may be not only the source of an important financial multiplier, but also an independent source of fluctuations inducing business cycles. The screening cycle mechanism is robust to generalizations along many dimensions such as the lending market structure, the lending rate determination and the imperfections in the screening technology.

The Physical Strenuousness of Work is Slightly Associated with an Upward Trend in the Body Mass Index

This paper explores the relationship between the physical strenuousness of work and the body mass index in Finland, using individual microdata over the period 1972-2002. The data contain self-reported information about the physical strenuousness of a respondent’s current occupation. Our estimates show that the changes in the physical strenuousness of work can explain around 8% at most of the definite increase in BMI observed over the period. The main reason for this appears to be that the quantitative magnitude of the effect of the physical strenuousness of work on BMI is rather moderate. Hence, according to the point estimates, BMI is only around 1.5% lower when one’s current occupation is physically very demanding and involves lifting and carrying heavy objects compared with sedentary job (reference group of the estimations), other things being equal. Accordingly, the changes in eating habits and the amount of physical activity during leisure time must be the most important contributors to the upward trend in BMI in industrialised countries, but not the changes in the labour market structure.

Trade Liberalization, Heterogeneous Firms and Industrial Dynamics

This master thesis studies how trade liberalization affects the firm-level productivity and industrial evolution. To do so, I built a dynamic model that considers firm-level productivity as endogenous to investigate the influence of trade on firm’s productivity and the market structure. In the framework, heterogeneous firms in the same industry operate differently in equilibrium. Specifically, firms are ex ante identical but heterogeneity arises as an equilibrium outcome. Under the setting of monopolistic competition, this type of model yields an industry that is represented not by a steady-state outcome, but by an evolution that rely on the decisions made by individual firms. I prove that trade liberalization has a general positive impact on technological adoption rates and hence increases the firm-level productivity. Besides, this endogenous technology adoption model also captures the stylized facts: exporting firms are larger and more productive than their non-exporting counterparts in the same sector. I assume that the number of firms is endogenous, since, according to the empirical literature, the industrial evolution shows considerably different patterns across countries; some industries experience large scale of firms’ exit in the period of contracting market shares, while some industries display relative stable number of firms or gradually increase quantities. The special word “shakeout” is used to describe the dramatic decrease in the number of firms. In order to explain the causes of shakeout, I construct a model where forward-looking firms decide to enter and exit the market on the basis of their state of technology. In equilibrium, firms choose different dates to adopt innovation which generate a gradual diffusion process. It is exactly this gradual diffusion process that generates the rapid, large-scale exit phenomenon. Specifically, it demonstrates that there is a positive feedback between firm’s exit and adoption, the reduction in the number of firms increases the incentives for remaining firms to adopt innovation. Therefore, in the setting of complete information, this model not only generates a shakeout but also captures the stability of an industry. However, the solely national view of industrial evolution neglects the importance of international trade in determining the shape of market structure. In particular, I show that the higher trade barriers lead to more fragile markets, encouraging the over-entry in the initial stage of industry life cycle and raising the probability of a shakeout. Therefore, more liberalized trade generates more stable market structure from both national and international viewpoints. The main references are Ederington and McCalman(2008,2009).

Mergers in Durable Goods Industries

Revised 2008-11.-- Published as an article in: Journal of Economic Behavior & Organization, 2008, 68, pp. 691-701.

Estructura de la bolsa española e introducción del mercado de activos derivados sobre el IBEX-35

[ES] La controversia acerca de si la implantación y negociación de activos derivados afecta a la estabilidad de los respectivos mercados de contado perdura desde hace más de dos décadas. En este trabajo abordamos la problemática anterior desde una nueva perspectiva. Concretamente, analizamos el impacto que sobre la estructura del mercado bursátil ha podido tener la introducción de los mercados de activos derivados sobre el IBEX-35. Para ello, definimos e identificamos la estructura del mercado bursátil para el periodo de estudio, y, a continuación, analizamos el efecto que sobre la misma ha tenido la aparición de los nuevos mercados de derivados. Nuestros resultados son consistentes con los de otros autores, ya que si bien no se ha producido un cambio generalizado y substancial en la estructura del mercado bursátil, la introducción de los nuevos mercados sí parece que ha afectado a un número reducido de empresas incluidas en el IBEX-35.