What moves German Bund futures contracts on the Eurex?

The German 10‐year Bund futures contract traded on the Eurex futures and options exchange in Frankfurt became the world's most actively traded derivative product by the end of 1999. In this article, we provide a detailed exploration of the interday and intraday return volatility in the Bund futures contract using a sample of five‐min returns from 1997 to 1998. The evolution of interday volatility is described best by a MA(1)‐fractionally integrated process that allows for the long‐memory features. At the intraday level, we find that macroeconomic announcements from both Germany and the U.S. are an important source of volatility. Among the various German announcements, we identify the IFO industry survey of business climate, industrial production (preliminary), and Bundesbank policy meeting as being by far the most important. The three most significant U.S. announcements include the employment report, the National Association of Purchasing Managers (NAPM) survey, and employment costs. Overall, U.S. macroeconomic announcements have a far greater impact on the Bund futures market than their German counterparts. © 2002 Wiley Periodicals, Inc. Jrl Fut Mark 22:679–696, 2002     

Java and object standardization in the Internet – A way to more competition in the software industry?

The computer software market is a textbook example of network externalities: if a user decides to work with a specific program, the utility of all other users of the same product increases. This increase in utility is not compensated for by the market; thus one speaks of network externalities. Such network externalities lead to a natural tendency towards quasi standardization, favoring a high market concentration on the supply side. This article demonstrates that Java programs combined with an appropriate object standardization may reduce the influence of the network externalities, giving smaller companies a better chance to compete successfully. This revised version was published online in August 2006 with corrections to the Cover Date.     

Achieving low-cost UMTS networks via pricing

One of the main concerns of mobile operators towards deployment of Universal Mobile Telecommunications System (UMTS) networks is the investment cost. The costly radio access network, based on the network equipment required in a service area, prevents incumbents and new entrants from upgrading or building a new UMTS network. In this article, a novel, low-cost approach to the UMTS radio access network design is proposed. The approach employs the use of pricing incentives. This approach is based on the assumption that a pricing mechanism is in place to control excessive traffic load during peak periods. By incorporating this assumption into the network design, the network designer is able to relax certain design parameters, which may contribute to significant savings in equipment cost. Investigation is focused on the UMTS coverage and capacity planning, using the Net Present Value (NPV) financial analysis. For certain price-sensitivity levels, the analysis indicates that this approach provides a suitable strategy for mobile operators to comfortably move forward with UMTS upgrade and gain competitive edge in the wireless market.     

Market entry in japan—Some problems and solutions 1

Japan is recognised as a major competitor in world markets but is less well‐known as an attractive market in its own right. This paper proposes that with the right strategies it is possible to successfully penetrate the difficult Japanese market. Problems and opportunities presented by the market are discussed, and some of the findings of a survey of Japanese and German managers in Japan and German‐based managers are reviewed. The paper covers the survey findings on market characteristics, barriers to entry, information requirements, factors contributing to success and methods of market entry. German and UK sources of information and advice on the Japanese market are given for those interested in pursuing the matter further.     

Promotion and Prevention Contracts in Distributor–Supplier Relationship Using Matched Dyadic Data

ABSTRACT

Purpose: This article aims to introduce and distinguish two features of contract design – prevention and promotion contracts – and compares their effects on opportunism within the distributor–supplier relationship. It also examines the moderating role of ex post contract enforcement strategies.

Methodology/approach: The authors test the proposed theoretical model by collecting matched data from distributors and suppliers in China. Moreover, partial least squares regression is used to analyze the data and test the hypothesis model.

Findings: The results show that a prevention contract leads the distributor to vigilantly avoid mistakes and punishments, thereby deterring him from behaving opportunistically. Alternatively, a promotion contract motivates the distributor to make an effort to attain potential long-run payoffs instead of short-term profits, subsequently restraining his opportunism. Overall, the promotion contract is more effective in curbing distributor opportunism than the prevention contract. In addition, the inhibitory effect of a prevention contract on opportunism is reinforced along with a severe contract enforcement strategy. By contrast, a promotion contract effectively mitigates opportunism with a swift contract enforcement strategy.

Originality/value/contribution: This study untangles two distinctive features of contract design – prevention-framed and promotion-framed contracts – and compares their effects on opportunism management. This study also provides a profound understanding of contract effectiveness by revealing the interaction effect between ex ante contract design and ex post contract enforcement.

Research implications: Researchers are encouraged to explore contract effectiveness from a framing perspective. In particular, ex post contract enforcement strategies should be included in research frameworks related to contract governance. Suggestions for further research on the effects of prevention and promotion contracts on different forms of opportunism are also proposed.

Practical implications: This article provides several insightful implications for managers in designing and enforcing contract in business-to-business marketing. Managers can strategically achieve control and motivation effects by consciously making framing decisions in the contract design, further curbing opportunistic behaviors. Moreover, managers can select a contract enforcement strategy in accordance with the contract type to maximize the effects of the specific contract.     

First-mover and incumbency advantages in mobile telecommunications

The present study analyzes data of 191 mobile network operators from 49 countries in order to identify the extent of first-mover and incumbency advantages. A large number of new market entry opportunities and involvement of many previous state-owned monopolists have characterized the mobile telecommunication services industry over the last 20 years. The results of this study show that both, first-movers and incumbents in the mobile telecommunication services industry are more successful regarding market share and operational financial results than later entrants. A pioneer position and incumbency are only loosely connected, with success originating both from first-mover and incumbency advantages. Moreover, the timing effect is stronger and more sustainable for market share compared to operating margin, indicating that followers successfully compensate part of their market share disadvantages with strategies like SIM-only tariffs, outsourcing and alternative distribution approaches. In addition, the typical rank-based measurement of timing position reveals somewhat stronger associations than a variable that is using the time elapsed between commercial launches of pioneers and followers.     

Implementing Supplier Codes of Conduct in Global Supply Chains: Process Explanations from Theoretic and Empirical Perspectives

Western buying companies impose Supplier Codes of Conduct (SCC) on their suppliers in developing countries; however, many suppliers cannot fully comply with SCC and some of them even cheat in SCC. In this research, we link contract characteristics – price pressure, production complexity, contract duration – to the likelihood of supplier’s commitment to SCC through a mediating process: how the buying companies govern their suppliers. Our structural equation model analysis shows that the hierarchy/relational norms governance is a perfect mediator of contract characteristics’ effects on the likelihood of supplier’s commitment; the market governance, an insignificant one. The managerial implications are provided for successfully implementing SCC in global supply chains.     

Cointegration,unbiased expectations,and forecasting in the BIFFEX freight futures market

The relationship between freight cash and futures prices is investigated using cointegration econometrics. Results illustrate that the BIFFEX futures market is unbiased, and hence efficient for the current, one, two, and quarterly contract horizons. Since the futures contract is based on an index of various shipping routes, which has undergone several changes since its inception, stability in the relationship between the spot and futures rates is investigated using rolling cointegration techniques. Results indicate that the futures contract appears to have become more efficient over time in predicting the spot rate, and that the decrease in trading volume found in the BIFFEX market is not driven by a lack of efficiency in this market. Rather, the decrease in futures trading might be attributed to the growth rate of the freight forward market. This article incorporates the long‐run cointegrating relationships between cash and futures prices in a forecasting model and compares the forecasting performance of this model with several alternatives. It is found that while the futures price is the best predictor of future spot rates for the current‐month contract, time‐series models can outperform the futures contract at longer contract horizons. © 2000 John Wiley & Sons, Inc. Jrl Fut Mark 20:545–571, 2000.     

Advertising and Economic Development

In this article it is argued that West Germany has developed into the largest advertising market with the highest productivity per employee in Western Europe. We observe a continuous increase of net advertising turnover during the 1970s. Some extraordinary characteristics of the German advertising market (such as the structure of the TV advertising market and the printed media industry), which set it into sharp contrast to other European advertising markets, are discussed. Furthermore, we analyse the relationship between advertising and the business cycle movement (procyclical v. anticyclical advertising strategies) and we find that the majority of German business firms still pursue a procyclical advertising strategy although evidence seems to prove that an anticyclical advertising policy adopted during recessions will result in higher market shares and strengthened market positions of advertised brands.     

The New German Sales Law: Changing Patterns in the Regulation of Product Quality

Directive 99/44/EC has led to a fundamental revision of the German Civil Code, the BGB. The Act on the Modernisation of the Law of Obligations, which is now in force, pursues a threefold objective: modernisation, Europeanisation, and integration. Modernisation means making German civil law fit for competition with the best civil systems. Europeanisation means transforming three directives on default, consumer sales, and e-commerce into German civil law. Integration means absorbing consumer legislation into the Civil Code.This paper focuses on sales law. The author argues that it enshrines a new concept of contract law. Its basic elements are made clear when examined on the basis of a historical analysis of the factors that have determined the development of the product quality regulation in the last century: contract law, technical standardisation, and competition law. All three are no longer in the hands of the Member States alone. Europeanisation is at the heart of the matter. Europeanisation has led to major changes in technical standardisation, in competition law, and now in contract law. This newly emerging concept might be termed "competitive contract law," as it develops under the influence of both EC contract and EC competition law. The German legislator has gone a long way in changing the regulatory patterns in sales law. Whether it will be politically and legally accepted remains to be seen.     

Interplays between manufacturer advertising and retailer store brand introduction: Agency vs. wholesale contracts

In retail supply chains, manufacturers' advertising for national brands and retailers' store brand introduction may relate to each other, and two types of contracts, i.e., agency contract and wholesale contract, are widely used. This paper uses game-theoretic models to investigate the strategic interaction between a manufacturer's advertising strategy and a retailer's store brand introduction strategy. We derive the equilibrium outcomes, including wholesale price, retail price, market demand, retailer's and manufacturer's profits under different contract forms. We find that when the product cost is small relative to the perceived value of the store brand, the introduction of a store brand will benefit the retailer. The retailer is more likely to introduce store brands under the wholesale contract than under the agency contract. In addition, compared with the wholesale contract, the agency contract may increase both the manufacturer's and the retailer's profits and lead to Pareto improvement for them.     

技术标准选择的博弈模型研究

从博弈论的角度分析技术标准选择过程,通过构建数学博弈模型,论证技术标准选择的均衡点和稳定策略等问题。应用该模型不仅可以确定先行者在存在网络效应的技术标准产品市场上可获得先发优势,还能用于学习成本锁定、合同锁定和顾客忠诚度锁定。通过锁定策略构建"软硬件"同盟策略,可以建立起技术标准研发的政府扶持机制,包括制定技术标准自主创新的发展战略,支持技术标准自主创新的公共政策,营造技术标准自主创新的良好环境,培育技术标准的自主创新主体。     

流通网络组织开拓农村市场研究

基于网络组织理论视角,探讨以商业信用与法律契约网络、信息网络和创新网络为基础,通过流通企业、农村个体与组织以及中介组织等各个组织节点的互动协调,克服农村的小生产与大市场的矛盾,从而有效开拓农村市场途径。     

公司与农户间商品契约稳定性问题的进一步探讨

本文针对"商品契约优于要素契约"的观点,就商品契约稳定性问题作了进一步的探讨。本文认为,签约产品专用性的强弱是分析商品契约稳定性的基本前提;产品专用性强的商品契约自身能有效地抑制农户将产品转售市场的机会主义行为,因而契约是稳定的;对于产品专用性弱的商品契约,实行市价加成法并不能有效地抑制农户的机会主义行为,而在实践中成功运用的虚拟高价法则可以有效地抑制农户的机会主义行为,从而确保契约的稳定。     

Investor behavior and volatility of futures market: A theory and empirical study based on the OLG model

Investor trading behaviors are always an important issue in behavioral finance and market supervision. This study examines the relationship between investor behavior and future market volatility. We first introduce a two-period OLG model into the futures market, and develop an investor behavior model based on future contract price. We then extend the model to two scenarios: complete and incomplete information. We provide the equilibrium solution, and develop two hypotheses, which are tested with cuprum tick data in Shanghai Futures Exchange (SHFE). Empirical results show that the two-period OLG model for future market is consistent with the market situation in China. More specifically, investors with sufficient information such as institutional investors usually adopt the contrarian trading strategy, whereas investors with insufficient information, e.g., individual investors, usually adopt the momentum trading strategy. These findings reveal that investor behaviors in the Chinese futures market are different from those of in the Chinese stock market.     

Liquidity supply and volatility: futures market evidence

This article examines the provision of liquidity in futures markets as price volatility changes. We find that customer trading costs do not increase with volatility. However, for three of the four contracts studied, the nature of liquidity supply changes with volatility. Specifically, for relatively inactive contracts, customers as a group trade more with each other and less with market makers, on higher volatility days. By contrast, for the most active contract, trading between customers and market makers increases with volatility. We also find that market makers' income per contract decreases with volatility for one of the least active contracts in our sample, but is not significantly affected by volatility for the other contracts. These results are consistent with the idea that, for high‐cost, inactive contracts, market makers react to temporary increases in volatility by raising their bid‐ask spreads significantly, and customers provide increased liquidity through standing limit orders. An implication of our results is that electronic systems, where market maker participation is not required, are able to supply adequate liquidity during volatile periods. © 2001 John Wiley & Sons, Inc. Jrl Fut Mark 21:1–17, 2001     

Return and Volatility Dynamics in the Spot and Futures Markets in Australia: An Intervention Analysis in a Bivariate EGARCH‐X Framework

This article provides evidence of linkages between the equity market and the index futures market in Australia, where the futures market has experienced a major structural event due to the futures contract respecification. A bivariate Exponential Generalized Autoregressive Conditional Heteroskedasticity (EGARCH) model is developed that includes a cointegrating residual as an explanatory variable for both the conditional mean and the conditional variance. The conditional mean returns from both markets are influenced by the long‐run equilibrium relationship, and these markets are informationally linked through the second moments. The crossmarket spillovers exhibit asymmetric behavior in that the volatility responses to past standardized innovations are different for market advances and market retreats. An intervention analysis shows that some of the parameters describing the return‐generating process have shifted after the contract respecification by the futures exchange. © 2001 John Wiley & Sons, Inc. Jrl Fut Mark 21:833–850, 2001     

Pre‐commitment to an Exclusive Contract under Partial Regulation

This article examines the welfare implications of an incumbent’s pre‐commitment to an exclusive contract in a partially regulated environment. It shows that the contract offered to customers in a competitive market makes the first‐best allocation infeasible in the partially regulated environment. However, the contract can have a welfare‐enhancing property through the exclusion of inefficient entry or cream skimming in the competitive market, especially when the regulated price ceiling is low and the incumbent’s technology is characterized by a large proportion of common cost in total cost.     

Testing the rate forecasting consistency of major foreign currency futures

This paper examines the forecasting accuracy of currency futures markets in Canadian Dollars, British Pounds, Japanese Yen, German Marks, and Swiss Francs in predicting the actual spot rates that will exist in the spot market for these currencies. A second objective is to determine if the accuracy of the forecast is related to the time to maturity of the currency futures contract relative to the actual spot rate for that currency. The results indicate that the currency futures market appears to be a reasonably good forecaster of future currency spot rates.     

Optimal contract design: For whom?

In designing a derivative contract, an exchange carefully considers how its attributes affect the expected profits of its members. On November 3, 1997, the Chicago Mercantile Exchange doubled its tick size of its S&P 500 futures contract and halved the denomination, providing a rare opportunity to examine empirically the search for an optimal contract design. This article measures changes in the trading environment that occurred in the days surrounding the contract redesign. We find a discernible change in the incidence of price clustering, an increase in the bid/ask spread, a reduction in trading volume, and no meaningful change in dollar trade size. These results suggest that the contract redesign did not increase accessibility but did increase market maker revenue. Despite the increase, however, the bid/ask spread of the S&P 500 futures contract remains low relative to the costs of market making and the spreads in markets for competing instruments. © 2003 Wiley Periodicals, Inc. Jrl Fut Mark 23:719–750, 2003