Multiple variable factors,demand uncertainty,and the cooperative firm

It has been shown that the risk averse, cooperative firm producing its output with labor as the only variable input and selling this output in a competitive market will produce more than the cooperative firm operating under condition of certainty. This letter proves that this result may not apply to the case of the cooperative firm facing a stochastic demand and/or employing more than one variable input.     

THE EXTENDED GOVERNANCE OF COOPERATIVE FIRMS: INTER‐FIRM COORDINATION AND CONSISTENCY OF VALUES

This work aims at providing a framework for the analysis of governance in networks of cooperative firms. It builds on four bodies of literature: cooperation, transaction costs, monopoly capitalism, production networks. The framework associates the specific principles that define the identity of cooperative organizations (self‐help, member ownership, democratic control, financial participation, limited capital remuneration) alongside more general governance levels (embodied values, property rights, control, resource allocation). We then apply the same dimensions to production networks and propose a stylized networking model for cooperatives. We introduce market power, and identify two polarized types of networks: (1) heterarchical forms of coordination based on cooperation and mutual help, (2) hierarchical coordination based on exclusive direction. We compare both types with our normative framework providing examples and brief case studies for each network type. Recommendations to scholars and practitioners point at the opportunity to discriminate inter‐firm relations and production development strategy in terms of the values of cooperation, at all governance levels.     

Management contribution and the allocation of time in a labor-managed firm

The problem of time allocation in a labor-managed firm is considered under a technology specification in which the role of management in the production process is different from that of “ordinary” members. Two allocation schemes are discussed, the egalitarian and the Nash equilibrium. It is shown that in the model discussed the Nash solution brings about an output level that is lower than the Pareto-optimal output level. If the manager seeks employment opportunities outside the cooperative that reflect his success as manager, he increases his time input so that the output of the cooperative and the “ordinary” members' utility levels increase.     

Separation of Regulatory Powers When Contracts Are Incomplete

The investment of a regulated firm affects the service/good provided on many dimensions. Should an integrated regulator take care of them all? Or is it better to have separate regulators responsible for them? We analyze the effect of the separation of regulatory powers on the regulated firm's ex ante incentive to invest in a “cooperative” innovation. The effects of the innovation are not verifiable and the cost of investing is sunk, hence, there is a problem of hold‐up. We find that when the innovation produces opposite effects the ex ante firm's incentive to invest is larger in the case of separation than in the case of integrated regulation. We also stress the risk of over‐investment that the separation of regulatory powers may induce. We maintain that along with classical incentive regulation—which mainly provides incentives for the firm to be efficient—the separation of regulatory powers may play a role in providing an incentive for cooperative innovations.     

On the price discriminating labour cooperative

This paper considers labor cooperatives selling in a competitive international product market and a monopolistic domestic market simultaneously. It is shown that output of the cooperative is smaller than that of a profit maximizing firm. Both firms have the same domestic sales. Output will decrease if domestic demand rises but it may rise or fall when foreign demand increases. These contrast with the single market comparative statics of Ward.     

Infrastructure,Multinational Affiliate Production,and the Pattern of Trade

In a two-country general equilibrium model with endogenously determined domestic and multinational firms, it is shown that public infrastructure development can have diverging implications for horizontal multinational affiliate firm production and trade, depending on the type of infrastructure invested in. Infrastructure investments with strong productive or local transport effects (i.e. schools or local roads) lead to greater domestic firm production and exports, fewer imports, and more foreign multinational affiliate firm production in the country making the investment. On the other hand, infrastructure projects that lower international trade and transaction costs (i.e. shipping ports or airports) lead to more domestic firms in both countries, a greater volume of bilateral exports in both directions, and less multinational affiliate production. Further, the effect of different types of infrastructure investment on income and welfare of the open economies is explored.     

A Model of a Price-setting Duopoly with a Wage-rise Contract

This paper considers a wage-rise contract between a firm and its employees as the firm's strategy, and suggests a wage-rise-contract policy. The policy is a promise by the firm that it will announce a certain output level and a wage premium rate, and if it actually produces more than the announced output level, then it will pay each employee a wage premium uniformly. First, this paper examines the case in which one of two firms unilaterally offers the wage-rise-contract policy by using a two-stage price-setting duopoly model. It is then shown that there exists an equilibrium which coincides with the Stackelberg solution where the firm adopting the policy is the leader. Next, this paper examines the case in which both firms can offer the wage-rise-contract policy in the model. It is then shown that there exists an equilibrium which is more profitable for both firms than in the unilateral case.     

On the relations between demand creation and growth in a monopolistic firm

This paper deals with the allocation of resources over time by a monopolistic firm between growth of the productive capacity and growth of the market-demand capacity. As the demand-creation relations follow an S-shaped curve, different phases in the behavior of the growing firm are conceived in which investment cycles occur both in productive and demand-creation activities.The paper analyzes the case of homogeneous resources as well as nonhomogeneous resources. It is shown that in general the phases in the behavior of the growing firm are preserved in both cases. In the homogeneous case, when there are investment activities in both types of capital, it is shown that the firm will allocate its resources between the two activities in such a way that the ratio of the rate of growth of demand price (with respect to demand-creation capital) and the rate of growth of output (with respect to productive capital) will be equal to one plus the reciprocal of the elasticity of demand and will, therefore, be bounded between zero and one.     

Cooperative choice of corporate social responsibility in a bilateral monopoly model

This article presents an examination of a linear bilateral monopoly model with endogenous and cooperative choice of corporate social responsibility (CSR) level. This article also describes an investigation of the effects of cooperative choice of CSR on the market and welfare. New findings are explicit derivation of the necessary and sufficient condition for solving a double marginalization problem in the bilateral monopoly model with CSR. In addition, this report is the first demonstrating that cooperative CSR with Nash bargaining improves consumer surplus, social welfare and each firm’s profit to a level higher than that achieved through noncooperative CSR. Furthermore, cooperative CSR with Nash bargaining is shown to be capable of completely solving the double marginalization problem generated by a bilateral monopoly, although the manufacturer and the retailer are not vertically integrated.     

Global Value Chains,Horizontal Intra-Industry Trade and the Heterogeneous Firm

This paper examines global value chains at the level of the heterogeneous firm. The context is a world of horizontal intra-industry trade, characterized by imperfect competition and product differentiation at the firm level. Standard microeconomic tools are employed to assess the effects of inter-firm dissimilarities in both demand and supply on firms’ responses to changes in trade policy. In this set-up, dissimilarities in firm characteristics play roles similar to factor endowments and technology differences in traditional trade models. When cross-border production sharing (“fragmentation”) is introduced into this framework, those differences in firm characteristics determine the degree to which individual firms will enter into production networks. In this context, horizontal and vertical intra-industry trade elements interact in their effects on firm decisions. Traditional comparative advantage considerations still govern the choice of off-shored activities, while direct competition between imports and exports expands the range of possible outcomes. Finally, it is shown that cross-border production sharing reduces the sensitivity of firms to variations in exchange rates, matching a phenomenon that has been observed in traditional country-level models.     

Technological Upgrading under Tariffs and Equivalent Quotas*

This paper compares the effect of tariffs and that of equivalent quotas on the domestic firm’s production technology choice when it competes with a foreign firm in the domestic market. It is shown that under Bertrand price competition, the ranking of technology under tariff protection and quota protection is ambiguous, as it depends on the relative strength of the strategic vs output effects. The equivalent quota regime can generate a higher‐technology (implying a lower production cost) choice than the tariff regime if the strategic effect dominates the output effect. In contrast, the technology level is necessarily higher under the tariff regime than under the equivalent quota regime when the firms engage in Cournot quantity competition.     

Adam Smith’s division of labor and structural changes

This paper considers two different cases of division of labor: (i) the subdivision of different operations in order to produce a particular product in a given firm or plant; (ii) the specialization of firms in the same industry. Division of labor of the former type is limited by demand for output of a particular firm or plant, while division of labor of the latter type is limited by demand for the industry as a whole. It is argued that, in the case of an industry producing a homogenous product, an increase in the scale of production of any particular firm is likely to be associated with changes in the internal division of labor. In the case of inter-firm division of labor, decreasing unit costs may result from lateral disintegration. Finally, in the case of an industry producing a composite commodity (that is, a commodity composed of many different sub-commodities), firms’, disequilibrium behavior may lead to concentration of each firm to fewer sub-commodities, in the anticipation of the entry of new firms, or as a result of it.     

Coordination Costs,Market Size,and the Choice of Technology

Impact of coordination costs and market size on a firm's choice of technology is studied in a general equilibrium model in which finns engage in oligopolistic competition. A firm establishes an organizational hierarchy to coordinate its production. First, it is shown that an increase in market size leads a firm to choose a more specialized technology. Second, surprisingly, a robust result is that an increase in the level of coordination efficiency leads a firm to choose a less specialized technology.     

On Assisting Domestic Industries under Bertrand Competition

In a homogeneous‐good duopoly game with a home and a foreign firm, which compete on prices, it has been shown that the optimal way to assist the domestic industry is by a production subsidy. The argument here is that the subsidy is used to keep potential competitive pressure on the foreign firm. This paper analyzes under which conditions this threat of entry of a subsidized home firm is credible. It is shown that in markets where the firms move before the government, a subsidy is not credible and dominated by a tariff in terms of welfare.     

Interactions of the firm's real and financial decisions

This paper provides an integrated approach to the theory of the firm. Under technological uncertainty, corporate taxes, risky debt and risk neutrality it is shown that the firm's investment production and financing decisions are made simultaneously. It is demonstrated that the relationship between optimal capital (or labour) and debt is not strictly negative as in Dotan and Ravid (1982) nor strictly positive as in Hite (1977). The direction of this relationship depends on the characteristics of debt and the characteristics of the firm's production function. Given the simultaneity of the real and financial decisions, it is shown that an interior optimum exists for the firm's value as a function of debt.     

Location of public and private firms under endogenous timing of choices

This paper studies the choices of locations in a mixed duopoly when production costs are endogenously determined and the public firm maximizes a weighted sum of social surplus and its profits. We find that the locations of the two firms are decided simultaneously when the weight of the public firm’s profits in its objective function is high enough. When this is not the case we find that one firm (not always the public firm but sometimes also the private one) behaves as a leader in the choice of location and location decisions are made sequentially. Moreover, in equilibrium, the production cost of the public firm is never higher than that of the private firm.     

Technology adoption under hidden information

We consider a firm where workers have pre-contractual private information regarding their cost of production. Before contracting takes place, the owner of the firm can adopt a new technology that reduces production costs for each type of worker. We show that technology adoption may have an adverse rent effect that counteracts the cost-reducing effect. This is the case whenever the new technology reduces the costs of more efficient types more strongly. Nevertheless, if the owner contracts directly with a worker (two-tier hierarchy), the cost-reducing effect always dominates. By contrast, if the firm has more hierarchical tiers such that contracting with the worker is delegated to a manager, the rent effect may prevail. Then, the owner does not adopt the new technology, even if it is costlessly available.     

双边关系质量与合作治理模式:整合分布式创新核心机制的概念模型

分布式创新是近年来技术创新领域的一个前沿主题,已有学者发现企业间双边关系质量对分布式创新结果和绩效具有促进作用,但关于其对分布式创新过程及治理模式的影响仍缺乏机理性认识。从社会网络视角,基于分布式创新机制与合作治理理论,提出了企业间关系质量—分布式创新机制—合作治理模式的分析框架。通过深入分析分布式创新中双边关系质量对合作治理模式选择的影响,构建了一个由分布式创新内在机制和合作涉及的技术范围组成的带有中介和调节作用的路径整合模型。总体来说,解释了双边关系质量通过完善分布式创新机制使得企业更倾向于选择股权合作模式的内在机理,希望通过该模型为后续学者提供一个分析双边关系特征与合作创新之间关系的新思路。     

Learning-by-Doing and Strategic Trade Policy

The paper models international rivalry between a domestic firm that is going through a learning-by-doing phase, and a mature foreign rival. It is shown that the optimal production subsidy for the domestic firm depends on the degree of strategic sophistication of the foreign firm. Optimal production subsidy rules are derived under various scenarios. They are shown to be very sensitive to the specification of the game between the domestic and the foreign firms. Whether the optimal subsidy should decrease over time depends on the strategic sophistication of the foreign firm.     

International Commodity Taxation under Monopolistic Competition

We analyze non‐cooperative commodity taxation in a two‐country trade model characterized by monopolistic competition and international firm and capital mobility. In this setting, taxes in one country affect foreign welfare through the relocation of mobile firms and through changes in the rents accruing to capital owners. With consumption‐based taxation, these fiscal externalities exactly offset each other and the non‐cooperative tax equilibrium is Pareto efficient. With production‐based taxation, however, there are additional externalities on the foreign tax base and the foreign price level that lead non‐cooperative tax rates to exceed their Pareto efficient levels.