Prohibiting State Aid in an Integrated Market: Cournot and Bertrand Oligopolies with Differentiated Products

The prohibition of state aid in an integrated market such as the European Community is analyzed in a model where firms produce differentiated products and market structure is either Cournot or Bertrand oligopoly. State aid is financed by distortionary taxation so the opportunity cost of government revenue exceeds unity. Under both Cournot and Bertrand oligopoly, if products are sufficiently close substitutes then there exists a range of values for opportunity cost where governments give state aid and where the prohibition of state aid will increase aggregate welfare. With sufficiently differentiated products, the prohibition of state aid will reduce aggregate welfare.     

Experimental analysis of choice

Experimental choice analysis continues to attract academic and applied attention. We review what is known about the design, conduct, analysis, and use of data from choice experiments, and indicate gaps in current knowledge that should be addressed in future research. Design strategies consistent with probabilistic models of choice process and the parallels between choice experiments and real markets are considered. Additionally, we address the issues of reliability and validity. Progress has been made in accounting for differences in reliability, but more research is needed to determine which experiments and response procedures will consistently produce more reliable data for various problems.Sawtooth SoftwareDecision Research     

Using stated response choice data to enrich revealed preference discrete choice models

There is growing interest in exploring the view that both revealed preference (RP) and stated preference (SP) data have useful information and that their integration will enrich the overall explanatory power of RP choice models. These two types of data have been independently used in the estimation of a wide variety of discrete choice applications in marketing. In order to combine the two data sources, each with independent choice outcomes, allowance must be made for their different scaling properties. The approach uses a full information maximum likelihood estimation procedure of the hierarchical logit form to obtain suitable scaling parameters to make one or more data sets comparable. We illustrate the advantages of the dual data strategy by comparing the results with those obtained from models estimated independently with RP and SP data. Data collected as part of a study of high speed rail is used to estimate a set of illustrative mode choice models.     

My Boss is Morally Disengaged: The Role of Ethical Leadership in Explaining the Interactive Effect of Supervisor and Employee Moral Disengagement on Employee Behaviors

The popular press is often fraught with high-profile illustrations of leader unethical conduct within corporations. Leader unethical conduct is undesirable for many reasons, but in terms of managing subordinates, it is particularly problematic because leaders directly influence the ethics of their followers. Yet, we know relatively little about why leaders fail to apply ethical leadership practices. We argue that some leaders cognitively remove the personal sanctions associated with misconduct, which provides them with the “freedom” to ignore ethical shortcomings. Drawing on moral disengagement theory (Bandura 1986, 1999), we examine the relationship between supervisor moral disengagement and employee perceptions of ethical leadership. We then examine the moderating role of employee moral disengagement, such that the negative relationship between supervisor moral disengagement and employee perceptions of ethical leadership is stronger when employee moral disengagement is low versus high. Finally, we examine ethical leadership as a conditional mediator (based on employee moral disengagement) that explains that relationship between supervisor moral disengagement and employee job performance and organizational citizenship behavior (OCB). Results from a multi-source field survey provide general support for our theoretical model.     

Finance for development and islamic banking

Islamic banking, where fixed interest contracts are banned, needs if it is to be successful to operate within a type of financial system in which bank-industry relationships are sufficiently close and pervasive for profit- and loss-sharing arrangements to be acceptable to both sides. However, the creation of such a business culture is likely to be difficult.     

Some characterizations of stockpiling behavior under uncertainty

The objective of this note is to gain new theoretical insights into stockpiling phenomena. The model used to derive our results envisions consumers as responding optimally to uncertainties in the promotion environment. We show that, all else being equal, consumers will stockpile a promoted product more intensely: (i) the lower the availability of deal opportunities, (ii) the smaller the expected deal discount, and (iii) the lower the uncertainty about the deal/regular price, provided that dealing occurs with high/low frequency.     

University research and development activities: Intrusion into areas untended? A review of recent developments and ethical issues raised

The traditional and emerging roles of the major research entities in the United States are reviewed. Particularly controversial has been the university's emerging role of applied researcher in addition to its traditional role of basic researcher. Private, for-profit research laboratories have vociferously objected to the funding of university applied research by both the federal government and private industry. The funding of university research by these latter two entities is then reviewed and discussed. In addition to the ethical issue of whether university applied research should be funded, there is apparently another ethical issue regarding how the recipient universities are selected. In essence, if the universities intrusions are merely into untended areas, the first ethical issue seems less serious. Such may be the case if private laboratories are not equipped to perform the research. Of course, the second issue of which university should receive the funding remains. The apparently strengthening ties between universities and private industry are then reviewed. Direct ties between universities and industry still account for a very small part of university research. But impediments to cooperation are melting away as universities market their services to private industry. The authors contend that the government encourages cooperative ventures between universities and industry. They pose questions for all sides and suggest further areas of study should these joint ventures continue as they seem most likely to do. Much of the literature has leaned toward criticism of these joint efforts. Martin Kenney, in the February, 1987 issue of The Journal of Business Ethics, offered one of the more extensive efforts in his criticism of cooperative industrial/university research. Kenney concentrated on the area of biotechnology research. The present article avoids specific areas of research and takes a broad view of these cooperative research efforts. It is less critical than Kenney of the cooperation between industry and universities. David E. Blevins is Associate Professor of Management in the Department of Management and Marketing, University of Mississippi. From 1962–1971 he was employed by Caterpillar Tractor Co. in various management positions including District Representative for four European and Middle East countries. He received a Ph.D. and MBA from the University of Illinois and a BS in Industrial Engineering from the University of Missouri. He has published articles in the Journal of Business Ethics, Journal of Product Innovation Management and Mississippi Business and has published three textbooks. Sid R. Ewer is Assistant Professor of Accountancy at Southwest Missouri State University. His areas of research interest involve public policy and ethics, and he has published in The Journal of System Management. He has spent eight years in state government as an executive for an educational agency, and, prior to state government Mr. Ewer was an executive for industry. He is a Certified Public Accountant, Certified Management Accountant and Certified Internal Auditor.     

Stakeholder Theory and Managerial Decision-Making: Constraints and Implications of Balancing Stakeholder Interests

Stakeholder theory is widely recognized as a management theory, yet very little research has considered its implications for individual managerial decision-making. In the two studies reported here, we used stakeholder theory to examine managerial decisions about balancing stakeholder interests. Results of Study 1 suggest that indivisible resources and unequal levels of stakeholder saliency constrain managers’ efforts to balance stakeholder interests. Resource divisibility also influenced whether managers used a within-decision or an across-decision approach to balance stakeholder interests. In Study 2 we examined instrumental and normative implications of these two approaches. We conclude by considering the contributions of this research.     

Market entry and international propagation of business cycles

In this paper, pro-cyclical market entry acts as an international transmission mechanism for business cycle shocks. In an imperfectly competitive dynamic equilibrium model, an expansion in one open economy leads to additional business formation in a parallel large open economy through demand spillovers. Business formation causes a decline in markups leading to an expansion in employment, production, and investment in both economies. The modeling of the entry decision is critical. Only when the entry game is modelled as sequential (with incumbents enjoying a first mover advantage) are markups sufficiently elastic to cause international comovement.     

Does corruption increase emerging market bond spreads?

We study the relationship between corruption and borrowing costs for governments and firms in emerging markets. Combining data on bonds traded in the global market with survey data on corruption compiled by Transparency International, we show that countries that are perceived as more corrupt must pay a higher risk premium when issuing bonds. The global bond market ascribes a significant cost to corruption: an improvement in the corruption score from the level of Lithuania to that of the Czech Republic lowers the bond spread by about one-fifth. This is true even after controlling for macroeconomic effects that are correlated with corruption. We find little evidence that investors became more sensitive to corruption in the wake of the Asian financial crisis.