Endogenous market power

In this paper we develop a framework to study markets with heterogeneous atomic traders. The competitive model is augmented as we provide traders with correct beliefs about their price impacts to define equilibrium with endogenously determined market power and show that such equilibrium exists in economies with smooth utility and cost functions and is generically determinate. Traders? price impacts depend positively on the convexity of preferences or cost functions of the trading partners and are subject to mutual reinforcement. Compared to the competitive model, the volume of trade is reduced, and hence is Pareto inefficient. The price effects of non-competitive trading depend on the convexity of marginal utility or cost function.     

Unruly entrepreneurs – investigating value creation by microfinance clients in rural Burundi

ABSTRACT

This study explores the entrepreneurial potential of the rule-breaking practices of microfinance programs’ beneficiaries. Using the storyboard methodology, we examine the strategies employed by the poor in Burundi to bypass institutional rules. Based on 66 short interviews conducted in seven rural provinces of Burundi, our exploratory study analyzes the entrepreneurial potential in four instances of rule-evasion: consumption spending, illegitimate investment, loan juggling and loan arrogation. We argue that some of the unruly practices are in fact entrepreneurial, as they create tangible and intangible value for the rural poor at both household and community levels. These include strengthening social ties through gift exchange and ceremonies, which then help poor households to self-insure against shocks through social networks. By analyzing the push and pull factors for unruly behavior, we show that rule-breaking practices are often necessitated by the microfinance industry itself and call for increased flexibility and adaptability of microfinance products.     

Corporate Governance and Financial Performance of Companies in Poland

The research presented in the paper is aimed at examining the relationship between the level of corporate governance and the financial performance of listed companies in Poland. The corporate governance degree is expressed by the outcomes of a rating of 2003 performed by Polish Corporate Governance Forum. The attempted models are of ordered multinomial type. Endogenous variable represents the rating outcome (A−, B+, B, B−, and C+), while the exogenous variables include various financial indicators evaluated on the basis of the 2002 financial statements. The estimated ordered logit models show that the level of corporate governance of companies in Poland is associated with their ability to cope with the financial distress, as expressed by the degree of liquidity, profitability and the financial leverage variables.     

Government activity and economic growth – one size fits All?

This study investigates the role of government activity in economic growth, arguing that economic systems are important and that, therefore, one size of government does not fit all countries. Taking a panel of 111 countries over the years from 1971 to 2010, we consider clusters of economic systems as predicted by an extended Varieties of Capitalism (VoC) approach. The empirical growth impact of government activity is positive but u-shaped and depends on both the quality of institutions and the institutional setting. For the polar cases of liberal economies and Scandinavian coordinated market economies, the potential growth impact is quite similar and superior to other clusters of countries. However, the maximum growth effect is realized for above-average levels of government activity in the Scandinavian countries, while this would be detrimental to growth in liberal countries. Hence, high levels of government activity are consistent with growth but only in economic systems consistently rooted in a high level of government activity.     

Spatial Heterogeneity of Willingness to Pay for Forest Management

The paper investigates the spatial heterogeneity of public’s preferences for the implementation of a new country-wide forest management and protection program in Poland. Spatial econometric methods and high resolution geographical information system data related to forest characteristics are used to explain the variation in individual-specific willingness to pay (WTP) values, derived from a discrete choice experiment study. We find that respondents’ WTP is higher the closer they live to their nearest forest, and the scarcer forests are in the area where they live. Interestingly, the higher the ecological value of forests in respondents’ area, the more people prefer extending areas of national forest protection. We also investigate spatial patterns in individual-specific WTP scores and in latent class membership probabilities, finding that preferences are indeed spatially clustered. We argue that this clustering should be taken into account in forest management and policy-making.     

Impression Management in Letters to Shareholders: Evidence from Poland

We study impression management in an emerging market setting with high ownership concentration. Using content analysis, we identify impression management techniques in a sample of letters to shareholders written in the Polish language by the 60 largest companies listed at the Warsaw Stock Exchange in 2008 and 2013. We find patterns in the occurrence of these techniques with the use of k-means clustering: the largest cluster includes letters that praise the management, while the rest include defensive arguments, discussions of negative outcomes and short, formal letters. The more concentrated ownership is, the shorter the letters are, which indicates that management invest less effort in communicating with investors. This is particularly visible in companies held by insiders, which tend to produce short, formal letters, devoid of impression management. In contrast, companies controlled by foreign shareholders prepare letters that are longer and which are more likely to present defensive arguments, while institutional non-controlling shareholders favour extensive disclosure. The results shed light upon communication practices in Central and Eastern Europe, and offer implications for regulators and managers that may help strengthen the information environment in regional stock markets.     

Centralisation of Collective Bargaining in a Decade of Decentralisation: The Case of the Engineering Construction Industry

This article examines the sole recent case of the comprehensive centralisation of bargaining. This ‘exceptional’ case allows new light to be cast on existing trends in multi-employer bargaining. The analysis suggests the importance of the state and unions as interlocutors in the political process of the determination of employer ‘interests’.     

Value of a Statistical Life—the Case of Poland

This study investigates the relationship between wages and the risk of work-related death for male blue-collar workers. The size of the premium for risk and its statistical significance depend heavily on the inclusion of industry dummy variables into the regression. Irrespective of the type of risk variable used, controlling for industry at a finer breakdown lowers the price of risk and its statistical significance. Estimates of the value of a statistical life (VSL) proved to be more robust when an aggregated risk measure at three-digit occupational level was used. In this case, the VSL varied from 0.79 million USD (for the model with industry dummy variables at the three-digit level) to 2.41 million USD (for the model without industry dummy variables). To the best of the author’s knowledge, this is the first study estimating VSL using the compensating wage differential approach for countries in Central-Eastern Europe.     

Long-term unemployment, unemployment benefits and social assistance: The Polish experience

This paper provides a comprehensive account of the regulations governing the systems of unemployment support and social assistance in post-communist Poland. To provide a solid foundation for a further discussion of these issues, the paper extensively characterizes the Polish labor force in terms of the prevalence and duration of unemployment. A final aspect of our empirical analysis concerned the question of what are the main sources of personal income for labor force participants, unemployed workers and long-term unemployed workers. In conclusion, we argue for a reform of the Polish systems of income support that separates the objectives of employment growth and poverty alleviation, and that improves upon the implementation of support schemes.